Grains show benefits from communism's collapse

by Morton Sosland
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In all the celebration and commentary prompted by the 20th anniversary of the demolishment of the Berlin Wall, the importance of this event for global grain received scant attention. That is remarkable for anyone who has studied or just recalls the central role grain had in the bi-polar world ruling when western nations were arrayed against countries ruled by communism. Indeed, much of the dissatisfaction ruling in 1989 among peoples behind the Berlin Wall, not just in Eastern Germany but also in the nations that were satellites or parts of the Former Soviet Union, stemmed from inadequate grain supplies, periodic crop shortfalls and inefficient processing and distribution. Mounting envy of the ability of western nations to grow grain adequate to their own needs and to have surpluses for export became a major trigger for the wall coming down and communism’s collapse.

Amid all the studying of developments beginning two decades ago, it is apparent that many are unaware of what this occurrence meant for the grain industry and its underlying importance to millions of people. For instance, some blame the recent economic recession on the unwillingness of governments, in reaction to the fall of Soviet rule, to exercise control over financial institutions. Criticism is aimed at the inability or unwillingness of western nations to seize the opportunities presented by communism’s collapse, especially when it comes to managing the economy. Structural reforms seen as urgently needed in Europe never were addressed, largely because of the astonishing speed with which Germany was reunified once the wall came down. Most serious of these criticisms focuses on Germany, at the center of Europe, as being fearful of change, whereas 20 years ago it was eager to embrace change.

Totally overlooked in these allegations is the market liberalization that is one of the great dividends of communism’s demise. No evidence of this is more powerful than what has happened in grain. The nations once comprising the Former Soviet Union not only produce sufficient grain for their own requirements, but have emerged as a leading force in exporting. Instead of needing to import a third of their domestic requirements, which was typical 20 and more years ago, these countries now are aggressive competitors. This has come about in response to a grain market offering plenty of incentives to farmers as well as to merchants and processors intent on upgrading the faltering infrastructure left by communism.

The thriving grain market in the countries that once were under Moscow’s yoke has been a significant force in the modernization of the entire European grain market. It cannot be forgotten that unifying Germany strengthened this nation’s role in the evolution of the European Union. No one in 1989 would even have dared dream of the Soviet satellite nations joining the E.U., attracted in large part not just by democracy and liberal economics inherent in the Union, but also by the promise of participating in the huge grain market across E.U. members.

Looking at wheat alone, and recognizing improved supplies, growth in size and a dynamic economy, it is notable that E.U. consumption has more than doubled. That contrasts with no change in North America. Only sub-Sahara Africa shows consumption growth at a similar pace. When it comes to coarse grains, where North America enjoyed a doubling, the expansion in E.U. usage is close to eight times, once again outstripping emerging markets. Contemplating such numbers lends wonder to the observation that Eastern European people protesting communism did not want to embrace capitalism; they wanted freedom to live their lives without state control. It is further contended they did not want "the new cruel world of efficient markets." Yet, it is that world which has brought massive benefits in the quality of life, in the supply and marketing of grain, and in achieving the freedom that the people of all these lands enjoy now that the wall has been down for two decades.