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VI. PART II - Major trends and policy questions in food and agriculture

A. World situation and outlook: Salient Features in the World Situation
B. Commodity problems
C. Fishery problems

D. Indicative world plan for agricultural development
E. FAO contribution to the second development decade
F. The protein problem in relation to the world food supply
G. Multilateral food aid
H. World food programme
I. Freedom from hunger campaign
J. Article XI reports

A. World situation and outlook: Salient Features in the World Situation

Agricultural Production
Surplus Stocks
Agricultural Trade

32. The Conference discussed the world food and agricultural situation on the basis of the Director General's preliminary report on The State of Food and Agriculture 1969 : and the updating document tabled at the opening of the session. It noted that the documentation was extremely useful because it presented a realistic picture of current problems, and indicated clearly the complexity of the situation.

33. The Conference agreed that the changes which had been made in the form and content of the document, in the light of the Council's suggestions at its Fifty-First Session, constituted an improvement. The objective of greater timeliness had been largely achieved in the preliminary version, while the final version, which would include also the information contained in the up-dating document, would be a more valuable reference document. The introduction of regional reviews, in addition to a shortened world review, was welcomed, as it provided an opportunity for the discussion of specific problems of importance to individual regions. The hope was expressed that the more analytical approach which had been adopted in the 1969 issue of the report would be further strengthened.

34. Several delegates welcomed the inclusion in the report of the results of the medium-term food outlook reviews. They expressed the hope that this would become a regular feature of the report, and suggested that the country coverage of the medium-term forecasts should be increased. It was agreed that a phased programme, to cover different countries of the world over a period of two or three years, would be followed.

35. Some delegates felt that the document gave insufficient attention to some important topics, including livestock development, fisheries, human resources and the cooperative movement, and expressed the hope that these subjects would be treated more fully in future issues. It was also suggested that a special chapter on buffer stocks be prepared for inclusion in a future issue.

36. Several delegates noted that the generally inadequate statistics for the developing countries made it difficult to prepare analytical reports on developments in these countries. They urged that FAO intensify its efforts to assist developing countries in building up their statistical services, which were also an essential precondition for more efficient development planning.

Agricultural Production

37. The Conference noted that agricultural production in the developing countries had in 1968 grown by approximately 2 percent, thus barely keeping abreast with the population growth. This was a smaller increase than had been achieved in 1967, when there had been a widespread improvement in weather following two years of poor crops. A very large increase, of around 5 percent, had been achieved in the agricultural and food production of the developing countries of the Far East, but production results in other regions had been less satisfactory. In Africa, output had risen by about 3 percent, but had remained unchanged in per caput terms at the low level which had prevailed for several past years. In the Near East, production had risen only fractionally, and in Latin America widespread drought had caused a fall in total output. Among the developed regions, output had risen by 2 percent in Western Europe and North America, and by 5 percent in Eastern Europe and the U. S. S. R., while a steep recovery, by 15 percent, had taken place in Oceania.

38. Tentative indications for 1969 suggested some recovery of production in Latin America, and a further increase in the Near East, where several countries had had good cereal harvests.

No quantitative estimate was yet possible for Africa nor for the developing countries of the Far East, though in the latter region it appeared possible, if weather conditions during the rest of the season remained normal, that a further increase in cereal production though more moderate than in the preceding two years might be achieved. For the developed regions, first estimates for 1969 suggested virtually no increase in production.

39. The very substantial increase in production in the developing countries of the Far East in 1968 was considered encouraging. It had enabled a number of major deficit countries to reduce their hitherto growing cereal imports. Even more important, it had been to a considerable extent due to the more widespread use of new high-yielding cereal varieties, and of modern cultivation techniques associated with them. This suggested that there was justification for the hope that a growing number of developing countries could now increase their food production at a faster rate than in the past, provided that appropriate policies were pursued, and they were able to meet their requirements for purchased inputs, such as fertilizers.

