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XIII. Appendix D - Statement by the Director-General

Mr Chairman, Delegates and Observers, Excellencies, Ladies and Gentlemen,

The Twenty-third Session of our Conference marks the completion of four decades of work by FAO. The Organization itself is but the tip of the iceberg. Vaster but less visible, a thousand forms of international cooperation have developed during these forty years. Together we strive to rid the world of its millennial scourge of hunger and malnutrition.

Our thoughts will be much devoted to the past: to an assessment of what has so far been achieved, by FAO and others; and to mapping out the tasks which still lie ahead. This will be our special theme next Thursday, when the Conference will formally celebrate the fortieth anniversary of the Organization.

Today I would like, rather, to look at the situation of today, and its implications for our work of tomorrow.

Movements in the world economy may appear remote from the work of FAO, but they nonetheless determine the elbow-room of our member countries for coping with problems in food and agriculture. In one way or another, they have a major impact on world food security.

The state of the world economy can give us small comfort. The recovery from the deep depression of the early eighties appears to be losing its impetus. The developing nations have benefited little from the recent buoyancy in the industrialized areas. Their external debt is moving toward the awesome figure of one thousand billion dollars. As yet there is no consensus on how short-term debt management can evolve into long-term expansion of the national economy. These nations must attempt to remove the stranglehold of debt at a time when they face a deteriorating economic climate, and when trading conditions - to which I shall return in a moment - are alarmingly weak.

The debt problem remains central to the economies of many developing countries, especially in Latin America and also in Africa. Until it has been solved, their economic and even social stability must be considered in jeopardy. This includes their food security. A foreign exchange crisis can prevent imports of the fertilizers and other inputs needed to grow food. It can bring the most extreme difficulties to a food-deficit country which is obliged to import basic foodstuffs.

In the interest of rich and poor countries alike, it is imperative that the industrialized nations reach agreement on a set of concerted macro-economic policies. These policies should aim at steering the world away from the danger of another slump, at bringing about a renewed flow of capital to the developing countries, and at creating an environment in which the nations of the Third World can resume the growth rates of the seventies. Only in a context of overall growth can the poorer nations cope with the investment and policy requirements on which their future food security will. depend. Either their economies will grow, or their problems. And if the human race Is to survive at all, it is surely time to put an end to the competitive dissipation of resources for armaments. The fault is by no means only with the richer nations. How much of the external debt of the developing countries is owed for weapons? Mankind is impoverishing itself to build its own funeral pyre.

In food and agriculture, the scene before us is in many respects favourable indeed. Although the final harvest results for 1985 are not yet in, we can already see that in most regions it has been a satisfactory year. Global food production is likely to have grown a little faster than population. Increases have been well distributed among the developing countries. It is likely that in many areas the nutritional levels of the poor have further improved. Africa - to whose problems I shall return in a minute - has shown a good recovery from its recent run of disastrous crops, although by no means all countries are out of difficulty.

Cereal stocks are forecast to reach a level equivalent to 21 percent of annual consumption at the end of the current season: more than enough to act as a cushion for world food security.

However, all is not well. The problems have deep roots, but are reflected chiefly in trade. They were reviewed just last month by FAO's Committee on Commodity Problems.

World prices have been trending downwards, across almost the entire spectrum of agricultural commodities. This would not be so serious, if we could look forward to markets picking up again in the near future. However, there is little to justify hopes of an early upturn. On the contrary, the prospect of a general economic slowdown suggests rather that prices may continue to be weak.

Over the medium term, too, we foresee scant possibility of renewed dynamism in agricultural trade. Our most recent round of commodity projections, just completed, suggests that in most cases import demand will grow more slowly in this decade than it did in the seventies. Both developing and developed exporters will be adversely affected.

For many tropical products, such as coffee, cocoa and tea, the market is projected to expand by little more than one percent per annum up to 1990. For some commodities, it may even contract.

In the cases of cereals and livestock products, import demand grew in the seventies by more than seven percent annually; in the eighties, growth is projected at between one and two percent only.

This unpromising trade environment is being further weakened and distorted by the side effects of national agricultural policies, especially those of developed countries.

