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D. Statement by the director-general

Mr Chairman, Honourable Ministers and Heads of Delegations.
Distinguished Delegates and Observers, Excellencies, Ladies and Gentlemen.

It is it great joy for me to address this Conference which has given a vote of confidence, re-electing me to a third term of office. Fully aware of the honour which has been bestowed upon me, I should again like to express my deepest appreciation to the Member Nations. I am also fully cognizant of the challenge. in these troubled times, which this task represents. Looking back over my first two terms (If office, the Conference may I believe. feel some satisfaction at the way in which the governing bodies have conducted the affairs of FAR The Organization has given proof of its capacity to respond to changing world requirements. concentrate on essentials, trim its bureaucracy, maintain a basically sound financial situation and develop it field programme responsive to the priorities of its poorest Member Nations. In the prevailing climate of austerity, every item of expenditure has been carefully scrutinized and there has been no expansion of programmes. at least not over the past four years.

I cannot. however. conceal my anxiety for the future. In the last few years. the situation has deteriorated: persistent economic gloom a steadily worsening climate of international cooperation, heightened tensions and competition in trade, tribulations on the money markets. indebtedness and financial crises are rife. All these factors cast uncertainty and doubt on prospects for future growth. They could not fail to have depressing repercussions on the United Nations system.

The UN system, despite some remarkable achievements to its credit. is undergoing a very serious existential and identity crisis which has thrown into question its future role in the concert of nations. This system provides an impressive tool for harmonization and cooperation, and an invaluable Source of strength in times of disaster or crisis.

Every endeavour must be made to preserve its strength. We cannot allow a cash flow crisis - temporary, let us hope - to jam the machinery permanently. We cannot stand idly by and watch steadily worsening conditions of employment force the premature retirement of FAO's best people and continue to hinder the recruitment of qualified experts. The winds of reform now blowing should not be allowed to challenge FAO's major orientations and capabilities.

As regards FAO. I know that I can count on your full support in Overcoming the current obstacles. [and if] finding the right solutions in a spirit of peace and harmony,

Circumstances force me to briefly discuss these three subjects - the cash flow crisis. staff and reform - its well as the Programme of Work and Budget before you. But first, it quick overview of the world food situation.

Mr Chairman. there is no doubt that considerable progress has been made in the world over the last few decades. Despite this. the picture is far from bright.

The world as it whole is better nourished today than it was twenty-five years ago, although there are 1.8 thousand million more people on our planet: this is certainly no mean accomplishment. But at the same time. it is hardly reassuring to note that the absolute numbers, if not the proportion. Of the undernourished continue to rise.

World agricultural production has grown at all average annual rate of 2.5 percent during this period. The rate Of growth in developing countries has been 3.2 percent. or, taking into account population growth, 0.8 percent per caput.

FAO is particularly pleased to have contributed to this result through its analytical and research work, policy and programme formulation, training, and the execution of its many field projects.

Of course, this overall development conceals it number of differences between one region and another and from one country to the next.

The most remarkable feat was perhaps that of the Asian countries. A mere ten years ago. it was still feared that they would never emerge from their food crisis. Thanks to the green revolution and various incentive measures, Asian agricultural production has increased at an annual rate of almost 5 percent since 1980.

In Latin America and the Near East. annual agricultural production has risen by 3 percent and 2.9 percent respectively between 1961 and 1985. However, growth has slowed down since the early 1980s and malnutrition has spread, particularly among file poorest people. African agricultural production has risen by barely 2 percent oil average over the last two decades. a figure well below population growth. The terrible famine of 198 3 and 1984 is still fresh in our memories.

In the developed countries agricultural production has risen at an average annual rate of 2 percent between 1961 and 198 5. with it deliberate slowdown over the last few years which has not, however, prevented the buildup of enormous surpluses.

