6. The Council considered the Director-General's proposals which were presented pursuant to ECOSOC Resolution E/RES/1836(LVI). It had before it the report of the First Session of the Commission on Fertilizers 2, and also a number of additional documents including the replies to the demand-and-supply questionnaire 3 a document on the pesticide situation 4, and the Sri Lanka proposal for the establishment of a world fertilizer fund 5.
1 CL 63/2, CL 63/INF/6, CL 63/PV/1, CL 63/PV/2, CL 63/PV/3, CL 63/PV/4, CL 63/PV/9, CL 63/PV/10
2 CL 63/2-Sup.1
3 CL 63/2-Sup.2
4 CL 63/2-Sup.3
5 CL 63/INF/8.
7. The Council expressed its appreciation of the work done by the first session of the Commission on Fertilizers and of its Chairman Suleiman Jabati (Sierra Leone), and in general endorsed its conclusions and recommendations on this item. The Commission had given detailed consideration to the Director-General's proposals and reported favourably to the Council on them, in the light of the very tight fertilizer supply-demand situation.
8. The Council recognized that the Director-General had responded promptly to the request from ECOSOC by presenting the action proposals which constituted a good basis for discussion. The council felt that the timing of the current Session was opportune as decisions had to be made in respect of the short-term action proposals, which, in the light of the worsening situation, were most urgent if fertilizers were to be supplied to the developing countries in time for forthcoming planting seasons.
9. The Council noted that the Director-General's proposal was a comprehensive framework within which urgent action could be initiated bilaterally and multilaterally. It further noted that the Scheme contained as an important element an information system. It would receive and make available a regular flow of information on the requirements of developing countries, on supply availability and on possible sources of finance. Contacts would be established with governments of both fertilizer producing and/or consuming countries, with governments having bilateral aid programmes and with industry on the supply situation. Constant liaison was expected with the United Nations Emergency Operation, the World Bank, and other international and national sources of finance. Thus as a “clearing house” FAO would play an active role with a view to reallocating part of current fertilizer production to needy countries.
10. The Council endorsed the proposal that FAO establish an information system on fertilizer supply and demand. This would include, in addition to matters suggested by the Director-General and the Commission on Fertilizers, information on aid requirements and investment needs of developing countries. It would also include an analysis and information on prices and the investment intentions of the fertilizer industry.
11. With reference to para. 1(a) of ECOSOC Resolution 1836(LVI), the Council authorized the establishment of a fertilizer pool to which contributions would be made either in fertilizer or in cash. The pool was not intended to meet the overall fertilizer problem of developing nations but, in the present emergency situation, to fill gaps when an otherwise insoluble problem emerged. Fertilizers would be supplied on a grant or subsidy basis. Cash contributions would be used to supply fertilizers to countries with balance-of-payments difficulties, to meet shipping costs and to improve the efficiency and output of plants in developing countries. The Council took note of the readiness of some countries to make contributions to the pool.
12. It was proposed by the Director-General that targets of the International Fertilizer Supply Scheme should relate to individual developing countries, and that no developing country should have a lower aggregate supply of fertilizer in 1974/75 than it did in 1973/74, and an increment of at least 12 percent should be achieved wherever feasible. This would result in an increase in total fertilizer imports by developing countries of one million tons of nutrients as compared with 1973/74. Priority should be given to those countries which qualify for assistance from the United Nations Emergency Operation, i.e. those developing countries most seriously affected by the present situation, bearing in mind the particular problems of the least developed and land-locked countries.
13. The criteria adopted for allocating fertilizers should relate to the objective assessment of all factors that determine the real need for importing fertilizers, and the question of criteria would be reviewed by the Commission on Fertilizers.
14. A number of members indicated the efforts their countries were making in supplying fertilizers to developing countries on a bilateral basis. The Council took note that this form of aid could be an important element of international solidarity and should be taken into account in an international fertilizer supply scheme.
15. The Council accepted that, within the framework mentioned in para. 12 above, priorities for the allocation of fertilizer or cash from the pool should be the responsibility of the Director-General. He would apply these same priorities in directing requests from developing countries for consideration by countries which offered bilateral aid.
16. The Council suggested that the Director-General maintain close contact with the appropriate organizations in the United Nations system (such as the World Bank group, UNIDO, the UN Regional Economic Commissions, UNDP and UNCTAD), governmental and non-governmental organizations. It further reiterated the need for the cooperation and participation of industry in this Scheme. It must call upon the maximum efforts of producer countries and the fertilizer industry as well as financing sources if it was to reach its objectives.
