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Follow-Up Investment

246. Investment Centre. The Conference noted with satisfaction the rapid development of the activities of the Investment Centre as presented in document C 69/18. As regards the FAO/IBRD Cooperative Programme which accounted for the bulk of the activities of the Investment Centre, it expressed its appreciation of the new trend in Bank policy toward greater emphasis on agriculture, and its gratification at the increases already achieved and the targets which had been set. In addition to the FAO/IBRD Cooperative Programme which had now been in operation for five years, work under the more recent agreements with the area banks was proceeding satisfactorily and contacts were in course with the Kuwait Fund for Arab Economic Development with a view to establishing a similar type of cooperation. Close coordination was maintained with the bilateral programmes of assistance.

247. During the detailed discussions on the Director-General's proposal for a substantial increase of FAO's Joint Programme with IBRD, a number of points were raised, such as the climate of investment, credit and loan policies, priorities and criteria for project financing, and the methods of work of the Programme. While it was appreciated that a number of these questions were of primary concern to IBRD rather than to FAO, it was noted that the climate for investment was a most important factor in attracting foreign capital to agriculture, and that, in that respect, FAO could play a useful role in pointing out project opportunities in the agricultural sector to potential investors and financial agencies. With respect to priorities, the Conference noted that IBRD intended to carry out economic and sector reviews with cooperation from FAO and the UNDP, and that these sector reviews would, by pin-pointing priorities for investment in relation to country development programmes also indicate priority fields for pre-investment and project formulation. As regards credit and loan policies, the Conference considered that high interest rates, short grace and repayment periods and the resulting onerous debt burden were factors which inhibited the external financing of agricultural development. In this connexion, the Conference welcomed the IBRD President's efforts to accelerate the Bank Group's lending to agriculture and also noted with satisfaction that the second replenishment of IDA resources at a level of US $400 million per annum had now been accomplished and IDA fully activated again.

248. In the discussion of criteria for investments, several delegates stressed that these should not be limited to a strictly financial calculation of cost and returns, but that attention should be given to broader economic considerations, taking due account of social costs and benefits. Some delegates emphasized the need for modification, adjustments or a relaxation of the terms, conditions and specifications of the world bank in lending to agriculture in order to induce a greater flow of credits to agriculture in developing countries. It was appreciated that FAO under the terms of the agreement, had no direct influence on the investment and loan decisions of the Bank on projects identified or prepared for financing by the Cooperative Programme, and that the final decision rested with the Bank. The Conference expressed the hope that FAO, through its continuous and close cooperation with the Bank, would contribute to the shaping of Bank policy, and also help to devise more adequate systems of project formulation and evaluation.

249. As regards the scope of activities, the Conference appreciated that the range of projects which had been dealt with recently by the Joint Programme was substantially wider than in previous years. While recognizing that it was up to the government of each Member Nation to decide on the projects for which it would seek world bank financing, several delegates drew attention to the desirability of investment in particular fields, with respect to the investment aspects of land reform and rural credit, storage facilities and marketing Mention was also made of fisheries and forestry, where large and as yet untapped resources existed in many developing countries of the world. It was also considered that the financing of production inputs such as seeds, fertilizers, etc. should be given a more prominent place in IBRD's lending programme. Special attention was also drawn to the need for larger Bank Group support of rural financing institutions, agricultural marketing, storage and handling. It was pointed out, with respect to agricultural credit, that this type of project which combined programme and project approaches provided an ideal vehicle for the foreign financing of agricultural development, especially in the small farms sectors.

250. Some delegates expressed concern about the number of missions which were at times required for the preparation and appraisal of projects. They hoped that further changes would be made to effect a reduction in the number of missions so as to reduce the drain on time and effort which developing countries could ill afford. Other delegates expressed satisfaction with the reduction of time already achieved in the preparation of investment projects and emphasized the importance to all concerned of thorough project formulation. A major step forward had been taken by the increasing participation of FAO staff members, who had been engaged in the preparation of projects and in appraisal missions of the Bank, and the desire was expressed that this practice be generalized. In addition, a management reporting system had been introduced for the last year by the Joint Programme, which allowed for the progress of all operations to be followed closely. Delays in project preparations nevertheless occurred, involving factors over which FAO had at times no control, for instance when basic policy issues required a decision by the government concerned.

