The Sessions of this Council are now succeeding one another with quite remarkable frequency. By the end of June, there will have been four within the space of a single year. Thus, what I think you will require from me today, so relatively short a time after we last met, is chiefly in the nature of a progress report in connexion with the important matters that are before you for consideration.
I will begin with the world food situation. The main background fact is that, in 1974, the world's wheat and coarse grain crops were 4 percent less than in the previous year, while the rice harvest was down 1 percent. The main elements in this were the reductions in the wheat crop in the Soviet Union and the coarse grain crop in the United States, together with the erratic monsoon in the Far East which brought India's overall cereal production to the lowest level for five years and led to shortfalls in rice production in Bangladesh, India, Pakistan and Thailand.
This fall in world cereal production for the second time in three years means that stocks in the main exporting countries will probably decline once again to even more precarious levels than before. Wheat stocks, for example, are likely, by 30 June, to be down 6 million tons from the previous year to a level of only 20 million tons, less than one third the level of 1970. And, by the same date, total cereal stocks, excluding those of China and the U.S.S.R., will probably go below 100 million tons, which would mean that they amounted to only about 11 percent of total available supplies as compared with the 17 or 18 percent which FAO estimates as being the minimum needed to assure world food security.
The present critical world food situation once again bears most heavily on developing countries, and particularly the 33 countries “most seriously affected” by food shortages and financial difficulties - or MSAs as they are now commonly known. Already at the end of last November, following the World Food Conference, I called an urgent Intergovernmental Consultation on Cereals Supplies, attended by major cereal exporting nations and major developing importing countries. At the meeting, it was shown that the total grain import requirement of the MSA countries up till 30 June of this year was almost 5 million tons more than in the previous year and that their import requirements not yet covered by either commercial purchases or food aid amounted to about 7.5 million tons which, with the necessary freight, would cost about $1.8 billion. The exporting countries agreed at the meeting that the actual supplies needed to fill this gap were physically available. The problem was thus one of finance - how the uncovered needs of the MSA countries could be met by further use of their own scarce foreign exchange resources, by additional food aid commitments or by international grants or credits.
We were thus faced with an extremely dangerous short-term emergency arising out of the generally unsatisfactory world food situation - and one of wide dimensions which threatened large numbers of people in many different countries with death either from starvation or from diseases made fatal by shortage of food. Indeed, in some countries, the threat has become a reality. The emergency is still far from being over, but I am glad to say that, in the three months since the meeting at the end of November, the prospects have improved. By the middle of February, the uncovered grain import requirements of the MSA countries up till the end of June were down to 4 million tons. This was due to additional commercial purchases by the countries concerned, together with additional commitments of food aid. Moreover, the 4 million ton figure may be automatically reduced if the encouraging prospects for the Indian spring crop materialize. In addition, the United States announced on 3 February an increase in its food aid for the 1974–75 season of 2 million tons, a large proportion of which is to go to the MSA countries. There are thus grounds for hope that, with some further effort, the gap in the grain import requirements of the MSA countries which loomed so large in November may be covered.
The fact that this is a possibility at all is to me the first break in the dark clouds that have hung over the immediate world food situation in the last few years. For this possibility would not have existed had there not been a willingness on the part of the international community to face up to the short-term emergency. I believe that our November Cereal Consultation was a useful event in that it clearly identified the gap for which financing was needed and helped donors to decide how their assistance could best be provided in humanitarian terms. In this overall connexion, I should like to express my appreciation of the valuable cooperation we have had with the United Nations Emergency Operation - UNEO - under Dr. Prebisch, especially with regard to the fertilizer shortage, about which I shall have a little more to say in a moment. I would also like to pay tribute to all the donor countries concerned. The recent additional commercial purchases of grain by MSA countries to which I have referred were partly facilitated by credits from third countries. The European Economic Community acted with great promptitude in responding to what, as I described last December, has been a particularly dangerous food situation in Bangladesh. And now there is this notable increase of 2 million tons of food aid from the United States which brings the total of food aid commitments for 1975 - known to FAO - to 8.8 million tons and thus, sooner, I think, than many people expected, to within striking distance of the 10 million tons a year called for by the World Food Conference. More generally, the amount of the grants and credits granted by oil-exporting nations for various financial needs of MSA countries has been a distinctly impressive factor.
