Contents -

V. Major trends and policies in food and agriculture

A. Statements by Heads of Delegations in the General Discussion
B. World Food and Agriculture Situation
C. Progress Report on International Agricultural Adjustment including Agricultural Protectionism
D. Report of the FAO World Conference on Fisheries Management and Development (June-July 1984)
E. Adoption of the World Food Security Compact
F. Programme for the 1990 Census of Agriculture

A. Statements by Heads of Delegations in the General Discussion

49. The Plenary General Discussion was opened by the Director-General. The text of his statement is given in Appendix D. Following, this, 138 speakers participated in the discussion: the Independent Chairman of the Council, 124 Heads of Delegations - of which 98 were Ministers or Vice-Ministers, the Permanent Observer of the Holy See to FAO, representatives of four UN bodies (United Nations, United Nations Development Programme, United Nations Environment Programme (UNEP), World Food Council (WFC)), the European Economic Community (EEC), the Organization of African Unity, the Arab Organization for Agricultural Development (AOAD), the Organization of the Islamic Conference (OIC), the Pan Africanist Congress of Azania (African liberation movement) and observers from three international non-governmental organizations having consultative status with FAO. The statements of six Member Nations and one international nongovernmental organization in consultative status with FAO were inserted in the records.

B. World Food and Agriculture Situation

State of Food and Agriculture (SOFA)
Critical Situation in Africa
Study of Agricultural Price Policies
Importance and Complexity of Price Policies
Key Domestic Issues in Pricing Policy
Agricultural Pricing Policies in Developed Countries
Follow-up to the Report
Forestry: The Manifesto of Mexico (Ninth World Forestry Congress, July 1985)

State of Food and Agriculture (SOFA)

50. The Conference reviewed the world and regional food and agricultural situation on the basis of the Director-General's Report, The State of Food and Agriculture 1985 and its Supplement. It concurred with his assessment of the situation.

51. The Conference agreed that the early 1980s had been dominated by the economic recession that had had very negative consequences for food and agricultural production and food consumption, especially in developing countries. While the economic recovery had been strong in some industrialized countries, it had been less so in the majority of developing countries and had affected them unevenly. It was noted that this recovery in the developed countries had not had a beneficial effect on the growth of most developing countries. The problems of external debt in those countries, a decline in their flows of financial resources, declining international prices of their main export commodities and contracting export markets for agricultural products contributing to declining terms of trade, continued to pose serious obstacles to the resumption of widespread economic growth.

52. The Conference underlined the problems currently affecting agricultural commodity markets and the links between more liberalized trade, the expansion of export earnings and adequate servicing of international debt. The Conference called on Member States to reduce protectionism, including export subsidies and similar measures in agricultural markets, so that producers of agricultural products could expand their output and trade. It looked to the prospective round of multilateral trade negotiations under the auspices of GATT (General Agreement on Tariffs and Trade) to resolve these grave problems.

53. Recognizing the difficulties in overcoming problems of financing international debt, the Conference also called for solutions that permitted economic adjustments to take place without jeopardizing the standard of living of the more economically vulnerable populations.

54. The Conference welcomed the longer-term analysis presented in the documents as well as the regional coverage. It noted that the regional experience during the early 1980s, both with regard to economic issues and progress in the food and agricultural sectors, had been extremely diverse, having been very negative for some regions but more positive in others.

55. There was continued and unanimous concern for Africa. The region had experienced average annual declines in per caput income and merchandise exports of nearly 2 percent and 3 percent respectively in the early 1980s. During this time, its debt-service ratio had nearly doubled. This overall situation had been accompanied by a decline in per caput food and agricultural production of nearly 2 percent a year, largely as a consequence of drought. Despite rising food imports, per caput food supplies had steadily declined. The Conference welcomed the widespread improvements in the food and agricultural situation in Africa during the current crop year, although it noted that economic problems continued at crisis levels and rendered the region still vulnerable to unfavourable weather conditions.

56. The Conference drew the attention of the international community to the need for continued support for long-term development efforts in Africa, although emergency aid would still need to be maintained in some cases. Support was expressed for FAO's efforts in the field of rehabilitation of agriculture in Africa. The Conference stressed the need for an early and adequate replenishment of the International Fund for Agricultural Development (IFAD), with its emphasis on small farm agriculture, typical in much of Africa. Support was also given to other initiatives, both bilateral and multilateral, aimed at financing the development of Africa over the long term.

