5. The report on The State of Food and Agriculture in 1964 was received only at the beginning of the session. This is a voluminous and important document which requires detailed consideration, not only by delegations, but also by the appropriate government services in Member Nations. In the circumstances, only a few Members of the Council had been in a position to make preliminary observations and comments. The Council called upon the secretariat to take action in order to avoid a recurrence of such a situation.
6. The Report on The State of Food and Agriculture indicated that the world situation with regard to hunger and malnutrition did not yet show any sign of real improvement. In 1963/64 1 there was only a small increase in world agricultural production, probably slightly less than the growth of population. Although this situation was mainly due to bad weather, especially in Europe and the U.S.S.R., the long-term development prospects in agriculture were disturbing. Over the preceding five years world agricultural production as a whole had done no more than keep up with population growth, and had only been able to provide for the bare requirements of the additional mouths that had to be fed. Moreover, while there had been gains in per caput production in some of the developed regions, in no less than three of the developing regions (Africa, Asia and the Far East, and Latin America) food production per caput had tended to decline over the last few years. These regions had been able to maintain their meager dietary levels only by larger imports or reduced exports of food.
7. The information that was gradually coming in on the current 1964/65 crop season, so far confined largely to the northern hemisphere, suggested that the increase in world agricultural production was likely once again to be relatively small. Although world wheat production, which had declined in 1963/64, was estimated to have increased again in 1964/65, the effect of this recovery on total food supplies appeared likely to be offset, at least in part, by a fall in the output of coarse grains.
8. The report indicated that in 1963 and early 1964 developments in world trade in agricultural products had been more favorable to exporters than for some years past. World prices of many commodities began to rise toward the end of 1962 and the increase continued throughout 1963 and into the early part of 1964. The over-all terms of trade for agricultural products were estimated to have improved by about 8 percent in 1963 compared with the year before, thus regaining about one third of the losses over the previous decade. The volume of agricultural exports also rose in 1963, and the net result was an increase of about 10 percent in total earnings from agricultural exports. Although the largest gains were in the developed regions, the vital agricultural export earnings of the developing regions were about 7 percent higher in 1963 than in 1962.
9. The recovery in world prices appeared to have arisen mainly from factors of a relatively short-term nature affecting particular commodities, rather than from any basic change in the underlying factors which had led to the long decline in prices of agricultural exports. In the last few months there had been marked declines in the prices of several commodities, including sugar, some coarse grains, soybeans, cocoa, and wool, from the peak levels reached earlier.
1 The year 1963/64 refers for the northern hemisphere mainly to the harvests of the spring, summer and autumn of 1963, and for the southern hemisphere to the crops harvested in the latter part of 1963 and the first half of 1964.
10. Even with the substantial improvement that had taken place in 1963, the terms of trade for agricultural products had only about regained the level of 1958. In comparison with their levels as recently as ten years ago, the prices of many products and the terms of trade of agricultural exports as a whole were still low. The report pointed out, therefore, that national and international efforts to improve the situation of agricultural exporting countries, particularly in the developing regions, could not be relaxed.
11. Among other main aspects of the world food and agriculture situation, the Report indicated that during 1963/64 there were substantial reductions in the stocks of wheat in the United States of America and also some reduction in the stocks of dairy products but that stocks of coarse grains turned upward again and cotton stocks increased further. Retail food prices had risen in the great majority of countries for which data were available, and in many the increase was greater than in the over-all cost of living, suggesting that rising food prices were often a main cause of the general increase in prices.
12. In analyzing current developments the report stated that indications could be found regarding modifications of policies that might be needed in order to adjust production to consumption needs or to reverse the recent decline in per caput production in many developing nations. Thus the primary emphasis given by many of these nations to expanding production for export had probably contributed to the long-term decline in world prices and to food shortages on domestic markets as evidenced by rising imports and consumer prices. Current obstacles to increased production were mainly economic and institutional rather than technical. Some Members stressed the importance of the analysis and comparative study of national agricultural plans and policies, and it was suggested that FAO's studies of the world food and agriculture situation should always pay special attention to the problems of agricultural development in the developing nations.
13. A special chapter in the Report was devoted to the development of synthetic substitutes for agricultural products. This had been a major factor in limiting the growth of agricultural trade, especially in raw materials, which were the principal exports of many of the developing countries.
14. A second special chapter dealt with protein nutrition. Although protein malnutrition, like so many other problems, could be finally overcome only through general economic development and higher incomes, such could also be done in the shorter run by nutritional education and related measures. It was emphasized, however, that assistance was required by the developing nations in organizing the necessary nutritional services and in making people understand the need to produce and consume protein foods.
15. The Council considered the Report of the Thirty-Seventh Session of the Committee on Commodity Problems (CCP). At that session the Committee had reviewed the world agricultural commodity situation and the problems of some specific commodities, and held preliminary discussions on the implications for its work of the recommendations of the United Nations Conference on Trade and Development. The Council warmly commended the work of the Committee which it regarded as of great value to FAO and its Member Governments.
16. The Council noted from CCP's review of the world agricultural commodity situation that the rise in commodity prices in international commodity markets which had occurred in 1963 had reached its peak in early 1964 and that a decline had subsequently set in. Moreover, this price rise and the expansion that had occurred in the volume of trade had mainly benefitted the exporting countries in temperate zones while developing countries benefitted only to a limited extent.
