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The State of Food and Agriculture, 1970

10. The Council discussed the world food and agricultural situation on the basis of the Director-General's preliminary report on The State of Food and Agriculture 1970, 1 the final version of which, together with a special chapter, had also been distributed at the General Commemorative Conference on 16 November 1970.

11. The Council expressed concern about the failure of the combined agricultural, fishery and forest products output of the world to show any increase in 1969, compared with a 4 percent rise in 1968 and a longer term average growth of about 3 percent a year. True, to a considerable extent this had reflected reduced production of farm products in developed countries. But also the increase in the combined farm production of the developing countries, at 3 percent, had been somewhat less than in recent years, and in each of the developing regions except the Far East the growth appeared to have been below trend, and to have resulted in stagnant or falling per caput output.

12. The main cause for satisfaction was the continued rapid growth of production, particularly of cereals, in those developing countries where the greatest efforts had been made to raise cereal yields through the introduction of high-yielding varieties, together with the associated package of inputs and services.

13. It was too early to state whether the compensating movements for accelerating food output in a number of developing countries and the simultaneous stability or cutback of production in some developed countries, particularly exporters, which had been intensified in 1970, was evidence of a basic international adjustment in production. In any case, these movements, together with the continued efforts of some developed importing countries to raise their self-sufficiency in food, had contributed to the stagnancy in the volume of world trade in farm products. The value of this trade had increased by some 4 percent, for the first time in three years, but this was due to higher average level of prices, which in turn was in part a reflection of the general inflationary trends in the world economy. The same price trend appeared to have continued into 1970. Again, so often in the past, most of the increase in value of exports had benefited the developed regions (except North America), particularly because of rapidly rising trade within certain areas, especially in Western Europe. In contrast, most developing regions had raised their agricultural export earnings by only 2–3 percent, and those of Africa had actually fallen.

14. The final version of the report contained also a special chapter, entitled “Agriculture at the Threshold of the Second Development Decade”, and designed to commemorate the Organization's Twenty-Fifth Anniversary. The review of the performance, problems and policies that had characterized the world agricultural development over the past 25 years showed clearly the critical nature of the food-population race, the importance of agriculture in economic development, and the emergence of social problems such as rural unemployment and underemployment. The greater part of the special chapter was devoted to an examination of four major problem areas facing the developing countries in their agricultural growth efforts during the Second Development Decade. These dealt, respectively, with the problems of maintaining the momentum and an appropriate composition of crop production through yield-increasing technology; those of livestock production, which it was necessary to accelerate in order to meet the increasingly growing demand for good quality proteins; problems of raising the developing countries' agricultural export earnings; and the problems of unemployment and underemployment arising from the current and prospective trends in population growth and the reduced labour absorbing characteristics of agricultural and other sectors of the economies.

15. The Council agreed with the Director-General's broad assessment of the salient features of the situation in 1969 and 1970, as indicated above, including the contrasting experience of different developing countries and regions as regards their agricultural production performance. The review contained in the report of the progress of high-yielding cereal varieties was welcomed as a realistic one, which placed the topic in a proper perspective, and dealt with a number of common misconceptions about it. It was pointed out that, relative to the growth of population and levels of nutrition, the progress continued to be limited to a few commodities and countries; and while several members reported progress made in their own countries, it was generally recognized that unless there was an increasing governmental commitment to the yield raising policies, accelerated progress was unlikely to be achieved. One member suggested that the relatively high cost of production with the new technologies in some areas was not a permanent phenomenon, but a short-term consequence of a shift to a new technology. A number of members stressed the need for making the benefits of the new techniques available also to smaller farmers and landless labourers, and reported on measures taken in their countries to such an effect. Stress was also placed on the need for a comprehensive development of national economies, in which agriculture plays a fundamental role.

16. The Council expressed disappointment about the slow growth of agricultural exports from developing countries, which in 1969 had risen by only 2 percent in value, compared with 5 percent for the developed countries and a 14 percent increase in the value of total world trade in all commodities. In the case of all developing regions except one, the value of agricultural exports in 1969 was lower than it had been in 1965 or 1966, and the share of these regions in world agricultural exports had thus fallen further. It was stressed by several members that these trends had in part, been caused by agricultural protectionism and export subsidization by developed countries. Unless there was a substantial improvement in this situation, in line with the objectives under the Second Development Decade, agricultural trade was not going to make a sufficient contribution to the economic betterment of the people of the developing countries. While the high-yielding varieties had had some impact on the international flow of cereals, in the main this had amounted to a reduction in food aid requirements, rather than to the emergence of export increases which would counter balance imports. The agreement on general preferences for imports from developing countries of manufactured and semimanufactured products was welcomed as a potential contribution to developing countries' export earnings, though the limited impact of this on goods of agricultural origin, and hence on the situation of developing countries with least advanced economies, was stressed.