57. The Conference also stated that food aid should play a continuing and important role in agricultural development in Africa. Seven million tons out of the total shipments of more than 12 million tons of food aid in cereals had been devoted to meeting Africa's food aid needs in 1984/85, but emergency needs in 1985/86 would be significantly lower.

58. The recent economic and agricultural situation also had been very discouraging in Latin America and the Caribbean in the early 1980s. Per caput incomes also had declined in the region, the growing external debt was US$360000 million, debt-service ratios were at very high levels (more than 40 percent of export earnings) and inflation rates had soared. Following the increases in the 1970s, agricultural production per caput and exports also had fallen. The problems of protectionism and extreme competition in agricultural markets, which caused the displacement of exports from low-cost producing countries, were particularly stressed. Similarly, declining food imports pointed to a deteriorating nutritional situation.

59. Some difficulties were being experienced in the Near East Region, although in part this stemmed from the worsening external economic environment. Declining agricultural production of some countries confronting rising demand for food had led to greatly increased food imports. Declining export earnings made the continued financing of such imports difficult and budgetary constraints were leading to pressures to reduce food subsidies, which contributed to social tensions in the region.

60. The Conference welcomed the progress that had been achieved in China and the Far East despite the recent difficult economic environment. Although deep-seated problems remained, incomes had increased significantly as had agricultural production. Per caput farm income had reportedly increased in China by 15 percent in 1084-. Overall per caput incomes had increased by an annual average of nearly 4 percent in the Far East in the early 1980s. Agricultural production had increased by between 7 percent to 8 percent and by nearly 4 percent a year in China and the Far East respectively in the early 1980s. The debt-service ratio had been relatively stable in this region at about 10 percent of export earnings. The Conference noted the important role that pragmatic, flexible and consistent policies had played in achieving this performance, not only in agriculture but in the overall economic and financial framework.

61. The Conference noted the unequal progress in agricultural development in developed countries between different regions. In some cases there were problems of structural surpluses. The Conference was informed that the work on agricultural trade under the 1982 Ministerial Mandate of the Organization for Economic Cooperation and Development (OECD) was striving to promote policies in developed countries leading to their coordinated adjustment. It was also informed that the Commission of the European Economic Community had not yet made formal proposals regarding the Common Agricultural Policy but that proposals would be made to the Council of Ministers before the end of the year.

62. The Conference considered that the immediate situation regarding global food and agriculture was more favourable because of ample supplies. Cereal production was expected to attain a record level in 1985. Cereal stocks, at a forecast 21 percent of expected consumption by the end of 1985/86, were an adequate safeguard for world food security. Nevertheless, concern was expressed at the situation of excessively low commodity prices, which created, great difficulties, and at the fact that undernutrition was widespread.

63. Governments of developing countries should place priority on achieving a progressive agricultural sector, both with regard to their policies toward the sector and allocations of investment. The focus of efforts to increase food and agricultural output should be on improved technology appropriate for use by small-scale farmers. Increased emphasis was being placed on agricultural research and improved access to modern inputs, with greater regard to the environment problems, which were multiplying. Less centralized decision-making and greater participation at the local level in project planning and monitoring were being more widely adopted. The important roles of women in food production were being more appreciated. So was the role of secondary crops in food security and nutrition. Financial and budgetary constraints, however, prevented as rapid progress as was required. In some cases, the high costs of inputs on world markets were inhibiting their greater use in low-income countries.

64. The Conference stressed the importance of the protection and conservation of forests in temperate and tropical regions and the importance of government intervention to prevent the blind exploitation of land leading to the destruction of forests and grassland. The scientific management of watersheds, soil conservation and tree planting should be promoted. Forestry and agricultural activities could be integrated in such practices as agrosylviculture. The role of forestry in contributing to the domestic economy and to export incomes in some countries was also emphasized.

65. The Conference noted that these matters had been elaborated in the Mexico Manifesto - the declaration of the Ninth World Forestry Congress held in Mexico in July 1985. It welcomed the initiative of France in convening a conference on trees and forests in 1986 which would address the problems of forest damage in Europe and deforestation in Africa.

