The Rural Voice, 1991-01, Page 38A GLANCE BACK
... A LOOK AHEAD
by Mervyn Erb
The January issue seems a fitting
place to highlight and sum up several
important issues and events that are
affecting all of us.
It was a pleasure to attend the
recent Jack Riddell appreciation night
and thank one of
the finest
ministers of
agriculture this
province has ever
seen. A lot of
good things were
said about Jack,
but one of the
best remarks, I
think, came from
Jack himself,
reflecting on his
much publicized
exit from cabinet.
"There is no
disgrace in
getting knocked
down," he said,
higher than daily output before the
invasion! Furthermore, daily global
consumption has dropped significantly
in response to sharply higher prices.
Result: oil experts now say it's
possible that the global oil situation
could return to a
"glut," even if the
Middle East
standoff drags on!
And should, by
the grace of God,
there be a
peaceful
resolution of the
crisis, we could
see oil prices
utterly collapse —
some say by two-
thirds from
current levels of
around $30 per
barrel.
This is in stark
contrast to
"the only disgrace
is in not getting back up." Well you
know the old story: the closer you are
to the top, the closer you are to the
door. I've been there too and know of
what he speaks.
Agriculture will have a great loss
if Jack's vast experience and terrier -
like resolution aren't utilized. With
the complexities and problems in
agriculture today, we need bulls like
Jack on guard. This is no time for
wimps in high places.
To those of you who might find
my commodity market analysis of no
use or boring — please turn to the
classifieds.
Gleanings and observations of
recent marketing reports: no oil
shortage whatever! In the months
since Iraq invaded Kuwait, the rest of
OPEC has boosted output so much,
that daily production recently hit 22.6 -
million barrels a day, 100,000 barrels
estimates by other
oil industry observers who just a few
weeks ago said war would produce
$100 per barrel oil, — 850 per litre
fuel prices — and lead to a global
recession.
Even if a shooting war breaks out,
experts now say that after an initial
spurt of $10 per barrel or more, prices
would quickly back off as the world
realizes it will be over in a matter of
weeks, if not days, and that the world
could easily survive the utter
destruction of Iraq and Kuwait
oilfields.
Why are grain markets so
ridiculously low?
To aid or not to aid? That is the
question dominating grain markets.
At least it is today, December 1, as I
write this. However, the scenario may
be totally changed by the time you
read this.
There was talk that the "chilly"
relations between Bush and
Gorbachev over the USSR's balking at
use of force in the Gulf played a big
role in the November 20 soybean
sharp downturn. Evidently Bush won
Soviet support that led to the
November 21 rebound. Experts say
that they've never before seen global
politics so totally dominate
commodity markets.
Some Washington D.C. economic
advisors insist aid to the USSR will be
wasted unless it's preceded by major
reforms. Others say the same break-
down of infrastructure that resulted in
spoilage or poor distribution of this
year's record crop in the USSR will
keep food aid from getting where it's
needed as well. Example: There's a
million tons of badly needed sugar
sitting in Odessa warehouses, but local
officials refuse to ship it out. With
their currency virtually worthless,
anything of value is being hoarded
like gold. Many fear the same fate
awaits U.S. food aid. Others say it's a
chance they have to take.
The Soviets are not seeking direct
credit from the United States
government. They can get credit from
private U.S. lenders and grain
companies — but only if the U.S.
government will guarantee the private
loans against default under its Export
Credit Guarantees (GMS -102)
program.
However, Bush will not grant
GMS -102 eligibility and Most
Favoured Nation status (which would
lead to a major grain -buying binge)
until the Soviets codify (put in law)
more liberalized emigration policies.
Everyone was thinking it wasn't a
matter of if, but when. However,
during the week of November 12, the
Soviet Deputy Trade Minister indi-
cated the Soviets are intentionally
balking at codification after all. He
said the government feared an exodus
of up to eight -million Soviet citizens
and that they'd take anywhere from
$2 -billion to $8 -billion dollars of
precious hard currency with them.
Because the Soviets are miffed at
the U.S., they are buying from
everyone except the Americans. In
October, they purchased four -million
tons of wheat from the Canadian
Wheat Board, even though they've yet
34 THE RURAL VOICE