D. Indicative world plan for agricultural development
98. The Conference had before it the Indicative World Plan for Agricultural Development (IWP). The IWP was introduced to the Conference by the Director-General in his opening policy speech and a large number of delegates referred to it in the general discussion which followed. It was subsequently discussed in more detail in Commission I.
99. The Conference noted that the Director-General had made a careful reappraisal of the concept and methodology of the IWP immediately after taking office, taking into account expert advice from outside the Organization, and on this basis had decided to press ahead with the IWP.
100. The Director-General emphasized that the IWP was not a plan in the conventional sense of the term; it was more in the nature of a detailed analysis of the problems likely to arise in world agriculture over the next 15 years, and as such was intended to provide an international framework for governments in formulating national policies and plans as well as a means of orienting the future work of FAO.
101. The Plan highlighted the acceleration that would be required in agricultural production in developing countries to attain the overall growth rate of around 4 percent per annum accepted as a target by both FAO and the United Nations for the coming decade. It dealt with the policies and measures considered necessary to achieve this acceleration. The Director-General believed that a rate of 4 percent would be feasible given determined effort along the lines proposed in the IWP. He emphasized the great difficulty likely to be encountered in many less developed countries in meeting the rapidly growing demand for products of animal origin, especially milk. The proposal before the Conference for an International Dairy Development Scheme arose largely out of the analysis and recommendations of the IWP.
102. The Director-General called attention to one of the most difficult problems that had been faced in the work, namely the policy issues arising in the field of international trade. He stressed that for every seller there must be a buyer and warned against the dream of a world consisting almost entirely of exporters. The coming years would bring with them a rapidly increasing need for international adjustment in agriculture: an adjustment of ambitions, of plans, and of production.
103. Finally, the Indicative World Plan brought into prominence what may prove the most intractable problem of all, that of unemployment and under-employment. This was a matter of grave concern where FAO would do its best, along with other agencies such as ILO, to help governments seek solutions. However, given current rates of growth of active population and the pressure on land in many less developed countries, it might be difficult to do more than keep the situation from deteriorating.
104. Without wishing in any way to minimize the shortcomings of the IWP, the Director-General believed its central findings to be valid. Subject to adjustments on the quantitative side, the IWP placed FAO in a particularly good position to indicate the policies and inputs required in the agricultural sector as one essential condition for the success of the Second Development Decade (DD2).
105. In the discussion of the Indicative World Plan in Plenary and in Commission I, most delegates agreed with the Director-General that the IWP was not a complete and detailed blueprint for agricultural development, but rather a framework within which countries could formulate their own development plans. The Conference generally endorsed the view that FAO did need to play the leading role in providing an international framework for agricultural development planning, including preparing the agricultural sector of the strategy for the Second Development Decade. Furthermore, FAO's advice to governments in the planning and implementation of their agricultural policies should be based upon an integrated and coherent view which took account of worldwide and regional aspects as well as national situations.
106. Many delegates considered that despite its imperfections the IWP contained numerous positive aspects, and thus constituted a significant contribution toward this objective. Between the position of several governments which deemed the IWP to be a major step toward developing an integrated and worldwide view of agricultural strategy for the next 15 years, and the few who considered it to be of no value, widely divergent views were expressed in respect of the strength and weaknesses of the existing provisional document. However, it was recognized as a pioneering undertaking in the face of great difficulties, and although some delegates disagreed most of the others considered that the IWP could be valuable both as a framework for national planning and for the guidance of FAO's activities. A large number of delegates congratulated the Director-General on the general quality of the work despite recognized defects.
107. The delegates of the Latin American Region whose countries were included in the regional study of South America expressed serious reservations on the usefulness of the IWP to them at this stage, particularly on the basis of the provisional study on South America, since they considered the production targets had been set much too low. The IWP had overlooked, or not given enough weight to, structural reforms which it was felt should be built into the Plan, and which if carried out would lead to both a more realistic estimate of elasticity of demand and a higher supply response. However, while stating that the provisional regional study for South America was unacceptable, they welcomed the concept of the IWP and noted that the final chapters of the world study did represent an improvement on the provisional regional study, particularly in respect of value judgements on impediments to increasing international trade. They made a number of constructive suggestions for strengthening and improving the analysis for their region, as well as for the World Study, and special stress was laid on the need for closer involvement of planning staff in FAO with regional and national planners. They strongly supported a perspective study on world agricultural development provided that it had a solid regional base.