17. The Council expressed concern about the anomaly of surpluses again appearing in a world where large numbers of people remained undernourished. To some extent the problem of nutrition had been eased by food aid. Several countries had, however, found it necessary to cut back their production unilaterally in order to balance supply and demand. The channeling of surpluses to constructive uses had been dwelled on at length by FAO, but remained a challenge facing the world community.

18. The Council stressed the need for a comprehensive approach to problems of agricultural development, both by countries in their own development policies, and by FAO in its reporting of progress in the world food and agricultural situation. On the one hand, it was necessary for countries to adopt a group of converging measures affecting all aspects of the economy, including production, trade, finance, and human resources, if rapid progress was to be made. For FAO, it was necessary to increase the emphasis in its reviews on other aspects of progress than production and trade, including nutrition, farm incomes and productivity, and social welfare, in particular employment and income distribution, and on the way in which production, trade and other aspects of agricultural progress were interlinked.

19. The Council drew attention to the role FAO should play in promoting, by means of consultations between countries, increased cooperation and exchange of information on a regional basis, particularly in the fields of science, technology and economics. As well as promoting technological development at regional and world levels, such action would also contribute to the development and stabilization of markets for agricultural products, and to the reduction of protectionism and trade discrimination, for the benefit of world trade as a whole. The need to mobilize the potential of the European and other developed countries in the field of vocational training and education for the benefit of the developing countries was also recognized.

20. As regards the form of reporting, the Council expressed the view that the changes made in the content and timing of The State of Food and Agriculture constituted an improvement. In particular, the greater stress on reporting and analysis of policy measures was welcomed, as was that of the inclusion of more material on the current year. The fact that the Council had in front of it simultaneously both the preliminary version of the report and the final version, which had been produced exceptionally early for distribution at the General Commemorative Conference, had caused some confusion, particularly as regards the status of the special chapter. The Council recommended that the Secretariat should give continued attention to the timing and content of The State of Food and Agriculture. The Council noted that the earlier practice of submitting to Conference and Council a supplementary statement bringing up-to-date the preliminary version might be reverted to at future sessions. In such case the final version would be published at a later date. At the same time, efforts would be made to have the preliminary version distributed earlier than had been possible for the past two issues, so as to provide governments and the general public with a more evenly spaced flow of information on the current situation. It was also stressed that it is more important to give widespread publicity to the final version rather than to the preliminary version.

21. The Council was in agreement with the further increase in emphasis it was intended to place on reporting developments in the current year, including the possibility of short-term forecasts for the full year. It also noted the intention to feature increasingly in the report the results of the medium-term forecasts of food production, consumption and trade. Other topics which various members suggested for more detailed attention in the future included economic integration schemes, the stock situation, international assistance to agriculture, human resources, including problems of employment, and trends in international agricultural trade relative to those in total trade. The Council noted the plans that were being made for up-dating FAO's information on the world nutrition situation.

22. The Council also noted that because of the contribution expected from FAO to the functional review and appraisal of progress under the Second Development Decade, increasing demands were going to be made on the Organization as regards reporting and analysis of the agricultural situation and outlook. In this connexion, the Council was informed that the Economic and Social Affairs Department was in the process of reviewing its current reporting activities with a vew to making them more efficient and timely. To this end the Department was also planning for the improvement of data, and for better data collection and handling, including automated data processing. Successful efforts in this regard were, however, in part dependent on active cooperation by Member Governments in the supply of statistical data and improvement of their quality.

1 CL 55/2.

Progress of the Perspective Study on World Agricultural Development

23. The Council noted that implementation of Resolution 1/69 of the Fifteenth Session of the Conference had progressed as follows:

  1. The statistical framework of the IWP had been up-dated to 1964–66 for about 140 countries and territories.

  2. FAO had worked closely with the Regional Economic Commissions, the Organization for Economic Cooperation and Development (OECD) and the European Economic Community (EEC) in establishing the economic growth assumptions for the decade of the 1970's in the framework of the Second Development Decade international development strategy.

  3. Demand projections for agricultural commodities for the years 1975 and 1980 were being revised.

  4. Geographical coverage had been extended to countries not covered in the IWP, the most important additions being Indonesia and Central America.

  5. A study of the agricultural and trade policies of the developed market economies, Eastern Europe and the USSR had been undertaken jointly by FAO and the Economic Commission for Europe. This study, which should provide a useful input for examination of the agricultural export prospects of the developing countries, is scheduled for completion in the second half of 1971. 1

  6. In the field of rural unemployment and under-employment, FAO and the ILO had developed a joint study programme, and a field project in a major Asian country was being prepared.