251. As regards the cooperation of the Investment Centre with national and bilateral financing institutions, the World Food Programme, etc., it was noted that close working collaboration had been established in many cases, from which it was hoped that many more results would be obtained in the form of tangible projects in the shortest possible time. The need for cooperation with private banks was also stressed. It was felt that with increasing experience in dealing with the larger number of potential suppliers of follow-up financing! new approaches needed to be continuously developed.

252. Taking into account, therefore, the large increase projected by the President of the IBRD for agricultural investment lending in the early 1970's, together with the continuing increase in the volume of work related to projects prepared for financing by other sources, the Conference fully endorsed the policy of the Director-General in giving continued priority attention to the financial follow-up of pre-investment projects and agreed to the budgetary proposals for the Investment Centre as contained in Chapter II B of Document C 69/3.

253. FAO/Industry Programme. The Conference emphasized the great potential of agro-allied industries within the purview of FAO in fostering overall economic development and recognized the role which the FAO/Industry Cooperative Programme was playing in mobilizing industry's management, technology, marketing experience and finance in bringing to fruition pre-investment projects undertaken by FAO. Several delegates stressed the importance of encouraging the establishment of agricultural input and processing industries, which were often an essential stage on the road to agricultural progress and industrialization. There was full recognition of the fact that it was up to the government concerned to determine whether and in whet form it wished to take advantage of cooperation with industry in the identification and implementation of development projects, preferably leading to joint ventures. Several delegates proposed that the membership of the Programme be broadened to include smaller-scale industries and were informed that there were no objections in principle to any firm, whether privately or publicly owned, joining the Programme, provided that it was prepared to adhere to the established charter.

B. Review of the Organization's Activities and Programmes with Special Reference to the Areas of Concentration

General Review of the Areas of Concentration as a Strategy for FAO
High-Yielding Varieties of Basic Crops
Filling the Protein Gap
War on Waste
Mobilization of Human Resources for Rural Development
Earning and Saving Foreign Exchange
Development Planning

General Review of the Areas of Concentration as a Strategy for FAO

254. The Conference had before it the Director-General's statement at the Technical Committee on the Areas of Concentration, and also the papers Strategy of Agricultural Development - FAO Areas of Concentration, Toward a Strategy for Agricultural Development, The Protein Problem in Relation to the World Food Supply and the Work of FAO 1968-69, as well as the relevant sections of the Director-General's Programme of Work and Budget for 1970-71 and Addenda.

255. The Conference noted that proposals for reorientation of FAO's work toward the Areas of Concentration had been submitted to the regional conferences and the Council in 1968. The regional conferences had recommended that the Organization's strategy be redirected along these lines and this was endorsed by the Council in October 1968. Five inter-divisional action groups had been set up within FAO to examine the main problems involved and to work out a programme. Their reports had been sent to Member Nations and FAO regional representatives for comment. The substantive increases proposed for the coming biennium in the Programme of Work and Budget 1970-71 were in considerable part, related to the five Areas of Concentration. The Conference was informed that the Director-General, in formulating his budget for 1970-71, was guided by the principles arising out of the reorganization and had specifically attempted to achieve the necessary strengthening through redeployment and the elimination of dead wood. To a modest degree, however, requests had beer made for increased resources. In addition, it was hoped to interest, or wherever possible, to enlist the technical and financial help of other international as well as bilateral agencies in developing programmes of the type indicated in the documents before the Conference.

256. The Conference gave strong support to the initiative for concentration of FAO's activities. It considered that this would achieve better coordination of effort under the regular programme and between regular and field programmes leading to improved efficiency and thus to better services to member governments.

257. Although some delegates welcomed the existing broadness of the concepts on the grounds that by this means the Areas of Concentration more effectively covered the needs of the member countries with their existing disparities of conditions, others expressed the view that the Areas of Concentration would be strengthened if they were more limited in their approach. The Conference urged that FAO should attempt to establish priorities within priorities in each Area of Concentration, and make a determined effort to eliminate activities of minor importance from its overall programme without damaging ongoing programmes of inherent significance.

258. The Conference recognized however, that the present proposals represented only a first step toward focusing FAO's activities under the Areas of Concentration and thus to achieving the better use of scarce resources. It welcomed the introduction of budgeting certain of FAO's activities under these five Areas on a programme basis. It recommended that special attention should now be paid to working out priorities and guidelines for action at the regional and country level. In this connexion the attention of the Conference was drawn to the approach being developed by the Economic Commission for Africa for its region. Closer involvement of individual countries in planning and implementation of future work under the Areas of Concentration would be a prerequisite of overall success.

