IX. Major trends and policy questions in food and agriculture
A. Review of the organization's general
B. World situation and outlook
C. Indicative world plan for agricultural development (IWP)
D. Inter-agency study of multilateral food AID
E. Food production resources program
F. World food program
G. Freedom from hunger campaign
H. Skim milk powder in the world dairy economy
I. Article XI reports
A. Review of the organization's general structure
39. The discussion on this item was opened by the Director-General who referred to the origins and aims of the Review and to the procedure which had been followed. He also commented on the major areas of agreement and disagreement between the views expressed in the Report of the Review Team and his own. He concluded by saying that he felt that the material presently before the Conference on the subject was not enough to make possible the immediate implementation of an overall reorganization plan, but that considerably more study was necessary before such a plan could be worked out. In view of this, the Director-General expressed the view that the Council resolution was an adequate instrument for carrying out the study further permitting at the same time a certain degree of implementation during the biennium 1968/69 within the limits of the budget which the Conference adopted for that period.
40. The Conference agreed that the Review Team had done a very commendable job and also thanked the Director-General for his very valuable recommendations. While the Conference recognized that the work of the Review Team, of the Program and Finance Committees, the Council and the Director-General had produced a large amount of useful material, it agreed with the Council that the studies carried out so far on the question of the reorganization of FAO were not sufficient for it to reach a decision at this stage. Although the Conference agreed that the procedure proposed by the Council would be adequate, it felt nevertheless that the general debate on the subject which would be reflected in the verbatim records would be most appropriate in order to supply the Director-General, the ad hoc Committee on Organization, and the Council with the general feelings of -member countries on this question, and with certain guidelines and objectives. In this context, most delegations felt that the work to be carried out under the procedure foreseen should use the Report of the Review Team as a starting point. However, other delegations felt that the recommendations of the Director-General should also be taken into regard but that in any event both could only be a skeleton on which to build on overall organization plan. The Conference agreed that whatever the basis used, those in charge of working out the plan should approach the matter in a pragmatic and flexible manner so as to permit adequate consideration of all the factors involved.
41. The Conference proceeded to a lively discussion of the issues involved in which representatives of 54 Member Nations expressed their views. Verbatim records of Member Nations views would be available for later use. The Conference fully agreed to proceed in accordance with the plan and timetable proposed by the Council.
42. There was full agreement to strengthen the FAO representation at the country level and the Conference decided that in cases where country representatives were needed they should be appointed as promptly as feasible within available financial resources. It was agreed that measures should be taken during the 1968/69 biennium to increase the number of country representatives both through the agreement which the Director-General had entered into with UNDP for the purpose of establishing senior agricultural advisers as well as by some redeployment of existing staff. Most delegations favored financing the country representatives, to the extent possible, through UNDP. However, some delegations felt that the appointment of FAO country representatives under the UNDP could lead to problems regarding lines of authority and therefore favored the appointment of FAO country representatives exclusively under the Regular Program. The question was raised whether the title of senior agricultural adviser was the most appropriate.
43. The discussions regarding the functions and usefulness of regional offices were very frank. Many divergent and even opposite views were expressed. A number of delegations recommended that the present regional offices be abolished, while others suggested that new duties and functions be assigned to these offices and that they be strengthened. Many delegations expressed the view that the regional offices may not be needed in all areas and that the need for regional offices be separately considered in each case. It was generally agreed that there should be no implementation of budget increases proposed for regional offices until the plan of organization had been approved by the Council. The essential considerations in deciding on the structure in and for each region should be the political, economic, technical and social conditions of each region, and the requirements of relations with other regional organizations, particularly the United Nations Economic Commissions. There was general agreement that these relations required substantial strengthening although the question was raised as to whether this strengthening could be best achieved through the regional offices, from Headquarters or through reinforced joint divisions with the Economic Commissions. The Conference agreed that the joint divisions with the Regional Economic Commissions should be continued and strengthened in accordance with proposals contained in the Program of Work and Budget for 1968-69. Under the circumstances the Conference felt that this matter required considerable further study and recommended that it should be approached in a pragmatic and flexible manner and that the solutions to be adopted need not necessarily have to be the same for all regions.
