7. The Council discussed the world food and agriculture situation on the basis of the Director-General's report on The State of Food and Agriculture 1968 1, together with an up-dating document2 tabled at the opening of its session. It noted that the food production situation was in a stage of transition, and supported the Director-General's opinion that recent developments gave grounds for cautious optimism about the future.
8. The long period in which food production in developing countries did little more than keep pace with population growth had culminated in the disastrous harvests of 1965 and 1966, when there had been virtually no increase even in absolute terms. In 1967, however, food production in the developing countries as a whole was estimated to have risen by as much as six percent, in comparison with an increase of only about three percent at the world level. In the individual developing regions the increase in 1967 had ranged from four percent in the Near East to five percent in Latin America, and six percent in both Africa and the Far East (excluding Mainland China). These large increases had made good much, though not yet all, of the drop in food production per head that had occurred in 1965 and 1966.
9. The extent to which it had been possible to maintain this good progress in the current 1968 crop year was still not clear. Droughts and other unfavourable weather had been quite widespread, especially in many Latin American countries, the Balkans, and parts of India, but in many of these countries the effect on production was not yet fully known and the situation could still be considerably changed by the weather during the remainder of the year. In India, the weather conditions were reported to have taken a turn for the better. Good crops were reported in many areas, including North America and, among developing countries, much of the Far East and Near East.
10. The Council recognized that a good part of the spectacular jump in output in developing countries in 1967 was the result of transitory factors, notably the very much better weather than in 1965 and 1966 and the high prices caused by the shortages in these years. Even though it was too early to assess their precise contribution, it was clear, however, that there was also a combination of factors that had a longer-term significance and held out the promise of self-sustaining growth in the future. The Council emphasized the desirability of identifying the relative contribution of the transitory and self-sustaining elements in the growth of production.
11. Among the latter elements, the Council noted that many governments were now putting greater emphasis on agriculture in their planning and investment. The cumulative effect of long years of development efforts at last seemed to be bearing fruit, including the slow building up of research and extension services, long-term investment in irrigation, land settlement and other infrastructure, and institutional improvements in land tenure, cooperatives, credit and marketing. Farmers in many countries were therefore taking more readily to the use of fertilizers and to other improved practices, while governments increasingly recognized the importance of providing adequate supplies of essential inputs. Last but not least, high-yielding varieties of wheat and rice had been introduced on a large scale in 1967 and 1968, in particular in a number of Asian countries.
1 CL 51/2.
2 CL 51/2 Sup.1.
12. The Council noted that some of the problems involved in raising agricultural productivity in developing countries by means of technological improvement were discussed in a special chapter in the report of The State of Food and Agriculture. From this it was clear that the use of the new varieties, far from reducing the need for other yield-raising practices, on the contrary increased it considerably. Similarly, the new technological potential accentuated the need for improvements in the institutional and related fields that were a prerequisite for sustained agricultural development.
13. The realization of the new potential also required very careful planning and expanded investment in the agricultural sector. The difficulties likely to arise were illustrated by recent events in some parts of India, where strenuous government efforts had been necessary to mitigate the fall in grain prices and to provide adequate storage for the large crops. Storage, which was the subject of the second special chapter in the Director-General's report, was an area likely to be much affected by the changing production situation.
14. While recognizing these difficulties, the Council expressed the view that much had been done in laying a basis for improvement in the world food situation and for the agricultural sector to make a fuller contribution to economic development.
15. Many members emphasized that a massive volume of aid to agriculture would be necessary to support the efforts of the devoloping countries themselves to take full advantage of the new technological possibilities. The Council therefore welcomed the recent announcement by the President of the World Bank of his intention that, while the total lending activities of the Bank group would be doubled during the next five years, loans for the agricultural sector would be doubled already in the next year and quadrupled over the five-year period. Reference was also made to the need of many countries for aid in the form of fertilizers and other production requisites at the present stage of their development.
16. The new production possibilities should help a number of developing countries to save foreign exchange by reducing their imports of food, although in many cases they would also entail the expenditure of additional foreign exchange for fertilizer imports. But in the important field of foreign exchange earning there was no general improvement to report, nor indeed was this in prospect. In a year that had seen the Second Session of UNCTAD there had been much discussion of trade problems but regrettably little concrete progress.
17. In 1967 total earnings from agricultural exports had declined for the first time for almost a decade, in strong contrast to the continued large rise in exports of nonagricultural products. Among the principal causes were the competition from synthetics and the economic difficulties in a number of industrialized countries, the principal import markets, which had brought a fall in the import demand for fibres and other raw materials. The agricultural export earnings of the developing regions, the chief suppliers of these raw materials, had fallen by two percent in 1967 for the second year in succession.