259. Whilst the Conference endorsed the general choice of fields of action under the Areas of Concentration, concern was expressed that sufficient stress had not been placed on "the development of human resources. " Basic social and institutional changes were essential to facilitate progress in the overall strategy proposed and in solving critical problems of employment. Massive training programmes would be required both for government services and for farmers. The human problem was thus central to agricultural development. A number of delegates therefore questioned apparent reductions in the proposed Programme of Work and Budget for 1970-71 in relation to this Area of Concentration and there was considerable support for more budgetary resources.

260. Several delegates considered that the "war on waste" represented a rather negative approach in its present form, as well as being too comprehensive. A more positive focus might be achieved by relating certain measures proposed under this Area of Concentration more directly to specific sectors of production, rather than by emphasizing losses.

261. Because of the close and complex inter-relationships between the five Areas of Concentration there was general recognition of the necessity to adopt an integrated approach and go forward in all these areas at the same time. This raised difficult problems in the allocation of scarce resources, and several delegates considered that it was necessary to concentrate effort both in selected geographic areas of countries and on carefully chosen short-term "package" programmes to achieve an early impact. In this connexion, the Conference felt that in some cases the Indicative World Plan could be helpful in establishing the practical guidelines for the five Areas of Concentration. Both strategy and tactics might thus more effectively be defined. The establishment of the Development Department and strengthening of FAO's staff at the regional and country level would help to ensure that project development was more effectively coordinated with national needs and priorities. Several delegates suggested that the Director-General might ask FAO's country representatives and other FAO personnel in each member country to discuss the Organization's five Areas of Concentration with appropriate country officials for the purpose of determining related areas of programme emphasis for which FAO might provide assistance.

262. Most delegates felt that mechanisms had to be worked out for studying agricultural development within the context of the economy as a whole, as well as for harmonization of long-term planning and more immediate implementation. The Conference therefore noted with pleasure that FAO was actively pursuing the goal of integrated planning in cooperation with other agencies in the UN family on work now in progress for the Second Development Decade.

263. The Conference requested that activities under the Areas of Concentration should be coordinated to the fullest extent possible with work being undertaken through the World Food Programme, the Freedom from Hunger Campaign, the FAO/IBRD) Cooperative Programme, and also with other agencies in the UN family Not only would this avoid overlapping but it could also result in opportunities for modification of existing or proposed field projects to incorporate action more closely in line with the priorities defined by the Areas of Concentration. Moreover, if the strategy proposed by FAO were to be fully accepted by other agencies involved in agricultural and economic development, (particularly those responsible for financial assistance), more rapid agreement on, and implementation of programmes and projects in the agricultural sector would be likely.

264. The Conference noted with satisfaction that the Economic Commission for Africa and FAO had reached agreement in the elaboration of a single UN programme for agricultural development in Africa, that ECA had adopted the strategy of the five Areas of Concentration for furthering agricultural development in the region, and that ECA had agreed to cooperate closely with FAO in a common action toward this end. The Conference also noted that the Director-General would bring these elements of policy strategy and the programme recommendations made at the Fifth FAO Regional Conference for Africa to the attention of all bodies concerned with the development of African agriculture.

High-Yielding Varieties of Basic Crops

265. The Conference stated that the proposals of the Fourteenth Conference concerning the high-yielding varieties were now on the way to realization in many countries. The overall experiences of the past biennium had demonstrated the effectiveness of the general line of action in this area. Many delegates, referring to the experiences gained during the first stages of introduction of the high-yielding varieties, suggested improvements and offered more precise definitions of their scope and of the conception of their use. Some delegates also pointed out the benefits that could be obtained from genetic improvement of local varieties as well as through suitable changes in farming methods.

266. Whilst short-run emphasis might have to be placed mainly on cereals several delegates considered that the definition of the high-yielding varieties in C 69/31 and FAO Basic Study No. 21 was too narrow, and should embrace other crops, including root crops, grain legumes and oilseeds, vegetables and fruit, and pasture and fodder species. Some delegates suggested that forestry, livestock and fish farming should be included. It was generally recognized that the term "high yielding varieties" should cover any variety of any crop capable of giving particularly high yields when supported by adequate inputs in a favourable ecological environment.

