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Report of the Ad Hoc Consultation on the Establishment of a Scheme for Agricultural Credit Development(SACRED)- Rome,3-4 June 19761

37. The Council supported the recommendations made by the Director-General proposing implementation of the Scheme for Agricultural Credit Development. The Council welcomed the expeditious manner in which the recommendations of the World Agricultural Credit Conference had been implemented. Confirming their position in favour of the Scheme, many of the developed countries expressed their willingness to consider financial and other support for the projects submitted to them. For the developing countries the implementation of this Scheme rated very high priority in view of the important role of credit services in the development process of agriculture, forestry and fisheries.

38. The Council agreed that the small Agricultural Banking and Credit Group should concentrate its efforts under the Scheme on matching the needs of agricultural credit institutions in developing countries with the resources provided by developed countries and the corresponding institutions in these countries. The Council emphasized the crucial importance of this task. It recommended that FAO should make a positive contribu- tion in project formulation and policy direction, and invited the Director-General to give attention to making this possible within the existing overall programme commitment. The Council called upon FAO to make special efforts to integrate agricultural credit with activities in allied fields such as marketing, extension, cooperatives and agrarian reform.

39. The Council took note of a proposal that the Committee on Agriculture should undertake an in-depth analysis of the various ways in which financial institutions in developing countries could gear their operations to mobilizing domestic resources and stepping up investment. It agreed that this was a subject which fell within the purview and scope of COAG. As regards a proposal that COAG should appoint under Rule 7 of its Rules of Procedure, a special Ad Hoc subsidiary body, the Council requested the Director-General to examine the administrative and financial implications of this. Some members of the Council, however, had reservations in view of the likely cumbersome structures and increased cost of setting up such a subsidiary body to COAG. There was however, general agreement that COAG should review this subject at an appropriate time.

Report of the Third Session of the Commission on Fertilizers Rome,7-1l june l9762

40. The Council concurred in the Commission report. It expressed appreciation for the work of the Commission and stressed the importance of its documents in helping to provide guidance to member countries, and requested the Secretariat to further improve the economic intelligence system and its methodology for forecasting demand, supply and price developments. The Council noted that long-term forecasts must be considered with caution and assessments of the current situation must be objective. Caution was.all the more necessary to avoid falling again into a crisis such as that of the late 1973-mid 1975 period, taking into account the need for a substantial increase of fertilizer use in developing countries, which was not quantifiable at the present time.

41. The Council also noted the work of the Commission on evolving a world fertilizer policy to ensure adequate supplies of fertilizer to developing countries at reasonable and stable prices. In this connexion the Council generally concurred in the conclusion of the Consultative Working Group of the Commission that an international commodity agreement for manufactured fertilizers probably would not be a feasible proposition. However, it agreed that the Commission should continue its study of international commodity agreements with respect to fertilizer raw materials. In view of the decisions of UNCTAD IV to include phosphates among the commodities covered by the overall integrated programme for which international trade agreement might be negotiated, this work should be undertaken in close cooperation with UNCTAD.

42. The Council also agreed that the Commission continue its study on long-term contracts including the Iran proposal with regard to a price adjustment formula, as a possible price stabilization measure, for consideration at the next session of the Commission.

43. The Council requested the Commission to place greater emphasis in its future work on the development of fertilizer production in developing countries in continued close cooperation with UNIDO and the World Bank. In this connexion FAO's constructive participation in the preparation for the forthcoming UNIDO consultation on the fertilizer industry was noted.

44. The Council stressed the need to accelerate the efficient use of fertilizers in develop ing countries if food production in them was to be increased rapidly as endorsed by the World Food Conference. To do so however required greater efforts to provide the necessary national infrastructure of irrigation, storage, marketing systems including credit, and most importantly, to train farmers to use fertilizer efficiently. In this connexion the Council noted the considerable impact the activities of the FAO Fertilizer Programme had had on the correct use of fertilizer in developing countries and agreed that its activities should be continued and strengthened. It also stressed the importance of closely coordinatingthe activities of the Fertilizer Programme and the IFS.