Returning to the short-term food emergency, however, I must point out two things. Firstly, there is the time factor. It is over the next few months that the gap remains especially critical. Thus, particularly in the case of food aid where some time must necessarily elapse before supplies can reach their destination, it is essential to act with the greatest speed. Secondly, even if sufficient financial assistance and food aid is made available in time, it must be remembered that we shall only have overcome the short-term emergency. Apart from the question of world food security, which is needed to do away with such emergencies, we shall continue to face the constant hunger and malnutrition which is the normal condition of some half a billion human beings in developing countries.
A vital element in the current world food situation is of course the situation regarding fertilizers. I do not need to remind the Council of the conditions of high prices and scarcity which led it to establish the International Fertilizer Supply Scheme - IFS - in response to a Resolution of ECOSOC. The Scheme itself has, I think, made quite a considerable impact. Working, as I indicated earlier, in close cooperation with UNEO - which was responsible for $28 million of the $64 million so far pledged in kind or in cash to IFS - it had, by the end of January, been engaged in the preparation and execution of 26 assistance operations involving 20 recipient developing countries at a cost of $50 million.
But, despite this and a considerable increase of bilateral assistance in fertilizer supply, we estimate that the MSA countries taken together will have suffered a shortfall of 337 000 tons of nutrients in the 1974–75 season, largely due to their inability to cover the cost, amounting to about $180 million, from their own resources or to mobilize it through bilateral and multilateral aid. This shortfall, which it is now of course too late to try and make good for the present season up till the middle of this year, is equivalent to the loss of about 2.7 million tons of grains in the MSA countries. Not only are 2.7 million tons more than a third of their huge uncovered grain import requirements as originally calculated last November. These requirements, you may recall, were also reckoned to cost about $1.8 billion - that is, ten times more than the cost of the fertilizers which, had they been available, could have averted this severe and substantial loss of production.
Let me now pass on to the prospects for the rest of 1975. Early indications suggest that there may be a substantial rise in world production of grains, excluding rice, in 1975, possibly going as high as 8 percent, which could lead to some rebuilding of depleted stocks in the 1975–76 season. However, it should be remembered that, even if such a large increase were to materialize, it would have to be set against the 4 percent decline in 1974. Moreover, the present favourable prospects could alter very considerably if the lower prices should cause farmers in North America to change their intentions regarding the acreage under grains, which could reduce supplies at a time while the world as a whole is still short of food and endanger the prospects for the very large harvest that is needed in global terms. The mere fact that this possibility of a reduction is coming under discussion shows how vulnerable the world is to the inability of the main grain-trading nations to develop concerted measures for ensuring a minimum degree of price stability in the markets for the world's major foodgrain, wheat. In the absence of such arrangements, the world will continue to be left exposed to wide fluctuations between situations of feast and famine. It would seem in these circumstances that the concept of international agricultural adjustment has lost none of its long-range validity.
Another factor which could of course sharply the present favourable prospects for 1975 is the possible onset, as last year, of unfavourable weather later on which leads to a major crop failure. And, in any event, the food situation of developing countries is going to remain difficult in 1975. Even if we take an optimistic view of the weather prospects, the MSA countries will probably need to import not less than 6 million tons of food grains in the second half of this year to meet essential current consumption needs. At present prices, this will cost about $1.3 billion including freight. To this must be added about another $900 million for their essential fertilizer imports during this period - and clearly, as the painful experience over fertilizers in the present short-term emergency demonstrates, financial commitments for such fertilizer supplies from outside will need to be made without delay to ensure that the fertilizers are delivered in time to be applied to crops during the second half of the year. Of this combined total of $2.2 billion, about $1.3 billion - or nearly 60 percent - is due simply to rise in prices over the last two years. Since it is this fierce increase in prices, almost entirely beyond the control of MSA countries, that has plunged them into the present depths of their balance of payments crisis, the continuation of emergency financial assistance to them in the second half of this year is as much a matter of justice as necessity.