108. Many delegates drew attention to the weaknesses of the statistics on which the analysis of the starting period for the Plan was necessarily based. Although there was considerable support for up-dating the base year to 1964-66 or for the adoption of a five-year rather than a three-year average, the Conference did not feel that inadequacies of statistics per se was a valid reason for drifting on an uncharted sea rather than attempting a perspective plan. Indeed many delegates recognized that the efforts made by FAO in connexion with the work on the IWP to improve the accuracy and consistency of the statistics was one of the major benefits accruing from the investment made in the Plan. The Conference recommended that FAO should continue as rapidly as circumstances permit with the updating and revision of statistics along the lines established for the IWP, not only to meet commitments in respect of DD2, but as an essential service both to FAO and to member countries.
109. Many delegates considered the absence of an analysis on production and trade policies for Zone A and B countries of comparable depth to that for Zone C countries to be a major weakness of the Plan. There were frequent references to the deterioration in the terms of trade for agricultural commodities, to competition from synthetics, to tariff and other trade barriers, to the protection of high-cost agricultural products in certain developed countries, and to the crippling effects of lack of foreign exchange on economic progress in developing countries. Most developing countries felt that unless major efforts were made by Zone A and B countries to modify their production and trade policies so as to reduce self-sufficiency where high-cost agricultural products competed with those of developing countries, the objectives proposed in the IWP would be unattainable.
110. FAO was therefore urged to expand the coverage of its work on the IWP to consider these problems more deeply and/or within a wider range of alternatives, thus making the Plan a "World Study" in the true sense. This work should be done by FAO in close collaboration with other international and regional organizations who already had some of the information required. At the same time it was felt that the Director-General should examine the possibilities of organizing meetings between groups of countries in developed and developing regions which could be sponsored by the respective economic commissions, and could be attended by representatives of international organizations concerned with trade and investment. This would enable a dialogue to be established on the basis of the conclusions of the IWP (as modified where necessary by on-going work), which could lead to the practical implementation of its results.
111. Some delegates referred to the complexities of trade analysis, and to the special statistical difficulties which limit the value of commodity and trade balances in the IWP at present as a basis for discussions on these matters. On the other hand, it was pointed out that a pilot study on cereals and a number of other food commodities in developed countries had in fact been carried out by OECD as a contribution to the work on IWP, which showed the enormous cereal surplus for which production potential existed in developed countries. Whilst this was unlikely to occur, it highlighted the need for a continuous review to enable policy adjustments to be made ahead of crises, since adjustments and particularly curbs on production were extremely difficult to implement.
112. However, the attention of the Conference was called to the difficulties of farmers in Western Europe and to the trends of production and consumption of food in this area. A number of delegates referred to internal and social problems which would require solution if adjustments were to be undertaken in order to reverse the trend toward increased self-sufficiency for food in Western Europe. Most of them thought that it would be unrealistic to assume that significant changes would take place rapidly. It was also mentioned that similar problems existed in other countries.
113. In this connexion, the Conference took note of the Director-General's opening statement and stressed that whilst there might be a case for limitation of uneconomic production of certain commodities, adjustments between the developed and the developing countries must be reciprocal. Some delegates stated that a concept of fair competition was necessary for international trade; hence a rational approach might best be achieved through trade liberalization and the application of the principles of comparative economic advantage in production. One delegate, however, pointed out that he could not accept these views without qualification. The Conference recognized that international adjustment must not be confined to the industrialized and developed countries, but was also necessary between developing countries. Opportunities should be thoroughly explored for expanded trade among developing countries and every attempt should also be made to improve efficiency in production and processing in the latter.
114. The Conference considered that whilst the IWP provided a useful starting-point for looking at some of the implications for trade relationships between developed and developing countries, a more searching analysis was required. Early action by FAO to follow-up its suggestions through assistance in commodity agreements, and measures to improve and rationalize production was also essential; although a better international division of labour in production and processing was desirable, it was unlikely to be a rapid progress.