  7. Alternative hypotheses for income distribution in Latin America were being incorporated into the analysis in cooperation with the FAO/ECLA Joint Agriculture Division.

24. Following a full discussion in Plenary on the progress to date and the future development of the Perspective Study, the many aspects of the Perspective Study were the subject of careful examination by a Working Party of the Council. This report embodied the Council's conclusions, taking account of the recommendations of the Working Party, as well as the progress report provided by the Director-General, the whole being considered in the light of the guidelines laid down by the Fifteenth Session of the Conference.

25. The Council expressed satisfaction that the work was proceeding in accordance with the recommendation of Resolution 1/69; it noted that the 1970 Regional Conferences had also expressed their appreciation in this respect. It was the opinion of the Council that work in the field of agricultural development policy was central to FAO's responsibilities and an essential part of the guidance that it should give member countries. It therefore reaffirmed its support for FAO's continued involvement in perspective planning, provided that this was done in close association with member countries and regional and other organizations in a position to contribute. All available information should be procured and used to the fullest extent possible. It was pointed out that the experience of some countries with a long history in planning, had shown that short-term planning could not be fully successful without a framework of long-term perspective planning. It is important that agricultural development planning be integrated into an overall inter-sectoral framework.

26. The Council re-emphasized the importance of worldwide coverage in the Perspective Study, particularly for the examination of alternative trade possibilities and having regard to comparative economic advantage, when due account was taken of the possibilities of modern technology, in developing more rational patterns of production and trade. In this connexion it stressed the importance of the study on agricultural adjustment policies and problems in high income countries being undertaken jointly with the Economic Commission for Europe and scheduled to be completed before the end of 1971 2. It noted with satisfaction that coverage of the developed market economies would include those in other regions (North America, Japan and Oceania), and stressed that full use should be made of all information and assistance the OECD can offer. It welcomed the readiness of OECD to share with FAO its studies and experience in the field of projections and agricultural policies in the developed countries, and asked FAO to establish close contact with OECD in carrying out this work. Some members also invited FAO to draw upon work on agricultural development carried out by the appropriate agencies of their own countries. It was agreed that this study and subsequent work on developed countries should not only take due account of possible modifications in production and trade policies and in the synthetics industries which could affect the exports of developing countries, but also of the social and economic problems which developed countries faced in adjusting their agricultural structures and policies.

27. The Council considered that an approach in terms of alternatives should be basic to the philosophy of work on the Perspective Study. Member countries would thus be given not just one prescription but would be able to see clearly posed the policy choices that were involved in alternative growth objectives and alternative methods of trying to achieve them. The Perspective Study could therefore be seen as providing the opportunity for developing a sensitivity analysis, in which the quantification would be used as a tool for thinking and not as a rigid over-simplified framework.

28. One of the most important objectives of the analysis under the Perspective Study should be to explore the possibilities for enlarging trade in agricultural commodities including processed products, both between developed and developing countries and between the developing countries themselves. In this work it would be necessary to consider competition between synthetics and agricultural products. The trade analysis should also be undertaken in terms of alternatives and their implications for possible changes in production, trade, and price policies. As the methodology was refined and the geographical coverage extended over time sensitivity analysis could be used to explore further the relationships between major aggregates of demand, production and trade in agriculture and the most crucial socio-economic factors such as employment and income distribution within agriculture and between agriculture and the rest of the economy.

29. The Council reiterated the need to give substantial weight in the analysis on developing countries not only to the conventional measures of economic growth but to social factors, such as better distribution of income, agrarian reform, agricultural taxation policies, and employment. In this connexion it welcomed the cooperation between FAO and ILO in the field of employment, and recognized that the work outlined in paragraph 23(f) would be valuable not merely to the country being studied initially, but also as a means of developing and testing definitions and methods of measurement suited to wider application by Member Governments generally. The work proposed under the Perspective Study would include to the fullest extent permitted by the data and the available resources the use of a model which provided for several postulates on GDP growth and also on income distribution where this appeared important or was desired by the country. This would not only bring out alternative courses which countries might follow regarding the relative rate of growth of the agricultural and the other sectors, but would automatically lead to alternative projections of internal demand for agricultural products. The production problems and possibilities could then be examined in relation to the alternative projections of internal demand, as well as different possibilities for exports as seen in the light of other work. The implications of the various growth patterns for agricultural income and employment could then be studied. The analysis would deal with the policy measures required to achieve specific goals in production, consumption and nutrition, trade and employment. At the same time the Council recognized the data and methodological difficulties inherent in dealing adequately with social objectives and social effects of economic policies.