40. While finding the progress in food production in some developing countries encouraging, the Conference agreed that it was still necessary to view the situation with caution. Substantial increases in production had so far been attained by only a relatively small group of countries, and in even the most successful regions the rate of growth of food production remained generally insufficient relative to the high rate of population growth. Moreover, the experience so far remained too short to permit a judgement as to whether a permanent and self-sustaining change in agricultural technology had been achieved, even in the most successful countries.

41. The Conference agreed that a strong commitment on the part of individual governments and international agencies was required if such a change were to be brought about, and the agricultural sector were not to remain a bottleneck to economic development, as still tended to be the case in many countries.

42. The Conference noted that in countries where initial successes in the use of high-yielding cereal varieties had been achieved, a number of "second generation problems" had now to be faced. In the main it was a question of ensuring that the faster rates of growth of production were sustained in the face of various impediments that had arisen, including problems of pest and disease control, and of consumer acceptance. Some delegates emphasized the importance of continued price supports. Of particular importance was also the development of adequate marketing facilities, and the special chapter in The State of Food and Agriculture 1969 analysing recent experience in marketing improvement programmes in developing countries was welcomed as making a concrete contribution to a better understanding of the problems in this field. Many delegates stressed the importance of more research in the field of plant breeding, with a view to developing constantly improved varieties, not only of cereals but also of other crops, such as pulses, oilseeds and fodder crops, as well as of livestock; and of improved extension services to carry the fruits of research efficiently to the individual farmers. The Conference also stressed the importance of education and training, of both farmers and technical personnel. Another important factor was the reform of land tenure in many countries to ensure that the cultivators received a fair portion of the increased returns, and thus had an incentive to adopt the more modern but also expensive techniques of cultivation.

43. Several delegates pointed out that FAO had an important role to play in all these areas, both by providing direct technical assistance to countries, and by acting as a catalyst for increased investment in agriculture. Some delegates suggested that FAO might give greater assistance for the purpose of establishing regional research centres for the development of high-yielding crop and livestock varieties suited to the local environment.

44. It was also pointed out that the use of increased amounts of purchased inputs, particularly fertilizers, that was associated with the modern techniques centering around the high-yielding seed varieties, created an additional burden on the balance of payments of many developing countries. The hope was therefore expressed by many delegates that the proposal for a programme of aid in the form of food production requisites, which had been made by the Director-General at the Fourteenth Session of the Conference, would be revived.

Surplus Stocks

45. The Conference noted with concern that although production had increased only moderately, the tendency for surplus stocks of temperate zone foodstuffs to accumulate had reasserted itself markedly in 1968 and 1969. By the end of the 1968/69 crop year the combined wheat stocks of the major exporting countries (other than Argentina) had reached a level only slightly below the all-time peak of 1961, and a further increase was expected in 1969/70. Stocks of butter and skim milk powder, the other principal products affected, had reached a record level by the end of 1968, and continued to expand in 1969. The stocks were, moreover, geographically more widespread than before, and had now appeared in several countries that had not earlier held significant excess stocks.

46. Some delegates pointed out that the renewed surplus accumulation had the positive aspect of providing the world with improved security against food scarcities arising from widespread crop failures, such as had been witnessed in 1965 and 1966. More generally, however, it was felt that they had reached a level at which they had a serious price depressing effect in international markets, while their disposal at heavily subsidized prices had tended to disrupt trade outside specially protected markets and discourage domestic production, particularly in developing countries.

47. The reasons for the re-emergence of the surplus stocks were well known. In the main they were an expression of the long-standing conflict in high-income countries between the effects of technological progress and farm income policies on the one hand, and the slow growth of demand on the other. In the case of wheat, additional factors in recent years had been the increased self-sufficiency of some developing food deficit countries and the recovery of wheat production in the U. S. S. R.

48. In discussing possible solutions to the problem, many delegates stressed that there was an urgent need for structural adjustments in the agricultural sectors of many high-income countries, which were also high-cost producers Some delegates, however, stressed the difficulties of bringing about such changes rapidly. Some delegates also expressed doubts as to whether such changes would in fact solve the surplus problem, and whether it might not be necessary to introduce also other measures, including possibly some forms of production control.