115. Another matter of grave concern to the Conference was the omission of certain developing countries, for example Indonesia and even of groups of countries, such as the Caribbean region. Although it recognized that a sincere effort had been made to include the bulk of the population of Zone C, and that lack of resources, or other valid reasons might have prevented the inclusion of some countries in the provisional studies, population was not the only criterion and the Conference recommended that these omissions should be made good as rapidly as possible.
116. The Conference noted that preliminary work had been undertaken on Indonesia and that means of including that and possibly other missing countries were being explored with the national representatives at the Conference. It also noted that certain gaps in the coverage in Africa were being filled in cooperation with the United Nations Economic Commission for Africa (ECA). Reassurance was given that the Secretariat had very much in mind the need for revision of certain aspects and targets of the South American regional study. The Conference was informed that the Secretariat placed high priority on further consultations on the spot with as many countries of Latin America as possible to widen and deepen the analysis of the continent as a whole. It was hoped that this work of consultation with the countries could be based on careful preparation by the countries themselves within an agreed methodological framework. This could include a suitable range of alternatives within which the additional measures which might be required to achieve higher goals and/or DD2 targets would be carefully specified.
117. Several delegates suggested that in its future work FAO should re-examine its present regional groupings, and might possibly work in terms of sub-regional groups which could be more meaningful in terms of actual or potential trading partners and/or be more homogeneous in their ecological or social conditions. In this connexion, the Conference noted with satisfaction that cooperative work was well in hand on Central America (in conjunction with the FAO Advisory Group for Central American Economic Integration (GAFICA)), and that new work was envisaged on the Maghreb countries in cooperation with the Permanent Consultative Committee on the Maghreb countries. It noted a request that similar work be undertaken in the Caribbean in connexion with the Caribbean Free Trade Association (CARIFTA).
118. The Conference welcomed the closer involvement of regional and national agricultural planning staffs evident in FAO's approach to the coverage of additional developing regions and countries, and recommended that such contacts be strengthened and deepened. By this means problems of the type which had arisen with the South American regional study could be avoided, closer links could be forged between FAO and its Member Nations, and assistance given to national planners. It would enable long-term planning to be continued, using the IWP methodology and interdisciplinary approach as a base, but refining and modifying its conclusions in the light of national needs, without the need for a massive headquarters apparatus.
119. Some delegates expressed appreciation of the realism of the IWP and the objectivity of the work. Whilst every attempt should be made to consider and evaluate national plans and aspirations, whether for developed or developing countries, they felt that FAO would be doing a disservice to its Member Nations if it departed from an impartial evaluation in work of this type. The Conference felt that the inter-disciplinary approach and the consequent role of the IWP in drawing together the various threads of FAO's Headquarters and field activities had been of great value. It urged that this inter-disciplinary approach should be preserved and strengthened in any future activities on perspective planning, including the technique of inter-disciplinary regional teams.
120. One aspect of the Plan which the Conference considered to be of great potential value was the work on the inputs required to achieve its production objectives, and a number of delegates stated that this was already proving a valuable yardstick against which to measure their own assumptions. Concern was expressed, however, as to how the vast increase in purchased inputs predicted by the IWP would be financed, particularly where economies of scale for local manufacture were lacking. Delegates would have liked more consideration as to how production costs, and particularly costs of inputs, might be reduced.
121. The Conference recommended that special studies on such matters should be undertaken. Several delegates also requested that the Director-General should attempt to re-open the proposal for aid in the provision of food production resources submitted to the Fourteenth Session of the Conference. Alternatively it should explore other appropriate means for "soft" loans and technical aid from developed to developing countries in the purchase, manufacture, and optimum use of production inputs.
122. In addition the Conference believed that further study was required of the whole implications of the IWP for investment. This applied both to mobilization of domestic savings (concerning which opinions were divided as to the potential for the rural sector contributing significantly to financing economic development in the period covered by the Plan), and to the financial contribution which might be forthcoming from international or bilateral external sources. Delegates recognized that the Plan could not be expected to provide a complete aid bill, nor suggest how resources might be allocated to optimum advantage between agricultural and non-agricultural sectors, and looked to DD2 to provide broader guidance on this. FAO should nevertheless play the leading role in advising the United Nations on this crucial aspect of development planning and should therefore attempt to refine IWP's tentative conclusions in this respect.