267. The Conference recognized the breadth of the aims of FAO's policy. It also realized that the present emphasis on high-yielding varieties reflected the "breakthrough" that had occurred with regard to a few species. In addition, the Conference realized that FAO would not concentrate, to the exclusion of other activities, on fostering the use of these new varieties alone. FAO should focus attention on high-yielding varieties now so as to exploit their potential, while concurrently maintaining a flexible and dynamic approach. Shifts of emphasis could then bring in other commodities as and when the opportunity arose. To the fullest extent possible "priorities within priorities" would be determined for work at the national level. This would ensure that limited resources were utilized effectively and not dissipated over too broad a front.

268. In discussing their experience of the use of high-yielding varieties, several delegates drew attention to the remarkable change in cereal production that had taken place with the introduction of such varieties. Indeed, in a number of countries which until recently had serious food grain deficits, it was confidently hoped that self-sufficiency in staple cereals would be attained within the space of a few-years - within the next five-year planning period in some cases. One of the main goals of FAO strategy - to reverse the ever-growing net grain imports in a number of developing countries was thus slowly being realized. But, as indicated in the report of the Fourteenth Conference, even with the realization of the aim of reaching self-sufficiency in the near future many problems remained to be solved and new ones might arise.

269. The Conference noted with satisfaction that progress in the achievement of cereal self sufficiency through the use of high-yielding varieties, quality seed, irrigation, fertilizer, and related inputs, was expected in a number of countries to facilitate progress in the production of other crops and livestock. This would result in part because cereals not required for human use would provide additional feed for livestock, and partly because a breakthrough in cereal production could release land and other resources from cereals for other priority lines of production. The high-yielding cereal varieties, where these were shorter maturing, could also contribute to increasing productivity through facilitating multiple-cropping. Progress would, however, depend on cereals becoming available for livestock at economic prices, and also on accelerated research on problems of non-cereal food crops and on livestock.

270. The Conference was impressed both with the potential and the problems associated with the use of high-yielding varieties. Expanded production had already saved appreciable amounts of foreign exchange formerly spent on imports. However, exchange would increasingly be required to purchase the inputs essential to the successful use of high-yielding varieties. Lack of suitable systems for providing credit for farmers to buy the vastly expanded requirements for quality seeds, fertilizers, pesticides and machinery were also resulting in constraints in some countries. Progress was also being impeded in certain countries by the insufficient technical training of farmers. In this connexion some delegates expressed the need for FAO to make studies on the most effective systems of operation or management of the high-yielding varieties to help Member Nations achieve a- maximum impact on a national scale.

271. Some developing countries were also having difficulties in providing transport and storage to deal with the increased crops resulting from the use of high-yielding varieties and related inputs. This had led to excessive wastage, which in some cases was being aggravated by lack of drying facilities. Marketing created a series of problems - indeed several countries were anticipating problems related to surpluses in place of their former worries over shortages. Price and marketing policies would have to be geared to providing adequate incentives and profit margins to farmers. The Conference noted that the expanded use of high-yielding varieties, once self-sufficiency had been achieved, could lead to serious difficulties in world trade. These difficulties would be substantially increased if there were to be an intensification in the tariff and non-tariff barriers of the developed countries.

272. The Conference recognized that the economic implications of the changes mentioned above could be immense and that both developed and developing countries would be affected. It was suggested that FAO and the developed countries should consider setting up special financial and technical assistance arrangements, if possible on a multilateral basis to help developing countries to purchase or manufacture inputs. In this connexion it was noted that a study of multilateral food aid was being carried out under the World Food Programme, and that this also included consideration of aid in non-food items, such as fertilizers and pesticides.

273. The Conference stressed the importance of due consideration to quality factors in developing certain high-yielding varieties: improvements were required in protein content, amino-acid composition, and cooking and baking qualities. Reference was made, however, to the great hope of increased and improved protein production, to be obtained from maize varieties with a high content of lysine and tryptophane. Similar work was being undertaken on wheat and other cereals to help rectify the deficiencies alluded to above. The objective should be to produce varieties with high-yield potential, high protein content and quality, as well as consumer acceptability.

274. Several delegates called attention to the limitations of adaptability of some high-yielding varieties of cereals to certain ecological conditions. In areas of low rainfall, water shortage, and salinity other high-yielding varieties might well have to be developed, appropriate to these environments. One delegate, however, reported considerable improvements from the use of the Mexican wheats even under rainfed farming. However, there was an urgent need for high-yielding varieties of sorghum, millet and maize adapted to areas of moderate rainfall and for rice varieties suited to regions of excessively high rainfall and periodic flooding. The Conference therefore recommended that special attention should be paid in breeding programmes (whether through the use of local or other suitable genetic material) to evolving varieties resistant to diseases and pests as well as to other adverse conditions. In addition to the efforts of research institutes in these fields the skills of private breeders and breeders' organizations should be made use of.