45. The Council noted the latest FAO assessment of the international fertilizer situation reported in CL 70/2-Sup.1, which updated the situation in the Report of the Commission, but recognized that this should be regarded with caution, as past activities in the international market had shown rapid changes in the supply availability as well as price levels.

46. The Council expressed its satisfaction with the service provided by IFS and its appreciation for fertilizer aid, in particular the contributions in cash and kind through the Scheme. It was also mentioned that IFS had been useful in helping to monitor the international fertilizer supply, production and distribution situation. It noted that developing and in particular MSA countries were still experiencing difficulties in satisfying their import requirements and the limited financial resources did not permit them to cover their import requirements with existing levels of financial aid, and asked donor countries to continue and increase their fertilizer assistance to developing countries both on bilateral as well as multilateral terms. Assistance through multilateral channels should normally be left to the sole discretion of the intermediary organization. which would be the only judge of the distribution to recipient countries on the basis of the established criteria. The majority of members expressed the hope that fertilizer aid reach the estimated target set by the Seventh Special Session of the UN General Assembly, and urged that at least 30 percent of total fertilizer aid be channelled through the International Fertilizer Supply Scheme. It was also suggested that fertilizer could be a component of aid given under WFP.

47. The Council appreciated the suggestion that there was need to strengthen IFS activities and expand its scope to include other agricultural inputs, in particular pesticides. Many members stressed the need for the continuation of IFS as a continuing programme, while other members found it premature to decide on the long-term future of the scheme. The Council requested the Commission on Fertilizers to review the future of the IFS at its next session (autumn 1977) and report its recommendations to the Council 3.

48. The Council concurred in the Commission's view that it would be desirable to have one central point within FAO to deal with all aspects of fertilizer. It noted that a Task Force on Fertilizers had been established to coordinate FAO activities on fertilizers.

World Conference on Agrarian Reform and Rural Development4

49. At its Sixty-Seventh Session the Council had requested the Director-General to report to its November 1976 Session on progress made in the preparation for holding the World Conference on Agrarian Reform and Rural Development. The Programme Committee, at its Thirty-First Session, took note of the progress report and underlined the importance of ensuring concrete results from this Conference through careful preparations.

50. In considering the report it was noted that, as a result of the review of the preparations for the Conference undertaken by the Director-General, the Conference would be held in July 1979 instead of in 1978,as was originally recommended by the Council, in order to allow more time for essential preparatory work. Although some members questioned the need for the postponement of the Conference, the majority considered that it would give countries the necessary extra-time in which to make effective preparations for their contributions to the background documents. It was suggested that discussions be held on regional and sub-regional levels of agrarian reform and rural development and that this item be placed on the agenda of the FAO Regional Conferences to be held in 1978. It was further suggested that the preparatory meeting should be held nine months and not six months before the Conference in order to ensure adequate time to complete and distribute the background documentation. The Council noted that it was proposed to hold the Conference in FAO Headquarters in Rome but that the delegate of Peru had stated that his Government offered the city of Lima as the site for this event. This offer was supported by some of the members. It was also noted that the number of preparatory meetings and consultations had been reduced and that rather than the Conference being simply a large gathering, it would be organized in such a way as to function as an efficient working conference. Further, the main emphasis of the preparatory work would be on the evaluation of progress made in programmes for agrarian reform and rural development implemented by member countries.

51. The importance of the role of FAO as the leading agency in the field of agrarian reform and rural development was stressed by the majority of members. This also meant that FAO should have the main responsibility for the preparation and follow-up of the World Conference on Agrarian Reform and Rural Development. Due to the supporting multi-disciplinary aspects which were involved in programmes of this nature, members welcomed the offers of active participation received from the United Nations and the UN specialized agencies concerned in the Conference and the preparatory work.