Critical Situation in Africa

66. The Conference reviewed the situation of food and agriculture in Africa on the basis of the report presented by the Director-General. It concurred with the main points contained in the report which had been submitted in response to Resolution 1/87 "The Food Situation in Africa" of the Eighty-seventh Session of the FAO Council.

67. The Conference noted that FAO had been warning of a deteriorating food situation since 1976 and that, on the basis of information provided through the Global Information Early Warning System (GIEWS), the Director--General had as early as the spring of 1983 appealed for additional international assistance to meet the food emergency conditions arising in Africa. The Conference appreciated the continuing efforts of the Director-General to draw the attention of the International Community to the plight of the African countries affected by acute food shortages.

68. The Conference expressed full support for the GIEWS and its proposed reinforcement. It noted with satisfaction that the system had brought the magnitude of the needs of the affected countries to the prompt attention of the international community.

69. The Conference expressed its deep concern at the economic and financial situation in Africa and its implications for agriculture. Indeed, the latest economic reports indicated that GDP (Gross Domestic Product) in Africa was rising by only 2.2 percent in 1985, even lower than the 2.6 percent growth of 1984. Inflation remained high and there was a decline in primary product export prices and deterioration of returns to exports. The debt burden was still rising. Its servicing was expected to reach on average 32 percent of export earnings in 1985. Furthermore, without anticipating the outcome for 1984, development aid on concessional terms between 1980 and 1983 had regrettably declined. In view of this, the Conference appealed to all states who could contribute to improving this situation to carry out all measures likely to increase the resources of the countries concerned which could be devoted to their economic development. Concern was expressed at the negative impact of the Republic of South Africa's policies on attempts to resolve the current food and agricultural crisis in southern Africa.

70. The Conference expressed its satisfaction at the improvement in the food supply position in many African countries as a result of good harvests in most of the countries which had been most affected by drought in 1983 and 1984. It noted that, following favourable weather conditions throughout the growing season in the majority of countries, the region's aggregate output of cereals was expected to increase by about 30 percent, with the production of the Sahelian countries rising by some 60 percent.

71. The Conference stressed that, despite the improvement in the overall food supply position, large amounts of food assistance would still be needed in Africa during 1986. Emergency food aid would continue to be required by several countries, particularly Angola, Botswana, Cape Verde, Ethiopia, Mozambique, Sudan and possibly Lesotho. Many of the other countries which had been affected by the prolonged drought would continue to need to import cereals in 1986. Although a substantial part would be covered by commercial imports, some external food assistance would be needed. It noted that the total food aid requirements of the 21 most affected countries were provisionally forecast by GIEWS at about 3 million tons for 1985/86, less than half the amount required in the previous year.

72. The Conference noted with concern that, despite all the efforts which had been made by the international community and the governments of the affected countries to expedite deliveries and remove logistic constraints, a substantial amount of pledged assistance either had not been received or distributed in time and would have to be carried forward into the 1985/86 season. It urged the international community and the governments of the countries concerned to ensure that the arrival and distribution of this aid was carefully planned to take account of available storage capacities and to avoid disruption of markets in recipient countries. The Conference endorsed the need to reinforce national early warning systems and the level of preparedness and to increase national and regional food reserves, as well as to improve the procedures for marketing and distributing food assistance in the recipient countries, in order that they would be better prepared for any similar emergencies in the future.

73. The Conference noted that several of the African countries affected by the 1984 drought would have surpluses of cereals available for export in 1985/86. It urged the international community to take measures, when appropriate, to mobilize these local surpluses, such as funding triangular transactions, in order to meet the deficits in 1985/86 in neighbouring countries.

74. The Conference emphasized that the improvement in food and agriculture production this year in Africa should not divert attention from the rehabilitation and other measures required to resolve the underlying structural difficulties, in order to facilitate agriculture aid rural development and to safeguard food security in the region. It stressed the need for the expansion of international support to such long-term measures and for well-coordinated efforts of the Governments, as well as of bilateral and multilateral agencies, involved. It reiterated that the long-term solution to the food and agricultural problems of the region rested with the African Governments themselves, as underlined in the declaration of the Twenty-first OAU Summit. Some members emphasized that the underlying structural difficulties included problems of economic structure, development policies, population growth and desertification.