While I do not want to speculate too much at the moment on what is going to happen further into the future, I fear that present signs point to a continuation both of the difficult world food situation and the acute financial problems of the MSA countries which are bound up with it well beyond the end of this year. The world food situation cannot really improve until cereal stocks are rebuilt to safer levels. And everything seems to be combining to make the balance of payments crisis of the MSA and other developing countries even worse. The economic recession in developed countries has reduced both the prices and the demand for their agricultural exports. At the same time, developing countries have had to suffer much higher prices for their imports of industrial goods, oil and fertilizers. The continuing high prices of fertilizers have been particularly damaging, since they have held back increases in developing countries' own food production, with the result that there has been an inevitable tendency for the food import requirements of these countries to grow even larger. To get out of this vicious circle, action is clearly needed to ensure an orderly expansion of fertilizer supplies to developing countries at reasonable and more or less stable prices - and, in this connexion, we are preparing some longer-term policy proposals, in cooperation with the World Bank and UNIDO, for consideration at the next session of the Commission on Fertilizers in June. But it will inevitably take some time before such proposals could come into effect - or indeed before the world food situation is placed on a more secure footing. In the meantime, the MSA countries must be helped to obtain their essential requirements not only of food for current consumption but also of fertilizers and other inputs to enable them to achieve higher rates of domestic food production. What this means in effect is that, even after what I have called the present short-term emergency comes to an end in the middle of this year, an emergency situation will continue for quite some time and that a generous flow of international assistance will be required both to meet this emergency situation and to provide the help needed to terminate it.
At this stage, I think it might be useful if I were to mention where we now stand with regard to world food security following the endorsement of the International Undertaking by the World Food Conference and its adoption by this Council at its last Session. In the first place, as you may be aware, we have been sending out an increasing number of technical missions to developing countries at their request to help them draw up policies for establishing national reserves. Then, on 10 and 11 February, the United States convened in London an Ad Hoc Meeting on International Grain Reserves to which several major producing and consuming nations were invited. To some extent, it appears, that progress at this meeting was limited by considerations as to whether commitments on stocks and reserves could be made outside the multilateral trade negotiations in GATT, but it was nevertheless decided that reserves could be a subject for consideration by a future International Wheat Council Preparatory Group working on the possible basis for a new International Wheat Agreement.
Since then, we have had here at Headquarters an Expert Consultation on National Stock Policies, which took a brisk and practical approach to several issues. It went through the International Undertaking and, while agreeing that the principles and guidelines which it contains are good as far as they go, it urged that an effective international agreement on cereals, with specific provisions regarding prices and stock-holding, would provide the strong basis that is needed for global cooperation on world food security. It stressed the need to work out precise rules for coordinated action. It was also made clear at this Expert Consultation that the various discussions concerned with aspects of world food security held either in London at the International Wheat Council or in GATT or here in Rome are all closely interrelated and that this relationship has to be strengthened in order to ensure, above all, that none of these discussions should cause any delay in taking action on world food security. If necessary, it is envisaged that a distinction should be made between questions of price stabilization and measures for world food security as such. Hopefully, action will be taken an important stage forward at the forthcoming Intergovernmental Consultation on World Food Security in May.
Let me turn now briefly to the action that has so far been taken with respect to FAO's participation in two of the most important institutional arrangements created as a result of the World Food Conference - the World Food Council and the Consultative Group on Food Production and Investment in the Developing Countries, the CGFPI. We have had a number of discussions with the United Nations in the one case and the World Bank and UNDP in the other.
I do not need to go into the details of the arrangements that have been worked out so far, since these are in the documents before you. I should like, however, to make a few comments. In the first place, so far as the World Food Council is concerned, I should like to extend a warm welcome to its first Executive Director, Dr. Hannah, who will be speaking to you later in this Session. With his sense of idealism and his distinguished record, I am sure that Dr. Hannah will succeed in playing an invaluable role in the launching of this new initiative by the international community to deal with the world food problem. I am also, of course, very glad that my colleague, Sartaj Aziz, our Director of Commodities, has been designated Deputy Executive Director, ranking immediately after Dr. Hannah. I think everyone in this room knows full well the outstanding contribution that Mr. Aziz made to the World Food Conference itself, particularly his dauntless and untiring efforts during the long months of preparation in which he pulled together the extremely impressive substantive documentation without which the Conference would never have been able to achieve what it did.