49. Some delegates stated that no permanent reduction in the productive capacity of the high income countries should be made until there was certainty that developing countries were able to produce economically all the food they wanted to. Some other delegates stressed that, as suggested by the Indicative World Plan for Agricultural Development (IWP) substantial increases in food production in Zone C countries could not be achieved without changes in production and trade policies of Zone A and B countries. In the meantime, food aid would be needed, particularly of protein foods, and this constituted one of the most constructive uses of surpluses. Food aid should, however, be used in ways that encouraged rapid economic development. In distributing it, great care needed to be taken that normal commercial trade and domestic production in recipient countries were not disrupted.

50. Several delegates suggested that adjustments in price and income supports and in the level of production could be best achieved in an internationally agreed framework. Efforts in such a direction were now being made in the Organization for Economic Cooperation and Development (OECD), but other approaches could also be envisaged, for instance in a regional context. In such efforts, FAO had an important role to play. The majority of delegates expressed their support of attempts to solve the surplus problems through commodity arrangements and consultations.

Agricultural Trade

51. The Conference noted that the overall value of world agricultural trade had failed to increase in 1968. Although there had been improvement in the agricultural exports of the developing countries - their value was estimated to have risen by about 3 percent - the increase benefited only two of the four developing regions (the Near East and Africa, excluding South Africa), and much of it consisted of a recovery following widespread declines in 1967.

52. Of even greater concern was the evident lack of dynamism in trade in agricultural products over the longer run: overall, this trade had shown no sustained growth for the past four years, and for the world as a whole and for all regions but three (Western and Eastern Europe and the Near East) the value of agricultural exports in 1968 was at or below the level that had been reached in 1964. This situation was particularly disturbing when contrasted with the expansion of trade in all commodities at a rate of about 8 percent per year during the same period, and with the steady rise in prices of manufactured goods which adversely affected the terms of trade of developing countries.

53. The Conference discussed at length causes and possible remedies to this disquieting situation. This concerned most seriously the developing countries, which depended on agricultural exports for much of the financing of their development, although a number of high-income agricultural exporters, in some cases similarly dependent, were also being affected. Unless the trend was reversed, it would not only limit the growth prospects of developing countries, but have serious repercussions on world trade as a whole, through its effects on imports of the countries concerned. In the longer run, it would also affect the ability of high-income agricultural exporters to extend economic aid.

54. There was widespread feeling among the developing countries, that the developed countries should take a more positive attitude to increasing their imports from developing countries, including the review of their production, price, and income policies which encouraged increased self-sufficiency by uneconomic production, and the removal of the remaining tariff and non-tariff barriers. Note was taken in this connexion of the work under way in the GATT Agriculture Committee. Delegates from some developed countries, doubted however, whether any major expansion in agricultural export earnings of developing countries could be achieved by further reductions in tariff, fiscal and other barriers

55. Several delegates expressed their support of commodity arrangements as a means of raising prices and export earnings, but others pointed to the limits of such arrangements in situations of heavy over-supply. Another suggested remedy was the promotion of regional trade arrangements, including arrangements among developing countries. Other delegates stressed the importance of promoting agricultural trade in general, among all countries. Some delegates pointed out that more information was needed on prospects in centrally planned countries.

56. One important cause that hindered the growth of exports from developing countries was the growing displacement of natural by synthetic products in various end-uses. Some delegates asked for greater efforts at research into marketing and end uses to encourage the combined use of synthetic and natural materials.

57. The Conference noted that virtually the only major sector of agricultural trade which had throughout the recent period continued to show a rapid rate of increase was that of forest products. The value of their exports had increased in 1968 by 10 percent, and exports of developing countries by 20 percent. Even this sector, however, was not making the full contribution to the economic growth of developing countries of which it was capable on the basis of the forest resource endowment of these countries and the strong domestic and export demand for its products. As was pointed out in one of the special chapters included in The State of Food and Agriculture 1969, an important reason for this was the often antiquated administrative and institutional structures which govern the exploitation of forest resources in the developing countries. Some delegates pointed out that another factor was the tendency of investment in forest resources exploitation in developing countries to concentrate on the extraction of unprocessed timber.