44. The Conference considered the idea of transforming all or part of the present technical regional staff into task forces which would be at the disposal of member countries for specific and concrete short-term missions such as the identification and preparation of Special Fund or investment projects, among others. This would provide for a more effective use of the outputted regional staff in relation to the requirements of Member Governments as regards the planning and timing of their activities. Several delegations felt that the proposal regarding task forces had considerable merits and deserved to be tried. It was suggested that such a trial could be evaluated after a certain period so that the results could be reviewed. Other delegations believed that the task forces were not the most effective manner of carrying out these functions.
45. Considering the important Development of FAO field activities under the different programs for which FAO is responsible, and the interrelations between the activities under the Regular Program and the field programs, the Conference examined the structure to be given to Headquarters first from the point of view of ensuring the most effective conduct of field operations. There was general agreement that in response to the Development requirements of Member Governments, FAO had become heavily involved in field operations and that this involvement should not only continue but required expansion.
46. Some delegations favored the Director-General's recommendations to establish a Department of Operational Policy and Co-ordination (OPCD) which would also provide the regional focus for field activities through regional desks and regional committees, while the technical divisions would retain responsibility for field operations. Other delegations, while agreeing with the essence of this approach, felt that the responsibility for the operation of multidisciplinary projects should be transferred to the OPCD. On the other hand, many delegations believed that neither of these solutions would reach the objectives of increasing the effectiveness of field operations and favored the proposal of the Review Team to establish an Operations Department on a regional basis which would replace regional offices and take over the operational functions presently vested in the technical divisions. With regard to this last approach, some delegations felt that it may nevertheless be necessary to have a Director-General's representative in the regions. Whatever the solution to be adopted, due consideration should be given to the need to avoid drawing a complete dividing line between technical and operational activities and duplication of the type of staff in the Technical and Operational Departments. Some delegations did not favor the proliferation of staff and inter-departmental committees purely for liaison and coordination.
47. As regards the planning function, the Conference felt that the present situation was inadequate and that greater emphasis on this function as well as on evaluation was required. As to the way of achieving this, some delegations felt that there should be a small nucleus of high calibre economists, centrally located, who, while working in close co-ordination and in close association with the other economic, technical and social activities of FAO, would be in a position to approach planning and evaluation from an integrated point of view. Other delegations, however, favored the Review Team's proposals of concentrating all economic activities, including planning, in an Economic, Planning and Evaluation Department.
48. With regard to staff matters, the Conference placed the greatest emphasis on the ability of FAO to attract and retain staff of the highest calibre best adapted to the functions which will be expected of them under the new conditions. Within this general principle, there was the need for adequate personnel policy which took due account of career prospects without overlooking, however, the need for flexibility which could be achieved through short-term employment, in cooperation with Member Governments, universities, research institutes and consulting firms.
49. Many delegations favored the proposal of the Review Team concerning the establishment of a staff selection committee, although the composition of such a committee required further study. The Conference agreed that the recruitment of all FAO staff should be centralized as far as possible. Several delegations felt that a system of rotation between Headquarters and field staff should be studied.
50. The Conference agreed that FAO should improve and strengthen its relations with organizations working in similar or related fields, including of course those not belonging to the United Nations family. In this context special reference was made to UNCTAD, GATT and regional banks and trade associations.
51. While being of the view that ample flexibility and freedom of action should be given to the Director-General and to the ad hoc Committee on Organization, in the preparation of an overall reorganization plan, the Conference felt that the following guidelines and objectives which had emerged during discussions of Conference and Council should be taken into account in this exercise:
(a) What measures should be adopted to improve FAO's efficiency as a decisive instrument of Development;
(b) The way which the planning activities of FAO already started with the Indicative World Plan could best be geared to the enlarged and more effective operational functions of the Organization, and more particularly how a more precise focus could be given to the Plan and to such functions;
(c) The manner in which FAO's technical competence could be channeled better towards operational activities, thus fulfilling the aspiration of countries as regards assistance for the execution of urgent programmes, without imparing flexibility of operations and effective management, and increasing at the same time the opportunities for significant technical advance;
(d) How could FAO's economic activities be strengthened and brought to bear more effectively on FAO's field work, and how could greater consideration be given in such work to the institutional and organizational aspects;
(e) The ways in which a switch could be effected towards a still larger and more effectively conceived number of multidisciplinary projects, and the possibility of operating these projects in a better integrated and more centralized manner;
(f) As a consequence of the above, how could the problem of the regional structure be approached pragmatically, adapting it to the different situation prevailing in the various regions
(g) How could FAO contribute to a better co-ordination of international collaboration to accelerate the process of Development, assisting in an integrated manner in the solution of the vital aspects of a global Development strategy and a better and closer co-operation among the agencies of the United Nations family, and in so doing, take maximum advantage of the opportunities which the ever important bilateral programs and private efforts were continuously presenting;
(h) The extent to which authority can be delegated to departments, divisions, branches, regional and country representatives.
