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D. International trade problems relating to agricultural products

The Constitution of FAO enumerates among its functions: "The Organization shall promote and, when appropriate, shall recommend national and international action with respect to improvement of the ... marketing and distribution of food and agricultural products and the adoption of international policies with respect to agricultural commodity arrangements."

In the light of this provision the Conference has discussed the major problems of trade in agricultural products.

Changed Pattern of Trade

The war brought about substantial shifts in the composition and direction of world trade. In respect of agricultural products, the deficit countries have in general become for the time being more deficit, while the capacity to export,; instead of being distributed among many countries, has become concentrated in a few - particularly in the Western Hemisphere. The result has been to add to the strains and stresses of international economic relationships. This situation merits careful and continued study for which further information is essential . In this connection governments are, urged to provide FAO with a fuller account of their export and import programs.

The Conference

- Noting that several exporting countries are endeavoring to introduce greater diversification of their agricultural production, thus tending to reduce the quantities of basic commodities available for export; and

- Noting with satisfaction that, by raising the purchasing power of the population, economic development in the countries hitherto less well developed is increasing internal demand.

- Remarks that this increased diversification in the normal exporting countries is not likely to bring about an increase of agricultural production in these countries with sufficient rapidity to meet the needs of the deficit countries;

- Calls attention to the opinion of the Third Session of the Conference, as stated in its Report, that optimum utilization of food, will be served by maximizing as far as practicable, in view of economic conditions in exporting countries and other limiting factors, the movement of certain food and agricultural supplies in the form of raw materials, rather than as finished products;

- Recommends that the Council, in consultation with all the appropriate international organizations, such as the Economic and Social Council, its Regional Economic Commissions, and the International Monetary Fund, study the trends which emerge as regards international trade in food and agricultural products; and

- Requests that the results of this study, together with suggestions as to the action which should be take by member governments, be submitted to the next session of the Conference.

Level of Stocks

In Section 1 of this chapter it has been pointed out that world stocks of food in general are still very low. The extremely good harvest of cereals-in the Northern Hemisphere must not lead to a careless utilization of current supplies either for human or-animal consumption. The rapid change in the supply position of coarse grains has brought about a serious disequilibrium between livestock numbers and the supply of fodder. Undoubtedly livestock numbers, especially of pigs and poultry, will tend to increase rapidly on the basis of improved fodder supplies and attractive prices of livestock products, but care should be taken that this increase does not go beyond the probable fodder supplies for 1949/50.

It is inevitable, therefore, that in the near future larger stocks, particularly of cereals, will have to be accumulated and financed in most countries. The present world situation, with balance-of- payment difficulties for many importing countries, puts the burden of financing more than ever on the shoulders of the producers and the governments of exporting countries.

The Conference considers that despite the good crops harvested last year, the summer of 1949 will find stocks of several of the principal commodities to be inadequate, and believes that it is not possible to rely indefinitely upon exceptionally good harvests in the exporting countries.

The Conference

- Draws the attention of governments to the necessity of exercising caution in the: utilization of the 1948 harvest, and to the possibility of establishing security stocks; and

- Requests the Council, during the year 1949, to give consideration to the question of stocks and the financing there of further requesting that the relevant parts of this question should be studied in conjunction with the proposed review of commodity problems.

Standardization of Agricultural Products Entering International Trade

Experience has shown that international trade in food and agricultural products would be facilitated if the commodities in question were subjected to precise regulation as to their intrinsic characteristics and the form in which they are presented.

Several countries have already adopted certain measures in this respect, notably for the most important commodities. Further efforts are necessary to co-ordinate these practices and to standardize their application internationally.

However, the Conference recognizes that real progress can only be made if a careful study is undertaken, commodity by commodity.

The Conference

- Recognizing the advantages for the development of international trade which would result from standardization of a number of food and agricultural products; and

- Being convinced that progress could be achieved with the minimum delay if particular attention were given, commodity by come; modify, to the special problems arising in this connection,

- Invites the organizations responsible for each commodity, such as the Wheat Council and the Sugar Council, to proceed without delay to the study necessary to arrive at concrete recommendations to the governments that are members of such organizations; and

- Recommends that the Director-General and the Council of FAO give attention to problems of standardization concerning those commodities for which there is no appropriate organization.