B. Commodity problems

International Adjustment
Price Movements in Latin American Trade
Consultative Obligations Under the FAO Principles of Surplus Disposal
International Dairy Development Scheme

58. In summary, the general world agricultural commodity situation had probably deteriorated in some respects over the past two years. While world output of a number of commodities had reached record levels, the value of agricultural trade, as noted above, had declined slightly. Carryover stocks for some commodities had reached disquieting proportions and there were incipient surpluses for a number of other commodities. The world index of international agricultural prices had dropped from 105 in 1966 to 99 in 1968. These developments had taken place not in a depression but in a period when world economic activity generally had been at a high level. Moreover, it did not appear that trade would show significant improvement in 1969 and prices in general were likely to remain under pressure, except in a few cases where there were shortages of supply. Further additions to stocks of cereals and dairy products were likely.

International Adjustment

59. The Conference agreed with the conclusion of the Committee on Commodity Problems (CCP) that the root causes of current trade problems lay in the actual or potential excess of supply over effective demand of many commodities and that there was an urgent need for adjustment, including supply management, in international and national policies. In the absence of such adjustments, developing countries which depended heavily on their export earnings of agricultural products would be seriously handicapped in their development, and high-income countries would also suffer from the curtailment of trade. These problems, together with those resulting from limitations of access to markets, had been serious for some time and were becoming more crucial because of the inadequate action to date at national and international levels.

60. In considering the role of FAO in promoting adjustments where needed, the Conference stressed the commodity by commodity approach, as exemplified in the work of the various commodity consultations conducted under the auspices of the CCP. These now covered ten commodities on a regular basis. A Second Ad Hoc Consultation on Meat and Poultry was being convened, and many delegates expressed the view that intergovernmental consultations on this group of commodities should be put on a permanent basis as soon as possible. These activities constituted a significant part of the total international effort in the commodity field. The Conference noted that the FAO commodity bodies had in many cases been able to carry their analyses and discussions forward to the point where the elements of concrete action could be identified. In particular the Conference noted the progress made in developing the technique of informal commodity arrangements as illustrated in the work of the Study Groups on Jute and Hard Fibres. While it was too early to make a full assessment of the gains accruing to the developing countries from the operation of these arrangements, it was felt that such arrangements could in certain circumstances offer some advantages over formal commodity agreements which generally required lengthy and difficult negotiations, lacked flexibility and implied the setting up of relatively costly institutions for their administration. The informal arrangements had contributed to greater stability in world markets, and the Conference considered that a similar approach should be made to the problems of other commodities. There was general agreement that the individual commodity work of FAO should be oriented increasingly toward finding solutions to problems in each case.

61. The Conference expressed concern at the problem posed for producers of agricultural raw materials by the competition of synthetics. The Conference urged FAO, in cooperation with other bodies, to make every effort to improve the competitive position of the natural products and to assist developing countries in finding new markets for them. In this connexion, the Conference noted with approval that programmes of research into end-uses were being developed under the auspices of the Study Groups on Jute and Hard Fibres and it stressed the importance of a similar approach for other commodities where needed.

62. Many delegates expressed their satisfaction with the work done by the Study Groups on Citrus Fruit and Bananas and expressed the view that the facilities offered by these bodies were of great value to developing exporting countries and hoped that all countries would make even greater use of them in developing national and international policies on these commodities.

63. Some delegates supported the view that the FAO Study Group on Bananas provided an adequate forum for international consultations, and that additional international machinery was neither necessary nor desirable at the present time.

64. Certain delegates also referred to the better prospects for trade in citrus products than for fresh citrus and urged that the Study Group on Citrus Fruit intensify its work in this field, so that developing countries might be fully informed of developments and prospects. This would assist them in planning their development programmes

65. A number of delegates spoke of the favourable prospects for increased trade in other fruit and vegetables, particularly tropical fruits, and noted that provision had been made for FAO to strengthen its activities in this field.