123. Many delegates referred to the problem of unemployment as being a major threat to social stability in the world as a whole; and the way in which this grim problem had been highlighted in the IWP was considered to be one of its major contributions, although some delegates still felt that the way in which it had been handled was unsatisfactory. Certain delegates feared that the role allocated to mechanization might lead to further unemployment, but others pointed out that in most instances it was essential for the intensification of agriculture by removing critical bottlenecks, or for developing new land, and that this could lead to increased rather than diminished employment opportunities.
124. However, the Conference recognized that no adequate solution to the employment problem could be found in agriculture alone, and that success would depend to a great extent on industrial development and the creation of job opportunities in other sectors. Here again FAO would have to work closely with other agencies such as ILO and UNIDO, both within the framework of DD2 and in connexion with special studies of the kind which many delegates felt to be desirable.
125. Reference was made to the role of domestic demand as a driving force for economic development. This was largely a function of income and employment, and in some cases (particularly in South America) it was felt that the income elasticities used in the Plan were too low. These needed further review in cooperation with national planners, taking into account the possible impact of income redistribution on converting potential into effective demand. Although this was recognized as an extremely delicate task, it was nevertheless of vital importance to an objective assessment of the future world food situation.
126. The Conference was gratified by the possibilities for improvement in the food situation revealed by the IWP in much of the developing world, although some delegates, particularly from Latin America, considered that the possibilities for their region were under-estimated. Many delegates stressed that ultimate success would depend on the involvement of millions of small farmers. This was a tremendous task, and the Conference therefore welcomed the emphasis placed in the Plan on training, agrarian reform, the development of more adequate institutional instruments for rural progress, and on human resources as a whole. There was considerable pressure not only for more work within FAO on planning aspects such as requirements for skilled manpower, but for higher priority to be allocated to all aspects of developing human resources in FAO's work on the five Areas of Concentration.
127. Some delegates felt that prescriptions for production in the IWP needed further examination in the light of new developments in technology, the possible emergence of surpluses resulting from the use of high-yielding varieties in the developing countries, and the continued protection of high cost production in certain developed countries. One aim of such studies might be to determine economic opportunity costs in the light of cost-benefit analysis which would assist in the optimum allocation of resources both at the national and international level and in the identification of natural trading partners. This might be done by means of special studies on selected commodities and fed into future work on the commodity projections. The difficulties of incorporating assumptions on changes in relative prices were recognized, as was the heavy workload which might be involved in attempts to identify economic opportunity costs, but it was suggested that certain aspects of the methodology in these respects should receive further study.
128. The wide-ranging discussion clearly demonstrated the interest which had been stimulated by the Indicative World Plan, as well as the anxiety of the majority of the member countries to see that its benefits were not lost. Despite the reservations expressed by many speakers concerning the gaps in country coverage, certain aspects of the methodology, and in particular the trade analysis, it was felt that it could provide a valuable reference for planning and that means should be found for work along these lines to be continued and up-dated so as to improve its reliability and extend its coverage. It would need to be evaluated against changing conditions, and the conclusions fed not only to member countries but also into the policy for FAO's own activities. Several delegates stressed that its ultimate success would depend not only on a continuing dialogue between FAO and the member countries, but also on the cooperation of all divisions of FAO itself, and finally on the political will of both developed and developing countries to implement its findings as appropriate within the concept of "one world. "
129. To this end a very large number of constructive suggestions were made by delegates, but in view of budgetary limitations and the wish expressed by the Director-General not to increase his proposed Programme of Work and Budget for 1970-71, the Conference requested the Director-General to indicate a continuing programme of work within the coming biennium. The Director-General recognized that decisions of the Conference would determine the follow-up of the IWP, and offered the following suggestions:
(i) There would not be a general reworking, or new edition of the study in the detail in which it was now presented, since the administrative apparatus had largely been dismantled;
(ii) The statistical work should be maintained and improved within the frame established for the IWP, including the development of unofficial statistics where no adequate government figures were available;
(iii) The Secretariat should continue its contacts with regional and country planning institutions in order to extend and deepen its knowledge of the situation in different areas;
(iv) At the request of governments, basic studies should be undertaken which would assist them in the formulation of agricultural policy;
(v) For the next series of regional conferences, papers should be prepared which drew together the implications of the IWP for the respective regions and indicated policy adjustments which needed to be made if the objectives of the developing countries were to be met adequately;
(vi) Special studies should be made on certain major issues which the IWP indicated as likely to dominate world agriculture in the next 10 or 15 years, such as the weakness of the livestock sector and the problem of unemployment;
(vii) The Secretariat should work closely with the United Nations and provide material on agriculture in connexion with plans for the Second Development Decade; this would involve some modification of the IWP.