75. The Conference expressed full support for the Agricultural Rehabilitation Programme for Africa (ARPA) and appreciated the steps taken by the Director-General to launch this Programme which was important for the recovery of African agriculture. The Conference considered ARPA, with its short- and medium-term projects for recovery, as a link between the emergency situation in Africa and the long-term requirements for agricultural development.

76. The Conference endorsed the action taken to refocus the FAO Regular Programme and to use part of its savings in order to assist and support countries identified as most in need of agricultural rehabilitation. The need for FAO to continue to strengthen cooperation with other organizations with a view to long term development was also emphasized.

77. The Conference requested the Director-General to continue his efforts for financing the ARPA programme and urged the international community and donors to respond to his appeal for further financing.

78. The Conference appreciated the assistance given by FAO to the OAU Secretariat in preparing the Special Programme of Action for Improvement of the Food Situation and Rehabilitation of Agriculture in Africa. It also appreciated the offer made by the Director-General to provide technical assistance, mobilize resources and assist in the implementation of this programme, as well as the Special Emergency Assistance Fund for Drought and Famine in Africa, and the OAU Special Emergency Fund.

79. The Conference welcomed the proposal to carry out an in-depth study of agricultural and food problems in Africa which had been endorsed by the Thirteenth FAO Regional Conference. It noted that the problems of African agriculture could only be tackled within the framework of the total economy, including an examination of the external forces - debt, trade conditions, migration, aid flows - which have such a major impact on it. The Conference welcomed the Director-General's decision to seek the advice of African experts on the study's findings before its submission to the Fourteenth Regional Conference for Africa to be held next September, in Brazzaville, Congo.

80. Given the crucial importance of the food and agricultural sectors in Africa, the Conference emphasized the important role of FAO in the preparations for and the deliberations of a Special Session of the United Nations General Assembly on Africa's critical economic situation and supported the offer of the Director-General to prepare documentation on food and agriculture.

81. The Conference adopted the following Resolution:

Resolution 4/85



Recalling Resolution 1/83 of its Twenty-second Session on the critical situation of food and agriculture in Africa, a situation which, since then, has dramatically deepened and spread into a continental food crisis inflicting untold suffering upon 30 million Africans in 25 countries,

Gratified by the hope engendered in Africa, thanks to the return of abundant rains this year in most of the African countries affected by the drought, and with the prospect of bumper harvests which should cover most of the food deficits in many affected countries,

Expressing appreciation of the action conducted by WFP throughout the food crisis in Africa despite the difficulties of all kinds it has had to face,

Realizing that Africa has been profoundly affected over the years by a series of natural calamities and political, social and economic crisis, and that the resulting hunger will not disappear merely because the rains have come back,

Concerned by the fact that the destabilizing acts of aggression of South Africa are having a negative impact on agricultural production and food security in southern Africa. a/, b/, c/

Recalling the Addis Ababa Declaration, adopted at the Twenty-first OAU Summit (July 1985), on the Current Economic Situation in Africa, wherein African Heads of State and Government pledged themselves to progressively increase the share of public investments to the agricultural sector to attain the minimum target of 20 to 25 percent by 1989, and called for:

  • a) the convening of a Special Session of the United Nations General Assembly to deliberate on the critical economic situation in Africa,

    b) the preparation of an international conference on Africa's external debt, and

    c) the creation of a special Fund,

  • Noting with satisfaction the role played by the Director-General of FAO in informing and mobilizing world opinion since early 1983 on the massive dimensions of the African famine, thanks to the accurate forecast of the FAO Global Information and Early Warning System,

    Welcoming with satisfaction the timely Agricultural Rehabilitation Programme for Africa, geared to relaunch agricultural and livestock production within 1985-87 with the support and funding of both the developed and the developing countries, with the aim of reconciling emergency aid with long-term development objectives,

    Concerned, however, by the increase in basic development requirements at a time when official development assistance to the agricultural sector on favourable conditions is falling and the International Fund for Agricultural Development, which plays a fundamental role in the agricultural development of many developing countries and particularly the food-deficit, low-income, African countries is encountering difficulties in replenishing its resources,

  • 1. Supports the objectives of the Harare Declaration on the Food Crisis in
    Africa, adopted by the Thirteenth Regional Conference for Africa, and requests the Director-General of FAO to continue to help African countries implement its principles;

    2. Commends the Director-General of FAO for his efforts to focus the attention of the international community on the African Food Crisis and to define, under the Agricultural Rehabilitation Programme for Africa, a set of appropriate measures to overcome this crisis and its disastrous consequences;

