The grain trade refers to the local and international

trade Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct excha ...

in cereals and other

food grain A grain is a small, hard, dry fruit (caryopsis) – with or without an attached hull layer – harvested for human or animal consumption. A grain crop is a grain-producing plant. The two main types of commercial grain crops are cereals and legumes ...

s such as

wheat Wheat is a grass widely cultivated for its seed, a cereal grain that is a worldwide staple food. The many species of wheat together make up the genus ''Triticum'' ; the most widely grown is common wheat (''T. aestivum''). The archaeologi ...

barley Barley (''Hordeum vulgare''), a member of the grass family, is a major cereal grain grown in temperate climates globally. It was one of the first cultivated grains, particularly in Eurasia as early as 10,000 years ago. Globally 70% of barley p ...

maize Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. The ...

, and

rice Rice is the seed of the grass species '' Oryza sativa'' (Asian rice) or less commonly ''Oryza glaberrima'' (African rice). The name wild rice is usually used for species of the genera '' Zizania'' and '' Porteresia'', both wild and domesticat ...

. Grain is an important trade item because it is easily stored and transported with limited spoilage, unlike other agricultural products. Healthy grain supply and trade is important to many societies, providing a caloric base for most food systems as well as important role in animal feed for

animal agriculture Animal husbandry is the branch of agriculture concerned with animals that are raised for meat, fibre, milk, or other products. It includes day-to-day care, selective breeding, and the raising of livestock. Husbandry has a long history, start ...

. The grain trade is as old as agricultural settlement, identified in many of the early cultures that adopted sedentary farming. Major societal changes have been directly connected to the grain trade, such as the

fall of the Roman Empire The fall of the Western Roman Empire (also called the fall of the Roman Empire or the fall of Rome) was the loss of central political control in the Western Roman Empire, a process in which the Empire failed to enforce its rule, and its vas ...

. From the early modern period onward, grain trade has been an important part of

colonial expansion Colonial or The Colonial may refer to: * Colonial, of, relating to, or characteristic of a colony or colony (biology) Architecture * American colonial architecture * French Colonial * Spanish Colonial architecture Automobiles * Colonial (1920 au ...

and international power dynamics. The geopolitical dominance of countries like Australia, the United States, Canada and the Soviet Union during the 20th century was connected with their status as grain surplus countries. More recently, international commodity markets have been an important part of the dynamics of food systems and grain pricing. Speculation, as well as other compounding production and supply factors leading up to the 2007-2008 financial crises, created rapid inflation of grain prices during the

2007–2008 world food price crisis World food prices increased dramatically in 2007 and the first and second quarter of 2008, creating a global crisis and causing political and economic instability and social unrest in both poor and developed nations. Although the media spot ...

. More recently, the dominance of

Ukraine Ukraine ( uk, Україна, Ukraïna, ) is a country in Eastern Europe. It is the second-largest European country after Russia, which it borders to the east and northeast. Ukraine covers approximately . Prior to the ongoing Russian inv ...

and

Russia Russia (, , ), or the Russian Federation, is a transcontinental country spanning Eastern Europe and Northern Asia. It is the largest country in the world, with its internationally recognised territory covering , and encompassing one-eig ...

in grain markets such as wheat meant that the

Russian invasion of Ukraine in 2022 On 24 February 2022, in a major escalation of the Russo-Ukrainian War, which began in 2014. The invasion has resulted in tens of thousands of deaths on both sides. It has caused Europe's List of largest refugee crises, largest refugee cris ...

caused increased fears of a global food crises in 2022. Changes to agriculture caused by climate change are expected to have cascading effects on global grain markets.

History

The grain trade is probably nearly as old as grain growing, going back the Neolithic Revolution (around 9,500 BCE). Wherever there is a scarcity of land (e.g. cities), people must bring in food from outside to sustain themselves, either by force or by trade. However, many farmers throughout history (and today) have operated at the subsistence level, meaning they produce for household needs and have little leftover to trade. The goal for such farmers is not to specialize in one crop and grow a surplus of it, but rather to produce everything his family needs and become self-sufficient. Only in places and eras where production is geared towards producing a surplus for trade (

commercial agriculture Intensive agriculture, also known as intensive farming (as opposed to extensive farming), conventional, or industrial agriculture, is a type of agriculture, both of crop plants and of animals, with higher levels of input and output per unit of ag ...

), does a major grain trade become possible.