The outlook for 1987 is not encouraging. According to our [it test forecasts, world cereal production could suffer it setback of the order of 4 percent following reduction of sown areas in some exporting countries. mediocre harvests in Asia, and various natural disasters, The food situation is still tragic in several African nations which will soon need .special and expanded assistance. The spectre of locusts and grasshoppers still hovers over huge areas of the continent. though kept at bay so far by prompt action at national and international level. coordinated by FAO.

Mr Chairman. on the whole, therefore, the picture of world agriculture in recent decades is it positive one. Food supplies have improved remarkably. mainly due to the widespread adoption of more productive agricultural systems There have been no extensive chronic shortages. World cereal stocks provide a comfortable level of food security. despite their concentration in the developed countries and a tendency toward dangerously slender reserves in some of the big Third World countries. This is particularly true of rice.

And yet. FAO's Fifth World Food Survey indicates that there are still some 350 to 510 million seriously undernourished people in the world today.

We are also witnessing a gradual decline in nutritional levels in many developing countries as structural adjustments are put in place in an attempt to reduce budgetary deficits. Such measures have. of course, often been the sine qua non of non-inflationist recovery. But they cannot be applied indiscriminately. To suddenly apply the scalpel to food subsidies can only hit the earnings and nutrition of the poorest, just as the sudden withdrawal of import subsidies is bound to affect the level of agricultural production. We have learned from experience that structural adjustments are only socially acceptable and economically viable if introduced gradually over a period of time as part of a development strategy guaranteeing access of the poorest to food.

I hope, in any case, that the planned global study of adjustment programmes by the IMF will make the international community more aware of the social costs imposed on debtor countries by structural adjustments.

In the final analysis, malnutrition is caused less by a material absence of food than by poverty: the poverty of individuals who lack the land and resources to grow food and cannot afford to buy it: the poverty of nations that cannot provide the essential infrastructures, or subsidize farm incomes and services its is done by developed countries.

It is all very well for poor countries to reshape their policies. to accord higher priority and all increased share of the national budget to agriculture - their resources are ridiculously small compared to (heir immense needs. This being the case. they need external support more than ever to solve these problems. What form should support take?

Increased assistance from the rich countries, ? Probably, but this can never be more than it stopgap measure. It is, moreover. disheartening to note that the volume of aid has remained practically stationary in real terms since the early 1980s. In file last analysis, capital outflow in the developing countries still exceeds capital inflow.

Can they count on increased food aid? Can they count oil more vigorous and more profitable trade? Here, I think, is one key to the problem. The Third World - just like the developed countries - needs to trade in order to build, generate employment and therefore income. and repay its debts - in short. assume responsibility for its own development.

Here we have to face the fact that the terms of international trade are extremely unfavourable to developing countries. As exporters of raw materials. they are the first and worst hit by the agricultural trade crisis.

The volume of agricultural trade has scarcely increased in five years. and the prices of many commodities have tumbled to Unprecedented lows. In 1986 alone. declining terms of trade have led. to all estimated loss of over 90000 million dollars for developing countries. Taken its it whole. this degradation. according to OECD, is equivalent to 3 percent of their GNP. The purchasing power of their export earnings is further eroded by costlier finished products and services. The terms of trade for agricultural commodities compared Will) manufactured articles have thus declined by nearly 30 percent since 1980.

This being the case. how can these countries service their debts. an obligation which. for many countries, now absorbs more than one-quarter of their export earnings; Will the latest rise in prices be it mere passing breath of fresh air. or does it mark the start of a more general improvement, Chronic market instability, aggravated by exchange fluctuations. makes any forecast impossible.

The Current depression in prices of raw materials is largely the result of a chronically anaemic world economy driving down demand. The short-term Out look indicates modest economic growth of some 2.5 to 3 percent. it rate unlikely to do much to spur demand or tilt trade in favour of exporters.

The present situation is to some extent caused. and certainly exacerbated. by agricultural support policies of developed countries which have led to near-universal overproduction of the main staple commodities in western countries with the inevitable corollaries (if protectionism and dumping of goods oil Third World markets.