52. The Conference agreed that it was urgent to initiate, on the basis set out in paragraph 40 above, the reorganization of FAO and that insofar as possible these measures should not be postponed in their entirety until the Fifteenth Session of the Conference. In consequence, it recommended that those measures which could be taken within the limits of the budget adopted by the Conference for the biennium 1968/69 should be implemented as early as possible, provided that these measures do not prejudice the ultimate form of the overall structural organization or hinder the establishment of the new structure which would eventually be submitted to Council and Conference. In view of the special problems of fisheries which involve sea areas as well as land areas, some delegations felt that the ad hoc Committee and the Director-General may wish to consider also the comments and recommendations of the Committee on Fisheries with respect to the plan of organization. It further agreed that the study of the organizational plans, which should also take into account the verbatim records of the Committee-of-the-Whole, should be carried out by the Director-General in consultation with an ad hoc Committee on Organization of the Council which should be representative of the seven FAO regions, and the members should consist of individuals who, where possible, normally serve as senior members of the delegations to FAO. The Conference further agreed that the Chairmen of the Program and Finance Committees should be associated with the work of the ad hoc Committee on Organization.
53. The Conference also agreed to delegate to the 1968 Session of the Council the review and approval of the detailed reorganization plan to be used by the Director-General as a basis of presentation of the Program of Work and Budget for 1970/71 to the Conference.
54. The Conference adopted the following resolution:
Resolution No. 1/67
General Structure of the Food and Agriculture Organization
Recognizing that the world is faced with a growing crisis in its efforts to achieve and maintain a reasonable balance between a rapidly expanding population and the food supply;
Recognizing, also, that substantial improvements must be brought about in agricultural production, processing, distribution and utilization if the needs of the developing countries are to be adequately met;
Recognizing also the necessity for organizations of the United Nations family in the field of economic and social co-operation to adapt their activities, and consequently their structures, to the requirements of coordinated and integrated action towards Development, and in the case of FAO, also to new programs in particular those which may result from the Indicative World Plan;
Expresses its appreciation to the Review Team and to the Director-General for their report and recommendations (document CL 49/16);
Concurs in the need for organizational improvements in FAO so that it can be better able to meet its increasing responsibilities to the peoples of the world in the field of food and agriculture, particularly in the developing countries, and so that the Organization can continue to give increasingly efficient and practical assistance with qualified personnel having full understanding of the aspirations and the realities of those countries, as well as knowledge and competence in their respective fields;
Decides to move forward with the appointment of full-time Country Representatives chiefly financed from the UNDP, with overall responsibility for FAO programs within their respective countries;
Requests the Director-General within the approved budget for the biennium 1968/69 to proceed as rapidly as possible to expand the corps of Country Representatives in co-operation with the UNDP and to strengthen their effectiveness and responsibility in developing and carrying out the field programs in their respective countries;
Requests the Council to consult with the Director-General on the organizational adjustments to be made during the biennium 1968/69 and to be proposed for the biennium 1970/71; and for this purpose to appoint an ad hoc Committee on Organization to advise the Council in consultation with the Director-General on the implementation of this resolution. This ad hoc Committee should be representative of the seven FAO regions, and the members should consist of individuals who, where possible, normally serve as senior members of the delegations to FAO;
Requests the Director-General in consultation with the ad hoc Committee on Organization to take appropriate interim steps during the 1968/69 biennium within the approved level of the budget for that biennium to make organizational adjustments including, if necessary, a modest redeployment of staff:
(i) aimed at a more effective system of communication between the field and Headquarters so that decisions can be made more expeditiously and queries from the field can be handled more quickly,
(ii) in order that the operations of FAO in the field may be more efficiently conducted so as to provide more effective programming and managerial attention to country and regional projects and programs sponsored by FAO, including projects financed from UNDP and other sources, and
(iii) to consolidate general administrative and support functions, and to improve personnel administration;
Further requests the Director-General to develop in consultation with the ad hoc Committee on Organization a detailed reorganization plan for FAO for submission to the 1968 Session of the Council for its consideration;
Authorizes the Council to review and approve a reorganization plan sufficiently detailed to be used as the basis of presentation of the Program of Work and Budget for 1970/71;
Further requests the Director-General to report to the Fifteenth Session of the Conference on the organizational improvements made during the biennium 1968/69 and to present his budget for the biennium 1970/71 based upon the reorganization plan approved by the Council at its 1968 Session.