30. A number of specific points were raised in the discussion: (a) Some members while recognizing the need for FAO to develop the Perspective Study in accordance with the overall framework used by the organizations of the UN family for the Second Development Decade, considered that the economic growth assumptions of the Decade were too modest in relation to the aspirations and the needs of the developing countries. The need to take into account the potential of new technology as well as the opportunities for socio-economic change was stressed. (b) From the point of view of technical soundness the price elasticity of demand and supply should be taken into account. The Council recognized, however, that this was a matter of gradual improvement in the availability of data and in the development of techniques of analysis. The information would need to come basically from countries themselves and they would also have an important role to play in the development of analytical techniques. (c) Some members felt the need for a more refined classification of degrees of development than the current practice of speaking of developed and developing countries. The Council noted, however, that this was a matter for the United Nations and that FAO must follow established practice. (d) Many members pointed out the need for special attention to be given to the least developed among the developing countries, in accordance with the decision of the UN General Assembly on this matter. (e) Improvement of basic statistics in the countries and in FAO and their orientation toward the needs of those who use them for analytical purposes was essential for better perspective as well as operational planning. Experience gained in perspective planning could, however, give stimulus to improvement of statistics and also guidance as to priorities in this connexion, as had already happened in FAO's work so far. The Council noted with satisfaction that considerable progress had been achieved in the reorientation of FAO's statistical activities to service planning and evaluation and felt that a high priority should be given to continuing progress in this direction.

31. Given the complexity of the analysis called for under the Perspective Study, the Council agreed with the Director-General and the Programme Committee that it would be necessary to work in stages. It further agreed with the proposal to undertake the work described in paragraph 29 first in Latin America where the countries of the Region had urged a thorough reconsideration of the goals proposed in the IWP and the policy analysis connected therewith. The Council noted that the work of South America was planned to be completed in 1971, but recognized that the timetable for work now underway in Central America and for a UN/FAO Multi-disciplinary Advisory Team in the Caribbean would not make it feasible to incorporate the analysis on these sub-regions into the Perspective Study until some time in 1972. It considered that high priority should be given to regional integration groups and countries in all regions which specially requested assistance from FAO in long-term perspective planning.

1 See para. 26 below.

2 As now outlined, the study will include, on a selective basis: (1) information and analysis of recent dynamic changes and the prospective outlook for the next decade with respect to the position and role of agriculture in the overall economy, trends in consumption and production and the structure of agriculture; (2) past experience and present objectives and instruments of agricultural policies, including price supports, input subsidies, supply restrictions and structural adjustment policies; (3) the world dimensions of the agricultural problems in the next decade; (4) adjustment issues in the food and agriculture sectors of developed countries.

32. Great importance was placed on close consultation with countries at all stages of the the work; and on working closely with the Regional Economic Commissions and other regional bodies within and outside the UN family. Apart from the need for close consultation with the countries concerned, the range of topics covered in Resolution 1/69 raised important points of data availability and the development of analytical techniques. In the final analysis data availability mostly goes back to member countries and they also have an important role to play in the development of the necessary techniques of analysis. Fulfilment of the aspirations voiced in Resolution 1/69 will therefore depend a great deal on the willingness and ability of member countries to join in a common effort with FAO and other relevant organizations. In this connexion the Council drew the attention of the Conference to the invitation addressed by the General Assembly to its developing member countries to “formulate, early in the Decade, appropriate strategies for agriculture (including animal husbandry, fisheries and forestry) designed to secure a more adequate food supply from both the quantitative and qualitative viewpoints, to meet their nutritional and industrial requirements, to expand rural employment and to increase export earnings”. 1 The Council further considered that for the purposes of FAO's work this invitation should be taken up by all FAO Member Nations, both developed and developing, in order to ensure full coherence in the joint planning and review and appraisal activities.

33. The implementation of Resolution 1/69 should proceed “as rapidly as circumstances permit”, but remain within the resources that the Director-General found it feasible to devote to perspective planning given the total resources as decided upon by the last and subsequent sessions of the Conference. At the same time the Perspective Study should be recognized as of basic importance for the work of FAO. It was essential that all units of the Organization, including substantive departments and divisions at Headquarters, the regional offices and the country offices should be involved in the work laid down by the Conference.

34. It was noted that the Director-General was not able, at the present session of the Council, to present a detailed breakdown of budget resources and manpower allocations devoted to the Perspective Study as there had been no time to re-adjust to the financial situation that would face the Organization as a whole after this Session. Since the Latin American study had been started, concern was expressed as to the resources that would be assigned to the study. The Council took note, however, that the Director-General intended to submit to its next session a paper summarizing the basic approach being adopted in the preparation of the Perspective Study, identifying the main elements or component studies, with an indication of how they fitted into the project as a whole, together with the timetable and working arrangements proposed.

35. The Council considered that the preparation of the Perspective Study was not only valuable for FAO and its member countries but should be the main contribution of FAO to the international strategy for the Second Development Decade. The Perspective Study and the Second Development Decade were therefore intimately linked and it would facilitate discussions in the next Session of the Conference if these were shown on the Agenda as one item. The same would apply to discussions in subsidiary bodies including the next session of the Council.