Classical world

In the ancient world, grain regularly flowed from the

hinterland Hinterland is a German word meaning "the land behind" (a city, a port, or similar). Its use in English was first documented by the geographer George Chisholm in his ''Handbook of Commercial Geography'' (1888). Originally the term was associated ...

s to the

core Core or cores may refer to: Science and technology * Core (anatomy), everything except the appendages * Core (manufacturing), used in casting and molding * Core (optical fiber), the signal-carrying portion of an optical fiber * Core, the centra ...

s of great empires: maize in

ancient Mexico ''Ancient Mexico'' was an exhibition by William Bullock of casts of Aztec artefacts and both copies and originals of Aztec codices, held in 1824 in the Egyptian Hall in Piccadilly, London London is the capital and List of urban areas i ...

, rice in ancient China, and

and

in the

ancient Near East The ancient Near East was the home of early civilizations within a region roughly corresponding to the modern Middle East: Mesopotamia (modern Iraq, southeast Turkey, southwest Iran and northeastern Syria), ancient Egypt, ancient Iran ( Elam, ...

. With this came improving technologies for storing and transporting grains; the

Hebrew Bible The Hebrew Bible or Tanakh (;"Tanach"
'' ancient Egypt's massive grain silos. Merchant shipping was important for the carriage of grain in the classical period (and continues to be so). A

Roman Roman or Romans most often refers to: *Rome, the capital city of Italy *Ancient Rome, Roman civilization from 8th century BC to 5th century AD *Roman people, the people of ancient Rome *'' Epistle to the Romans'', shortened to ''Romans'', a lette ...

merchant ship could carry a cargo of grain the length of the Mediterranean for the cost of moving the same amount 15 miles by land. The large cities of the time could not exist without the supplies delivered. For example, in the first three centuries AD, Rome consumed about 150,000 tons of Egyptian grain each year. During the classical age, the unification of China and the pacification of the

Mediterranean The Mediterranean Sea is a sea connected to the Atlantic Ocean, surrounded by the Mediterranean Basin and almost completely enclosed by land: on the north by Western Europe, Western and Southern Europe and Anatolia, on the south by North Africa ...

basin by the

Roman Empire The Roman Empire ( la, Imperium Romanum ; grc-gre, Βασιλεία τῶν Ῥωμαίων, Basileía tôn Rhōmaíōn) was the post- Republican period of ancient Rome. As a polity, it included large territorial holdings around the Mediter ...

created vast regional markets in commodities at either end of

Eurasia Eurasia (, ) is the largest continental area on Earth, comprising all of Europe and Asia. Primarily in the Northern and Eastern Hemispheres, it spans from the British Isles and the Iberian Peninsula in the west to the Japanese archipelago ...

. The

grain supply to the city of Rome Cura Annonae ("care of Annona") was the term used in ancient Rome, in honour of their goddess Annona, to describe the import and distribution of grain to the residents of the cities of Rome and, after its foundation, Constantinople. The city of ...

was considered to be of the utmost strategic importance to Roman generals and politicians. In Europe, with the

and the rise of

feudalism Feudalism, also known as the feudal system, was the combination of the legal, economic, military, cultural and political customs that flourished in medieval Europe between the 9th and 15th centuries. Broadly defined, it was a way of structur ...

, many farmers were reduced to a subsistence level, producing only enough to fulfill their obligation to their

lord Lord is an appellation for a person or deity who has authority, control, or power over others, acting as a master, chief, or ruler. The appellation can also denote certain persons who hold a title of the peerage in the United Kingdom, or are ...

and the Church, with little for themselves, and even less for trading. The little that was traded was moved around locally at regular fairs.

Early modern and modern expansion

A massive expansion in the grain trade occurred when Europeans were able to bring millions of square kilometers of new land under cultivation in

the Americas The Americas, which are sometimes collectively called America, are a landmass comprising the totality of North and South America. The Americas make up most of the land in Earth's Western Hemisphere and comprise the New World. Along with th ...

, Russia, and Australia, an expansion starting in the fifteenth and lasting into the twentieth century. In addition, the consolidation of farmland in Britain and

Eastern Europe Eastern Europe is a subregion of the European continent. As a largely ambiguous term, it has a wide range of geopolitical, geographical, ethnic, cultural, and socio-economic connotations. The vast majority of the region is covered by Russia, whic ...