I should also like to refer to the interagency meeting that was held under the auspices of the ACC in New York last month, with Dr. Hannah in the chair, at which the role of the agencies concerned in contributing to the activities of the World Food Council was discussed. It emerged, not unnaturally, that the overwhelming proportion of the work would fall to FAO. This places a considerable responsibility on us, and I am already taking measures internally to coordinate this work.
Finally, so far as the World Food Council is concerned, you will no doubt wish, at the appropriate time, to examine the relations between your own work and that of this new world body. I welcome the suggestion of the Programme and Finance Committees that you, Mr. Chairman, should be invited to participate in the sessions of the World Food Council as an observer and that the President of the World Food Council should be invited to participate in a similar capacity in the sessions of the FAO Council. It is nevertheless clear that more comprehensive arrangements and procedures are needed to enable both Councils to function at full effectiveness in their respective spheres without duplication of effort.
With regard to the Consultative Group on Food Production and Investment, let me say, firstly, that, if, as I hope, the response to its creation is positive on the part of all countries concerned - traditional donors, new donors and recipients - then I am convinced that we have the opportunity of establishing a better climate than ever before with regard to the flow of the additional resources that are needed for food production in developing countries and the efficiency of their utilization.
You will know that, as the result of a consultation between the President of the World Bank, the Administrator of UNDP and myself, Mr. Edwin Martin, who is well-known to you, has accepted to serve as Chairman of the Consultative Group. He has already started energetically on his task. We count ourselves fortunate that a person of his wide experience should be helping us with the formation of this Consultative Group.
You will also know that you are being asked to nominate the ten members of the Group from developing countries in all five of FAO's Regions. Following the practice in the Consultative Group on International Agricultural Research, this is a function which would normally fall to the FAO Regional Conferences. But these of course do not meet until next year, and, since the first meeting of the new Group is scheduled for May in order that it may report to the first session of the World Food Council in June, I am sure that you will be ready to undertake this interim responsibility in order to get this vital new enterprise going. A similar procedure, you will recall, was initially followed in the case of the Consultative Group on International Agricultural Research. Moreover, it would be in accordance with the request of the World Food Conference, which, in the relevant paragraph of its Resolution on follow-up action, proposed that the CGFPI - and I quote - “be composed of bilateral and multilateral donors and representatives of developing countries, chosen as in the case of the CGIAR”.
I turn now to the Programme of Work and Budget for 1976–77. This is of course a very unusual year. We stand more or less half-way between the regular November Session of the Council at which the Director-General gives his indicative figure for the budget for the next biennium and the regular June Session when the Summary Programme of Work and Budget is discussed. This time, there is an intermediary stage, at which the Council has the opportunity of commenting on the outline of the shape of the Programme of Work and Budget, which itself reflects the views of the Special Session of the Programme and Finance Committees in January, particularly with regard to priorities. I trust that this opportunity for the Council to intervene at this critical stage will enable us to prepare the Summary Programme of Work and Budget in the short time available with confidence that a large measure of understanding has been reached on the broad priorities.
Briefly, you will recall that, at the opening of the November Session of the Council, I said that I was frankly reluctant to give an indicative figure for the budget level. The reason was primarily that the Council was meeting on the morrow of the World Food Conference, and I wanted to think out more carefully what implications the greatly enlarged responsibilities which the Conference had placed on FAO would have for the Programme of Work and Budget.
Nevertheless, in response to the wishes of the Council, I produced a document containing a very preliminary outline of what I thought I would have to take into account in formulating my ideas on priorities, and I gave a tentative estimate of a budget level of $191 million. This document, together with a summary of individual proposals for filling it out, was very carefully examined by the Programme and Finance Committees in January, and, as I have indicated, I have followed their views as closely as possible in putting forward this new outline of my proposals for the main priorities in 1976–77. It is on this basis that I now propose a budget level of approximately $185 million.