The difficulties being faced by many developed nations as they attempt to reshape their agricultural policy framework are highly complex. New policies must achieve objectives that conflict at many points. Farmers must be able to enjoy acceptable income levels. Food prices to the consumer must be reasonable. The farm community must be able to carry out its function of conserving the countryside, a function to which growing importance is attached by society as a whole. Exporters must be able to compete on international markets, and importers must be assured of a regular flow of supplies. Subsidies to agriculture from the rest of the economy must be kept within reasonable bounds.

The problem is not to achieve one or more of these objectives: it is to achieve all of them at the same time.

These unresolved dilemmas lead to national policies which can have a damaging impact on other countries through the mechanism of trade. In effect, farmers are being subsidized to produce surplus commodities, which importers are then subsidized to buy. The total cost to the world economy is enormous. And increasing competition for limited markets is leading to tensions between trading groups that are certainly not in the interest of the world community as a whole.

There are mounting pressures for protectionism, even while discussions on trade liberalization are under way.

It is essential to find viable solutions to these complex issues as soon as possible. The focus of attention is on trade, but in the last resort what happens in trade depends on what happens in production.

National production policies should be deliberately conceived in such a way as to minimize any possible negative effect on other countries through trade. The highest importance attaches to the decisions on farm policy which are under consideration by the United States and the European Economic Community. Together, the US and the EEC account for about 45 percent of the world's agricultural exports and the world's agricultural imports. Their policies are clearly going to have a very wide impact Indeed. I trust that the decisions will be statesmanlike, and will take full account of all implications for international trade, in particular for the interests of developing countries.

So far as trade issues are concerned, we have been counting heavily on the work of the GATT Committee on Trade in Agriculture, established just three years ago. I deeply hope that this Committee will be able to speed up completion of its work programme. I also hope that the conditions will be met for the early launching of a new round of multilateral trade negotiations in GATT. So far as agriculture is concerned, this could help to bring about again more rational and efficient arrangements for world production and trade.

In the meantime, the possible impact of trading difficulties for the developing countries is a matter for the greatest concern. How can agricultural exporters cope with their debt burden, and finance economic growth, without a strongly rising level of earnings from foreign trade?

The plight of exporters is made more desperate by the virtual collapse of most of the international commodity agreements. The chances of establishing the UNCTAD Common Fund for Commodities now appear remote.

Projections are not forecasts of what is going to happen. They are extrapolations from trends. They provide a warning. In order to mitigate the dangers I have analysed, a three-pronged approach to the problems of developing-country exporters can be suggested.

In the first place, the industrialized nations should deliberately sustain the efforts of the poorer countries to earn their livelihood through trade. Several distinct types of action are needed. New protectionist measures which would further restrict the trade outlets of the developing countries should not be enacted, and existing trade barriers should be lowered or if possible eliminated. There should be a halt to subsidized exports from richer nations which enter into direct competition with the products of the Third World.

Secondly, the development of South-South trade should be more systematically fostered. Intra-trade among the developing countries has been growing with great rapidity - it increased by more than five hundred percent between 1970 and 1980. Indeed, it now accounts for about a quarter of all the agricultural exports of the developing nations. Nevertheless, there is still much scope for liberalization in South-South trade. Negotiations among developing countries on a Global System of Trade Preferences are still at an early stage: they should be pressed forward vigorously. Among commodities, we see particular opportunities for expanding intra-trade in tea, fats and oils and oilmeals.

Thirdly, exporters of tropical products would do well to coordinate their production and investment plans, if necessary through informal groups such as those sponsored by FAO. If this is not done, a stagnant market can all too easily be pushed into collapse by the untimely expansion of production. And genuine efforts should be made to revive existing commodity agreements, to negotiate new ones, and to bring the UNCTAD Common Fund for Commodities into operation.

Difficulties of another kind face the world's fishermen. In substance, they must meet a constantly rising demand for fish while adapting to the new regime of the oceans, at a time when there are only limited possibilities of expanding the total catch. The year 1984 was a good one in this respect: the catch rose strongly and reached about 82 million tons, well above the previous record.