66. The Conference supported the CCP's suggestion to the Study Group on Rice to undertake a further comprehensive analysis of the likely future trends and patterns of trade, and to indicate the possible lines of action. With regard to practices in the rice trade that were causing concern, some delegates felt that the rice exporting countries should participate more fully in the activities of the Sub-Committee on Surplus Disposal. However, others considered that there was a need for a special code of behaviour for the rice trade, which could be of help to the Sub-Committee on Surplus Disposal.

67. The Conference commended the work on tea conducted under the auspices of the CCP, and welcomed the establishment of a permanent consultative committee to carry this work forward, including the introduction of an informal short-term arrangement designed to stabilize the tea market.

68. The Conference noted that a special session of the Study Group on Oilseeds, Oils and Fats, convened jointly by FAO and UNCTAD, would be held early in 1970, and hoped that it would be able to continue progress toward the initiation of both long-term and short-term measures to improve trading conditions, especially for developing country exporters of these products. The Conference noted the concern of countries members of the Asian Coconut Community at a proposal that the European Economic Community (EEC) impose a tax on vegetable oil imports. It was informed that a resolution adopted by the Asian Coconut Community requesting the EEC to withhold the imposition of the proposed tax would be brought to the attention of the above-mentioned special session of the Study Group on Oilseeds, Oils and Fats.

69. As regards more general approaches to international adjustments, the Conference recognized that FAO had a responsibility in this field and considered that further discussion of the FAO role should be taken up at the next session of the CCP, bearing in mind the activities of other competent bodies.

Price Movements in Latin American Trade

70. The Conference noted with interest the Secretariat Study Latin America - Comparison of Export Unit Values of Agricultural Commodities with Selected Import Unit Values. In introducing the report, the Secretariat pointed out that the work had been requested by the Tenth Regional Conference for Latin America which had asked that a study be prepared on how commodity export prices of that region had varied in relation to import prices of industrial inputs for agriculture. There were, however, severe limitations to the usefulness of the paper presented, due to problems both of inadequate statistical data and of a conceptual nature; these could only be overcome if a considerably wider range of price data (particularly concerning import prices for production requisites) were to become available. Nevertheless, the study concluded that, comparing the mid-fifties with the latest years, the purchasing power of Latin American agricultural exports appeared to have fallen, when deflated by price series for industrial imports, by almost one-fifth.

71. While the opinion was expressed that it would be useful if similar studies could be undertaken for other Regions and at the world level, it was realized that the statistical limitations were considerable and that certain other types of analysis of general trade experience over time might well receive higher priority. Specifically, it was mentioned that FAO had done no overall study of the terms of trade for agricultural products on the world market since 1956, when the topic had been covered in The State of Food and Agriculture. It was suggested that this subject could well be reexamined in a special chapter of that publication as soon as possible.

Consultative Obligations Under the FAO Principles of Surplus Disposal

72. The Conference noted with approval the action taken by the Council at its Fifty-Third Session in endorsing the recommendations prepared by the CCP on procedures for notification and consultation under the FAO Principles of Surplus Disposal. The Conference agreed that the procedures recommended would make an important contribution to more orderly conditions in international trade for agricultural commodities which would be in the interest of all Member Nations. The Conference therefore invited Member Nations to cooperate fully in implementing the agreed procedures.

73. Some delegates felt that certain types of transaction which they regarded as extra-commercial were still not covered by the recommended procedures on notification and consultation. Some other delegates did not agree that all the transactions listed in the Annex to Council Resolution 1/53 were of an extra-commercial nature. Some delegates expressed the hope that GATT would play a more active role with respect to those transactions not covered by the recommended FAO procedures so that the consultative procedures established in the two bodies could effectively cover the whole area of non-commercial transactions in international agricultural trade.