18. Whether there had been any recovery of agricultural export earnings in 1968 was still uncertain. Price quotations during the first eight months of the year showed little change from 1967 levels. The volume of trade in 1968 should have been favourably affected by the improved economic conditions in the industrialized countries, but it was too soon to say how far this had gone. A plea was again made for the reopening of the Suez Canal, presently a barrier to the expanding trade of agricultural commodities.
19. The Council was concerned at the serious effects of the contraction in world trade in agricultural products on the economies not only of developing countries but also of those developed countries that relied heavily on exports of agricultural products. It called on the Director-General to renew his efforts, in cooperation with UNCTAD and other appropriate bodies, to obtain an improvement in this situation. Reference was also made to the problems of surplus production that were increasingly arising in some developing countries, and the Council stressed the need to give urgent attention to the situation which was arising.
20. The Council noted that world wheat stocks, which were at a low level in 1966 and 1967, had risen again during the 1967/68 season and would probably show a further increase by the end of the current season. They thus provided a more adequate insurance against disaster, although remaining less than two thirds of the peak level reached in 1961.
21. The Council noted with approval that it had been possible to issue the report on The State of Food and Agriculture 1968 somewhat earlier than usual. While commending the continuing high quality of the publication, the Council nevertheless felt that the time had come for a review of its form, content and timing, in the light of its multiple functions. A particular problem was that under the present system of publication the information available mainly concerned the past year, while the title page referred to the current year. The role of the special chapters also required examination.
22. A number of specific suggestions for improvements were made. The Director-General proposed that the Secretariat should review their implications in detail in order to prepare a set of proposals, and that these should be referred to Programme Committee for its observations.
23. The Fourteenth Session of the Conference had requested the Director-General “to review carefully the methodology and progress of the Indicative Plan, taking into account both the criticism and doubts expressed by some delegations and the strong desire on the part of other countries that the work on the IWP should be carried forward with the same intensity of purpose and at as rapid a rate as possible.”1
24. The Council was informed of the steps taken by the Director-General to carry out the mandate of the Conference. The Organization had been fortunate in securing the services of Professor Tinbergen, a world authority on development planning and also Chairman of the United Nations Committee on Development Planning, which was considering the economic framework to be adopted for the Second Development Decade. Professor Tinbergen had given a generally positive report on the approach being used for the IWP. It was his judgement that “problems of the degree of complexity involved in the IWP have so far been solved with the aid of about the same methods as those used actually in establishing the IWP.” The full text of Professor Tinbergen's report had been circulated to the members of the Council.
25. Following this review, the Director-General had decided to move ahead as quickly as possible with the objective of having the provisional Indicative World Plan available in the summer of 1969 for discussion at the Fifteenth Session of the Conference. It was emphasized that the IWP was an effort of the Organization as a whole. After review by the Conference it was intended to use the Indicative Plan as one of the main bases for discussion at the Second World Food Congress in 1970.
1 See para. 144 of the Report of the Fourteenth Session of the Conference.
26. The Council was informed of the substantial progress made with the regional studies since its last session. The Near East study was already available, and the three further provisional regional studies had been completed, namely on South America, Africa south of the Sahara and Asia and the Far East. These last three regional studies were at the stage of translation and reproduction. Summaries of the main findings of these studies were being presented to the Regional Conferences. The summaries for Africa and Asia were completed and that on South America was nearly finished. The first two would be despatched to countries within a few days.
27. The secretariat emphasized that these regional studies were essentially drafts for discussion with countries and also regional and international organizations. The comments received on these drafts would be taken into account in the preparation of the world study. After the publication of the world study, the regional studies would be revised and published.
28. In addition to the regional studies, the IWP required a world trade framework. Work on the possible export availabilities and import requirements of the developed and centrally planned economies, on different policy assumptions, would be completed soon. The possible approaches to this problem had just been discussed in some detail at the recent CCP session. The next stage was to confront the tentative figures for developing countries with those for high-income countries. Many important issues on trade and production policies were likely to emerge.
29. The Council noted the progress of the work and was in general agreement with the proposed timetable.
30. Some members stressed the need for going into country problems in some depth in the regional studies, but the Secretariat indicated that the first drafts would not in fact provide a detailed guide to problems of production and trade at the country level. The Council agreed that progress could be made only by discussing the issues which would emerge from the first documents and making improvements in the future work in the light of experience gained. It was essential that these documents should explain the limitations of the methodology and clearly recognize and acknowledge its inevitable imperfections.
31. The importance of the contribution of trade to development and particularly to agricultural development was stressed by many members. Without dealing with this it would not be a world plan. However, the first Indicative Plan could not be expected to give more than a broad indication of the trade issues, particularly over such a long time perspective. Some members cited the changes over the last 20 years as an example of the difficulties of attempting to give guidance over the next 20 years and felt that the IWP commodity projections should perhaps only go to 1975. Other members felt that it was important in the Indicative Plan not to be tied too closely to trends so that it could take into account desirable policy changes which could give a greater possibility to developing countries.