, and the development of

railways Rail transport (also known as train transport) is a means of transport that transfers passengers and goods on wheeled vehicles running on rails, which are incorporated in tracks. In contrast to road transport, where the vehicles run on a pre ...

and the steamship shifted trade from local to more international patterns. During this time, debate over

tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and pol ...

s and

free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econ ...

in grain was fierce. Poor industrial workers relied on cheap bread for sustenance, but farmers wanted their government to create a higher local price to protect them from cheap foreign imports, with Britain's

Corn Laws The Corn Laws were tariffs and other trade restrictions on imported food and corn enforced in the United Kingdom between 1815 and 1846. The word ''corn'' in British English denotes all cereal grains, including wheat, oats and barley. They wer ...

being an example. Tab, Indiana - Railroad

As Britain and other European countries industrialized and urbanized, they became net importers of grain from the various

breadbasket The breadbasket of a country or of a region is an area which, because of the richness of the soil and/or advantageous climate, produces large quantities of wheat or other grain. Rice bowl is a similar term used to refer to Southeast Asia; and C ...

s of the world. In many parts of Europe, as

serfdom Serfdom was the status of many peasants under feudalism, specifically relating to manorialism, and similar systems. It was a condition of debt bondage and indentured servitude with similarities to and differences from slavery, which deve ...

was abolished, great estates were accompanied by many inefficient

smallholding A smallholding or smallholder is a small farm operating under a small-scale agriculture model. Definitions vary widely for what constitutes a smallholder or small-scale farm, including factors such as size, food production technique or technology ...

s, but in the newly colonized regions massive operations were available to not only great nobles, but also to the average farmer. In the United States and Canada, the

Homestead Act The Homestead Acts were several laws in the United States by which an applicant could acquire ownership of government land or the public domain, typically called a homestead. In all, more than of public land, or nearly 10 percent of t ...

and the

Dominion Lands Act The ''Dominion Lands Act'' (long title: ''An Act Respecting the Public Lands of the Dominion'') was an 1872 Canadian law that aimed to encourage the settlement of the Canadian Prairies and to help prevent the area being claimed by the United Sta ...

allowed pioneers on the western plains to gain tracts of (1/4 of a square mile) or more for little or no fee. This moved grain growing, and hence trading, to a much more massive scale. Huge grain elevators were built to take in farmers' produce and move it out via the railways to port. Transportation costs were a major concern for farmers in remote regions, however, and any technology that allowed the easier movement of grain was of great assistance; meanwhile, farmers in Europe struggled to remain competitive while operating on a much smaller scale. From the 1911 Encyclopædia Britannica: 1893 grain market Teheran HarpersMagazine v87 no522

1893 grain market Teheran HarpersMagazine v87 no522

The farmers of the United States have met a greatly increased output from
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
, the cost of transport from that country to England being much the same as from the United States in the 20th century. So much improved is the position of the farmer in North America compared with what it was about 1870, that the transport companies in 1901 carried 17
bushel A bushel (abbreviation: bsh. or bu.) is an imperial and US customary unit of volume based upon an earlier measure of dry capacity. The old bushel is equal to 2 kennings (obsolete), 4 pecks, or 8 dry gallons, and was used mostly for agric ...
s of his grain to the seaboard in exchange for the value of one bushel, whereas in 1867 he had to give up one bushel in every six in return for the service. As regards the British farmer, it does not appear as if he had improved his position; for he has to send his wheat to greater distances, owing to the collapse of many country
mill Mill may refer to: Science and technology * * Mill (grinding) * Milling (machining) * Millwork * Textile mill * Steel mill, a factory for the manufacture of steel * List of types of mill * Mill, the arithmetic unit of the Analytical Engine early ...
ers or their removal to the seaboard, while railway rates have fallen only to a very small extent; again the farmers wheat is worth only half of what it was formerly; it may be said that the British farmer has to give up one bushel in nine to the railway company for the purpose of transportation, whereas in the seventies he gave up one in eighteen only. Enough has been said to prove that the advantage of position claimed for the British farmer by Caird was somewhat illusory. Speaking broadly, the
Kansas Kansas () is a state in the Midwestern United States. Its capital is Topeka, and its largest city is Wichita. Kansas is a landlocked state bordered by Nebraska to the north; Missouri to the east; Oklahoma to the south; and Colorado to th ...
or
Minnesota Minnesota () is a state in the upper midwestern region of the United States. It is the 12th largest U.S. state in area and the 22nd most populous, with over 5.75 million residents. Minnesota is home to western prairies, now given over to ...
farmers wheat does not have to pay for carriage to
Liverpool Liverpool is a city and metropolitan borough in Merseyside, England. With a population of in 2019, it is the 10th largest English district by population and its metropolitan area is the fifth largest in the United Kingdom, with a populat ...
more than 2 s. 6 d. to 7s. 6d. per
ton Ton is the name of any one of several units of measure. It has a long history and has acquired several meanings and uses. Mainly it describes units of weight. Confusion can arise because ''ton'' can mean * the long ton, which is 2,240 pounds ...
in excess of the rate paid by a
Yorkshire Yorkshire ( ; abbreviated Yorks), formally known as the County of York, is a historic county in northern England and by far the largest in the United Kingdom. Because of its large area in comparison with other English counties, functions have ...
farmer; this, it will be admitted, does not go very far towards enabling the latter to pay
rent Rent may refer to: Economics *Renting, an agreement where a payment is made for the temporary use of a good, service or property *Economic rent, any payment in excess of the cost of production *Rent-seeking, attempting to increase one's share of e ...
,
tithe A tithe (; from Old English: ''teogoþa'' "tenth") is a one-tenth part of something, paid as a contribution to a religious organization or compulsory tax to government. Today, tithes are normally voluntary and paid in cash or cheques or more ...
s and rates and
tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
es.