1 International Development Strategy for the Second United Nations Development Decade, UNGA, Report of the Second Committee (Part I), para. 75.

FAO's Contribution to the International Stategy for the Second Development Decade

36. The Council noted that the FAO's contribution to the international strategy for DD2 included both the preparatory work in formulating the strategy as well as actual participation, with other organizations and bodies of the UN family, in the review and appraisal of the implementation of such strategy and in the mobilization of public opinion during the course of the decade.

37. The Council drew attention to the fact that the whole of FAO's activities would constitute a contribution to the Second Development Decade (DD2), as the Programme Committee had suggested. FAO was in a unique position to make a substantial contribution in this respect, particularly in view of the emphasis placed on agricultural development planning.

38. The Council considered that FAO's involvement in the international development strategy for DD2 should extend over the entire range of subjects relevant to its field of activities as set out in the DD2 document adopted by the UN General Assembly. The Council noted that FAO had participated in and made contributions to the work of the Committee for Development Planning and the UN Preparatory Committee for the Second Development Decade and that FAO's views appeared in a very abbreviated manner in the DD2 document adopted by the General Assembly.

39. The Council noted that the contribution of FAO to the formulation of the international strategy had included provisional evaluation of the objectives of the Second Development Decade considered by the UN Preparatory Committee for the Decade. In addition, projections of demand for agricultural commodities for 1975 and 1980 would be submitted to the United Nations in the course of 1971. Further contributions were linked with progress of work on the Perspective Study of World Agricultural Development and the Council noted the progress and future plans in this field. The submission of policy papers to the United Nations would thus be timed in accordance with progress in this work, and geared to the timetable of the United Nations.

40. Some members noted that the review and appraisal activities of FAO would comprise measurement and analysis of agricultural performance on the basis of a number of standard indicators plus more in-depth analysis of selected aspects of major importance to agricultural development. They considered that due weight should be given to assessing progress on social aspects of development, such as nutrition, rural employment, income distribution, land reform, agricultural taxation and youth participation in the development effort. They noted that in many cases special surveys in the developing countries were needed to collect material on these subjects.

41. The Council noted that analytical studies on selected subjects linked to the international development strategy might be presented as part of the routine review and appraisal, as and when FAO had time to prepare the studies.

42. Some members considered that review and appraisal every two years was too frequent. The Council noted that FAO would have to comply with interagency arrangements on this matter. A few members supported the view that effort should be primarily concentrated in the middecade and end-of-decade reviews.

43. The Council recognized the need for rationalizing FAO's system of economic information. The need for assistance to the developing countries in improving statistical services was stressed and FAO's effort in the direction of international standardization of agricultural statistics welcomed.

44. Regarding review and appraisal, FAO would be guided by the contents of the Second Development Decade document adopted by the General Assembly and eventual organizational arrangements that may be decided upon by the July 1971 Session of ECOSOC.

45. The Council considered that the mobilization of public opinion should constitute an essential element in the overall strategy for the Second Development Decade and that it had to be the responsibility mainly of national bodies.

46. In the industrialized countries it was necessary to make people more aware of the need to furnish increasing aid for agricultural development in the developing countries and to support the liberalization of trade in commodities and foodstuffs.

47. While the mobilization of public opinion in the developing countries in support of the Second Development Decade was equally important, methods different from those used in the developed countries were often called for. For example, in some developing countries there was a shortage of personnel to inform people. This called for a greater emphasis on training communicators. More use could also be made of visual media to reach illiterate people in rural areas.

48. FAO was in a unique position among the organizations of the United Nations System in having available the Freedom from Hunger Campaign through which to approach and involve the public and the hope was expressed that those developing countries which had not yet set up National Freedom from Hunger Campaign Committees would do so. At the same time, the role of FAO National Committees in supporting the Second Development Decade should be encouraged.

49. In view of the limited resources for mobilizing public opinion, the success of the operation depended on the careful selection of information channels. As provided in the strategy, the role of the Specialized Agencies is to make available basic background information material to national media. FAO should cooperate, in its information work for the mobilization of public opinion in support of the Second Development Decade, with the UN Centre for Economic and Social Information. The Council noted that information action in the context of the Second Development Decade had already been initiated by FAO, particularly in support of the Perspective Study for World Agricultural Development, and the Five Areas of Concentration, as well as through the organization of reportage missions of journalists and media representatives, in cooperation with other organizations in the UN family, to see and report on development problems and achievements. Attention was drawn to the useful role of Ceres, the FAO magazine on development.