32. Several members drew attention to the importance of other aspects of the Indicative Plan, including an assessment of the environment which could exist by 1975 and 1985 and the significance of this for production systems. The Indicative Plan should explore the technical possibilities. Financing required for agricultural development and the assessment of requirements for trained personnel should also be an important element in the IWP.
33. The shortage of basic information and difficulties of methodology were raised by several members. Particular attention was drawn to the necessity to envisage changes in price relationships where these seemed necessary and to give equal importance to alternative methods by which a “constant price gap” could be closed, only the one most appropriate to local circumstances being recommended. Doubts were expressed about the utility of econometric model building of the entire economies of developing countries, and about using capital import requirements as a residual of the process. It was recognized that the formulation of appropriate methodologies would take time and that methods would need to be reviewed as the work progressed. From such an effort gradual improvement should be possible through time which would make the plan increasingly useful to individual governments in the preparation of their own plans and policies.
34. The importance of giving careful consideration to existing country plans and policies and of their being duly taken into account by the IWP, was emphasized. Also, the IWP should be related as far as possible to other economic sectors, and make a contribution to the best possible formulation of the plans for the Second Development Decade, especially in connexion with the elaboration of a global strategy. The Council therefore welcomed the Director-General's policy of achieving a close tie-in with the work for the Second Development Decade.
35. In summing up, the Deputy Director-General said that Professor Tinbergen's advice could be summarized as stating that the only commonsense approach to the IWP was through “iteration” or a series of successive approximations. The Deputy Director-General reiterated that it was the Director-General's intention to keep the work in FAO integrated with the work on other sectors for the Second Development Decade. In fact, through the work on the IWP, FAO was now well equipped to contribute to the Second Development Decade.
36. It was clear that one of the most important aspects of the World Study would be the discussion of the world trade framework and the link between trade prospects and production possibilities. It would be especially appropriate to seek the advice of the CCP in the many complex issues involved in future trade patterns. However, the work on the IWP involved other problems besides those of trade and the advice of other specialist groups would also need to be sought.
37. The Deputy Director-General emphasized that the nature of the plan was truly indicative. The IWP would endeavour to indicate the nature of trends and the kind of policies, or alternative policies, which countries could be advised to consider. It was important to stress that the IWP was not a forecast and even less a master plan which could provide answers on points of detail, country by country. After all, each country must in the end make its own decisions. The term “plan” was not perhaps the best one. The real nature of what was being attempted had been summarized by the Director-General as “a synthesis and analysis of factors relevant to world, regional and national agricultural development.” From this a number of alternative conclusions might be drawn and a number of alternative policies formulated.
38. The Report of the Forty-Third Session of the Committee on Commodity Problems 1 was introduced by the Vice-Chairman of the Committee, Mr. A. Fatah bin Zakaria, in the absence of the Chairman, Mr. M.W. Oakley.
1 CL 51/4.
39. The Council took note of the Committee's decision to establish a Working Group to reappraise the role and terms of reference of its Consultative Sub-Committee on Surplus Disposal, and to consider whether there was a need for machinery for assembling, analyzing and distributing information on food aid operations. There had been changes in the nature, extent and location of surpluses, and there were also new sources and channels of food aid. With the growth in extra-commercial and “grey area” transactions, there had also been differences in views as to whether all such transactions could be appropriately described as surplus disposals and were thus reportable to the Sub-Committee under the consultation responsibilities involved in the acceptance of the FAO Principles of Surplus Disposal. The Council therefore agreed that the time had come for a reappraisal of the functions of the Consultative Sub-Committee and for consideration of the types of transactions to be reported. The Council noted the Director-General's intention to convene the first session of the working group early in 1969. If necessary, a second session would be held toward the middle of 1969 so that the working group could complete its report in time for the latter to receive adequate study by governments prior to the Foty-Fourth Session of the CCP.
40. The Council supported the Committee's decision to establish a study group on Wine and Vine Products. This decision was the outcome of a recommendation of an Ad Hoc Consultation on this group of commodities held in pursuance of Resolution 3/67 of the Conference. The Council agreed that the problems of this group of commodities called for further intergovernmental consultation and cooperation.
41. The Council also supported the Committee's request to the Director-General to convene an Ad Hoc Consultation on Meat and Poultry. In view of the urgent and complex problems of the meat economy, a number of members emphasized the importance of convening the Consultation as soon as possible in 1969. A number of members also urged that the Consultation should extend to some technical factors, such as sanitary regulations, which had an impact on exports from developing countries. Some other members, however, pointed out that such technical factors were the subject of work by other FAO bodies and that full account of this should be taken in planning the Consultation.