The spotlight is now on improved management. Just last year our World Fisheries Conference endorsed a Strategy for Fisheries Management and Development. At national level, the Strategy is already being widely utilized as point of reference by individual countries as they plan to strengthen their fisheries sector. Internationally, FAO has been giving particular attention to the Strategy provisions regarding trade in fish and fishery products. We shall be starting a series of intergovernmental consultations on this subject next year, taking up both its technical and its economic aspects.

Besides a Strategy, the Fisheries Conference also approved five Programmes of Action, for implementation mainly but not exclusively by FAO. I am glad to say that the annual target for contributions to finance these Programmes has been comfortably exceeded in 1985, and we are continuing to negotiate for further pledges. Most recently, the United States has agreed to support an FAO executed regional project in West Africa. I have also been in touch with the Minister of Fisheries of the Union of Soviet Socialist Republics, which I visited on the invitation of the Government. Last September, I was invited by the Government of Spain to participate in a Ministerial Conference on Fisheries which was organized as a follow-up to the FAO World Conference.

I may add that "Fishermen and Fishing Communities" have been adopted as a main theme for World Food Day 1986. I have spoken so far of the world's farmers and fishermen, but it is the foresters who have a special claim on FAO's attention in 1985, for this has been declared by the FAO Council as the International Year of the Forest.

The decision of the Council was part of FAO's response to the mounting wave of concern over the future of man's forest heritage. Atmospheric pollution, pest and fire in the temperate zones, indiscriminate cutting in the tropics: everywhere the forest is under siege.

Another response was the recent launching of a major FAO initiative which appears to be rapidly gathering strength. Last June, our Committee on Forest Development in the Tropics adopted an overall framework for action to tackle the problems which we believe to have the highest priority in tropical forestry. This overall plan covers a wide range of programmes: land-use planning, fuelwood, industry, forest conservation, and institution-building. These are not conceived as specific FAO programmes, but rather as priority areas for action by the international community as a whole.

I am glad to say that a series of follow-up meetings is being organized by individual governments. In this way, the diffused and generalized concern felt by the public about the fate of tropical forests can be channeled into concrete programmes and projects. Within the very flexible structure envisaged for the Programmes of Action, our Committee on Forest Development in the Tropics will function as the overall mechanism for monitoring progress and problems.

The other main event in this International Year of the Forest has been the Ninth World Forestry Congress held in Mexico last July. The conclusions of the Congress are embodied In a Manifesto which Is before this Conference. The Congress placed considerable emphasis on the integration of forestry in broader approaches for rural development. This is, of course, completely in line with the thinking of FAO. Furthermore, it expressed strong support for the Plan of Action for Tropical Forests which I have just described. I would also draw attention to the proposal supported by the Congress for the creation of a world fund for the development and environmental protection of forests, aimed especially at providing aid for developing countries.

This proposal - if it is acceptable to the donor community - would come at a very opportune moment. Official commitments of aid to agriculture in its broad definition (which includes forestry) declined in 1983 for the first time in the present decade. Within the total figure, an even sharper drop occurred in aid on concessional terms: in other words, loans for agriculture are tending to be given on harder terms. Multilateral assistance is going through a particularly difficult time: multilateral commitments to agriculture have dropped by 23 percent in current dollars since 1980. This reflects, of course, the difficulties being encountered by IDA, IFAD and other organizations. The long-drawn-out negotiations for the second replenishment of IFAD are especially worrying. I appeal to all parties concerned to bring them to a successful conclusion before the end of the year.

The progress of the Substantial New Programme of Action for Least Developed Countries, adopted by a United Nations Conference in 1981, has been less than satisfactory. Only some donors have reached the 1985 target for aid to the least developed countries. As for the LDCs themselves, their socio-economic situation In the last four years has tended to deteriorate rather than Improve. Food aid is the one bright spot. For the first time, the target of 10 million tons of cereals set at the World Food Conference in 1974 has been attained and surpassed. The International Emergency Food Reserve, too, has handsomely exceeded its target of 500 000 tons in each of the recent years. However, the increased flow is accounted for by emergency assistance to Africa, and not by a higher level of development aid. I deeply hope that contributors will make a special effort to attain the new target for the World Food Programme in 1987-88, amounting to 1.4 billion dollars in both commodities and cash.

It is, of course, in Africa that aid has made its most dramatic response to the most dramatic of problems. I would like, Mr Chairman, to summarize the evolution of the crisis in Africa south of the Sahara.