B. World situation and outlook
Salient features in the world situation
Nutrition in agriculture
Problems in fishery Development
Salient features in the world situation
a) Food situation in developing countries
b) Agricultural export earnings
c) Report on the state of food and agriculture
55. The Conference discussed the world food and agriculture situation in the light of the Director-General's report on The State of Food and Agriculture 1967 (C 67/4) and a supplementary document on more recent developments (C 67/4 Sup. 1). It endorsed the overall analysis presented in these documents and noted that, while in some respects the situation had worsened since its Thirteenth Session two years ago, at the same time a number of developments gave grounds for some hope for the future.
a) Food situation in developing countries
56. In 1965, as a result of widespread bad weather, world food production had failed to increase for the first time since the Second World War. In the developing regions food production had actually declined in that year, not only in relation to population growth but also in absolute terms. While there had been a recovery in 1966, it was largely confined to the developed regions, and per caput food production in the developing regions had decreased still further.
57. The information so far available on agricultural production in 1967 indicated some improvement in the situation. In particular, the increase in production appeared to have been better distributed as between developed and developing countries. Nevertheless, it did not seem likely that the increase had been sufficient to bring a recovery in per caput food production in the developing countries as a whole. The Conference noted with concern that it would take an expansion of some 7 percent in 1967 in the total food production of these countries merely to regain their 1964 level of per caput production. To meet, in addition, the increased demand resulting from improvements in income would require an even larger increase, probably over 10 percent.
58. These overall trends were the sum of many widely different country situations. Some countries were finding their rapid population growth a serious problem and were promoting family planning measures to slow it down, while others were less concerned at the effects of rapid population growth. On the production side also, countries had met with varying degrees of success. In the 33 developing countries for which FAO calculated index numbers of agricultural production, the increase in food production between 1952-56 and 1963-65 had exceeded or kept pace with population growth in 23 cases. In 10 countries (or nearly a third of those for which there were data), food production had failed to keep pace with population during this period.
59. It was clear, from the increases that had occurred in consumer food prices and in food imports, that in many countries where production was ahead of population growth the margin had been too small to keep up with the increase in per caput demand resulting from higher incomes. The Conference requested the Director-General to devote further study to the relationship between population growth and food production, with a view to determining the reasons why some countries had succeeded in increasing their production so much faster than others.
60. Lagging food production in the developing countries had given rise to many difficulties in their general economic Development, but had not usually brought a decline in food consumption. Because of larger imports and smaller exports of food, trends in per caput food supplies had generally been more favorable than in per caput production in these countries. In considering these broad averages, however, it should also be remembered that in each country the available food supplies were unevenly distributed between the richer and poorer groups of the population.
61. The food imports of the developing countries had approximately doubled in little more than a decade. From being net exporters of food before the war, both the Far East and the Near East had had a rapidly rising net import in recent years, while the net exports of Africa and Latin America had tended to decline.
62. Food aid had cushioned the foreign exchange resources of the developing countries against the full effect of the increase in their food imports. However, the stocks of grain in North America and elsewhere, on which both food and aid programs and rising commercial imports had relied heavily, were lower in mid-1967 than in any year since 1953. Although a small increase in North American grain stocks was now expected by the end of the current season in mid-1968, they would still be only about half the peak level reached in 1961.