Increasingly. domestic and world market prices diverge wildly, sometimes as much as fourteenfold, as in the extreme case of sugar. It is appalling to think that in 1987 aggregate government expenditure by the United States, the EEC and Japan on farm and export subsidies will exceed 70 000 million dollars, or the equivalent of all agricultural export earnings of the developing countries, To top it all, despite this expenditure, the incomes of small farmers, are increasingly threatened. The end result for everybody, producers as "fell as consumers. is dissatisfaction.

The developing countries are the first victims of unbridled competition. They are in tit) position to enter the subsidies race, and so they lose markets to the developed countries. If only countries with low incomes and food deficits could really take advantage of low prices to improve their daily fare! Alas. they are often forced to reduce their imports to check the foreign exchange drain and to balance their accounts.

For so-called tropical products, it is falling demand which is the obstacle to developing the export potential of developing countries.

Whichever way you look at it, they are the losers. No regulatory mechanism protects them. Commodity agreements are in a bad way. Despite some recent progress, they are not really capable of ensuring reasonable and stable market prices. International trade rules are increasingly flouted and poor countries too often find themselves barred front the markets in developed Countries by it panoply of restrictive measures.

That said. certain encouraging signs should not be minimized.

For one thing, it seems that the chances of seeing the Common Fund for Commodities finally become operational are appreciably improved. FAO. for its part. Will continue to give its vigorous support to the Integrated Programme for Commodities and to collaborate with UNCTAD ill achieving its objectives.

It is also increasingly felt that agricultural trade and production policies Should be corrected for greater responsiveness to market imperatives and signals. Surpluses and shortages cannot continue to coexist forever. The international community Must Use its resources to better advantage. In the long term, the solution lies in it freer and more fluid market in which today's obvious distortions Would be considerably less skewed.

This is why FAO attaches great importance to the GATT trade negotiations and is particularly pleased that the contracting parties have invited FAO to participate in the work of the agriculture and tropical commodities groups. This will enable them to get the maximum benefit from the competence and information that the Organization can provide,

Many constructive proposals are oil the table and we can only express our good wishes for the full success of this very important round of trade negotiations.

Mr. Chairman, I have perhaps taken more time than necessary to outline the world economic situation as FAO perceives it. You will, however, appreciate that this is the background against which we have to frame our action.

FAO cannot solve all the food and agriculture problems in the world. But it can and should play a major role in the fields that constitute the backbone of its programme of work. Its Ultimate aim is to promote agricultural production. ensure food security and guarantee a reasonable nutritional level for everyone. All our programmes are geared to this Old. Today I Will touch On general policy rather than technical aspects. The following remarks may perhaps serve as bearings for future action by the Organization.

Catalyst - FAO's role is not to do everything single-handed. but to promote ideas and policies and to stimulate action. It should identify problems, act its it catalyst for initiatives and achieve it Multiplier effect. To take just one example - the many meetings we hold each year throughout the world: I would say that, beyond their economic. technical or scientific purpose. their Value lies in fostering dialogue among thousands of experts and development agents. The Secretariat provides support - the Member Nations are the real protagonists. These exchanges. these transfers of knowledge and technology are of cardinal importance. not only ill North-South relations, but also in promoting Cooperation among developing countries: two of the Organization's major objectives.

Information - analyzing and disseminating basic data oil agriculture. fisheries and forestry is it major task of the Organization. The systematic use of modern information science techniques and the proposed compilation of agricultural data and strategies within it single data bank will provide an increasingly effective service to all Member Nations by improving, the quality accessibility and transparency of information. The constant strengthening of our Global Information and Early Warning System oil Food and Agriculture today coupled with a computerized environmental monitoring system, will lead to better food security by the early detection of risks of drought, poor harvests or locust attacks.

Only it few weeks ago, the role of FAO its an inter-governmental forum for discussion oil food and agricultural policies was again highlighted in the proceedings of the Committee oil Commodity Problems on protectionism in agricultural trade.