Two years ago, African food problems already occupied the forefront of the international stage. In November 1983, the last session of the FAO Conference adopted its resolution on "The Critical Situation of Food and Agriculture in Africa". During 1984 the crisis peaked, with widespread famine in Ethiopia, the Sudan and Chad, and intense local food shortages in a number of other countries.

The relief operation has mobilized an immense fund of goodwill and generosity, not only on the part of governments but also among private organizations and citizens. I would like to pay a special tribute to all who participated in fund-raising drives, both as organizers and as givers. Thanks to the efforts of governments, organizations and individuals, the food aid needs of the stricken countries, estimated at 7 million tons for 1984/85, have been almost entirely covered.

If the situation of food aid pledges is satisfactory, I cannot say the same for the logistics. Innumerable delays have occurred at almost every stage of the long transportation process which takes relief grain from its country of origin to the point of distribution. At the beginning of this month, over a million tons of pledged relief supplies had still not reached the afflicted countries. Further substantial. quantities were awaiting either discharge or transportation to the deficit areas.

In the meantime, the situation south of the Sahara has been transformed by timely and abundant rains. For 16 of the 21 affected countries, the emergency can be considered over, although most of them will continue to need food aid to cover their structural food deficits. In several cases, including Kenya, Malawi and Zimbabwe, the harvest has been so good that substantial quantities of maize and sorghum are available for export - although markets are extremely difficult to find. On the basis of present information, we expect only five countries to require further emergency relief in 1986.

Action must now be taken to organize the best use of the exportable surpluses in the region and the late-arriving relief supplies. If the necessary arrangements can be made, including triangular transactions and the rescheduling of destinations, it should be possible to meet emergency requirements for 1986, to contribute toward structural food deficits, and to rebuild national reserves in a speedy and rational manner. If this is not done, there is a danger that relief goods arriving late may depress prices and discourage planting for next year's harvest.

I have already drawn the attention of donors to some of these problems, and would urge all concerned - including both donors and affected countries - to plan the necessary measures as soon as possible. FAO will, of course, be ready to continue its support of these efforts.

The Agricultural Rehabilitation Programme for Africa (ARPA) launched by FAO at the beginning of the year is contributing toward the turnaround in food production. In order to get the Programme moving as fast as possible, the Council approved a refocusing of Regular Programme activities in the amount of 5 million dollars for the purpose of rehabilitation in Africa. This was increased by a further 2.5 million dollars from savings under the Regular Programme. As a third step, the Finance Committee approved my proposal to transfer to the Programme an amount of 15 million dollars from savings, to be used according to the procedures of TCP projects.

So far, projects costing about 200 million dollars are covered by tentative or definite pledges from various sources of finance. I am especially pleased that the list of participants includes some developing countries in other regions. However, many deserving projects still need a donor. I would ask potential contributing countries to look again through our list of projects for which there is at present no financing in sight.

Over and above rehabilitation and recovery, there remain many questions for the medium and longer term. How, in particular, can the different agroecological zones of Africa best achieve a massive increase in their rates of growth of food production? And how can they best be helped by the international community? We are formulating possible responses. Our suggestions will be put forward for discussion at the Regional Conference for Africa next September in Brazzaville. Before that time, they will be reviewed by an Expert Consultation of individual specialists from Africa.

Meanwhile, I would like to draw attention to a recommendation put forward by the Conference of Ministers of the Economic Commission for Africa last July, and modified by the recent Summit of the Organization of African Unity. This recommendation, in its final form, calls for agriculture to receive 20-25 percent of public expenditure. The fragmentary data which are available suggest that for most African countries this would involve a major shift in priorities toward agriculture.

In the last resort, the problems of African agriculture can only be tackled within the framework of the total economy. In turn, the problems of a national economy cannot be examined in isolation from the external forces - debt, trading conditions, migration, aid flows - which have such a major impact on it. That is why, in addressing the Second Committee of the General Assembly at the end of last month, I reiterated my suggestion that a Special Session of the Assembly be devoted to the long-term development of Africa. A proposal to this effect was adopted by the OAU Summit last July.