Exchange Difficulties

The Conference points out that international distribution of food and agricultural products is seriously impeded in many cases, first by the nonconvertibility of many of the principal currencies and second by the foreign exchange and balance-of-payments problems of many importing countries. Therefore,

The Conference

- Requests that these matters be taken into consideration by the Council in the review of commodity problems recommended below.

Restoration of exchange convertibility by appropriate action on the part of the governments concerned has been urged by some delegates, who have expressed the opinion that such a procedure would be one way of solving exchange difficulties. The Conference considers that this matter falls outside tits terms of reference.

Review of Commodity Situations

It will be the task of FAO, in close contact with member governments, to continue to review the world agricultural commodity situation.

The function of allocation has been performed by the appropriate commodity committee of IEFC. [See Section 3 of this chapter] As a commodity is removed from allocation, it has been customary for the committee to disband and for the work of review and compilation of statistics to be continued by the FAO staff.

The Conference

- Endorses this procedure, and

- Recommends

(1) that as commodities are de-allocated, the policy of disbanding the relevant committees and subcommittees should be continued, and the duty of statistical compilation and continuing survey of the commodity should be assumed by FAO as a staff function to the extent deemed necessary and subject to the avoidance of duplication with other agencies;

(2) that FAO, in the conduct of continuous study at the staff level of commodities coming within its purview, should pay particular attention to the need for early inter-governmental consideration for action when commodity shortages or surpluses are anticipated, and generally to the needs for promoting a stable and expending economy in accordance with FAO objectives.

With these general objectives in mind, the following principles have been accepted as background for discussion:

(1) The recommendations contained in the Report of the Preparatory Commission on World Food Proposals, read as a whole, provide a sound basis for an expansionist policy in production and distribution.

(2) The adoption of the Preparatory Commission's report by the 1947 Session of the Conference at Geneva places a responsibility on the Organization to pursue the objectives contained in the report, in particular, stability in production and distribution.

(3) A proper understanding of the problems associated with commodity distribution is a prerequisite to the formulation and operation of any form of commodity agreement.

(4) Pending the establishment of the International Trade Organization, the Interim Co-ordinating Committee for International Commodity Arrangements, on which FAO is represented, provides the machinery whereby study groups and conferences can be arranged on the recommendation of FAO at the request of any government or group of governments.

(5) The fullest possible co-operation is necessary between the United Nations and its specialized agencies in all discussions associated with commodity distribution and in the administration of agreements by the appropriate councils.

Several delegations have pointed out that it is an accepted principle in their national agricultural policy to attain, as far as possible, stability in the price of agricultural products for one or more years ahead, or a stable relationship between the price of agricultural commodities and the general price level.

The Conference feels that the increase in agricultural production needed to meet nutritional targets would be attained much more easily if methods could be worked out and practical action taken to relieve the agricultural community from the social and economic hardships of violent price fluctuations. Farmers fully appreciate that while manufacturing and mining industries can fairly quickly adapt their output to effective demand at remunerative prices, they - the farmers - must continue to bear with variations in output as a result of uncontrollable factors such as weather. In some countries the hardships caused by crop losses due to the vagaries of climate are being mitigated by crop insurance schemes. It has been stated by a representative of the farmers - the Observer from the International Federation of Agricultural Producers - that "The farmers of the world look to their own organizations and to their governments to prevent a recurrence of the ruin and dispossession they experienced between the two world wars. They believe that the hazard can be partially met by the development of international price stabilization programs as an inducement to the maintenance of adequate production of needed foods. Farmers believe that international agreements on such staples as wheat, feed grains, sugar, fats, cotton, and wool, if properly conceived, would be expansionist."