17. The Council considered that the Director-General should be given a clear mandate under the principles and provisions of the ECOSOC Resolution in order to prepare a plan of operation for emergency measures to increase fertilizer supplies to developing countries.
18. With regard to servicing the Scheme, the Council felt that maximum use should be made of existing facilities in the FAO secretariat, since it was essential in any case that a close cooperation be ensured with ongoing programmes. However, a small and temporary coordinating unit would be set up to operate the Scheme. The cost of this unit would initially be financed from Regular Programme savings but would subsequently be funded from an overhead charge on donor's contributions. In this respect the Council should be kept informed through the Finance Committee.
19. The Council agreed that the Commission on Fertilizers be designated as the body responsible for overall surveillance of the Scheme. The Council requested the Director-General to report progress on the operation of the Scheme in time for consideration by the World Food Conference, the November 1974 Council session and any other appropriate body.
20. The Council noted that in many developing countries fertilizer plants were not working at full capacity. Developed countries had offered help in bringing this potential capacity into full production. The needs included accelerated delivery of spare parts, financial assistance in purchasing these, and increased technical assistance. Governments of developing countries should let the Director-General know their needs in this respect so that this international assistance could be mobilized.
21. The Council expressed concern about the present level of international fertilizer prices, which reflected their scarcity value rather than their cost of production and a reasonable return on investment. Some members stressed that the increased cost of fertilizer imports adversely affected their balance of payments position. They also indicated that the fertilizer problem, arising in part from the energy crisis, was also due to the prohibitively high capital cost of new fertilizer plants. They added that financial assistance was needed by developing countries for this purpose and for the utilization of their raw materials. The Council felt that the Commission on Fertilizers should endeavour to assess the price range for fertilizers which on the one hand would not discourage investment in production facilities, but on the other would not provide excessive returns to manufacturers in times of scarcity.
22. The Council decided to establish a scheme along the lines set out in the Annex to Resolution 1/63. Moreover the Council stressed that in view of the present difficult fertilizer situation it was important that governments of both developed and developing countries should actively encourage the most efficient and economical use of available fertilizer supplies. Special mention was made of using appropriate means and types of fertilizer, including recycled organic waste and organic manures and adapting fertilizer application to soils and climatic zones. Improving handling and storage, simplifying market and credit facilities and, whenever possible, stepping up domestic production were also stressed. It was recognized that the Fertilizer Programme had made and should continue to make a considerable contribution to effective fertilizer use at farmer's level. The Council stressed the need for a full coordination between this programme and the new fertilizer Scheme.
23. The two action proposals on pesticides were endorsed by the Council with the indication that, due to the complexity of the pesticide situation, emphasis should be placed on getting complete information before any further action was taken regarding supply arrangements.
24. The Council expressed general interest in the principles underlying the Sri Lanka proposal for the establishment of a world fertilizer fund. Some members concurrend in the proposal because it contained matters of immediate concern and was not limited to the medium and long term. They also felt that the Director-General's proposals might subsequently be subsumed under the Sri Lanka and other proposals.
25. The Council supported the consideration of the Sri Lanka proposal by the forthcoming Preparatory Committee for the World Food Conference and was satisfied that the Committee would fully consider this proposal and transmit it to that Conference.
