Selling agriculture products to other countries has been an important part of the American economy since the country began. The first colonists in Jamestown, Virginia, did not find gold as they thought they might, but were able to turn a profit for their investors by exporting tobacco back to the old world. By 1620, the Virginians were exporting 100,000 pounds of tobacco each year back to England.
As the U.S. grew and farmers moved west, the home market grew faster than the world market. Exports were still important, but it was cheaper to ship produce across the country than across the seas. All of that changed during and after World War II.
As the war began, what had been a small, but steady flow of ag exports suddenly dropped as shipping became dangerous. Then the U.S. Navy began protecting convoys and demand from the Allies grew. The quantity of agricultural exports shot up, and this dramatic increase continued for the next 40 years. The graph of that increase is remarkably similar to the graph of the increase in productivity. As demand for exports increased, the farmer was able to increase productivity to meet it. American farmers came to rely on exports to prop up prices and farm incomes.
In 1940, even before the U.S. entered the war, Congress passed the Lend-Lease Act to send food and war materials to the Allies. It took a while to buy the food from farmers and get it on ships and safely across the Atlantic, but the program quickly became a government financed export program for farmers.
Hogs, poultry, eggs, dairy products and vegetables were the first priorities. The eggs and milk were dehydrated and shipped overseas. At home, shortages in these and other commodities pushed the government to ration food and manufactured products. The government became the biggest buyer of food.
As a result, by the end of 1941 – just as the U.S. entered the war – farm income was higher than at any time since 1929. Yet, direct cash subsidies from the government to farmers accounted for only 13 percent of that income.
By 1943, the government bought 80 percent of all the lower grades of beef produced in the U.S., 40 percent of all other beef cuts, 30 percent of all butter, 30 percent of the veal, 35 percent of all lamb and 50 percent of the canned fruits and vegetables. On the other side of the ledger, the War Production Board balanced the need for tanks and planes against the need for tractors and milking machines. Farmers often came out on the short end of the balance.
The war made the government the de facto controller of the export market. And the export market proved to be the foundation for farm incomes. In the 40 years after the war ended, when exports increased, so did gross farm income.
When the war ended, the Marshall Plan continued the U.S. government’s involvement in exports. All of this American food in the pipeline to foreign countries may have helped change the dietary habits of those countries. As the economies of Europe and Asia recovered, citizens there began eating more meat than they had before the war. The demand for meat, feed grains and protein meals from oilseeds increased. In many lower-income nations, traditional foods like rice and potatoes lost popularity to bread made from imported wheat. American farmers profited.
Yet, international trade is a two-way sea lane. America imports many agricultural products at the same time it exports others. Before the war, imports into the U.S. were dominated by rubber, coffee and sugar. All three commodities either can’t be grown in the U.S. or are grown more efficiently elsewhere.
By the end of the century, fruits and vegetables were the largest ag imports into this country, followed by coffee, grains and meat. In some cases, these commodities competed directly with U.S. goods. But in others, they provided U.S. consumers new choices. For example, fruit grown during the summer months in South America supplies U.S. consumers with fresh produce in the middle of our winter.
World War II increased the importance of the export market to American farmers. Agriculture is a world market. The prices a farmer in York, Nebraska, gets for his or her soybeans may be affected more by a storm in Brazil or dietary habits in Japan than it is by conditions in the farmer’s own backyard.