52. The Council approved the progress report and the changed date of the Conference It supported the efforts of the Director-General to ensure that careful preparations would be made which would result in a true working conference with specific conclusions leading to concrete results. Country reports would be the main basis for the work of the Conference. The Council agreed that an outline for country reports should be prepared taking into account the various suggestions made on its content. The outline should be sent to member countries as early as possible and before discussions took place at the regional level. The Council felt that FAO was in a leading position to deal with the problems of agrarian reform and rural development and supported the view that regional and sub-regional aspects could be handled by the FAO Regional Conference to be held in 1978. The Council requested regular reporting on progress, underlining at the same time the importance of cooperation with the United Nations, the specialized agencies and other institutions and organizations concerned. The Council supported the view that member countries should provide an evaluation of their programmes of agrarian reform and rural development to be used for background documentation to the Conference and that these should be distributed in advance to the extent possible. It expressed its gratitude to the Government of Peru for the offer to host the Conference in Lima but any change of venue would have to be made in consideration of the financial implications.

World Food Programme

Fourteenth Annual Report of the Governing Bodies of the World Food Programme 5

53. The Council considered the Fourteenth Annual Report of the IGC/CFA of the World Food Programme covering the period 26 March 1975 to 7 May 1976, during which the Twenty-Eighth Session of the IGC and the First Session of the CFA were held.

54. The Executive Director, in introducing the report recalled the fact that pledges for the present (1975-76) biennium stood at $668 million, or 52 percent beyond the target of $440 million; and that, with $574 million already pledged for 1977-78, more than 76 percent of the target of $750 million for that biennium had also been reached. In addition to regular pledges, the signatories of the Food Aid Convention of 1971 had made contributions which to date exceeded a million tons of grains, while fifty-seven thousand tons had already been announced for 1976-77. The Programme had committed $600 million in 1976, bringing overall commitments since its exception to over $3 000 million. Seventy percent of the total value committed to projects for economic and social development in 1976 were in least developed and MSA countries: 71 percent of these commitments were for agricultural production and rural development projects. $35 million of the current annual emergency allocation of $40 million had been committed; in addition $8 million had been made available from the Emergency Food Reserve. $15 million worth of WFP aid had, in 1975-76, been committed to relief operations in the Lebanon. Of the proposed Emergency Food Reserve of 500 000 tons only 104 000 tons, earmarked by Germany, Norway, Sweden and the EEC, had been forthcoming so far. Improvement in the Programme's cash resources, thanks largely to the Saudi Arabian contribution of $50 million for 1975-76, and an identical pledge for 1977-78, had made it possible to increase purchases from the developing countries themselves, to an approximate total of $15 million in 1976. The CFA had recommended, and donors had agreed, that in future all dried skim milk supplied to WFP projects in countries suffering from a vitamin A deficiency would be enriched with this vitamin. The Third Session would consider the adequacy of the 10 million ton cereal food aid target, since the World Food Council had asked that this be done periodically.

55. The Council expressed satisfaction on the achievements of the Programme outlined in the Executive Director's report. The share of assistance being directed to the LDCs and MSA countries, the emphasis being placed on projects for the increase of food production leading to self-sufficiency, and the increase in food purchases from developing countries were noted with approval. In this connexion recourse to triangular transactions was recommended. Some Members thought that developing countries not coming within the above mentioned categories should not be excluded from receiving WFP aid, and the desirability of admitting schemes for resettlement (transmigration) to the list of current priorities was mentioned.

56. The Council noted the current resource situation of the Programme, and hoped that the 1977-78 target might be exceeded. Given the rapid growth of the Programme, the proportion of resources allocated for emergency operations was felt by some Members to be insufficient although the Council understood that, whereas, it was relatively easy to establish commitment targets for development projects, it was difficult to estimate the probable extent of emergencies over any given period. It was generally agreed , however , that special consideration should be given to providing further emergency assistance to the Lebanon.

57. The importance of WFP's role in coordinating aid from various source was appreciated, but disappointment was expressed at the slowness with which the Emergency Food Reserve was getting under way. The desirability of minimum food aid targets and the positive effects of food aid on local production were also stressed, as were the advantages to be expected from allowing, to a controlled extent, the sale of WFP commodities in Order to generate cash necessary to the effective implementation of certain typs of projects.