26. The Council then adopted the following resolution:
Resolution 1/63
INTERNATIONAL FERTILIZER SUPPLY SCHEME
THE COUNCIL,
Being aware that a substantial part of mankind suffers from hunger and malnutrition, and the risks of increasing food shortage, and that the production of food is a matter of the highest priority for all countries and especially the developing countries,
Drawing attention to the basic role of fertilizers and pesticides in ensuring adequate food supplies for the peoples of the world,
Noting with great concern the difficulties created particularly for developing countries by the current shortages and high prices of fertilizers and pesticides,
Affirming that the international community has a responsibility to ensure that the world supply of fertilizer is increased to meet the increasing demands of the countries in need of fertilizers and that the available supplies of fertilizers are equitably distributed to all countries at reasonable prices,
Recalling that in its resolution 1836(LVI) of 14 May 1974 on emergency measures in regard to the supply of fertilizers and pesticides, the Economic and Social Council of the United Nations requested the Director-General to draw up an emergency plan of operations for increasing the supply of fertilizers to developing countries,
Having considered the proposals submitted by the Director-General of the Food and Agriculture Organization of the United Nations in response to this request of the Economic and Social Council,
Having examined the Report of the First Session of the Commission on Fertilizers held in Rome from 2 to 5 July 1974, and in particular its recommendations regarding the proposals of the Director-General,
1. Approves the immediate establishment of an international fertilizer supply scheme designed to increase the availability of fertilizers for developing countries, including the establishment of a fertilizer pool, and to mobilize financial and technical assistance for the purchase of fertilizers and the improvement of domestic fertilizer production for importing developing countries;
2. Calls upon the governments and industries of fertilizer and pesticide exporting countries to participate fully in the Scheme and to allocate substantially increased fertilizer and pesticide supplies as compared with 1973/74, at reasonable prices to meet the needs of developing countries;
3. Calls upon governments and other potential donors to contribute immediately, in fertilizers or in cash, towards the fertilizer pool, in the spirit of ECOSOC Resolution 1836(LVI);
4. Calls upon governments and the shipping trade to accord a high priority in the allocation of space for fertilizers;
5. Calls upon the governments of countries with under-utilized fertilizer and pesticide production capacity to take urgent steps to remove production bottlenecks, with international assistance for developing countries where appropriate;
6. Calls upon governments to promote the most effective and economical use of available fertilizer and pesticide supplies and of alternative sources of nutrients;
7. Invites the governments of developing countries to keep the Director-General informed of their current fertilizer and pesticide import requirements and to submit requests for fertilizers under the International Fertilizer Supply Scheme;
8. Invites also the governments and industry of exporting countries to keep the Director-General informed of the current and prospective fertilizer and pesticide production and supply situation, including plans for fertilizer aid;
9. Requests the Director-General, in cooperation and coordination with the Executive-Director of UNIDO, the President of the World Bank and the Administrator of UNDP, to assist developing countries on request to increase domestic production of fertilizer and improve its distribution and use;
10. Calls upon developed countries, other potential contributor countries and other potential donors to provide technical and financial assistance and capital equipment on the softest possible terms to developing countries to enable them to raise their national production;
11. Requests the Director-General immediately, within the framework of the existing structure, to set up the machinery required for implementing the Scheme;
12. Requests the Director-General of the Food and Agriculture Organization to bring the establishment of the International Fertilizer Supply Scheme and the accompanying appeals to the attention of governments and other interested parties, to appeal for an urgent and positive response and to submit a progress report on the implementation of the Scheme to the next session of the Council.
ANNEX TO RESOLUTION ON INTERNATIONAL FERTILIZER SUPPLY SCHEME
1. The International Fertilizer Supply Scheme will consist of a framework for concerted actions by governments, inter-governmental and non-governmental organizations and industry to give urgent assistance to developing countries to obtain fertilizers at reasonable prices for the forthcoming growing seasons and while fertilizer shortages continue.
2. The Scheme will take account of bilateral and multilateral actions as well as activities which FAO is requested to implement.
3. The role of FAO will be to:
match four separate elements, namely, production, supplies, credit and the fertilizer supply shortfalls on the basis of individual developing country assessments.
Assess in collaboration with governments, organizations and industries the deficits of individual countries with regard to fertilizer supplies and credit, as well as the overall shortfall in supplies to developing countries, and establish an information system for use by donor and recipient countries, covering inter alia supply and demand trends and requirements, and investment needs of developing countries, prices and investment intentions of the fertilizer industry.
Assess priorities for allocating fertilizer material and/or finance made available to it.
Assist in mobilizing financial resources needed for emergency fertilizer supply.
Implement or assist in implementing arrangements between, on the one hand, sources of fertilizer supplies and of finance, and on the other developing countries requiring assistance under the International Fertilizer Supply Scheme.
Administer the fertilizer pool (consisting of fertilizer and cash) in accordance with the financial regulations of the Organization.
Collaborate with the governments concerned, other organizations of the UN system and other inter-governmental and non-governmental organizations to further coordinated and concerted action programmes.
4. The International Fertilizer Supply Scheme will be operated through a small coordinating unit working directly with the various divisions involved.
27. The Council considered the report of the Ad Hoc Working Party on World Food Security, which had been convened in Rome from 27 to 31 May 1974, in accordance with Conference Resolution 3/73 on World Food Security, to review the draft International Undertaking on World Food Security with a view to preparing a revised text for consideration by the CCP and Council, and for adoption by governments at the earliest possible date. The Council commended the Working Party, which had prepared a revised text of the Undertaking and had also made a number of useful proposals for follow-up concerning the implementation of a World Food Security Policy.
