Chapter 502: Franz with a Headache

  Chapter 491 – Franz’s Headache

With the conclusion of the economic conference, the power industry was listed as Austria’s new pillar industry for the next ten years, and along with it, heavy industry.

To this day, the industrial scale of Austria’s heavy industry is also an astronomical figure. The main industries involved are: iron and steel, metallurgy, coal, machinery, chemicals ……

In terms of categorization, electricity can also be regarded as a kind of heavy industry, and the two sides are very closely linked. It was only because it had just started and its own industrial scale was very large that it was singled out.

The number of pillar industries cannot be large, since the power and heavy industry has become a new pillar industry, naturally, there are also industries that fall from the “pillar industry”.

Undoubtedly, it was the “railroad” that was replaced. It is not that railroads are not important, but after more than twenty years of hard work, most of the railroads in Austria have been built.

The railroad industry is beginning to become saturated, and this state of affairs requires steady development, which no longer requires the government to invest too many resources.

In addition to railroads, agricultural development actually reached its limit. The growth rate of local agriculture has long been reduced, the market for agricultural products is so large, food is not planted more than earn more.

The growth rate of agriculture is now about the same as that of the population, and Austria already accounts for seventy percent of the international agricultural export market, a share that is almost impossible to grow further.

It will not be long before the Russian agricultural products will come back, and it will be very difficult to retain the current market share.

In order to ensure the healthy development of agriculture, Austrian agriculture has been adjusted many times, from the initial direct export of agricultural products, to the subsequent export of processed agricultural products.

This period also included the promotion of raw silk cultivation in Lombardy and Venetia to develop the raw silk industry, and the promotion of grape cultivation in the Balkan Peninsula to develop the wine industry.

All of these practices artificially lowered food production in order to secure food prices. With the outbreak of the Russo-Prussian War, there were fewer Russians as competitors in the international market, and only in the last few years have times gotten better.

These good times, however, are about to come to an end. The Tsar’s government is negotiating with various countries to offset previously reneged debts with grain.

It was a forced sale, and if the debtors didn’t accept it, then those debts would never be paid. It didn’t take much thinking for Franz to realize that Alexander II’s plan would work.

The debts of the Woolly Bear were not easy to collect, and even at a discount, it was better to be able to recover some of them than to have no money at all. It was the governments that had a problem with it, and capital would make everyone compromise.

What is in dispute now is only the issue of interest, sooner or later can be negotiated. The diplomatic obstacles that prevented the Russians from entering the international market for grain have now been cleared by Alexander II.

The market is so big that if you sell more, others will naturally sell less. Although there were many food shortages in this era, unfortunately the only ones with purchasing power were in Europe.

If the Russian Empire’s transportation wasn’t strong enough to directly hold back their grain exports, the international price of food would have immediately bloodied up.

Franz never had any doubts about the Russians’ grain capacity. In particular, Alexander II engaged in a great opening, which simply overturned the table.

From the fact that in the last few years, Alexander II had suffered more than twenty assassinations, one could prove how much his reforms were hated.

Even the noblemen with the worst brains reacted. Unfortunately, the momentum had been set, the land had already been reclaimed, and it was too late to go back.

Franz was not interested in participating in the infighting of the Tsarist government. Including Alexander II’s use of grain to offset debts, he did not think much of it.

Even the best policy depends on the implementation, the domestic grain is not the tsar’s. If you want to use it to pay off debts, you first have to collect the grain and ship it out.

The financial pressure brought about, let alone the acquisition of grain, this has to be implemented by someone, right? In front of the interests, who can guarantee that these bureaucrats do not move.

You know when the great open field, Alexander II watch so closely, there are people withholding rations from the farmers, but also caused a riot, and not just once.

When food was collected in the form of a tax, it happened that three or five buckets were overcharged, or a term like “fire consumption” appeared, which was legally floated away.

Bureaucrats buy grain directly from the people with money, and bureaucrats will do the same. They would buy directly from the peasants at a low price, sell it to capitalists for a profit, and then leave a little for the Tsar.

Unless the tsarist government sets a high price, higher than the market price, from which the bureaucrats can make a bigger profit, they will not be able to collect much grain.

The tsarist government’s plan could not be realized, but the impact of Russian grain would not be small. The capitalists would still ship grain out for sale as long as it was profitable.

Franz had a strong suspicion that Alexander II had done it on purpose. First, he used the loan of grain against debt to set up countries and get them to open up their markets.

The Tsar’s government gave a symbolic amount of grain every year to offset the debt, and then allowed the capitalists to ship the grain out and sell it.

Although it seems that the tsarist government did not make any profit, in fact, as long as the domestic stagnant grain is sold out, it is a big profit.

Even if the countries knew about the Russians’ plan, they would most likely go along with it. For food-importing countries, it is always a good thing to be able to buy cheap food.