Mr Chairman, I have dwelt at length on the two issues - or groups of issues which I see as the most disturbing at this time: the trading problems of developing countries; and the difficulties of Africa.

Among the more specific questions on the agenda of this Conference, I would like to draw special attention to the proposed World Food Security Compact.

On the occasion of this fortieth anniversary, the Compact gives an opportunity for the solemn reaffirmation of the principles which are guiding our endeavours. It contains no new commitments of a legal or financial character. What it does offer is a statement to the world of what we are trying to do, and of the indispensable contributions that can be made by governments, organizations and individuals.

I deeply hope that the Compact can be adopted without controversy, and by consensus, as an integral part of the celebration of our anniversary.

Similarly, I would urge the Conference to adopt by consensus the International Code of Conduct on the Distribution and Use of Pesticides. The document before the Conference is the culmination of several years of preparatory work, in the course of which there have been extended consultations with the many interests involved. This final text incorporates certain suggestions put forward in the recent discussion in the FAO Council, which we hope will facilitate its acceptance by the Conference.

As developing countries intensify their agricultural production, plant protection becomes increasingly important. Pesticides are not the only instrument within plant protection strategies, but they are often of crucial importance. The Code of Conduct can be of special benefit to developing nations which do not already have their own pesticide control procedures and regulatory processes. It can help to avoid hazards to health and the environment, and thus promote a key aspect of agricultural development.

I would also like to draw attention to the items on the Conference agenda relating to the 1990 Census of Agriculture and our Study of Price Policies.

Without going into the substance of these two questions, I wish to flag them as prime examples of FAO's role in organizing the collection of data, and in analysing the information which becomes available in terms of policy options.

The function of a world data centre, with a high capacity for analysis, is likely to become of ever-increasing importance in future. This is the result of both the mounting complexity of the world in which we live, and the rapid advances in the technology for handling information. FAO must remain at the forefront in coming years, as it has in the past.

These concerns, Mr Chairman, are reflected in my Proposed Programme of Work and Budget, which is before the Conference.

I cannot emphasize too strongly that my proposals are based on strategies which have been unanimously approved by the entire membership of the Organization. The general thrust of FAO's programme has the full backing of the countries of the world.

It is only when we come to financial matters that we find unanimity more difficult to attain.

My approach has been aimed at three objectives: to improve the service which FAO provides to its members, and especially to developing countries with serious food problems; to show austerity, economy and efficiency in the use of the funds made available to us; and to seek a consensus among all groups of countries on the level of the budget.

With a view to achieving the last of these objectives, I have made certain adjustments since my Summary Programme of Work and Budget was discussed by the
Programme and Finance Committees and Council. This is the first time I have taken such a step, and I hope that members will appreciate the spirit of goodwill in which it was done.

In substance, I have maintained my proposals for a modest increase in our technical programmes, but have made a number of reductions in administrative and support costs.

There remains a small net programme increase, but I foresee that this will be fully covered by an increase in Miscellaneous Income and by changes in the effective dollar/lire exchange rate.

The actual cost of the budget to member countries will, in the last resort, depend on the exchange-rate factor, but I believe that most countries will find an actual reduction in their contributions to FAO in the next biennium.

I appeal to all member countries to support the Programme of Work and Budget which I have submitted to the Conference.

Mr Chairman, the fortieth birthday of FAO was celebrated on 16 October last with a very fine ceremony, at which we were honoured by the presence of His Excellency President Cossiga of Italy. While he was here, President Cossiga unveiled a plaque marking the start of work on the additional buildings which the Italian Government is generously constructing for FAO. These will enable all the Rome staff to work at the Terme di Caracalla, rather than being spread over several different locations in the city.

In a broader sense this was a gesture of support, not just for FAO, but for all that FAO stands for: raising the living standards of the poor and the malnourished; promoting a rational world order in food and agriculture; and ultimately contributing toward peace and prosperity for all.

It will be up to FAO, as it moves into its fifth decade, to justify this confidence. We have gone far, but not far enough, toward the aims established forty years ago. The reflections inspired by our anniversary should lead us to a new dedication of purpose, a new vigour in our action, and above all a renewed enthusiasm.

With purpose, vigour and enthusiasm we shall fight to bring all people their birthright of food security and happiness.

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