Agreements under Consideration

Several delegations have stressed the failure on the part of several countries to ratify the wheat agreement concluded at the Washington Wheat Conference, January-March 1948. It has been announced, however, that the Wheat Preparatory Committee will meet as soon as possible to arrange for a resumption of the Wheat Conference, possibly on 25 January 1949.

The Conference

- Notes with satisfaction this development, and expresses the view that FAO should encourage the continuation of multilateral negotiations, looking toward intergovernmental agreements on single commodities such as wheat and sugar.

The Draft Charter of ITO provides that the appointment of study groups and the calling of intergovernmental conferences for the purpose of considering any intergovernmental commodity arrangements rests with that organization. The special interest of FAO in such arrangements is recognized. The Constitution of FAO imposes a responsibility on the Organization in respect of commodity arrangements. The field of interrelationship between FAO and ITO will need to be considered in the drafting and approval of their interagency agreement.

Organizations already exist for the study and/ or administration of certain commodities, e.g. wheat, sugar, cotton, wool, and rubber.

The Conference

- Recommends that FAO ensure the closest cooperation with such councils and study groups, and avoid unnecessary duplication of statistical and other services.

Future Procedure

The Conference feels that the problems associated with the formulation function, and administration of commodity agreements are not widely understood. It is apparent also that some misapprehension exists in the minds of consumer and producer groups with regard to prices. Discussion has stressed that stability is the main objective rather than any particular level of prices. It has also revealed the need for continuous study by the Organization, the Council, and the Conference. Having considered how best this need might be fulfilled,

The Conference

- Recommends

(1) that at future annual sessions of the Conference the FAO Council provide for a committee of Commission I to deal with the annual review and to examine and report on commodities as affected by agreements, international trade, and distribution;

(2) that appropriate working documents be prepared by the Council of FAO for member governments and the Conference;

(3) that the Council,

(a) bearing in mind the related and extensive documentation of the Preparatory Commission on World Food Proposals, the Economic and Social Council, the Interim Coordinating Committee for International Commodity Arrangements, and the various intergovernmental commodity organizations, arrange for a preliminary review of commodities and groups of commodities, within the purview of FAO, in respect of

(i) the type and purposes of intergovernmental discussions or arrangements, if any, now proceeding or-in being;

(ii) the relation between these purposes and the objectives of FAO;

(iii) FAO's relations with bodies already established for discussions or negotiations;

(b) be invited to submit this review to member governments if possible immediately following the first 1949 meeting of the Council, together with a statement of the Council's instructions to its observers at meetings of intergovernmental study groups, conferences, or councils, and

(c) in the light of its analysis, submit to governments any suggestions it may see fit to make for governmental and intergovernmental action in respect of any other com modify or group of commodities

(4) that FAO, in association with ICCICA, give continuing publicity to the provisions and purposes of existing and contemplated commodity arrangements in the field of. food and agriculture, with special emphasis on the interlocking of the interests of producers and consumers in any such arrangements.

E. Documentation for annual reviews

Good documentation is prerequisite to successful intergovernmental discussions. The effective pursuit of FAO's objectives requires at all times accurate appraisal of the agricultural and food situation. Without such, discussions on policy issues are all too likely to be misinformed and ineffective in their outcome.

This session of the FAO Conference has seen a decided advance in the quality of documentation, and the experience gained makes possible further improvement.

Behind any documentation of quality lies months of careful preparation both by member governments and the secretariat of FAO. Cooperation between the staff of the Organization and its members in the provision and study of data related to the food and agricultural situation throughout the world is a matter) of month by-month planning and timing. Documents are not written and printed overnight,) nor is the provision of the original data by member nations always a simple: matter or "reply by return mail" to an enquiry from FAO headquarters, The type of data and the nature of analyses required must be considered in relation to staff and other necessary resources at both ends of the process: to member nations from FAO and return. In a sense, a volume such as The State of Food and Agriculture 1948 represents examination, over many months of a wide range of material and culmination of a great deal of work performed in the interests of FAO both by the national governments and the staff of the Organization.

The Conference has accordingly considered many aspects of this matter, more especially aspects concerned with annual reports by members, documents required for an effective review of the world food and agricultural situation, and the general machinery for their- preparation.