– Election of Five Members of the Committee on Food Aid Policies and Programmes6

58. The Council elected the following five Member Nations to the Committee on Food Aid Policies and Programmes of the World Food Programme, for a term of office of three years (1 January 1977 to 31 December 1979):

FranceTrinidad and Tobago
Germany, Fed. Rep. of

Inter-Agency Relations and Consultations on Matters of Common Interest 7

–Relations with the World Food Council, IFAD and CGFPI 8

59. The Council took note of the Director-General's report on matters of major interest to the Organization which had arisen in various UN fora, particularly the General Assembly, ECOSOC and ACC, and in other important international consultations held since the Eighteenth Session of the FAO Conference. The Council also noted that the ad hoc Committee on the Restructuring of the Economic and Social Sectors of the United Nations System had not completed its work, and had therefore recommended to the General Assembly an extension of its mandate with a view to enabling it to submit final recommendations to the Assembly in 1977, through the Economic and Social Council.

World Food Council 9

60. The Council noted that, in line with the proposal made by its Sixty-Ninth Session concerning the assumption by the United Nations of full financial responsibility for the World Food Council from January onwards, the UN Secretary-General had agreed to include the necessary provisions in his supplementary budgetary requirements for 1977, but that the General Assembly had not yet reached a decision on this matter.

61. The Council reiterated the need for strengthening cooperation between FAO and the World Food Council, and welcomed the Director-General's intention to continue to develop cooperative relationships with the World Food Council at secretariat level.

62. The General Assembly also had for consideration the report of the Second Session of the World Food Council, submitted to it through ECOSOC. The Council was informed that the Second Committee had approved with two amendments the draft resolution on "Secretariat of the World Food Council" which had been proposed by the World Food Council itself to the General Assembly, but had not yet completed its consideration of the item.

International Fund for Agricultural Development (IFAD) 10

63. The Council Was informed that there had been further encouraging developments in relation to the pledging of contributions to the Fund and it expressed the hope that the Fund would become operational shortly.

64. The Council underlined the importance that the Fund, when created, would have for agricultural development in developing countries and the need to develop close working relations with FAO. In this connexion, the Council welcomed the arrangements being made by the Director-General in support of the Preparatory Commission and its interim secretariat, particularly through lending staff and making available premises, services and other facilities. The Council noted that the Director-General would begin duscussions with the Chairman of the Preparatory Commission on the draft FAO/IFAD relationship agreement after the forthcoming meeting of the Preparatory Commission.

Consultative Group on Food Production and Investment (CGFPI)11

65. The Council considered the results of the third session od the Group held in Manila in September 1976, at which the Group had set out its future programme of work, concentrateing on a narrow range of items. The Council endorsed the Director-General's recommendation in the sense that the CGFPI should proceed with the work programme along the lines indicated at the Manila meeting and that the future position of the Group and its relations with FAO would be reassessed in about one year's time.

Relations with the UNDP 12

66. The Council heard a progress report concerning the status of the FAO/UNDP programme and its prospects, particularly after the yearly pledging conference of UNDP which had been held recently before the Council session. At this Conference, the total pledges for 1977 had increased by approximately 8 percent over contributions for 1976 including assessed programme costs but excluding special additional contributions of "approximately $21 million made to the central resources of the Programme"13 as opposed to the expected 14 percent which was the basic assumption for the establishment of new IPFs for the second five-year cycle starting the next year. This would entail a certain reduction of the 1977 UNDP programme both in dollar and in real terms.

67. The Council noted that FAO continued to be the largest executing agency of the UNDP programme and that in 1976 it would deliver around $ 107 million in expert services, equipment and fellowships, as against $ 120 million the previous year. However, because of the inflation factor the real programme delivery would be reduced by another 7 to 10 percent as compared with 1975. In the light of the Action Plans received from the Resident Representatives it could be forecast that in 1977 FAO would execute about 30 percent of the UNDP programme. The Council emphasized the need for close and continuous monitoring of the situation.

