The grain trade is probably nearly as old as
grain growing, going back to 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 their family needs and become
self-sufficient. Only in places and eras where production is geared towards producing a surplus for trade (
commercial agriculture) does a major grain trade become possible.
Classical world In the ancient world, grain regularly flowed from the
hinterlands to the
cores of great empires: maize in
ancient Mexico, rice in
ancient China, and
wheat and
barley in the
ancient Near East. With this came improved technologies for storing and transporting grains; the
Hebrew Bible makes frequent mention of
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 merchant ship could carry a cargo of grain the length of the Mediterranean for the cost of moving the same amount 15 kilometres 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 basin by the
Roman Empire created vast regional markets in commodities at either end of
Eurasia. The
grain supply to the city of Rome was considered to be of the utmost strategic importance to Roman generals and politicians. In Europe, with the
fall of the Roman Empire and the rise of
feudalism, many farmers were reduced to a subsistence level, producing only enough to fulfill their obligation to their
lord 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, 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, and the development of
railways and the
steamship shifted trade from local to more international patterns. During this time, debate over
tariffs and
free trade 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, resulting in legislation such as Britain's
Corn Laws. in
Indiana, United States As Britain and other European countries industrialized and the urban population increased, they became net importers of grain from the various
breadbaskets of the world. In many parts of Europe, as
serfdom was abolished, great estates were accompanied by many inefficient
smallholdings, 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 and the
Dominion Lands Act allowed pioneers on
the western plains to gain tracts of or more for little or no fee. This moved grain production, and hence trading, to a much more massive scale.
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.
20th century changes in 1939 During the
Great Depression, farmers in Australia and Canada reacted against the
pricing power of the large grain-handling and shipping companies. Their governments created the
Australian Wheat Board and the
Canadian Wheat Board as
monopsony marketing boards, 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 became a popular alternative to the major grain companies. At the same time in the
Soviet Union and soon after in
China, disastrous
collectivization programs effectively turned the world's largest farming nations into net importers of grain. , New York with a 4,500,000 bushel capacity built by
Monarch Engineering Company before January 1919 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, and so on. The largest private companies, known as the "big five", were
Cargill,
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. Subsequently, Americans paid greater attention to large trading companies. By contrast, in 1980, the US government attempted to use its
food power 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 and negatively impacted American farmers. == Modern trade ==