Documents Desired for Next Annual Review

In considering the nature of the required documentation, the Conference wishes first to express its appreciation of the basic documents prepared this year, notably The State of Food and Agriculture -1948 and National Progress in Food and Agriculture Programs - 1948. The former is of primary importance to Commission I. The latter is of more general interest to the Conference as a whole.

From the experience gained this year it is considered that the document for Commission I could be improved by being shorter, more up-to-date (in relation to date of issue), and more clearly separated into (a) appraisal of situation, and (b) policy problems.

To achieve this,

The Conference

- Recommends that for its next session this basic document should be as concise as possible and should contain the following sections:

(1) the state of food and agriculture, with particular emphasis on the year just begun, i.e. 1949/50;

(2) plans and programs, including (a) a qualitative statement of objectives or trends and (b) quantitative production, trade, and consumption targets for 1950/51 and for subsequent years if available;

(3) identification and analysis of policy issues; and the following annexes:

(a) reports on the regions (see below);

(b) reports on commodity situations;

(c) additional maps, charts, tables, and line graphs;

(d) last-minute situation reports (to be issued at the time of the Conference session).

Attention has also been given to the question of continuing in future years the Conference document National Progress in Food and. Agriculture Programs.

The Conference

- Recommends that the analysis represented by this document should be continued and that (except for the material on targets which will be utilized in the document The State of Food and Agriculture) it should form a part of the Director-General's annual report. Thus this latter report would contain two sections, namely

(1) review of the work of FAO; and

(2) the work and progress achieved by national governments.

Some consideration has also been given to the form of this analysis, which might be related to the Director-General's review of FAO activities or, alternatively, remain substantially as at present in effect a summary under the same headings as used by member governments in their annual reports.

Sources of Documentation

The Conference considers that the required documentation may be drawn from the following sources:

(1) Current statistical material. This should be obtained through the regular approved machinery of the secretariat.

(2) Current non-statistical material, e.g. information on weather, changes in land tenure, etc. This should be obtained from various sources, e.g. from staff members working in particular countries, through special enquiries, and also to some extent from member governments annual reports.

(3) Material on plans and programs. This should be obtained principally from the annual reports and other documents supplied by governments.

Form of Annual Reports from Member Governments

Each government should be requested to submit one report, consisting of

(1) Measures taken and progress achieved: this will include measures taken to carry out the objectives of FAO and to implement resolutions passed at various Conference or Council sessions. This should cover more general items also, such as industrial development, movement of prices, and changes in income levels which have a bearing on food and agriculture.

(2) Plans and programs or advanced estimates which would include: (a) a qualitative statement indicating the general objectives or direction toward which the country's production, consumption, and trade programs should move in the next few years or decade ahead; and (b) specific production, consumption, and trade targets, in quantitative terms, for each of the major agricultural products for the year ahead, together with figures for current levels, including a discussion of how the government expects to implement these targets.

The Conference

- Urges every government to submit a full report. Should some governments be unable to supply quantitative targets for all their major products, the Conference suggests that such governments supply targets for the one or more products that are most important to them in international trade. In the event that some governments are unable to supply quantitative information for any of their products, the Conference suggests that those governments make a qualitative statement concerning the direction their agriculture is moving and the objectives toward which they are working.

The Conference

- Authorizes the Director-General to prepare and circulate an outline which will assist governments in the preparation of their reports, and suggests that, if practicable, he may wish to consult the Council or its Policy Committee before final approval of this outline. Moreover,

The Conference

- Recommends, that in preparing, the above outline every effort be made to:

(1) simplify the nature and number of headings in the outline;

(2) provide more precise definitions and explanatory notes to guide governments in reporting under each heading;

(3) substitute for the long list of previous Conference recommendations a general invitation to report on implementation of such recommendations as concern the country and region in question;

(4) take advantage of material submitted by governments to other United Nations agencies and avoid duplication of requests to governments.