74. The Conference noted that the CCP was continuing its consideration of procedures for the establishment of specific safeguards in transactions that were subject to prior consultation, in order to avoid harmful interference with production and commercial trade. These efforts were directed toward the establishment of a "usual marketing requirement" defined as an undertaking by the recipient country to maintain at least a specified level of commercial imports of the commodities to be supplied under the concessional transaction. In this respect, some delegates drew attention to the endorsement by the Council of the special position of developing countries, not only as recipient countries, but also as exporting countries which depended heavily on exports of agricultural commodities. The Conference requested the CCP to continue its efforts to reach agreement at its next session on a procedure for the establishment of usual marketing requirements which could meet with the approval of all Member Nations.

75. The Conference endorsed the recommendation of the CCP that FAO should establish a central information service on food aid for the purpose of providing governments with detailed and timely data on food aid.

International Dairy Development Scheme

76. The Conference considered the proposal put forward by the Director-General for the establishment of an International Dairy Development Scheme. The Conference noted at the outset that the Director-General did not regard the Dairy Development Scheme as an alternative to the negotiation of an agreement to regulate international trade in dairy products but as supplementary to and supporting such an agreement. The Director-General's purpose was that the scheme would provide an informal FAO/WFP/FFHC framework for greater efforts, both multilateral and bilateral, to speed up the development of local dairy industries in developing countries and raise their levels of consumption of milk and milk products. Participation could be open to any member government interested in cooperating as a recipient or donor of development aid for this purpose. The Director-General had envisaged that resources for dairy development under the scheme would include supplies of milk products, feeding stuffs, technical assistance, equipment and finance according to the preferences of individual recipients and donors in the context of particular national programmes. The principal role of FAO under the proposed scheme would relate to project planning, the technical assessment of projects, and the provision of a focus for consultation. The Secretariat, in collaboration where necessary with other agencies, would assist potential recipient countries at their request to prepare integrated medium-term plans for domestic dairy development, milk distribution and milk imports, including requirements for external aid. The proposed scheme would essentially operate in a flexible framework of multilateral consultation and cooperation, with the World Food Programme playing a major role in the handling of resources in the form of milk products and feeding stuffs. The Conference noted that there had been some preliminary discussion of the proposal in the recent sessions of the CCP and the FAO Council.

77. A large number of delegates from developing and developed countries expressed interest in the proposal, and it was recognized that the activities proposed could make an important contribution in the FAO Area of Concentration "filling the protein gap. " The representatives of two international bodies expressed their interest in the proposal and indicated their readiness to participate in its further consideration. The Director-General's initiative was considered to be a timely one, bearing in mind on the one hand the existing surplus stocks of milk products in developed countries and the unsatisfied demand for and slow growth of domestic production of such products in many developing countries. Delegates from a number of developing countries stressed the importance of promoting the expansion of the local dairy industries as the long-term objective. Imports of milk products as food aid could provide considerable help in the short term, but it was important to ensure that such imports contributed to dairy development within the recipient country. Hence they welcomed the inclusion of other resources such as equipment and technical assistance under the proposed scheme - in many cases the provision of dairy technicians and the training of local people would be essential.

78. The Conference concluded that, in view of the interest expressed by so many delegates representing potential recipients and donors under the scheme, the proposal should be considered in greater detail. The Conference therefore accepted the Director-General's proposal to convene an ad hoc consultation as soon as practicable so that representatives of interested governments could give further consideration to the matter. Although a good deal of information was already available in the FAO publication Milk Products as Food Aid it was evident from the discussion that a wide variety of situations would have to be dealt with under such a scheme. Thorough preparations would therefore be needed for the ad hoc consultation to enable governments to get a clearer picture as to the manner in which the scheme might operate; the types of activity that could be envisaged; the respective roles in these activities of FAO, the WFP, other international agencies and the governments of recipient and donor countries, in relation to existing channels for the distribution of dairy development aid; and the financial and budgetary aspects of the scheme for FAO and other participants. The Conference stressed the importance of bringing other international agencies into consultation on the scheme, particularly WFP and the international financial institutions. In view of the discussions proceeding in GATT on an international agreement on minimum prices for dried skim milk, it would be advisable to seek also the cooperation of the GATT Secretariat. There was general understanding that the scheme would be based on existing institutions.

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