28. The Council noted that, under the terms of paragraph 3 of Conference Resolution 3/73, the final text of the Undertaking would be transmitted to governments after the Council had the opportunity, at its Sixty-Fourth session in November 1974, to take into account the report of the CCP.
29. Since the convening of the special session of the Council gave it the opportunity to consider the revised Undertaking before the discussions related to world food security at the World Food Conference, many members felt it would be desirable for the Council to endorse the Undertaking at this stage, subject to its further consideration by the Forty-Ninth session of the CCP. Some members, while welcoming the progress made by the Working Party, felt that formal adoption by the Council could be premature at this stage as their governments were still actively considering the text of the Undertaking as revised by the Working Party, and it was also important to permit non-member nations the opportunity of influencing the content of the Undertaking when it was reviewed at the CCP.
30. The Council therefore decided to endorse in principle the Undertaking embodied in the draft text as revised by the Ad Hoc Working Party, subject to further consideration by the CCP. It authorized the Director-General to make the text available to the World Food Conference, while specifying the stage reached in the consideration of the text, along with a general progress report on the evolution of the world food security concept, including the view of the CCP.
31. The Council agreed that the formal transmission of the Undertaking to governments should take place, as provided in Conference Resolution 3/73, after the Council had finally adopted it at its Sixty-Fourth session. The Council stressed the importance of the participation in the Scheme of all states which are members of the United Nations, any of its specialized agencies or the International Atomic Energy Agency and urged that all possible steps be taken to achieve this.
32. A number of members referred to the technical and financial problems which would have to be resolved in implementing the Undertaking, including such questions as the criteria for the release of stocks, the feasibility of regional reserves, the investment costs of storage facilities, and the difficulties posed to importing countries by the exceptionally high cost of grain on world markets, and the Council supported the proposals made by the Working Party for further studies. It was also stressed that the establishment of adequate stocks in developing countries would depend on their achieving a substantial acceleration of the rate of growth in their food production. The precise form of the consultative and operating machinery also required further consideration and the CCP was requested to pay special attention to this matter.
33. The Observer for the International Wheat Council (IWC) outlined the programme of studies which his organization was initiating on possible elements in a new international wheat agreement, including stockholding provisions compatible with the international undertaking on world food security. The Council welcomed this initiative, as well as the close working collaboration between the secretariats of the IWC and FAO. The Observer for IFAP informed the Council of recent IFAP studies, and stressed the importance of ensuring that stock policies were associated with international trade and price stabilization policies.
1 CL 63/4, CL 63/PV/8, CL 63/PV/10.
34. At the request of the Council, Sayed A. Marei, Secretary-General of the World Food Conference, gave a brief account of the preparations under way for the World Food Conference. He stressed the need for the governments at the World Food Conference to adopt a practical action-oriented programme, concentrating on specific areas where progress could be achieved by effective follow-up action. In his view, the approach to the solution of the world food problem had two basic policy implications: the first was to increase food production and to determine priorities for action to remove the obstacles to raising food production in developing countries; and the second was to evolve a food security policy embracing food aid, better arrangements for emergency situations, price stabilization, stock arrangements and ensuring a balance between supply and demand. The implementation of any agreed long-term and short-term policy actions in these two fields would require cooperation amongst all countries and additional technical and financial assistance from developed countries.
35. Members appreciated the practical and constructive approach outlined by Sayed A. Marei and expressed their support for the objectives sought to be achieved at the World Food Conference. Various members referred to the different proposals made at the second session of the Preparatory Committee of the World Food Conference (Geneva, June 1974) for a fertilizer fund, a bank for food and agricultural inputs, and a more comprehensive fund for agricultural development and hoped that the lines of action represented by these proposals would be considered and decided upon by the World Food Conference. The delegate of Japan announced the intention of his government to table at the third session of the Preparatory Committee a proposal to set up a world-wide information system on the food and agricultural situation. The members from Latin America referred the Council to the declaration made by countries from that region during the second session of the preparatory committee of the World Food Conference, and hoped that their declaration could contribute to finding concrete solutions to the problems facing the Food Conference.
36. The Council expressed its warm appreciation to Sayed A. Marei for providing it with a valuable analysis of the world food problem and the approaches being made towards its solution.
1 CL 63/INF/11, CL 63/INF/12, CL 63/PV/7, CL 63/PV/9.