20th century changes

In the 1920s and 1930s, farmers in Australia and Canada reacted against the

pricing power In economics, market power refers to the ability of a firm to influence the price at which it sells a product or service by manipulating either the supply or demand of the product or service to increase economic profit. In other words, market powe ...

of the large grain-handling and shipping companies. Their governments created the Australian Wheat Board and the

Canadian Wheat Board The Canadian Wheat Board (french: Commission canadienne du blé, links=no) was a marketing board for wheat and barley in Western Canada. Established by the Parliament of Canada on 5 July 1935, its operation was governed by the Canadian Wheat Bo ...

monopsony In economics, a monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. The microeconomic theory of monopsony assumes a single entity ...

marketing board A marketing board is an organization created by many producers to try to market their product and increase consumption and thus prices. It can also be defined as an organization set up by a government to regulate the buying and selling of a certain ...

s, buying all the wheat in those countries for export. Together, those two boards controlled a large percentage of the world's grain trade in the mid-20th century. Additionally, farmers' cooperatives such the

wheat pools A wheat pool is a co-operative that markets grain (mostly wheat) on behalf of its farmer-members. In Canada in 1923 and 1924, three wheat pools were created. They were farmer-owned co-operatives, created to break the power of the large for-p ...

became a popular alternative to the major grain companies. At the same time in the

Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, ...

and soon after in China, disastrous

collectivization Collective farming and communal farming are various types of, "agricultural production in which multiple farmers run their holdings as a joint enterprise". There are two broad types of communal farms: agricultural cooperatives, in which member- ...

programs effectively turned the world's largest farming nations into net importers of grain. By the second half of the 20th century, the grain trade was divided between a few state-owned and privately owned giants. The state giants were Exportkhleb of the Soviet Union, the Canadian Wheat Board, the Australian Wheat Board, the

Australian Barley Board ABB Grain was Australia's largest agribusiness. Founded in 1939, the company was listed on the Australian Securities Exchange until its takeover by Viterra in 2009. For most of its history, the company focused solely on grain accumulation and ...

, and so on. The largest private companies, known as the "big five", were Cargill,

Continental Continental may refer to: Places * Continent, the major landmasses of Earth * Continental, Arizona, a small community in Pima County, Arizona, US * Continental, Ohio, a small town in Putnam County, US Arts and entertainment * ''Continental'' ( ...

, Louis Dreyfus, Bunge, and Andre, an older European company not to be confused with the more recent André Maggi Group from Brazil. In 1972, the Soviet Union's wheat crop failed. To prevent shortages in their country, Soviet authorities were able to buy most of the surplus American harvest through private companies without the knowledge of the United States government. This drove up prices across the world, and was dubbed the " great grain robbery" by critics, leading to greater public attention being paid by Americans to the large trading companies. By contrast, in 1980, the US government attempted to use its

food power In international politics, food power is the use of agriculture as a means of political control whereby one nation or group of nations offers or withholds commodities from another nation or group of nations in order to manipulate behavior. Its po ...

to punish the Soviet Union for its invasion of Afghanistan with an embargo on grain exports. This was seen as a failure in terms of foreign policy (the Soviets made up the deficit on the international market), and negatively impacted American farmers.

Modern trade

Since the Second World War, the trend in North America has been toward further consolidation of already vast farms. Transportation infrastructure has also promoted more

economies of scale In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables ...

. Railways have switched from coal to diesel fuel, and introduced

hopper car A hopper car (US) or hopper wagon ( UIC) is a type of railroad freight car used to transport loose bulk commodities such as coal, ore, grain, and track ballast. Two main types of hopper car exist: covered hopper cars, which are equipped with ...

to carry more mass with less effort. The old wooden grain elevators have been replaced by massive concrete inland terminals, and rail transportation has retreated in the face of ever larger

truck A truck or lorry is a motor vehicle designed to transport cargo, carry specialized payloads, or perform other utilitarian work. Trucks vary greatly in size, power, and configuration, but the vast majority feature body-on-frame constructi ...