68. The Council welcomed the Close working relations between UNDP and the Agencies. It noted the declining relative importance of UNDP as a financing source for the FAO programme in the agricultural sector and, in this regard, it noted with satisfaction the increase of other extrabudgetary resources. It also expressed the wish that FAO continue to be the major executing agency in the agricultural field.

69. The Council expressed its concern at the growing tendency towards direct project execution by UNDP and other initiatives being taken by UNDP which would point to a diminishing participation of the Specialized Agencies in the actual implementation of UNDP-financed projects. The Council emphasized the need for clear and concise criteria for direct UNDP execution and it took note of the statement by the UNDP representative that no decision on this matter would be taken by UNDP without consultation with the Agencies.

70. The Council drew a distinction between direct execution by UNDP and by the Governments themselves and agreed that the latter should be encouraged, provided that technical competence and efficiency were maintained with assistance and collaboration from the UN Specialized Agencies, as required. The Council noted that this matter would be examined by an Inter- Agency Task Force in December 1976.

UN Joint Inspection Unit (JIU) 14

– JIU Report - Office Accommodation Provided for Extra-Budgetary Staff in the United Nations System (JIU/REP/75/6) 15

71. The Council noted that the Finance Committee had decided to defer consideration on this matter until the Inter-Agency review had been completed.

– JIU Report - Utilization of Office Accommodation at the Headquarters of the Food and Agriculture Organization of the United Nations (FAO) (JIU/REP/76/4) 16

72. The Council endorsed the report of the Thirty-Eighth Finance Committee Session concerning the utilization of office accommodation at FAO Headquarters, as reported by the Joint Inspection Unit. The Council stressed the need for Building D to be made available to FAO as soon as possible.

73. The Council noted that following the availability of Building D, it would most likely still be necessary to rent some premises at commercial rates, and that for this reason, the possibility of obtaining new buildings adequate to accommodate all Headquarters staff in one location and to find and overall solution to FAO's accommodation needs should be pursued with the Italian Authorities.

74. The Council welcomed the statement by the Delegate of Italy which gave up-to-date information on the situation (including the financial aspects) regarding Building D. It noted that it was expected that this building, which required internal restructuring to meet FAO's requirements, would probably be completed within 3 years.

75. The Council recognised the generosity of the Italian Government in making a series of special contributions in compensation for the cost of rented premises.

76. With reference to the accommodation leased to the Banca Commerciale Italiana 17/, the JIU had recommended payment of rent and the Finance Committee had strongly supported this. So far, however, the Banca Commerciale Italiana had rejected repeated requests. Orally it had stated that it was losing money on the business received from the Organization, its staff and visitors/ delegates to FAO. During the same period, the Banca Commerciale Italiana had been pressing for large increases in charges made to staff for the private transactions. The representatives of the staff, on the other hand, maintained that staff members could obtain better services for less cost elsewhere, but that their main concern was improvement in efficiency and quality of services as a condition of higher charges.

77. The Banca Commerciale Italiana had then advised the Organization that in the absence of a suitable understanding, it wished to discontinue its services at FAO. The Director- General was studying various courses of action open to him. The Council noted that he would probably have to take decisions before the next session of the Finance Committee.

78. The Council also took note of the JIU report concerning the arrangements for providing accommodation in Headquarters to the American Express Company. The suggestion was made that the agreement with AMEXCO should be reviewed by the Director-General.

– JIU Report - Latin American Integration: Technical Cooperation Provided by the United Nations System (JIU/REP/76/3) 18

79. The Council concurred with the Director-General's view that this report provided useful information on technical assistance provided by the UN system to the integration schemes in Latin America and gave due recognition to the important contribution that FAO had made to the integration process in the region. The Council drew attention to the recently established SELA (Sistema Economico Latino Americano), which would provide an additional opportunity for FAO to further strengthen its support to the economic integration movement in Latin America. In general, the Council felt that FAO's future contributions to integration schemes should be strengthened and be kept in line with the Director-General's new policy of action-oriented assistance.