42. The Council supported the Committee's decision to hold its next session in September 1969 for the purpose of examining the provisional Indicative World Plan for Agricultural Development. The choice of this date would enable the Committee to review the Plan and in particular its trade aspects. The Council emphasized the importance of trade in the IWP and believed that the Committee's study of the Plan would be of considerable value to the Conference.
43. The Council noted the comments made at the CCP on the outcome of the Second United Nations Conference on Trade and Development on commodity problems. Several members pointed out that the results of this Conference had failed to meet their countries' expectations. Some members referred to the causes of this failure.1 Others pointed out that the institutional changes approved by the Seventh Session of the Trade and Development Board of UNCTAD held out hopes for very positive discussions on the problems of international trade, and for a more operative UNCTAD. They stressed the need for continuing and more determined efforts at international cooperation, so that more rapid progress could be made toward the attainment of a higher rate of growth of trade and development in the developing countries. The Council noted with satisfaction the continuing close working relations between the FAO and UNCTAD Secretariats and urged that these relations should be further intensified.
44. The Council expressed its appreciation of the work of the CCP and its Study Groups which provided an important forum for intergovernmental examination of commodity problems. The Council considered that the CCP, in performing its role of analysis of commodity problems and the development of recommendations on possible solutions, could help UNCTAD and other organizations to achieve positive results in improving conditions for the expansion of commodity trade. Moreover, its work was of particular relevance to FAO's activities in the priority area of foreign exchange earning and saving. Some members asked that the CCP give more attention to rubber, millets and cassava.
1 See CL 51/PV-7.
45. The representatives of the International Monetary Fund (IMF) and of the International Bank for Reconstruction and Development (IBRD), informed the Council of the progress made in their respective Organizations toward the implementation of a resolution adopted in 1967 at the annual sessions of the International Monetary Fund and the International Bank for Reconstruction and Development, calling for a joint study by the staffs of the two organizations on the stabilization of prices of primary products. The first part of the study had now been completed and has been transmitted to FAO. The second part, which was still under consideration by the two Organizations, would contain recommendations on the possible courses of action which the IMF and the IBRD could undertake as a contribution toward the solution of problems of instability in commodity trade. The two representatives stated that in the preparation of these studies, they had drawn widely on the work of the FAO Secretariat and on the views expressed by government representatives at FAO sessions. They both stressed the interest of their Organizations in the continued advice and assistance of FAO in the field of commodity analysis.
46. The Council noted with regret that the Committees' session had been attended by only 29 of its 34 members. While it appreciated the difficulties which prevented participation by the delegations of five developing countries, the Council urged the governments concerned to ensure full representation at future sessions of the Committee. It recalled that the recent increase in the membership of the Committee and the adoption of a special balloting method for elections of its members had been decided on by the Conference with a view to ensuring adequate representation on the Committee of the interests of developing countries.
47. The Council noted the discussion in the CCP of the second report on the Inter-Agency Study on Multilateral Food Aid which had been prepared by the Secretary-General of the United Nations in cooperation with the Director-General of FAO, and in consultation with the Executive Heads of other interested agencies, for submission to ECOSOC. This report contained proposals and suggestions for the consideration of governments concerning the relationships between food aid and other forms of aid, and the role of different organs of the United Nations family in various aspects of multilateral food aid operations, and in the coordination of food aid, bilateral as well as multilateral. The report developed the concept of food aid as a specialized form of economic assistance, made available in response to the demonstrated needs of the recipient countries.
48. The new report was generally recognized as a useful step forward in presenting a balanced and practically oriented consideration of the main issues. The Council agreed with the Committee that any expansion of multilateral food aid activities should be based to the maximum extent possible on present institutions including the World Food Programme.
49. One member urged FAO to reexamine its attitude to promotion of agricultural products as a means to increase trade. He pointed out that the promotional efforts undertaken by individual developing countries could be made more effective if they were assisted by an organization such as FAO in the choice of areas and the means to be employed in order to obtain the best results. He felt that FAO should play a role in this field.
50. The Council agreed that while the established policy of FAO precluded it from engaging directly in the operation of promotional schemes for single commodities, this did not mean that the Organization was unable to render assistance in the directions proposed. In fact, much of the Organization's activities served the general objective of promoting agricultural trade. These activities included, for example, the exchange of ideas and experience gained in national schemes for promotion of consumption, marketing improvement programmes, grading and standardization, the identification of new uses, and the dissemination of the results of research work. Moreover, FAO had close working relationships with the International Trade Centre conducted under the auspices of UNCTAD and GATT, which was developing a valuable service in export promotion. FAO might usefully do more to bring together information on the techniques of promotion and on the results obtained from promotional programmes outside FAO for various commodities. It was also open to member governments to make use of FAO bodies such as study groups to discuss promotional activities which might eventually be implemented by action outside FAO.