130. The Conference supported the programme proposed by the Director-General, and noted that his suggestions were in line with the Programme of Work and Budget for 1970-71. However, in the discussion the following recommendations were made by various delegates to further clarify work in connexion with economic, technical and statistical aspects of the IWP.
(i) The future work in this area should be called a "Perspective Study on World Agricultural Development" rather than an Indicative World Plan, in order to clarify the real nature of this work;
(ii) The Secretariat should work closely with country and regional organizations in using the findings of the provisional studies, where useful, in their planning activities; this would be an important part of the work of various divisions of FAO, in particular Economic Analysis Division;
(iii) The basic development strategy as outlined in chapters 1 to 13 of the World documents and Volumes I and II of the Regional Studies should not be fully reworked although some readjustments should be made in the light of new information, and eventual revision of the quantitative aspects of the Plan might be necessary;
(iv) The supply, demand and trade balances for agriculture were inconsistent from one region to another and did not fit together into a consistent world frame; these should be revised as part of the work to be done for the Second Development Decade; this activity should not only be coordinated with but integrated into the work being done on commodity projections;
(v) These revisions must involve a re-evaluation of production targets which should consider the aspirations and the potentials of the developing countries on a more up-to-date basis;
(vi) This task should be carried out in close coordination with national agencies responsible for the planning and formulation of agricultural policies, and with regional or subregional Economic Commissions of the United Nations; where similar work was being done by the joint FAO and United Nations agricultural economic divisions of these commissions; this should be integrated into the Perspective Study of World Agricultural Development;
(vii) The revisions of the supply, demand and trade balances should include all developing member countries; also more attention should be given to alternative supply and demand projections for the Zone A and B countries so that the implications of agricultural problems in these countries for the expansion of trade of the developing countries could be identified;
(viii) Alternative agricultural supply, demand, and trade projections should be formulated while as far as possible preserving the present Plan, taking into account probable changes in income level and income distribution, alternative economic opportunities for production, social needs, and trade policies indicated by various international forums;
(ix) In developing alternative projections, especially for Zone A and B countries, cooperative arrangements with other international and national organizations might be considered;
(x) Work on the statistical country files, including the product accounts, should move forward rapidly; the work on the new base period, 1964-66, should be completed very soon so that it could be used as a basis for the revisions necessary for the Second Development Decade and for the commodity projections; where unofficial statistics were developed, countries involved should be consulted where practicable.
131. Some delegates also pointed out that apart from these aspects of work on the IWP there was also the need to make the Plan operational, whether within the overall planning of member countries or on the basis of regional or sub-regional groupings. One delegate suggested that multilaterally planned projects in the agricultural sector might be implemented jointly by various donor countries representing both Zones A and B. Some Latin American delegates expressed reservations concerning this suggestion, as they considered that at this stage it would be premature to take the IWP into account as a basis for decision-making for their region in view of the limitations pointed out in respect of the provisional regional study for South America.
