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II. The World Food Situation

The Council has examined the world food situation and the problems which appear to lie ahead.

The information available to the Council indicates that although more than two thirds of the world's population is still chronically malnourished, there have been, during the past few months, several changes in the world food situation, particularly the emergence of surpluses in certain countries, which merit being brought to the attention of governments, as these are likely to involve some far-reaching economic consequences.

Food consumption in 1948/49 in western and central Europe is some 10 percent higher, in terms of calories, than in 1947/48. This has been caused by the excellent 1948 harvest and the continuation of imports at a high level. In the United States of America, Canada, Australia and New Zealand the diet remains very satisfactory, whereas in the Far East, the Near East, and some parts of Africa and Latin America consumption is increasingly inadequate.

The 1948 harvest was excellent in the United States of America, including a record crop of maize, while in Europe favorable weather helped the production of major crops to exceed the previous abnormally low year by approximately 30 percent. The Southern Hemisphere has fared less well, with maize crop failures in South Africa and the Argentine. In the Far East and other parts of Africa and Latin America output remains at a low level apart from improvement in a few crops and areas - such as rice in Thailand and oilseeds in West Africa. In the underdeveloped regions lack of capital and equipment, lack of technical assistance, and continued internal disturbances constitue major obstacles to expansion of production.

Some commodity situations are changing rapidly. The bountiful harvests in most wheat exporting countries enabled world grain exports in 1948 to be the highest since 1930/31. In the United States of America wheat stocks on 1 July 1949 will be 50 percent higher than in July of the previous year and coarse grain stocks three times as high. Sugar output was higher than prewar everywhere except in Asia, although Cuba slightly reduced production from the previous year's record level. With prospects of good crops again in 1949 the prices of sugar and cereals are falling in certain markets, and local surpluses are beginning to accumulate in dollar areas.

Rice production, on the other hand, has unfortunately shown no improvement in the Far East, while population has increased. In recent months the recovery in Thailand's exports has been partly offset by the halt to recovery in Burma.

Fats and oils production has recovered, but because of increased consumption in exporting countries world exports are still 33 percent below prewar.

In the countries with important livestock industries animal numbers are increasing gradually, but in Europe as a whole the numbers and the output of meat and milk remain far less than in 1934–38.

International trade in farm products remains substantially below prewar. But the share of the Western Hemisphere in this export trade has risen from 38 to 60 percent between 1937 and 1947. The share of the United States of America has risen in the same period from 10 to 25 percent. In one important item, cereals, she now supplies half the world's exports. The past year has seen a slight reduction in dependence on the United States of America in respect of certain farm products, due in part to a slight recovery in shipments from other traditional exporting areas and in part to reduced total purchases by many deficit countries. In general, however, there is no sign of any real change in the new structure of international trade with its great dependence on the Western Hemisphere and particularly on the United States of America.

The significant facts are, therefore, that notwithstanding continued high production of food in some countries, especially in North America, and steady improvement in western Europe, millions are still underfed, so that the average consumption throughout the world has still not achieved the prewar level. Less than 10 percent of the world's food production is exchanged between countries, representing only three-quarters of the volume exchanged before the war. Of this, North America is responsible for a largely increased share, with the result that variations in output in that area have now a greater effect on supplies and prices in the producing countries, and entail more serious consequences for consumers elsewhere, than would be the case if the volume of international trade were greater and more widely distributed among suppliers throughout the world.

Standards of nutrition in the ill-fed areas of the world can be raised only by increasing production in those areas or by transferring to them supplies from which countries produce more than they themselves need and which in many cases are capable of still further increased output. Conversely, the building up of unmanageable stocks in the producing countries can be avoided only by transferring additional supplies to the deficit areas or by actually reducing output. At a time when hundreds of millions are still hungry, the inability of the world to devise policies which would enable the surplus producing countries to avoid a deliberate curtailment of efficient production should not be tolerated.

Clearly means must be found to increase international trade in foodstuffs, as well as to stimulate production in the deficit areas. But food must be exchanged for other goods and services if exchange on an international basis is to be maintained. Thus the problem of developing the transfer of food supplies from the areas where they can be most economically produced to the areas where they are needed is part of the wider economic problem of exchange. Means should be found to enable the deficit countries to obtain the available surpluses of the exporting countries.

At the present time, North America, the most prolific area of food production, is also the most prolific area of industrial production. It is proving difficult to develop a basis whereby the surplus foodstuffs of North America can be exchanged for other commodities. To the problem of purchasing food because of low purchasing power in the underdeveloped countries is thus added the special problem of purchasing supplies from the hard currency countries, where abundant supplies are available, owing to the difficulty of establishing a basis of exchange with those countries. Moreover, the satisfaction of local demands from local production or from other soft currency areas, often achieved at heavy cost, will not solve the problem of surpluses in North America and other hard currency exporting countries.

Such surpluses, while contributing nothing to feeding the hungry millions of the world, affect prices - not only in the producing countries, but also in the deficit countries. Modern methods of communication lead to price fluctuations independent of local supply considerations. A fall in prices in one center leads to an expectation of a fall elsewhere - and such an expectation is soon translated into reality. A fall in the price of one commodity often leads to a fall in others. Nothing is so detrimental to production programs as an unchecked fall in prices; and the collapse of programs for expanded production would, in present circumstances, be alien to all humanitarian instincts as well as to the whole conception of an expanding world economy.

As long as consumption, even though increasing in certain areas, is still far below required standards in many countries, the twin problems are to stimulate production in the underdeveloped areas and to find ways of transferring to the deficit countries the abundant supplies of the areas able to produce them economically and effectively. Both problems must be tackled in relation to each other, so as to ensure that an orderly expansion of production is achieved without exacerbating the problem of exchange, and so that exchange is developed without hampering that further expansion of production which the world needs.

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