It is only the grain exporting countries that are really hurting now, with Austria being the biggest victim. Politically there was no confrontation yet, economically Russia and Austria were pitted against each other first.

There is little room for Austria to choose, either to use the advantages of transportation and agricultural technology to directly reduce the price of food, so that the Russians will not be able to export food profitably.

But to do so would be to kill the enemy eight hundred and lose a thousand. It is important to realize that Austria is now the dominant player in the international agricultural export market, and is able to gain a great deal of profit every year.

Even if you win the price war, occupy a larger market, or because of the decline in food prices, resulting in a decline in profits, and in the end not only can not obtain greater benefits, but also to pay a small price.

The Russians are just barefoot challengers, the big deal if they fail is that they are still the same, and if they succeed, they can get a lot of benefits.

The original time and space Americans play the price war, beat down all the competitors, and established the hegemony of grain exports, that is to realize the strategic purpose.

Now Austria can not follow the example, consume a lot of financial resources aside, the key is now the era of colonial empires, Britain and France have a large number of colonies.

If the local food is insufficient, it can be made up from the colonies. Relying on the control of international food exports, simply can not scare them.

Otherwise, Franz has long been drumming up food export alliance, pulling together several food exporting countries to manipulate the international food market, in order to obtain greater benefits.

Unable to realize the strategic purpose and facing the challenge of many competitors, it can be said that after the completion of the basic accumulation of capital, the importance of agriculture was reduced.

Decreasing importance does not mean that it can be abandoned, in fact agriculture is still one of the most important industries in Austria. The chain around agricultural production accounts for 38.6 % of Austria’s GNP.

Although this percentage is decreasing year by year, it still remains important. In the face of the Russian challenge, industrial restructuring has become imperative.

The Austrian agro-industrial system has been perfected, from the production of the primary agricultural products to the sale of the final agricultural products, the added value of the products has been played to the limit.

For example: from wheat – flour, cookies, from fruits and vegetables – canned goods, from grapes – wine, raisins, from potatoes – -French fries ……

This era was all about ecological agriculture, no chemical fertilizers, pesticide additives, no green food to speak of. The populace is too poor to have much of a market for branded agriculture.

The complete industrial chain increases the ability to resist risks, and the impact on the economy is much greater when there is a shock.

The technical content of these industries is very low, European countries are not completely without agriculture, they also exist in these industries, only limited by the raw materials are not large-scale.

Once a large amount of cheap raw materials appear, capitalists certainly do not mind expanding production. Even Austria is the largest buyer of Russian grain, the interests of the capitalists in front of the integrity has never been very low.

The low tariff system between Russia and Austria created opportunities for Austrian industrial and commercial exports, but also brought challenges.

Faced with cheap food from abroad, these agro-processing companies will certainly make choices that are in their own interests. The government cannot force them in this regard; after all, businesses have to survive, too.

To this day, the profits of agricultural product processing enterprises have also dropped dramatically, from the initial 30 to 40 percent to the current 10-odd percent.

This is still the gross profit, the net profit will be even lower. In the brutal market competition, agricultural products processing enterprises have entered the era of micro-profit, all rely on the volume of money.

Relatively high profits, are snack food processing enterprises. However, the competition in these enterprises is even more brutal, almost all of the snacks on the market are dozens, or even hundreds of similar products.

The problem with the good profit of a single piece is that the sales volume is not large. There are simply not many companies that can make a brand and earn huge profits.

Now the technology of the Austrian agricultural industry has risen to the top of the times, and has become a ring-keeper’s existence.

The good thing is that the Russians’ agricultural products are relatively single, nothing more than potatoes, wheat, corn, fruits and vegetables, unless they are processed into canned goods, or they will rot before they are shipped out.

Obviously Russia’s industry hadn’t kept up, and none of these industries were well developed, producing products that couldn’t be sold locally, let alone on the international market.

At this point, the Austrian agricultural industry adjustment has been inevitable, for example: cut down the production of agricultural products will obviously be affected by the impact, and switch to other cash crops in short supply on the market.

This is easier said than done. Austria so many farmers, want to let them change the planting habits, also can not be accomplished in a word.

Because the market information is not transparent, even Franz can not accurately determine what agricultural products will be in short supply in the future market.

Do not know what the market lacks, which makes the government to guide the cultivation of agricultural products, has become an empty word.

Unless it is a planned economy, there will be a long period of time in the future when the cultivation of agricultural products will be in chaos.

This is an unsolvable dilemma. Produce that is in short supply this year may rot in the ground next year, and no one will care about it.

Farmers are also regulating the direction of agricultural produce cultivation according to their own judgment, and there are too many people involved to make coordination possible.

Franz has a headache.

Continue to ask for votes, the National Day double monthly vote, early, to the back of the waste!

(End of chapter)