Normative function -The "normative" function gradually assumed by FAO, with the active support of all its Member Nations. also deserves to be emphasized. International legislation is beginning to take shape under our very eyes in varied and highly specialized fields. I need only mention the Codex Alimentarius standards, the International Code of Conduct oil the Distribution and Use of Pesticides, the International Undertaking on Plant Genetic Resources, or the World Food Security Compact. The importance Of this function cannot be overstressed.

I am moreover convinced that FAO can and should be the promoter and coordinator of initiatives oil a vast international scale involving recipient and donor countries its well as multilateral institutions. Let the give you some examples:

- The Tropical Forestry Action Plan Tropical forests represent it universal patrimony critically important because of their ecological role within the environment. They also represent considerable development resources for the Countries where they are found. The Tropical Forestry Action Plan reconciles the objectives of forest conservation, use and development within a universally acceptable framework for action at national, regional and world level. Within the United Nations system FAO is responsible for coordinating this Plan. which was prepared in consultation with the World Bank, UNDP and the World Resources Institute.

- Fisheries. The strategy adopted by the World Conference oil Fisheries Management and Development offers a coordinated conceptual framework for programme and project formulation and execution. We now have to build oil the achievements of the last three years. Fisheries should both provide food and promote development to meet the needs of the year 2000 and beyond.

- Plant and livestock production. The recent success of the locust control campaigns has shown flow decisively FAO call act to coordinate efforts by the international community. Our Organization also has a wider role to play in fortifying national and regional plant protection capacities. This is equally true mutatis mutandis, its regards safeguarding livestock against the major diseases.

- Biotechnology. Developments in this sector are growing by leaps and bounds. FAO has ail active part to play here by helping Member Nations in considering the political and socio-economic implications of these new technologies for OW agricultural sector. It also intends to pursue consideration of the technical aspects in collaboration with other United Nations agencies. such its UNIDO and Unesco.

- Finally, I should mention two other initiatives launched by FAO for Africa following its report, African agriculture: the next 25 years. I am thinking of the study oil aid in kind, which your Conference will be discussing, and the gradual development of it soil conservation strategy for Africa. In both cases. FAO's aim is to bring together all the interested parties for concerted international action.

Advising governments - FAO is bound to play an increasingly vigorous role in advising governments on agricultural and rural development policy formulation. The presence of our Representatives in the countries is crucial in this respect. This is an obvious function for ail Organization such its ours. The assistance it already provides in agricultural planning ill many Countries is illustrated in the document oil field programmes before the Conference. FAO stands read), to intensify sectoral and sub-sectoral analyses if so requested by governments. It is above all keen to be associated, as closely as possible. with the whole process of preparation and holding of UNDP roundtables and World Bank Consultative groups. particularly since the agricultural sector is almost always of major importance.

Now, let me say it few words on the Field Programme. We perceive no hiatus, but rather it synergetic relationship of Mutual Support between the Regular Programme and the Field Programme. It is not by chance that activities financed by extra -budgetary funds so often embrace the major policy orientations and priority action programmes drawn up by our governing bodies. Time is too short for the to detail all our various Operations - from emergency interventions ill the case of natural or other disasters, to development projects. I should however, like to underscore the importance we attach to certain specific aspects:

- Investment promotion. The FAO Investment Centre is responsible for identifying and preparing, bankable projects to be submitted to international financing institutions. In 1986 alone, 40 projects prepared by the Centre were approved for it total amount of 3 000 million dollars, of which 1 700 million represented international credit. Today cooperation agreements have been concluded with virtually every multilateral institution lending to the agricultural sector, and the Centre has also developed a large-scale programme of cooperation with private banks:

- The strengthening of national capacities within the recipient countries to prepare and execute projects, greater use of national experts and services, and the promotion of cooperation among developing countries:

- Another important item: the importance of education and training. FAO has trained no less I fiat) hall' it million people over the last ten years, But this is not enough. FAO intends to promote it massive effort in this sector, in close collaboration with the different agencies concerned:

- Finally, a word oil the place of women in rural development No one can fail to grasp the importance of this issue. FAO is pleased to submit to you a document On the orientations of its programmes in this sector, as requested by the Council:

- Lastly, our activities. whether under the Regular Programme or the Field Programme. Must Increasingly take into account ecological concerns. FAO agrees with the analysis and general conclusions of the Bruntland Report of the World Commission oil Environment and Development. It will endeavour to strengthen its aid to Member Nations, especially to conserve and develop natural resources and to combat soil degradation. desertification and deforestation.

