Russian wheat deal

From MarketsWiki
Jump to navigation Jump to search

The "Russian wheat deal" generally refers to the July-August 1972 sale by the United States to Russia of about 440 million bushels of wheat for about $700 million. The Russians had previously bought a relatively small quantity of U.S. Agricultural Products.[1]

U.S. grain exporters benefited heavily from the deal, dividing among them a $300 million taxpayer subsidy.[2]

Immediately after the sale, the price of wheat began to rise dramatically, and the price of U.S. commodities in general followed. The U.S. General Accounting Office released a report in July of 1973 saying that the sale had been mishandled and helped push food prices up, and that taxpayers paid unnecessary subsidies. The GAO said that Russia would have paid higher prices for the grain, reducing the subsidies paid to grain companies, and that farmers did not profit from the wheat deal; only exporters did. [3]

Another major grain deal with Russia took place in 1987 under the Reagan administration, when the Soviet Union agreed to four million metric tons (147 million bushels) of American wheat. The amount represented about 8 percent of a wheat surplus of 1.88 billion bushels.[4]