As a result of the recent world food situation, particularly the problem of repeated production shortfalls, the precipitous drawdown in grain stocks and the rapid increase in grain prices, widespread concern has developed over instability in food supplies and prices. Government officials and heads of international organizations have given considerable attention to stabilization measures, particularly grain reserves, as a means of offsetting fluctuating supplies and unstable prices of basic foodstuffs.

For the United States, the problem of fluctuations in grain prices and unstable markets is not one of domestic origin. At recent levels of production, grain supplies have always exceeded domestic needs in the past two decades. Wheat is a good example. U.S. exports of wheat as a share of domestic production went from about 40 percent in 1970-71 to about 70 percent in 1972-73. In recent years, U.S. overseas markets have been the main source of instability in grain prices. Instead of reducing grain consumption or relying on their own grain reserves, many foreign countries experiencing shortfalls in grain production used the world and U.S. markets to purchase needed supplies.