50. The Council also noted that a growing number of FAO executed field projects in developing countries now included a communications element to interest local populations and to assist in training mass media experts. It was also noted that FAO assistance was also being increasingly provided to Member Governments for the improvement of their communications with rural populations through the use of mass media techniques.

51. The Council requested the Director-General to present at its Fifty-Sixth Session a more detailed statement on the contents of review and appraisal as well as the orientation of FAO's Programme of Work and the development of relevant action programmes for contributing to the Second Development Decade.

Commodity and Trade Problems: Forty-Fifth Session of the Committee on Commodity Problems 1

52. The Report of the Forty-Fifth Session of the Committee on Commodity Problems 2 was introduced by Soegeng Amat (Indonesia), Chairman of the Committee. The Council endorsed the Report and expressed its satisfaction with the work of the Committee and its subsidiary bodies. It noted that at its Forty-Fifth Session the Committee had made a number of important decisions.

53. Many members drew the attention of the Council to the main conclusion in the analysis made by the Committees of the world commodity situation, i.e. that during 1969 the value of trade in the principal agricultural commodities had shown its first increase for three years. Both developing and developed countries had obtained higher returns from their exports but the percentage share of the developing countries showed a further decline. According to many members, the latter development was due in part to the adverse effects on the exports of developing countries of the agricultural price support policies and trade policies of developed countries.

54. The Council noted the Committee's preliminary discussion on FAO's role in promoting agricultural adjustment. There was a general consensus in the Council that FAO, within the UN family of organizations, was well placed to pursue objective studies on the problems which were raised by the unbalanced growth of supply and demand for many agricultural commodities. Some members referred to the effects of excessive protection in importing countries. FAO had special competence in the investigation of the problems lying behind agricultural protection. It was thus important for FAO to study the problems of agricultural protection, to analyse objectively the various types of solutions, and to evaluate their possible repercussions in international markets on a worldwide and regional basis. It was suggested that the Director-General of FAO should consult with the executive heads of UNCTAD and GATT on ways of coordinating the efforts that the three agencies could make toward promoting international policies of agricultural adjustment.

55. The Council endorsed the decision of the Committee on Commodity Problems to retain the item of agricultural adjustment on its agenda and to give further consideration to the role that FAO should play in this field, in the light of an account of the relevant activities of FAO and other bodies.

56. Reference was made to the main provisions adopted by the General Assembly of the United Nations with respect to international commodity policies to be adopted in the coming ten years in order to attain the objectives of the Second Development Decade. The Council pointed out that, within the strategy for the Decade, FAO should continue to play a very important role in dealing with international commodity problems, and in promoting the adoption of adequate measures for expanding exports from developing countries.

57. The Council noted with appreciation the decisions of the Committee concerning the establishment of guidelines and procedures for usual marketing requirements within the consultative procedures applying under the FAO Principles of Surplus Disposal which the Council itself had adopted at its Fifty-Third Session in Resolution 1/53.

58. The Council considered that the Usual Marketing Requirement, defined as the specific agreement by the recipient country to maintain at least a specified level of commercial imports in addition to any imports of the commodities under a concessional transaction, constituted a useful technique for providing guarantees for usual commercial trade and adherence to the FAO Principles of Surplus Disposal. In endorsing the texts recommended by the Committee on Commodity Problems on procedures for the establishment of usual marketing requirements, the Council felt that these procedures should form an integral part of the text which was agreed at the Fifty-Third Session, and noted the intention of the Director-General to include it in that text under the heading “Establishment of Usual Marketing Requirements (UMR)” as a third sub-heading of the procedures for notification and consultation adopted by the Council under Resolution 1/53.

1 See also paras. 114 – 117 below.

2 CL 55/7.

59. The Council adopted the following resolution:

Resolution 2/55



Recalling its Resolution 1/53 on Consultative Obligations of Member Nations under FAO Principles of Surplus Disposal in which, inter alia, it urged the Committee on Commodity Problems to finalize recommendations on the establishment of usual marketing requirements;

Noting that the Committee at its Forty-Fifth Session had adopted an agreed text providing procedures for the establishment of usual marketing requirements;

Considering that the usual marketing requirement constituted a useful technique providing guarantees for usual commercial trade and adherence to the Principles of Surplus Disposal recommended by FAO;

Endorses the recommendations of the Committee on Commodity Problems as reproduced in the Annex to this Resolution and commends them to the attention of Member Nations;

Requests the Director-General to transmit to Member Nations and Associate Members the text of the present resolution and of its Annex and to invite them to signify their readiness to adhere to the agreed procedures; and

Requests further the Director-General to integrate the text annexed below with that annexed to Resolution 1/53 in a single document, and circulate it to Member Nations and Associate Members.