275. The Conference was concerned that concentration on high-yielding varieties and development of areas of higher agricultural potential might lead to widening income disparities, and therefore, urged FAO to assist member countries in developing suitable crops and varieties especially for less favourable areas, with due regard to their soils and climatic conditions.

276. The high-yielding varieties call for high inputs, high fertility and better cultivation practices. Many delegates emphasized that adoption of these varieties increased most of all the need for fertilizers. In this connexion the value of the "fertilizer programme" was recognized as a valuable tool in popularizing high-yielding varieties. It was also stressed that the fertilizer programme should be associated wherever possible and appropriate, with programmes to introduce high yielding varieties. This would ensure that the population concerned were made aware of the benefits of fertilizer and also of the correct methods for its use. There was urgent need to eliminate supply bottlenecks and to provide the requisite credit and distribution facilities. High costs of fertilizers created an especially acute problem in countries where imports involved long overland transport. It was emphasized that a basis for sound decisions would involve an economic analysis of inputs relative to increased production through the use of high-yielding varieties. In a call for early action programmes one delegate recommended special attention from FAO/IBRD and UNIDO to the problem of fertilizer supplies.

277. The modification of existing projects to include high-yielding varieties capable of responding significantly to fertilizers was welcomed. This would be of particular relevance in relation to fertilizer projects, where interactions with high-yielding varieties could give especially good results

278. It was also emphasized by many delegates that the adoption of these varieties increased the need, besides that of fertilizers, for irrigation (including improved water management and use), fungicides, insecticides, improved tools and implements, and in certain circumstances farm machinery. Mechanization would have special significance in facilitating the introduction of multiple cropping. In addition, the provision of credit, improvements in marketing, and in education and extension services to farmers to raise the level of management was often required. The Conference therefore recommended that wherever possible FAO should adopt a fully coordinated approach to its future action on high yielding varieties.

279. The Conference stressed the need for FAO involvement in support of research development and coordination activities, particularly in regional activities, although some delegates suggested that this should not be in basic research. The Conference favoured a regional approach in the development of high-yielding varieties, and appreciated the support being given by FAO to the Near East Wheat and Barley Improvement and Modernization Programme. The Conference also welcomed the initiative of FAO in participating in the West African Rice Development Association and the effect that quick action could have on the widespread utilization of high-yielding varieties of rice in West Africa. More such regional approaches were called for and higher priority should be considered where appropriate to other important crops such as pulses and oilseeds, roots and tubers or pasture and fodder development. At the same time, FAO would continue to work closely with all other agencies contributing to research development, and establish closer cooperation with technological institutes.

280. Some differences of opinion were apparent concerning the attention that should be devoted to induced mutations as a means of developing new varieties. The need to combine new and traditional research methods was apparent and would receive more detailed attention in meetings to be held during the coming year.

281. The Conference noted with interest the proposals to strengthen activities in seed exchange and the collection and maintenance of genetic stocks. The involvement of other agencies and of countries which were centres of origin of cultivated species was confidently expected in this field. This work would be of prime importance to prevent the loss of valuable material for future plant breeding as new and pure varieties of limited genetic composition became more widely adopted.

282. The Conference welcomed the emphasis being placed by FAO on the production and distribution of adequate supplies of good seeds as a fundamental input for good crops. The need for attention to seed multiplication and the seed industry was emphasized by a large number of delegates. It was recognized that the seed industry as such was a step behind other inputs in terms of development, and a special effort was called for.

283. The Conference recognized that a major effort in the field of crop production would be required as a result of reorientation of FAO's priorities toward the high-yielding varieties. A number of delegates questioned the possibility of carrying out this work with the modest staff changes envisaged, particularly in connexion with the proposals put before the Conference for seed development, and recommended further strengthening of the activities of the Plant Production and Protection Division in the varieties and seed development. The repeated requests of many member countries for assistance in introduction and development of high-yielding varieties and in seed industry development indicated the need for special budget allocations to organize and carry out seed project identification and formulation missions. In addition training centres and training courses in seed industry development would be required and would also require financing. In this connexion it was noted that FAO would make a major effort to mobilize assistance from other sources, including the IBRD and area banks, UNDP, bilateral aid, WFP and the FFHC.

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