    3. Endorses the actions taken by the Secretariat and the Director-General to prepare the ARPA;

    4. Welcomes the reallocation of US$22.5 million under the 1984-85 Regular Programme for the immediate implementation of rehabilitation projects under ARPA and for financing supporting activities;

    5. Supports the priority given to the Global Information and Early Warning System and to the development needs of Africa in FAO's Programme of Work and Budget for 1986-87;

    6. Asks that the policies and programmes of the African countries and external aid and assistance programmes give priority to the rehabilitation and development of food production;

    7. Encourages the efforts now being made at the Fortieth Session of the United Nations General Assembly to convene a Special Session of the General Assembly at Ministerial level to consider in depth the critical economic situation in Africa, in accordance with the appeal made by African Heads of State and Government at the Twenty-first OAU Summit;

    8. Fully recognizes the importance of Africa's debt problems and the close link between external debt and agricultural development and takes note with attention of the appeal made by African Heads of State and Government with a view to the urgent preparation of an international conference on Africa's external debt. d/, e/, f/

    9. Appeals to all IFAD Member Nations to finalize negotiations on the second replenishment of this institution's resources without delay, and in any event before the Ninth Session of the Governing Council;

    10. Requests all the donor countries to facilitate achievement of the World Food Programme's pledge targets for 1987-88 as proposed by the CFA (Committee on Food Aid Policies and Programmes), including contributions in cash, so as to: a) encourage the use of triangular transactions and b) accelerate the delivery of food aid and other supplies;

    11. Stresses the urgent need for concerted international measures aimed at mitigating the adverse effects on agricultural production and food security of southern African states of destabilizing acts of aggression by South Africa; a/, b/, c/

    12. Expresses its gratitude to the international community, including the United Nations System, for its support and aid to Africa, and requests it to continue this assistance, with special attention underlining the Importance of the priority programme adopted by the Twenty-first OAU Summit;

    13. Asks the Director-General of FAO to monitor the implementation of this Resolution within the terms of FAO's mandate and report on it to the Conference.

  • a/ The delegate of the United States of America stated that his government did not consider the introduction of political issues appropriate for consideration in FAO.

    b/ The Member Nations of the European Economic Community, Spain, Portugal, Israel and Japan made the following declaration: "In the text voted by the Conference, preambular paragraph 5 and operative paragraph 11 raised objections on our part. Our governments have, on various occasions, condemned South Africa's policy of apartheid and the repressive measures associated with this policy. However, FAO is a specialized agency of the United Nations which by virtue of its statutes is a technical organization in which it is not appropriate to deal with political questions, which come within the province of other United Nations bodies. The Member Nations of the European Economic Community, Spain, Portugal, Israel and Japan regret that they had to abstain on the resolution as a whole, but the voting procedure imposed on us by the majority did not allow us any other way of expressing our reservations, which related only to certain paragraphs".

    c/ The delegate of Côte-d'Ivoire, on behalf of the whole African Group (50 countries), and Colombia, Cuba, Iran (Islamic Republic of), Mexico and Nicaragua, which had strongly supported the present Resolution, rejected the concept of politicization of FAO as referred to by countries which abstained from voting or voted against the Resolution on the Critical Situation in Africa, given the fact that this Resolution repeated the terms of ECOSOC (Economic and Social Council) Resolution 1985/80 as adopted on 26 July 1985 by consensus and which had been adapted to the field of food and agriculture in keeping with the mandate assigned to FAO.

    d/ The Member Nations of the European Economic Community, Spain and Portugal recalled that a constructive dialogue had developed within the framework of the competent international agencies, and in particular the International Monetary Fund, the World Bank and the Club de Paris, for defining appropriate strategies for approaching the debt problem presently confronting African and other developing countries. They continued to think that a case-by-case approach was the most effective way of implementing the relevant paragraphs of the declaration on Africa adopted last year by the General Assembly of the United Nations.

    e/ The delegates of the United Kingdom and of the United States of America considered that FAO did not have any substantive competence in matters relating to external debt. They also considered that the reference in the text to the close link between external debt and agricultural development was an over-simplification of a much more complicated interaction which could not be specified in isolation.

    f/ The delegate of Cuba considered that external debt problems were closely related to agricultural development and food production, and that independently of negotiations between heads of state in other fora, governments and people had the sovereign right to discuss the consequences of the external debt on their social, economic and political processes.