80. The Council endorsed the Director-General's comments as well as the views expressed on this report by the Programme and Finance Committees. With these observations, the Council supported the general conclusions and recommendations of the JIU Report.

– JIU Report - The Regional Structures of the United Nations System (JIU/REP/75/2) 19

81. The Council took note of the JIU report on the Regional Structures of the United Nations System and of the comments thereon by the Administrative Committee on Coordination (ACC). It endorsed the views expressed by the Programme and Finance Committees on the report, with respect to both its usefulness and limitations, agreeing that its references to the regional structures of FAO had been outdated by the decision of the Council on decentralization taken at its Sixty-Ninth Session.

82. The Council noted that it would have an opportunity of re-examining certain aspects of this subject when the Director-General had completed his review of the Regional Offices and the Joint Agricultural Divisions. This review would take into account the possibility of greater authority and responsibility being delegated by the United Nations to its Regional Economic Commissions and the effect that this might have on the role and functions of the Regional Offices.

– JIU Report - Eighth Report on the Activities of the Joint Inspection Unit (July 1975 - June 1976) 20.

83. While noting that the Eighth Report on the Activities of the Joint Inspection Unit (July 1975 - June 1976) had been submitted to the governing bodies of the participating organizations for their information, the Council considered that the observations made by the Programme Committee on the work programme of JIU and on the working relationships between FAO and the Unit were relevant and important. In particular it stressed that, were the Joint Inspection Unit to be continued, arrangements should be made with the Unit to ensure that visits of Inspectors and requests for information were planned in such a way as to avoid undue burdens being placed upon the Secretariat.

84. The Council was informed that the question of the continuation of JIU was then being considered by the Fifth Committee of the General Assembly which had before it differing versions of revised terms of reference submitted by ACABQ, ACC and the Unit itself. One of the matters still to be resolved was the scope of the responsibilities to be assumed by the Unit for external and internal evaluation.

85. The Council confirmed its support in principle of the Joint Inspection Unit. It noted that were the General Assembly at its current session to approve the continuation of JIU, its Statute, which would include revised terms of reference governing its mode of operation, would be submitted to the governing bodies of the participating organizations for their acceptance.

86. The Council requested the Programme and Finance Committees to examine this Statute, the implications of its acceptance by FAO, and the proposals of the Director-General regarding future relations between FAO and JIU, and to submit their recommendations to its Seventy-First Session.

1 CL 70/18, CL 70/PV/5, CL 70/PV/15.

2 CL 70/11, CL 70/11-Sup.1, CL 70/PV/5, CL 70/PV/15, CL 70/PV/16.

3 See also CL 69/REP, para. 47.

4 CL 70/4 para, 1.77; CL 70/19, CL 70/PV/6; CL 70/PV/15; CL 70/PV/16.

5 CL 70/20: CL 70/PV/8; CL 70/PV/16.

6 CL 70/21, CL 70/PV/14.

7 C 75/REP, paras 90 and 334 - Res. 3/75, Part.II, para.3; CL 70/4 para.1.95, CL 70/32; CL 70/PV/9; CL 70/PV/10; CL 7O/PV/16; CL 7O/PV/17.

8 CL 70/4, para 1.98-1.104.

9 CL 69/REP, paras 55-61; CL 70/22.

10 CL 69/REP, paras 62-64; CL 70/22 (b).

11 CL 69/REP, paras 65-68; CL 70/22(a).

12 CL 70/4, paras 1.41 to 1.55.

13 Quotation from the Closing Statement by the Administrator at the UNDP Pledging Conference, 2 November 1976.

14 CL 70/PV/10, CL 70/PV/16.

15 CL 70/PV/12.

16 CL 70/13.

17 CL 70/13, paras 29–32.

18 CL 70/14; CL 70/4, paras 1.83–1.89 and paras 2.126–2.128

19 CL 70/4, paras 1.78–1.82 and 2.117–2.119; CL 70/15

20 CL 70/4, paras 1.90 – 1.94 and 2.129 – 2.130; CL 70/16; CL 70/16-Sup. 1.

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