A Threat of Food Shortage

In actions dolefully reminiscent of dumping milk and killing little pigs during the Depression, U.S. chicken farmers and cattle raisers last week threw down the first major challenge to the Administration's price freeze. Claiming that they cannot make a profit at present prices as long as the cost of freeze-exempt feed grains keeps rising, poultry farmers cut their losses by systematically gassing, drowning and suffocating a million baby chicks and selling their egg-laying hens. Other farmers sent pregnant sows to the slaughterhouse and dispatched old milk cows to hamburger heaven. These tactics raise a two-headed specter of shortages and higher prices for milk, eggs and meat in the next few months.

To buck up the supply and bring down the price of feed, the Administration clamped a temporary embargo on exports of soybeans and cottonseed. This week the Administration will announce a stiff program of export controls on these feeds, and perhaps corn as well. President Nixon acted after the Commerce Department reported that export commitments for June, July and August were so great that the nation was in danger of running out of the pea-shaped, yellow or green, protein-loaded soybeans before the next harvest begins in September.

The export controls will aggravate the nation's trade deficit, which jumped to $158 million in May. They will make the U.S. dollar less convertible--and thus less valuable--in the world because it cannot be exchanged for certain commodities. Worse, the historically unprecedented embargo against friendly nations infuriated European and Japanese customers, who charge that the U.S. has reneged on its long-term export contracts. The Japanese were particularly irked because U.S. officials have prodded them relentlessly to Buy American. Japan needs soybeans--they are used for soy sauce, bean curd and other foods--and buys almost all of them from the U.S. Last year Europe's Common Market nations also bought $800 million worth of American soybeans and soy products.

Yet Administration officials argue that they had little choice. Demand for U.S. soybeans and other feed grains has gone through the roof, largely because increasingly affluent foreigners are buying more meat, and overseas sources of feed have declined because of bad weather (see following story). As a result, domestic feed supplies have grown scarce, and prices have zoomed as grain farmers, speculators, wholesalers and other middlemen tried for the fattest prices they could get. In Georgia and Illinois, for example, soybean meal in the past year has leaped from $100 to $400 a ton, and fish meal has gone from $130 to $600. One consequence, says Mississippi Agriculture Commissioner Jim Buck Ross, is that "it costs a poultry producer about 49-c- a lb. to produce a broiler that brings him only 40-c- a lb. when he sells it."

Though the prices that farmers charge are exempt from the freeze, they are being held in check because wholesalers and retailers refuse to pay more for supplies since their own prices are frozen. Thus farmers are killing chickens and taking other steps to reduce costs. Dairy farmers are being increasingly rigorous in picking out for slaughter all but the best milkers in their herds.

Scarcities of milk and other dairy products could develop by August. Herrell DeGraff, president of the American Meat Institute, predicts that beef supplies could well grow leaner and costlier by early winter. Cattlemen are avoiding oppressive feed prices by letting their steers fatten on grass, a process that takes about 90 days longer than grain feeding.

Shoppers have to settle for a more limited selection in the supermarket.

Food processors are dropping some items because fruit and vegetable growers are demanding higher prices for their control-exempt goods, while the companies' prices for many products are often frozen at last summer's lower level. General Foods, for example, is turning away orders for some frozen-food lines, especially raspberries and strawberries. Some supermarkets are not stocking plums and tomatoes. Also, potatoes and fish sticks are already being priced off store shelves.

Administration officials bullishly predict that the food and feed prices will ease off by autumn because of 1) the export controls, and 2) an expected rise in this year's output of soybeans and other feed. Better late than never, the Administration this year freed up more land for planting. Only if the Government continues to expand domestic farm production will the nation be able to beat the high cost of eating--and help meet the needs of an increasingly hungry world.

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