    Study of Agricultural Price Policies

    82. The Conference reviewed agricultural price policies on the basis of the report of the Director-General. It noted that the report drew on the results of the examination of the subject by the four FAO Regional Conferences in 1984 and that a preliminary version had been discussed in depth by the Committee on Agriculture (COAG) in March 1985.

    83. The Conference welcomed the revised report as a valuable contribution, which went far toward filling a gap in knowledge of current price policy practices and problems. It was well informed and comprehensive and succeeded in combining analytical insight with practical, down-to-earth suggestions for improved formulation and application of price policies.

    84. While agricultural price policies were necessarily country specific, their general framework and the issues with which they dealt often had much in common. By identifying key issues and options and by gathering more facts on recent or existing price policies, including the extent of price bias, the report was a useful guide to member countries, especially developing countries. It should also be taken into account by other international bodies.

    85. The report should lead to follow-up action by both countries and by FAO. The subject, however, required deeper and more disaggregated analysis of certain aspects, particularly the bearing of protection on agricultural prices and trade.

    Importance and Complexity of Price Policies

    86. The Conference stressed the importance of agricultural price policies at all stages of development, both in market economy and centrally-planned countries. Prices exerted a major influence on production, consumption and trade and all governments Intervened to some extent - and often to a considerable extent - in the pricing of agricultural commodities and inputs to production. These interventions had international as well as national impacts.

    87. The Conference underlined the great influence of non-price factors on production, such as agricultural structure (farm size, cropping pattern, technology, income level, etc.), transport and its infrastructure as well as the availability of inputs. If these other prerequisites were not available, price incentives alone would not result in adequate growth. Nevertheless, a sound price policy was often the missing ingredient in agricultural policies. Price policies which hampered or excessively promoted the growth of farm output or which paid insufficient attention to the nutritional problems of the very poor could inflict high economic and social costs.

    88. The Conference noted that significant modifications to price policy were taking place in many countries, developed as well as developing and centrally planned as well as market economies. The general thrust of the modifications was to try to bring consumer prices closer to costs and to provide remunerative prices to producers. A number of developing countries were giving greater priority to food crops in contrast to export crops. Price policy bias against agriculture had been reduced in a number of instances. Subsidies were also being reduced.

    89. Repeated attention was drawn during discussion to the complexity of price policies. This arose primarily from the multiple role of prices in providing farm incomes, in relating supply to demand and in giving signals for resource allocation and production decisions. A number of Influences and potential conflicts had therefore to be brought into balance, e.g. interests of producers and consumers, urban and rural populations, large farmers and small farmers, and priorities to be given to cash crops and food crops, respectively. At times, price policy decisions which were politically and socially unpopular had to be taken.

    90. The Conference gave particular attention to

  • (a) internal issues faced by developing countries in deciding upon and applying their price policies and

    (b) the effects on developing countries of agricultural protection in developed countries.

  • Key Domestic Issues in Pricing Policy

    91. The Conference emphasized the need to apply multiple economic criteria in recommendations concerning the level of prices, although the final decision could be influenced by broader political and social considerations. Market prospects, cost of production and international prices all had to be taken into account. A number of countries used additional criteria.

    92. The Conference agreed that the major function of producer price policies in developing countries was to give adequate incentives to farmers to increase output and returns by, for example, where appropriate, switching crops, increasing productivity and adopting better technologies. For this purpose it was essential that price bias against agriculture should be eliminated or reduced to the greatest extent possible. The Conference further agreed, however, on the necessity of cushioning the impact of incentive food prices on the food consumption of poor people. Policies must not neglect their effects on distribution.

    93. The Conference emphasized the importance of food subsidies in meeting this problem but it agreed that they should be in the form of targeted subsidies available only to the very poor and other vulnerable groups. Rural and not only urban populations should be enabled to benefit. It was difficult to target food subsidies effectively; this was an area in which the exchange of country experience would be most valuable in finding the best system.

    94. The Conference pointed to the need for macro-economic links to be taken fully into account when decisions were being made on agricultural price policy and on broader economic policy which had implications for the sector. It was particularly desirable that the influence of exchange rates on producer prices of agricultural products be assessed with care. Appropriate institutional arrangements could ensure that price policy was properly integrated not only in agricultural policy but also in overall national development strategies.