Modern issues affecting the grain trade include

food security Food security speaks to the availability of food in a country (or geography) and the ability of individuals within that country (geography) to access, afford, and source adequate foodstuffs. According to the United Nations' Committee on World ...

concerns, the increasing use of biofuels, the controversy over how to properly store and separate

genetically modified Genetic engineering, also called genetic modification or genetic manipulation, is the modification and manipulation of an organism's genes using technology. It is a set of technologies used to change the genetic makeup of cells, including ...

and organic crops, the

local food Local food is food that is produced within a short distance of where it is consumed, often accompanied by a social structure and supply chain different from the large-scale supermarket system. Local food (or "locavore") movements aim to con ...

movement, the desire of developing countries to achieve

market access In international trade, market access is a company's ability to enter a foreign market by selling its goods and services in another country. Market access is not the same as free trade, because market access is normally subject to conditions or req ...

in industrialized economies,

climate change In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to ...

and

drought A drought is defined as drier than normal conditions.Douville, H., K. Raghavan, J. Renwick, R.P. Allan, P.A. Arias, M. Barlow, R. Cerezo-Mota, A. Cherchi, T.Y. Gan, J. Gergis, D. Jiang, A. Khan, W. Pokam Mba, D. Rosenfeld, J. Tierney, an ...

shifting agricultural patterns, and the development of new crops.

Price volatility and protections

Price volatility greatly effects countries that are dependent on grain imports, such as certain countries in the

MENA region MENA, an acronym in the English language, refers to a grouping of countries situated in and around the Middle East and North Africa. It is also known as WANA, SWANA, or NAWA, which alternatively refers to the Middle East as Western Asia (or a ...

. "Price volatility is a life-and-death issue for many people around the world" warned ICTSD Senior Fellow Sergio Marchi. "Trade policies need to incentivize investment in developing country agriculture, so that poor farmers can build resistance to future price shocks".Food price spikes put the spotlight on the need for sustained commitment to agriculture
International Centre for Trade and Sustainable Development, 1 June 2010. Two major price volatility crises in the early 21st century, during the

and

2022 food crises 2022 saw a rapid increase in food prices and shortages of food supplies around the world. The compounding crises in distinct parts of the world were caused by compounding geopolitical and economic crisis. The crises followed food security ...

, have had major negative effects on grain prices globally. Climate change is expected to create major agricultural failures, that will continue to create volatile food price markets especially for bulk goods like grains. Protection against international market prices has been an important part of how some countries have responded to the volitility of market prices. For example, farmers in the

European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...

, United States and Japan are protected by

agricultural subsidies An agricultural subsidy (also called an agricultural incentive) is a government incentive paid to agribusinesses, agricultural organizations and farms to supplement their income, manage the supply of agricultural commodities, and influence the ...

. The European Union's programs are organized under the

Common Agricultural Policy The Common Agricultural Policy (CAP) is the agricultural policy of the European Union. It implements a system of agricultural subsidies and other programmes. It was introduced in 1962 and has since then undergone several changes to reduce the ...

. The agricultural policy of the United States is demonstrated through the "farm bill", while rice production in Japan is also protected and subsidized. Farmers in other countries has attempted to have these policies disallowed by the World Trade Organization, or attempted to negotiate them away though the Cairns Group, at the same time the wheat boards have been reformed and many tariffs have been greatly reduced, leading to a further globalization of the industry. For example, in 2008 Mexico was required by the North American Free Trade Agreement (NAFTA) to remove its tariffs on US and Canadian

. Similarly, protections in other contexts, such as guaranteed prices for grains in India, have been an important lifeline for small farmers in the context of further Industrial agriculture, industrialization of agriculture. When the BJP Party Premiership of Narendra Modi, government of Narendra Modi attempted to repeal guaranteed prices for farmers on key grains like wheat, f2020–2021 Indian farmers' protest, armers throughout the country rose in protest.

References

Works cited

*W. Broehl, ''Cargill Going Global'', University of New England Press, 1998. *W. Broehl, ''Cargill Trading the World's Grain'', University of New England Press, 1992. *Chad J. Mitcham, ''China's Economic Relations with the West and Japan, 1949-79: Grain, Trade and Diplomacy'', Routledge, 2005. *Dan Morgan, ''Merchants of Grain'', Viking, 1997. *W.E. Morriss, ''Chosen Instrument: A History of the Canadian Wheat Board, the McIvor Years'', Canadian Wheat Board, 1987 {{Authority control Grain trade, Trade by commodity Commodity markets Agricultural economics History of agriculture Intensive farming