132. The Conference adopted the following resolution:
Perspective Study of World Agricultural Development
Noting that reliance on a perspective study of the agricultural economy of the world is of interest to all FAO Member Nations, that such a study will enable nations to improve their information with a view to programming agricultural, forestry and fisheries development, and that a significant effort has been made in the assembly, compiling and analysis of the information material included in document C 69/4; and
(a) that a study of this nature must take account of the development plans of the various countries through consultation with their Governments as well as with the Regional Economic Commissions of the United Nations,
(b) that the projections of this study must be based on statistics that are sufficiently representative of the historical period considered,
(c) that this study should take into account both the world trade outlook and the growth of the respective domestic markets and that such information must refer to all member countries,
(d) that in its conception it is essential to have regard to the considerations and recommendations formulated by various international forums sponsored by the United Nations, realizing that Man is the cause and end of economic process, and
(e) that for its greater usefulness such a study must offer diverse alternatives in its conclusions;
1. Recommends to the Director-General that as rapidly as circumstances permit, and within the limits of the budgetary proposals for 1970-71, the trust funds available for work on the United Nations Second Development Decade and such other extra-budgetary funds as may become available, he evolve the Indicative World Plan into a Perspective Study of World Agricultural Development in order to:
(i) adapt it to the requirements of the Second Development Decade;
(ii) consider the aspirations and the potentialities of the developing countries on more up-to-date bases;
(iii) include all member countries in order that its coverage may in fact be worldwide and that the implications of agricultural problems in the developed countries for the expansion and trade of the developing countries may be identified; and
(iv) formulate alternative projections while as far as possible preserving the present Plan, taking into account probable changes in income level and income distribution, alternative economic opportunities for production, social needs, and trade policies indicated by various international forums;
2. Recommends that this task be carried out in close contact with national agencies responsible for the planning and formulation of agricultural policies and with regional and sub-regional economic integration bodies.
3. Recommends to that end, that greater use be made of the FAO Regional Offices and of the United Nations Regional Economic Commissions.
E. FAO contribution to the second development decade
133. The Conference considered the preparations for the Second Development Decade (DD2) to be of the greatest importance, and was anxious that FAO should make a major contribution.
134. It noted that FAO's contribution to the International Strategy would include:
(i) Evaluation of the feasibility of alternative objectives for gross domestic product (GDP) within the range considered by the Preparatory Committee for the Second Development Decade, from the point of view of the potentialities in the agricultural sector and the constraints in this sector;
(ii) Projections of demand for agricultural commodities for 1980 on the basis of the population projections and the overall economic growth rates finally decided upon for DD2;
(iii) Interpolations - after appropriate adjustments - of the quantitative aspects and the policy judgements of the Indicative World Plan for the initial and final year of the Second Development Decade as soon as the plans for the latter - and particularly the degree of detail which is required - are sufficiently definite to indicate what data and analysis are needed;
(iv) Suggestions for policy measures required to achieve the growth rates in the agricultural sector component of the international development strategy.
135. The Conference noted that the FAO Secretariat had already presented the United Nations
Secretariat with a preliminary analysis of the agricultural growth rates that would be consonant with various rates of overall economic growth, and had expressed the view that rates of increase in agricultural production that were appropriate to a 6 percent growth in GDP should be feasible. This rate would average around 4 percent. The proposals regarding growth rates should not necessarily be those in the regional studies of the IWP, but should take into account higher growth alternatives. In particular, suggestions should not be put forward which would lead to average overall growth rates for developing countries below 6 percent.
136. The Conference considered that FAO's work on long-term perspective planning and development strategy over recent years should place the Organization in a position to make a particularly valuable contribution to DD2. It expressed a hope that the realistic approach of FAO in this work would be taken into account not only for agriculture but also for the whole of DD2. At the same time, the Conference reaffirmed the view of the Council that the contribution of FAO should not be based only on the Indicative World Plan but on the whole work of FAO.
137. One delegate, while supporting the general objectives of DD2, expressed reservations regarding the putting forward of proposed targets since failure to achieve these could subsequently lead to disillusionment. Another delegate suggested that in the work on DD2 a priority should be to review the performance of agriculture in DD1, since it was not possible to set a strategy for DD2 without learning the lessons of the First Development Decade.
138. The Conference supported the statement of the Director-General before the Preparatory Committee in Geneva which analysed the kind of sub-sectoral targets and policy issues which could be considered in the draft of the international strategy. Particular reference was made to the desirability of having sub-targets for protein supplies. Special attention should also be paid to the question of under-employment in the agricultural sector. Mention was also made of the desirability of having specific reference in the preambular declaration of the international strategy for the Second United Nations Development Decade to the need for a better organization of agricultural trade with a view to ensuring its steady expansion in terms of volume, of foreign exchange earnings, and of retained value added.
139. The Conference also emphasized the role of FAO in implementing this international strategy by orientating its programmes all through the next decade.
140. The Conference requested the Director-General to present a progress report on FAO's contribution to the international strategy for DD2 to the 1970 Council session, and thus afford the Council an opportunity to review the proposed policy measures in the agricultural sector as well as the procedures to be used for the review and appraisal of the measures proposed.