Annex to Council Resolution 2/55

Procedures for the Establishment of Usual Marketing Requirements (UMRS)

  1. The Committee reaffirmed the need for safeguarding usual commercial trade and for this purpose, the need to establish safeguards with the objective that the recipient country maintained at least the usual global commercial imports of the commodity concerned a in addition to the imports under the concessional transaction.

  2. The Committee agreed that the establishment of UMR was a useful and necessary technique in order to ensure observance of the FAO Principle of additionality. The Committee therefore recommended that any transaction undertaken by governments in categories subject to prior consultation (2) of Annex to Council Resolution 1/53 shall be subject to the establishment of a UMR, as appropriate to the specific situation in order to ensure that the transaction resulted in additional consumption and did not harmfully affect normal patterns of production and trade. The UMR should be defined as the specific agreement by the recipient country to maintain at least a specified level of commercial imports in addition to any imports of the same a commodities under the concessional transaction.

  3. The Committee noted that the FAO Principles of Surplus Disposal contain provisions aimed at avoiding the danger of displacement of commercial sales of closely related commodities b, and it reaffirmed that any interested country should have the opportunity to be consulted in this connexion. The Committee therefore agreed that the supplying country should consider whether commercial trade in closely related commodities was likely to be harmfully affected and, if so, it should undertake consultations under the procedures set out in the Annex to Council Resolution 1/53, and take appropriate measures to safeguard such trade. A third party may request consultations with a supplying country on its own initiative.

  4. In principle, the UMR should reflect the traditional commercial imports of the recipient country. The determination of a UMR should also take into account the economic and balance of payments position of the recipient countries and their development needs, and should not constitute an undue burden on them.

  5. If the application of the principles in paragraph 4 leads to a change in UMR levels, wherever they exist, then such changes should take account of the balance of payments position of the recipient country and should avoid disruptive effects on its economic development.

  6. The following steps will be taken to arrive at a UMR for a particular recipient country for a specified period. c

(a) As a point of departure, the supplying country approached will attempt to calculate the statistical figure representing the total commercial imports of the commodity concerned by the requesting country in a representative period of years, which should normally be the preceding five years. To help arrive at an as accurate a statistical basis as possible, the FAO will be prepared to furnish Member Nations with basic trade statistics including a breakdown according to types of transactions d relating to the commodity and country concerned. To this end, Member Nations are requested to extend full cooperation in supplying the data required to facilitate the task of the secretariat.

(b) The Committee recognized that the statistical figure of the total commercial imports of the recipient country in a representative period might need to be modified by special factors such as the following:

  1. A substantial change in production in relation to consumption of the commodity concerned in the recipient country;

  2. A substantial change in the balance of payments position or general economic situation of the recipient country;

  3. Evidence of a significant trend in the reference period in the commercial imports of the commodity concerned of the recipient country;

  4. The level of the relevant UMR negotiated according to the procedures laid down in the present paragraph by the interested countries in the nearest previous period. However, when a UMR is negotiated for the first time under these procedures, note will be taken of the provisions of para. 5 above.

  5. Any exceptional features affecting the representativeness of the reference period for the recipient country;

  6. Any other special considerations, including those which the Government of the recipient country may raise in its request or otherwise e.

(c) The proposed figure, with appropriate explanation in cases where it differs from the basic statistical figure (which shall also be notified), will be the subject of bilateral consultation with those Member Nations whose normal commercial exports may be affected by the transaction; if there is a suggestion for changing the negotiated UMR, then this should be discussed between the supplying and the recipient country.

(d) The proposed UMR, as determined by the supplying country in the light of the bilateral consultations will be included in the prior notification to CSD of the main features of the transaction, as provided in para. (2) (b) of Annex to Council Resolution 1/53.

(e) The final step in establishing the UMR will be the negotiation between the supplying country and the recipient country f.

  1. In determining a UMR for a given period, a supplying country would ensure at the stage of bilateral consultations that all the interests concerned were taken fully into account, and use its best endeavours to arrive at a UMR that would be generally acceptable to all the parties concerned.

  2. For any given recipient country and commodity the UMR should be established e for a given period of time (e.g. the calendar, fiscal or crop year e or any other period of 12 months, according to procedures to be agreed between the supplying country and the recipient) it being understood that during this period of time there can be only one such UMR.

  3. In the event of an unforeseen and substantial deterioration in the balance of payments and general economic situation of the recipient country during the life of a particular UMR, such UMR may be re-negotiated with respect to the same commodity and the same period of time.

  4. The Committee agreed that, if the need to improve procedures for establishing the UMR arises, the CSD should study the problems concerned in order to assist any further consideration by the CCP.