This $185 million represents an increase of a little over $81 million in comparison with the present biennium. And this increase divides up into $41 million for cost increases and $40.6 million for an increase in the programme.
It is the latter, no doubt, which will raise the biggest queries, accustomed as our governing bodies have been in recent times to relatively small programme increases, imposed to some extent by the weight of the cost increases which have been beyond our control. But it is precisely the smallness - indeed, the inadequacy - of recent programme increases that makes a much more substantial increase imperative in the circumstances that have now arisen on the world food and agricultural scene. Let me say that, even if there had been no World Food Conference, the critical worsening of the world food situation in the last two or three years and the consequent need to tackle it in a much more energetic fashion would have necessitated a considerable strengthening of FAO. But, in recognition of this need to deal with the world food situation more effectively than in the past, there has also been the World Food Conference. And no one, I think, can deny that one of the effects of the World Food Conference has been to place heavy additional responsibilities on this Organization.
It is true, as has been said, that the Conference was very largely concerned with national and intergovernmental efforts. But any study of the Resolutions of the Conference makes it clear that FAO was expected to make a substantial increase in its impact on food and agricultural development and in its support to these national and intergovernmental efforts. And, if FAO is to make the much greater impact that is now expected of it, I do not think we can escape the conclusion that it must have much greater real resources under the Regular Programme. I stress the Regular Programme, since not only will increased extrabudgetary resources made available to us inevitably involve some increase in our own expenditure but there are also a number of things we shall have to do for which sufficient extrabudgetary resources will not be available.
At this point, I am sure that there will be some people ready to argue once again that we must try and find extra resources by eliminating low priorities and concentrating our activities on fewer things. I have, as I think you know, always been in favour of the elimination of low priorities and the concentration of activities, and I believe that, in the years since I have been Director-General, we have done quite a lot on both counts. Indeed, in the new Programme of Work and Budget, we have still been continuing to eliminate low priorities. But there comes a point where neither exercise is any longer very meaningful or helpful. So far as priorities are concerned, you reach a stage where the elimination of any more would not only do serious damage to the programme but would also, remembering that even low priorities represent activities that have been approved by our governing bodies, arouse loud and justified protests. With regard to concentration of activities, you will recall my own initiative for the Areas of Concentration. This has undoubtedly proved a valuable framework for drawing up the Organization's programme, but in practice we are of course obliged to break down each area into programmes, sub-programmes and programme elements to enable our governing bodies to examine our Programme of Work and Budget in terms which are meaningful to them. If they did not require to conduct this exercise, I could easily present a programme which would look marvellously concentrated.
In the present context, it really does not get us very far to discuss the resources that FAO now needs in terms of low or high priorities or the concentration of activities. The crucial question should surely be what desirable activities FAO is best fitted to undertake with short-term or long-term cost benefit at a particular time and relate this to the budget level. In these terms and remembering what I have said about the worsening world food situation and the new responsibilities placed on the Organization by the World Food Conference, I think that the budget level I am proposing in what will be the last Programme of Work and Budget submitted by me is eminently reasonable. The increase I am asking for compares favourably with what has been accorded to some other specialized agencies. And I do not think anyone will deny that the role of FAO in the world of today is more crucial than ever before, not least in the context of the efforts being made by the United Nations system as a whole.
There is one issue related to the present Programme of Work and Budget on which I should like to comment specifically, and this is the very important question of decentralization. In this connexion, I should first of all like to say that document CL 65/3 before you had to be prepared in a very short time, so that there was therefore no possibility for prior consultation with our Regional Representatives. It will be amended in accordance with a consensus that has now been reached between the Headquarters ADGs and the Regional Representatives for submission to the meeting of the Programme and Finance Committees in May.