FAO intends to pursue all these activities in close cooperation with the whole United Nations family: first of all with the agencies that have their headquarters here in Rome: WFP, IFAD and WFC: and in the Administrative Committee oil Coordination. chaired by the United Nations Secretary-General, which brings together the heads of all the agencies; lastly. through Our permanent contacts with the various specialized agencies such as IAEA, ILO, WHO, UNIDO, Unesco UNDP and the World Bank Group. I should add that we also wish to strengthen our already fruitful cooperation with non-governmental organizations active in the rural sector.

Mr Chairman, do we have-will we have - the means to enact the above scenario.

In presenting my draft budget lot- the 1988-89 biennium I had one major concern: to ensure its adoption by consensus. I therefore modified the proposals set out in the Summary in order to achieve the broadest agreement possible. The real increase in the programme finally proposed amounts to only 0.25 percent of the budgetary base.

Also, since provision has not been made to cover increased costs completely, it will in all likelihood be necessary to absorb some of them during the implementation of the next Programme of Work. A token growth on paper could well lead to negative growth ill practice. .11, Was the case during the present biennium.

In these circumstances, I firmly trust that all Member Nations will adopt the draft budget by consensus.

Be that as it may, I must at this stage say a few words about the unprecedented cash flow crisis we face, primarily as a result of three unfortunate but concomitant circumstances: the delay in payment by the largest contributor: a fall of more than 30 percent in the value of the US dollar: and it decline in miscellaneous income.

Through it series of draconian economy measures covering about 25 million dollars and using the mechanisms available to its. in particular the Working Capital Fund and the Special Reserve Account. we should be able to reach the end of this biennium without too much damage. However, even if the dollar remains firm and inflation does not Snowball. FAO will soon find itself ill it financial impasse if our largest contributor does not pay up quickly. We have today received two-thirds of its contribution for 1986, nothing for 1987, and the timing and amount of the next payment are still uncertain. We have no information for the 1988-89 biennium. Everything seems to indicate that delays and arrears will continue to accumulate.

As you know, it is not only FAO that is affected but all the United Nations system agencies, whose financial stability is threatened if this practice continues into 1988 and thereafter. [it all case, it would be heartbreaking to see FAO plunged into into a cash flow crisis when. if one lakes into account all the arrears and contributions due to it, its financial situation is stable - there are even some surpluses.

I can only appeal to this great country a long-time friend of FAO to comply ;it the earliest possible date with its avowed contractual obligation to the organization. We note with satisfaction its off-stated intention of doing just that.

Whereas these cash flow problems are, let its hope only, transitory it must not be forgotten that FAO's real capital is its staff. On this subject I will say little - reserving the right to come back to it in Commission III - but with the profound conviction of acting both On the side of justice and its, all administrator concerned with sound management. In fact some recent decisions of the United Nations General Assembly oil salaries and pensions - decisions which also apply to the specialized agencies which are members of the Common System - erode employment conditions and are damaging to staff . Because of this the Organization has Suffered an avalanche of premature retirements - over 100 last year alone, and is finding it increasingly difficult to recruit qualified staff. 'File Programme and Finance Committees have recently drawn the attention of the governing bodies to this state of affairs. I personally will do everything in my power to defend the legitimate rights of our staff in the appropriate fora.

Mr Chairman. before concluding allow me to say a few words on the Subject of reforms.

Like any other human enterprise. FAO can be improved upon and is indeed subject to constant self-improvement. The Secretariat has always been open to new ideas, and initiatives. After all, it was just after my election in 1976 that. at the request of the Conference. I undertook it detailed review that led to far-reaching changes in the policies. priorities and operational methods of FAO. My proposals were adopted unanimously.