17. The Council noted the action taken by CCP with respect to tea, coconut and coconut products, and cocoa. In the case of tea, the Committee had requested the Director-General, on the completion of studies then in preparation, to convene an ad hoc conference of interested governments to examine the problems of this commodity and to report on possible further action. For coconut and coconut products the Committee, in response to a suggestion of the FAO Group on Coconut and Coconut Products and to a request of the Third FAO Regional Conference for Africa, had decided to ask the Director-General to extend invitations to the next session of the Group not only to Member Nations of the Group but also to Nations substantially interested in other oilseeds and oils. This augmented meeting would examine the problems facing fats and oils in general, and its report should enable the Committee on Commodity Problems to reach a conclusion on the implications and feasibility of extending the work of the Group to include other oils and fats. For cocoa, CCP had decided that the FAO Cocoa Study Group should continue in existence, and had agreed that informal discussions by the secretariat should be continued with the countries mainly concerned with a view to determining if and when conditions were opportune for a resumption of formal negotiations toward the conclusion of an international cocoa agreement.
18. During the discussion it was suggested that CCP might approach commodity problems from a new angle by relating production targets of foodstuffs to the nutritional needs of developing areas in addition to other requirements. It was further suggested that the task of indicating production targets could be performed by a new permanent subcommittee of CCP, taking as a starting point the Indicative World Plan for Agricultural Development which was being prepared by the secretariat.
19. The Council noted the view expressed by several Members of the Council that the present membership of CCP did not allow for sufficient participation of African Member Nations. It agreed to discuss the membership of CCP more fully at the Forty-Fourth Session of the Council (June 1965).
20. The Council recognized, along with the Committee on Commodity Problems, that the establishment of machinery on trade and development within the United Nations framework, as recommended by the United Nations Conference on Trade and Development (UNCTAD), would have important implications for the future work of the Organization and, particularly, for CCP. The Council agreed with the Committee, however, that, until the contemplated new machinery had been set up, it would only be possible to express preliminary views on these implications and their effects upon the direction which the future work of the Organization should take. It was already clear, however, that in future increasing emphasis should be placed on the problems of economic and social development.
21. The Council recognized that CCP had accumulated considerable experience in commodity problems which should be fully utilized, along with that of other agencies, in the total international efforts to achieve the objectives set forth by UNCTAD. Thus, CCP should be an important element in the expanding international activities in the field of trade and development.
22. The Council agreed that it was important from the outset to ensure continuous and close co-operation so that duplication could be avoided, as stressed in the UNCTAD recommendations. The Council was therefore glad to learn that the Director-General had begun consultations with the United Nations with a view to developing close working arrangements between FAO and the proposed new machinery.
23. Some Members of the Council expressed the view that, in the future division of work between the agencies concerned with trade and development matters, FAO should concentrate on production and consumption aspects, including related trade matters as appropriate, while the new machinery should become the main forum for international trade questions. Thus, CCP might have to give up some of its activities while developing others, and it would be advisable for its terms of reference to be reviewed in due course. Certain other Members of the Council could not support these views. The Council was in general agreement that it was premature at this stage to define the future functions of CCP. The Council agreed that the question should be considered at its Forty-Fourth Session and at the Thirteenth Session of the FAO Conference, when it was expected that the new machinery would have taken more definite shape.
24. In the interim period, pending the decisions to be taken with respect to the new trade and development machinery, the Council felt that CCP should not slacken its well-established activities, and should make its maximum contribution within its terms of reference. The activities of the Committee, including its reviews of the commodity situation and outlook, its reviews of stabilization and price support policies, its activities in the fields of commodity projections and surplus disposal and utilization and, in particular, the work of its commodity study groups, had been very helpful to Member Governments and formed an important part of FAO's work as a whole.
25. The Council recalled that the Twelfth Session of the FAO Conference, taking account of the position of rice as a basic food for a large part of the world, and particularly in developing nations, had endorsed in principle the proposed declaration of an International Rice Year. At the request of the Conference, the Director-General had consulted the governments of the main rice producing and consuming countries, and a large number of these had indicated their intention of participating in the International Rice Year. Several governments had outlined specific projects which would be included in their national programs and the Council also noted that there was support from some national rice industries. Attention was drawn to the model list of possible projects and activities which had been drawn up by the CCP Consultative Subcommittee on the Economic Aspects of Rice, and the Council further suggested that the International Rice Commission consider the desirability of issuing a comprehensive review of its activities to date on the improvement of rice production, protection, storage and processing.
26. The Council agreed in general with the proposals of the Director-General and decided that 1966 would be designated as the International Rice Year. It would last for one calendar year, although much of the work would be of a long-term nature continuing beyond this period. National activities would be arranged and financed by the participating countries, which would be invited to inform the Director-General as to their plans before the declaration of the Year so that the information could be transmitted to other interested countries.
27. The Council agreed that the Organization should play a positive role in guiding and stimulating national action, but it was emphasized that the degree of success of the scheme would mainly depend on the efforts of individual interested countries. The Council requested the Director-General to give all possible assistance and support to national programs, within the limitations of his Budget.