These Committees, when they examined the question of decentralization in January at the request of the last Session of the Council, concluded that this was indeed a very complex subject and implicitly recognized that it would take some time to implement it really effectively. I would agree with this, but I should also like to make it very clear that the concept of more decentralization of FAO's activities under the Regular Programme has always been one that has strongly appealed to me. It was with this in mind that I sponsored the idea of the Unified Programme, which I think is one of the most promising changes of direction in the internal policy of the Organization that has occurred since I have been Director-General. Athe very constructive meeting we had last week with the Regional Representatives, it was agreed that, starting from now, we should work progressively toward further decentralization of the Unified Regular Programme, not only in terms of resources but also of authority, to the Regional Representatives themselves. This means of course that there must be a strengthening of the Regional Offices, both in terms of staff and resources. We are already looking at the present Programme of Work and Budget to see what new or on-going activities causefully be shifted to them now and in the months to come. In asking the Council to give its blessing to this move, I would further request that you agree that my successor should have the authority to continue this progressive transfer of resources to the Regional Offices, on the understanding of course that he, just as much as I, should keep the Council regularly informed.
What we are witnessing is a major new orientation in the way this Organization will carry out its work in the years to come. It is one, I think, that is imposed not only by logic but also, I believe, by the wishes of at least a majority of our Member Nations. We are and must of course remain a world organization with a world policy. But I believe that this policy can only be invigorated by the contributions that are made to it from the regional level and that our technical leadership, although its general thrust will continue to come from the centre, will similarly be strengthened by a more active two-way partnership with the Regional Offices. As I say, this whole process of decentralization will inevitably take some time, since, in the essential interest of maintaining our efficiency and effectiveness, we cannot act in an abrupt fashion which would upset the functioning of the Organization as a whole or place a strain on the absorptive capacity of the Regional Offices. But I am convinced that it will prove to be of the greatest benefit to FAO as a whole and, if I may say so, I regard it as one of the most important legacies that I shall leave the Organization when my term of office is done.
On that note, Mr. Chairman, let me end. As always, I look forward very much to hearing the Council's considered views on the questions before it - and especially so at this time when there are such important issues at stake for the world's food and agriculture.
(from 1 January 1975)
Independent Chairman: Gonzalo Bula Hoyos
Germany, Fed. Rep. of 2
Sri Lanka 2
Trinidad and Tobago 3
United Kingdom 1
United States of America 3
1 Term of office until conclusion of Eighteenth Session of the Conference, November 1975.
2 Term of office until 31 December 1976.
3 Term of office until conclusion of Nineteenth Session of the Conference, November 1977.
(November 1973 – November 1975)
R.W. Phillips (United States of America)
W.A.F. Grabisch (Germany, Fed. Rep. of)
C. Nagata (Japan)
K. Prasad (India)
B. Shaib (Nigeria)
A.S. Tuinman (Netherlands)
J.C. Vignaud (Argentina)
E. Buciuman (Romania)
H.J. Kristensen (Denmark)
S. Juma's (Jordan)
(November 1973 – November 1975)
F. Shefrin (Canada)
S. Barkat Ahmad (Pakistan)
Soegeng Amat (Indonesia)
Miss M. de Barros e Vasconcellos (Brazil)
P.J. Byrnes (United States of America)
C-H. Lagerfelt (Sweden)
K.G.W. Frost (United Kingdom)
COMMITTEE ON CONSTITUTIONAL AND LEGAL MATTERS
(November 1973 – November 1975)
UN/FAO INTERGOVERNMENTAL COMMITTEE OF THE WORLD FOOD PROGRAMME 1975
* Argentina 1
* Canada 3
* France 2
* Germany, Fed. Rep. of 2
* India 3
* Indonesia 1
* Netherlands 1
* Saudi Arabia 3
* Senegal 2
* Switzerland 2
* Tunisia 1
* United States of America 3
* Elected by FAO Council.
1 Term of office until 31 December 1975.
2 Term of office until 31 December 1976.
3 Term of office until 31 December 1977.
FAO MEMBER NATIONS
(as at 14 March 1975)
Central African Republic
Germany, Fed. Rep. of
Korea, Rep. of
Trinidad and Tobago
United Arab Emirates
United States of America
Viet-Nam, Rep. of
Yemen Arab Republic
Yemen, People's Dem. Rep. of