63. Food aid schemes and the world's grain reserves could therefore no longer depend on surpluses that had grown up by chance, if there were another season of widespread bad harvests like 1965. The need for planned production for this purpose had already been recognized in the increasing of the food-grain area in the United States. Recent studies had indicated that the combined production capacity of the developed countries would be sufficient for many years to come to meet any foreseeable level of food imports into the developing countries.
64. The Conference reaffirmed that, while food aid had been invaluable in emergencies and would continue to be essential for many years, in the long run it was mainly in the developing countries themselves that the world food problem had to be overcome. It therefore welcomed the signs that agricultural Development was beginning to achieve a new momentum in some of these countries. The crucial role of agriculture in general economic Development and the close interdependence of agriculture and industry were now increasingly recognized in economic planning.
65. Increased productivity was the key to the further expansion of agricultural production. One of the most encouraging features of the current situation was therefore the rapidity with which farmers in some developing countries were taking to the use of modern production requisites, such as fertilizers and improved seeds. High hopes were pinned to certain technological breakthroughs, particularly the new high-yielding fertilizer-responsive varieties of food-grains now being introduced, on the basis of which a number of developing countries hoped to reach self-sufficiency in food by the end of the decade. The Conference emphasized, however, that if these hopes were to be realized, and if the necessary sustained increases in production were to be achieved, many problems remained to be solved and action was needed on a wide front, especially in the institutional field.
66. In this connection, the Conference welcomed the increased attention being given in many developing countries to the provision of adequate incentives for farmers, and commended the study of this subject included in The State of Food and Agriculture 1967. It noted that this study was to be used as the main working document at a meeting to be held on the implementation of incentive measures in the Far East, which it was hoped would give rise to some more specific suggestions on the appropriate policy measures to be taken by governments in particular situations. The study would also provide a basis for practical recommendations in this field under the Indicative World Plan.
67. The Conference stressed the importance of guaranteed minimum prices and assured markets if producers were to be convinced that it would pay them to increase their production and sales. This was particularly necessary where they were beginning to use larger quantities of purchased inputs. Improvements were needed in many other fields as well, however, including land tenure, marketing and credit facilities, and provision for the trained manpower required for the necessary expansion of government services to farmers. Many delegates emphasized the role of agricultural processing industries.
68. Concerning agricultural credit, further consideration should be given to the role of the banking system in meeting the credit needs of small farmers, and to the need to develop unambiguous registers of land titles and mortgages if the problems of rural credit were to be solved. It was also suggested that the possibility should be explored of the establishment of a credit guarantee fund by governments and regional Development banks.
69. Fertilizer subsidies could be a valuable incentive measure at certain stages of Development. It was essential, however, that increasing technical efficiency in fertilizer production should be translated into lower prices, and the Conference requested the Director-General to devote further study to the prices of fertilizers and other inputs.
70. Attention was drawn to the role of crop and livestock insurance in agricultural Development, and the Conference welcomed the increasing attention given to this subject by the Director-General, including the collection of information on existing schemes for regular dissemination to Member Governments.
71. In some countries the very success that had been achieved in providing farmers with the necessary incentives and in speeding up agricultural Development had led to new problems. The Conference noted that a number of developing countries now had export surpluses of food-grains, which they found it difficult to dispose of in world markets and most costly to store. It was likely that more and more developing countries would find themselves in this position in the next few years.
72. The Conference therefore requested the Director-General to keep this emerging problem under close review, with a view to proposing solutions to it. It was noted in this regard that, if a developing country achieved an export surplus of food-grains, this did not necessarily mean that hunger and malnutrition had been overcome among its own population. Measures might therefore be explored to develop domestic markets, including the provision of food subsidies and other assistance for the poorer groups of the population.
b) Agricultural export earnings
73. Earnings from agricultural exports were the main source of the foreign exchange needed by developing countries to import capital goods for their Development and to meet their increasing food deficits. Although at the world level there had been some increase in agricultural export earnings in 1966, the share of the developing countries had declined further. Their earnings from agricultural exports dropped by 2 percent in 1966, mainly because of a fall of about 7 percent in the Far East. If allowance was made for the steady rise in the export unit values of manufactured goods, which gave a rough indication of the purchasing power of agricultural exports, the declines in 1966 were even larger. In fact, in these "real" terms the agricultural export earnings of the developing countries were actually smaller in 1966 than in 1955, more than a decade ago.