60. The Council generally endorsed the establishment within FAO of an international scheme for the coordination of dairy development. Many members in welcoming the adoption of the scheme, indicated that it could serve an important role in helping to fill the protein gap. Insufficient protein was the main deficiency in the diets of developing countries and particularly affected the poorer strata of the population, exposing the more vulnerable to permanent injury. Several members, however, warned against the danger of building up greater expectations than could be met by the programme in its early phases. They also pointed out that, with the recent decline in surpluses of dairy products, the programme could not rely on as large a contribution of supplies of these commodities for the implementation of projects as could have been expected only a few months earliers. It was pointed out, however, that projects under the scheme should aim at promoting integrated plans for dairy development, not necessarily depending upon the supply from abroad of dairy products.

61. The Council stressed that the scheme should be operated within the institutional framework of FAO and under the general policy guidance of the FAO Council. The Council also agreed that the CCP should keep under review the operational, procedural and economic aspects of the scheme which fell within its sphere of responsibility.

62. The Council noted with approval the decisions reached by the Committee in the field of oilseeds, oils and fats, oilcakes and meals. These included a change in the terms of reference of the Study Group on Oilseeds, Oils and Fats giving it authority to: (a) extend its product coverage to include oilcakes and meals; (b) increase the emphasis of its work on its consultative functions and on the making of policy proposals for intergovernmental action to meet short-term market problems; and (c) consider measures which could help solve medium and long-term problems and submit practical proposals for intergovernmental arrangements in the fats and oils sector. The Council felt that these changes in the Group's terms of reference gave effect to that part of UNCTAD Resolution 16 (II) concerning oilseeds, oils and fats, and that they were a recognition of the need for new, more action-oriented, activities. The Council considered that the UNCTAD secretariat should be fully associated in the work of the Group.

63. The Council noted with approval the establishment of a Study Group on Meat. Several members indicated the readiness of their Governments to cooperate actively and constructively in the work of the study group, although originally they had had some doubts as to the need for a standing machinery to deal with the problems of this group of products. Other members reaffirmed the need for such a machinery, and stressed the contribution that it could make to the solution of problems now affecting production and trade of meat and poultry.

64. Warm appreciation was expressed in the Council of the offer made by the Government of Argentina to host the secretariat of the new group in Buenos Aires and to defray the additional cost involved in the establishment of the secretariat away from FAO Headquarters. Many members, however, expressed their agreement with the decision reached by the Committee on Commodity Problems that the secretariat should be located in FAO Headquarters. Other members felt that the Argentine proposal should be re-examined by the Committee or considered by the Study Group on Meat at its First Session.

65. Some members felt that the Committee should give attention to the economic problems of dates in view of the difficult marketing problems facing the producers of this commodity. One member suggested that the Study Group on Cocoa should examine the feasibility of developing informal arrangements for cocoa. In his view, such action, while contributing to maintaining more normal conditions in international markets, could facilitate progress toward the conclusion of a formal international agreement on cocoa, which had been under consideration for many years, so far without result.

66. At the suggestion of the Committee, the Council requested the Committee on Constitutional and Legal Matters to consider the legal problems relating to the nomenclature of the Committee's subsidiary bodies dealing with single commodities or groups of related commodities along the lines contained in paragraphs 186 and 187 of the CCP Report. It was pointed out that the functions of several of these commodity bodies had passed the stage of study and collection of information and had now reached a more action-oriented stage aimed at the formulation of policy recommendations, including international arrangements. These developments, it was felt, should be reflected in the group's nomenclature.

a The delegate of the Democratic Republic of the Sudan reserved the position of his Government on the deletion from the original draft of the words “or related commodities”.

b Especially the Principles in para. 4 (2) and that in para. 6 (1) (b) (Disposal of Agricultural Surpluses Principles Recommended by FAO, Rome 1967).

c The delegate of France declared that, with respect to the procedures for the establishment of a UMR, France intended to adhere to the undertakings set out in para. 2 of the Annex to Resolution 1/53.

d Transactions included in the Annex of the terms of reference of the Consultative Sub-Committee on Surplus Disposal, on the one hand, and all other transactions on the other.

e The delegate of Argentina stated: “With respect to this text and with particular reference to paragraph 8, my government understands that since for each period of time there will be only one UMR, both the receiving country and the supplying countries carrying out transactions for those same products during the same period, will be subject to that particular UMR. With this interpretation my delegation agrees to accept the text as proposed by the Working Party and formulates reservations as to the amendments introduced to that text”.

f The delegate of the Democratic Republic of the Sudan also reserved the position of his Government with respect to paragraph 6 (e) because it did not include the words “the conclusion of …”

Membership of the Committee on Commodity Problems 1

67. Reference was made to the question of the membership of the Committee on Commodity Problems. Some members were in favour of opening the membership of this Committee to all interested Member Nations of the Organization. The Council noted however, that the Programme Committee felt unable to recommend a change in the present membership of 34 for the time being.

1 See paras. 210–219 below.

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