    95. The Conference noted that uncertainty still remained as to the role of input subsidies as against output price incentives for raising production. Output incentives were often appropriate although in some circumstances subsidies on inputs such as fertilizer, seeds or credit could be effective, especially in countries at early stages of development where the use of new technologies needed to be promoted.

    96. The Conference emphasized that policies to ensure reasonable price stabilization were essential, both for consumers and producers. It could reduce risks of producers in adopting new technologies. Some price movement within seasons and from one year to another were normal but these should be kept within predetermined limits which respected minimum guaranteed prices. Government intervention in market prices could achieve such stabilization goals.

    97. The Conference expressed its concern that price policies could have adverse effects on the distribution of income within agriculture, especially in the short or medium term. Farmers who practiced largely subsistence agriculture received little benefit from output price incentives. The Conference therefore stressed the need for countries to ensure that the fullest use was also made of other measures which directly benefited small farmers and landless labourers, in accordance with the objectives and the plan of action of the World Conference on Agrarian Reform and Rural Development (WCARRD).

    98. The Conference agreed with the need for effective administration of price policies. One aspect was marketing. The Conference agreed that it was desirable to promote efficiency through competition. Likewise, it was stated that often this could best be achieved through a combination of parastatal and private marketing channels. Some members referred to the negative effect provoked in many cases by the activities of intermediaries. Improved transport and extension of roads were urgently needed in some regions. Marketing arrangements should also make adequate provision for quality differences in the application of agricultural pricing schemes.

    99. The Conference stressed the basic importance of planning and administration capacity and the availability of statistical and other information in determining the effectiveness of the application of price policies. The development of national capacity in these fields had to be given adequate priority in resources devoted to training and appreciation was expressed for FAO assistance of this kind.

    Agricultural Pricing Policies in Developed Countries

    100. The Conference discussed at length the extent and bearing of agricultural pricing policies in some developed countries on world agricultural trade, prices and supplies and on the external environment faced by other countries in formulating their price policies.

    101. The Conference agreed that it was an issue of fundamental importance to all countries. It was also one of great complexity. The full consequences could not yet be assessed with confidence although their nature, direction and broad magnitudes were now the subject of increasing research.

    102. Most studies pointed to lower and more unstable international prices as general results of protectionism; they also pointed to severely limited access to markets of major products, such as grains, sugar and meat. The Conference agreed that these results did in fact follow, inter alia, from protection. It also agreed that protection was not the only cause for price fluctuations in world markets, noting a number of factors such as exchange rate fluctuations. The Conference furthermore believed that assessments of the removal of protection limited to only one or a few commodities often gave misleading results and that a reliable assessment of a comprehensive reduction of protection along a broad front was not yet available. Existing and recent studies did suggest however that elimination or reduction of protection could lead to a substantial increase in the export earnings of those countries with comparative advantages in the production of commodities widely and heavily protected in developed countries.

    103. The Conference also noted that the position regarding protection varied widely amongst developed countries and amongst commodities. Some countries, for instance, which had introduced a system of price guarantees for limited amounts, protected their staple food commodities only to the point when approximate self-sufficiency was reached and thereafter restricted production. In small countries using this system, protection had only limited effects on world markets. Other countries continued their protection beyond self-sufficiency and then opted to subsidize exports. Some countries which historically had exported a significant proportion of their output at world market prices often strongly protected their production of import-competing products.

    104. Many members linked the guiding principles for the setting of agricultural prices to the guidelines for International Agricultural Adjustment which constituted the overall framework for the solution of agricultural issues.

    105. Some members expressed the view that protection in some developed countries had been a success in terms of goals of increased production and enhanced food security. They also suggested that presently high producer prices in their countries would eventually be reduced but that structural adjustments had first to be taken further. A number of developed countries also informed the Conference of a number of changes which they had made to improve agricultural trade prospects, including trade with developing countries.

    106. The Conference expressed the hope that forthcoming negotiations in GATT would therefore provide a sorely needed improvement in the policies and practices affecting world agricultural trade, including a significant limitation of protectionist policies, and improvement of the export opportunities needed to make fuller and more assured use of existing comparative advantages, taking into account the special characteristics of agriculture.

    Contents -