Supplementary Sources

Where regional meetings consider the state of food and agriculture in the region, they will reduce the need for regional committees at annual sessions of the Conference and provide reports useful in the documentation for the annual review.

Reports from these meetings should also be of service to the Regional Economic Commissions.

Time Schedule

The Conference points out that the successful conduct of the annual review depends in large part on the selection of a suitable date for the annual session of the Conference. It considers that from the point of view of the preparation of documentation on the state of food and agriculture, a date in the latter part of January 1950 would be more advantageous than a date in November 1949. This would enable firm estimates of Northern Hemisphere crops to be incorporated in the pre-Conference documentation and the first estimates of Southern Hemisphere crops to be made available at the time the Conference meets.

It is realized that there is a conflict between the desire of governments to receive the latest possible information and the desire to have ample time to study the documents before the Conference meets. This difficulty may be eased by giving more attention to the mechanics of distribution. In this regard, the recommendation made under the heading "Documents Desired for Next Annual Review" would help, namely, that up-to-the-minute information should be confined to an annex distributed at the session. The Conference also suggests that in the first instance the basic documents be circulated to governments in mimeographed form, with translations of an admittedly provisional nature. The printed documents and authoritative translations should be available by the date of the session.

As regards the timing of the various stages of preparation, the following suggestions are made, on the assumption (a) that the next session of the Conference is held in the latter half of January 1950 or (b) in November 1949

(1) Outlines to be dispatched to member governments on (a) 1 March 1949; or (b) 1 February 1949.

(2) Final date for receipt of reports from member government-(a) 1 September 1949; or (b) 1 July 1949.

(3) Documentation to be dispatched to member governments-(a) 1 December 1949; or (b) 1 October 1949.

Response of Governments

The Conference points out that this year, although the outline was sent to member governments on 15 February, only one report was received by the date requested, namely 1 July. Twenty reports were received up to one month late, 10 were received two months late, and 7 were received still later. Twenty countries sent no reports at all, and several metropolitan countries sent no reports or only very late reports for colonial territories. Of the 30 government reports received by 1 September which it was possible to include in National Progress in Food and Agriculture Programs, only 11 were supplemented by optional reports containing targets for 1950/51.

The Conference

- Strongly recommends that all member governments give particular attention to this matter in the coming year and endeavor to submit reports by the date requested, so that next year's documentation may be much more representative of conditions in all parts of the world.

It would hasten the distribution of reports to governments if each government took the responsibility for transmitting copies direct to other member governments.

Preparations by Policy Committee and Council

The Conference

- Records its appreciation of the report received from the Council and its Policy Committee, and

- Recommends that for. the next session of the Conference, discussion by the Council and its committee should be directed more to (a) identifying the main problems and policy issues which arise out of the documentation, (b) preparing a short list of items for Conference discussion, and (c) giving guidance to the Conference on these issues.


The State of Food and Agriculture-1948 (C48/8)

National Progress in Food and Agriculture Programs - 1948 (C48/9)

Program of Work for 1949 (C48/2)

Report of the International Emergency Food Committee to the Council of FAO at Its Fourth Session (CL 4/5) .

Supplementary Report on Nitrogen Fertilizer Production (CL 4/4)

Nutrition Problems of Rice-eating Countries in Asia-Report of the Nutrition Committee, Baguio; Philippines, 23-28 February 1948

Report of the Rice fleeting, Baguio, Philippines, 1-13 March 1948

Report of the FAO Regional Conference for the Near Eats Cairo, 14 February 1918 (CL 2/11)

Report of the Nutrition Conference, Montevideo, Uruguay, 18-28 July 1948 (N48/C02/11)

Report of the Third Session of the Conference

Report of the Preparatory Commission on World Food Proposals
Statement Made by the Vice-President of the International Bark for Reconstruction and Development (C48/I/14)

Report of the FAO/ECAFE Joint Working Party on l Agricultural Requisites (C48/20)

Report of the Latin-American Conference on Forestry and Forest Products, Terosopolis, Brazil, 1948 April 1918 (F48/Co 1/21 Rev.)

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