They were mainly intended to make the Organization less bureaucratic and more directly Useful to its Member Nations. I gave up some 330 posts that I had just inherited. I took measures to limit the impact of staff costs on the total budget. to the point where the proportion dropped from 77.2 percent in 1974-75 to 51.7 percent for 1988-89. Other measures were taken to cut costs for meetings, publications, etc., and to strengthen the Investment Centre.

These savings enabled us to launch the Technical Cooperation Programme, designed to provide help directly to countries in need: emergencies. short-term technical assistance. preparation of investment projects. and the like.

This reform also envisaged the gradual establishment of it network of Representatives in the countries. it process which is only just being concluded.

Other changes have followed, Such its the launching of special action programmes and the many initiatives to come to the aid of an Africa stricken by drought and crisis. It Would be tiresome to list them, but they bear witness to our organization's capacity to adapt. Some of the reforms envisaged today in the United Nations were introduced here long ago.

FAO is an inter-governmental organization. It is therefore up to its Member Nations to decide what it should be. what its functions are, how it Should operate and whether the nature and quality of services provided respond to their wishes.

It is your right to decide whether it review of some aspects of FAO is necessary and, if so, to agree on the appropriate subjects, the method to be followed. the timetable for discussions and the process of arriving at conclusions.

I beg you, however, to take this decision in harmony, by consensus - as was done at the United Nations. Any examination or consideration of the activities of an organization as vast as ours should be undertaken in an orderly and well-planned manner, to avoid the risk of paralysis or the folly of continuous reorganization. Clearly the Ultimate objective is to strengthen the Organization. not to bow to momentary financial constraints.

It Would, moreover. be simplistic to believe that one could transpose in toto the conclusions reached by the General Assembly. its regards the United Nations. to individual agencies. Each has developed in its own way. according to its specific technical nature, and past performance should be the guide to decisions bearing on the future.

The Secretariat for its part hopes to be able to make it full contribution to this process of reflection.

Mr Chairman. we all share the objective of making FAO ever more the instrument of progress that its founding fathers conceived it to be.

I have sketched above the main lines of possible action, as the secretariat sees them. It is LIP to you to tell US whether this Meets your expectations and. if not, to set US on the right path.

The most important thing is to preserve the harmony and unity that have always prevailed in our governing bodies. Perceptions may be different. interests and needs too: despite this, the degree of consensus reached in recent years. in regard to the major orientations and programmes of FAO is remarkably high.

Should we attribute this to Our awareness of the nobility of our mission: to eliminate hunger kind malnutrition I firmly believe this is so. With this impressive challenge and noble resolve before us, we are convinced that the international community needs, now more than ever. it strong and coherent FAO, United by a common vision. Once that is ensured. possible divergencies are trivial. All that matters is close and sincere cooperation among Member Nations and with the Secretariat.

We live in a time of paradox. There seems to be no longer any limit to the exploits of science and technology. The ends of the world seem to grow closer each day and the extent to which people are interdependent is blindingly obvious. And yet. abundance and surpluses in one place still exist side by side with poverty and deprivation in another: our wealth is frittered away on armaments: cold calculation still frequently wins over solidarity among nations: human dignity and rights. equity and social justice are all too often flouted.

The right against hunger and poverty will be long: it will require dogged collective and personal commitment. It is one of the categorical imperatives of our time. Its importance transcends our persons and all partisan interest. But this, we know. is not a lost cause. The means to win this struggle do exist. They are of it scientific, technical, economic and, above all, political order.

FAO is dedicated to mobilizing all these resources. A famous writer once said that it noble task is one which unites people. The same is true for an organization such as Ours, Its ambition is to gather people of goodwill to work together in harmony for it more equitable and more united future. This, at all events. is my objective and it is in this spirit that I shall endeavour to pursue the task you have once again entrusted to me.

I thank you and wish you every Success in your work.

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