74. During 1967, the inroads of synthetics and the other long-term difficulties faced by agricultural products in world markets had been reinforced by the effects of the slower expansion of economic activity in most of the industrialized importing countries. Total earnings from agricultural exports were therefore almost certain to be lower in 1967 than the year before. Unit values of agricultural exports had now been falling since the middle of last year and averaged about 3 percent lower in the first three quarters of 1967 than in the same period in 1966.
75. These trends in international trade in agricultural products continued to give rise to serious concern. Both developed and developing countries were agreed that they constituted a major obstacle to the economic and social Development of the developing countries. They also caused grave difficulties for those developed countries that depended heavily on exports of agricultural products.
76. Reference was made to the need to pursue all possibilities for increasing trade among the developing countries themselves, without affecting the volume of trade with developed countries. The developed countries, however, were by far the largest markets for agricultural exports, and these countries were once again urged to do all in their power to give freer access to agricultural products from developing countries, by the removal of tariff and non-tariff barriers an, where feasible, by the establishment of special preferences.
77. With regard to the aim of many developing countries to attain self-sufficiency in basic foods, many delegates referred to the dangers of departing too far from a distribution of production based on comparative advantage. Many developing countries, however, held that they had no other choice in their agricultural Development, since policies of self-sufficiency in the developed countries (including the production of synthetics) prevented them from increasing their production of commodities for which they had a comparative advantage.
78. Although new international measures had been taken for a few commodities, progress toward the solution of the problems of international trade had in general been deplorably slow. This had been a failure of the first United Nations Development Decade. The GATT Kennedy Round of tariff negotiations had resulted mainly in improvements for industrial rather than agricultural products, and would chiefly benefit developed countries. It was significant that the Second Session of the United Nations Conference on Trade and Development (UNCTAD), to be held early in 1968, in New Delhi, had to deal with very largely the same problems as those faced at its first session four years ago. It was suggested that the results of the Kennedy Round should be thoroughly evaluated at the UNCTAD Session, and that a new round of tariff negotiations should be started as soon as possible. The attention of the Conference was drawn to the Charter of Algiers, agreed in October 1967 by the Ministerial Meeting of the Group of 77, which set out the proposals of the developing countries for a new approach to trade problems at the second session of the UNCTAD.
79. The Conference emphasized that the world food problem could not be viewed in isolation, but only as part of the general problem of economic and social Development. It therefore welcomed the fact that the Second UNCTAD Session would be discussing the world food problem and its relation to trade and Development. It noted that the Director-General would be providing UNCTAD with documentation on this subject, including relevant extracts from the report of the Conference session.
80. The Conference stressed that, while the greatest assistance the developed countries could render to the developing countries was to provide a favorable economic climate for the trade that was essential for their Development, there was also a continued need for more direct assistance to these countries in the fuller use of their own resources. It noted with concern that such assistance was still far from sufficient, and that the net flow of official foreign assistance to developing countries had not increased much for several years. On the other hand, it was encouraged to learn from several delegates of the intention of their Governments to increase their assistance to 1 percent of the national income.
c) Report on the state of food and agriculture
81. While commending the Secretariat on the high standard of the annual reports on The State of Food and Agriculture, the Conference devoted some discussion to how the publication might be further improved. It expressed some concern that, because of the time inevitably taken up in translation, printing and distribution, the publication issued in October could contain data only up to mid-July. It noted that the possibility was being investigated of issuing a brief summary of the main features of the world food and agriculture situation as soon as the information became available in July. The inclusion of material derived from the reviews of the medium-term food outlook discussed at the Forty-Second Session of the Committee on Commodity Problems (CCP) would also help to make the publication more forward-looking. While the time factor made it impossible to check with governments in advance the material included in the review chapter of the report, the Conference suggested that where feasible this practice might be followed with respect to the special chapters.
82. The preliminary index numbers of agricultural production frequently tended to be revised upward in subsequent years. The Conference was informed that every effort was being made to increase the accuracy of these index numbers, although this depended in large part on the prompt receipt of the necessary information from Member Countries.
83. The Conference welcomed a number of new features in the latest report, including sections on foreign aid and on production requisites, and the switch to a calendar year basis in the production data. It noted that three topics were at present under consideration, from which the two special chapters for the 1968 issue would be chosen:
(a) Raising agricultural productivity in developing
(b) Improved storage and its contribution to world food supplies; and
(c) Planning for better family living.
a) World commodity situation
b) Short-term action
c) Longer-term action
e) Export promotion
f) New study groups
g) Other CCP activities
h) Co-operation with UNCTAD
a) World commodity situation
84. The Conference noted that a number of tropical and sub-tropical products and agricultural raw materials, commodities on which most developing countries depended heavily for their foreign exchange earnings, had suffered considerable falls in prices since 1966. These price declines had particularly affected rubber, hard fibers, jute, wool, fats and oils, and tea, due to a variety of factors, including the pressure of heavy supplies, the slowing down of economic growth in some industrialized countries and growing competition from synthetics. At the same time, there was a critical shortage of rice, and the coffee situation was menaced by the existence of heavy stocks, although the International Coffee Agreement had ensured satisfactory returns to producers. Bananas, citrus fruit, wine, livestock products and grains faced problems of market outlets. Cocoa was one of the few tropical products whose price had increased during this period.
85. The Conference stressed the role of trade expansion as an instrument of economic growth for all countries. Despite some favorable developments as regards actual or prospective international action on a few individual commodities as mentioned below, the Conference considered that the world commodity situation and outlook continued to be unfavorable, particularly for developing exporting countries.
b) Short-term action
86. The Conference was convinced that many of the short-term commodity problems could be alleviated through closer international co-operation or through world commodity agreements. Commodity agreements, however, could not provide durable solutions unless there were parallel efforts to develop production efficiently, to diversify production where necessary, and to open new markets. In view of the special circumstances influencing individual commodity trade problems, there were great practical advantages in a commodity-by-commodity approach. This approach would help to achieve agreements which could operate effectively and command the widest support of Governments. The Conference considered that in the commodity analyses of FAO, and in the work of the CCP, high priority should be given to commodities for which international arrangements could be envisaged.
87. There were some hopeful signs of progress. The International Grains Arrangements, including a wheat agreement and a new international food aid scheme, had been drawn up and was now open for signature. The existing agreements on Olive Oil and Cotton Textiles had both been extended. Progress had been made in strengthening some aspects of the present Coffee Agreement, and in considering proposals for the negotiation of a new agreement. The outcome of the preparatory talks in UNCTAD on cocoa provided a better climate for the forthcoming International Cocoa Conference, while preparatory talks were continuing on sugar with the aid of a Joint Secretariat representing UNCTAD, FAO and the International Sugar Council. The Conference was informed of the initiatives of both the International Rubber Study Group and the Secretary-General of UNCTAD, following proposals made by rubber producing countries, as to the desirability of an international arrangement embracing both natural rubber and synthetic rubber, to stabilize world prices at remunerative levels. It also noted that some developed countries had offered to accelerate Kennedy Round tariff cuts on commodities of special interest to developing exporting countries.
88. Important advances had been achieved through the eight commodity study groups established under CCP auspices. The Study Groups on Hard Fibers, and on Jute, Kenaf and Allied Fibers had agreed on informal international arrangements aiming at stabilizing world prices and trade The Study Group on Oilseeds, Oils and Fats was actively exploring the technical and economic feasibility of possible international arrangements and national measures, and had reached a preliminary consensus on objectives for future action. There had also been regular intergovernmental consultations on bananas, rice, tea, grains, citrus fruit and cocoa which had materially contributed to a better understanding of the fundamental commodity problems and had helped to reduce market instability.
89. The Conference strongly endorsed the activities of the Study Groups operating under the auspices of the CCP, and urged that governments make the fullest possible use of them in exploring or instituting remedial measures for commodity problems within their powers.