CCP 05/CRS.6

Table of Contents

I. INTRODUCTION

II. THE ORIGINS: SURPLUS DISPOSAL AND THE FAO PRINCIPLES

III. FROM SURPLUS DISPOSAL TO FOOD ASSISTANCE: CREATION OF MULTILATERAL MECHANISMS

I. INTRODUCTION

1. This document is being provided as an information note to accompany Document CCP 05/14. It is a brief history of the international and institutional developments related to food aid, with a focus on the contributions of FAO and particularly the Committee on Commodity Problems (CCP) and its subsidiary, the Consultative Subcommittee on Surplus Disposal (originally abbreviated as CSD and subsequently changed to CSSD¹). The treatment of food aid in multilateral trade negotiations is discussed in the main document.

II. THE ORIGINS: SURPLUS DISPOSAL AND THE FAO PRINCIPLES

2. The first discussion of food aid in an international forum can be traced back to the Seventh Session of FAO Conference in November 1953. The Conference paid special attention to the growing difficulties encountered for the first time since the end of the Second World War in absorbing surpluses of certain commodities (notably cereals), rapidly accumulating in North America. These difficulties had led the United States to adopt measures and legislation of surplus disposal but there was concern that if these measures were to be applied exclusively in the light of national objectives and interests, they could threaten orderly development of international trade.

3. Following its review of the situation, the Conference concluded that, in accordance with FAO's basic aims, the absorption of excess supplies was to be sought by adopting policies for increasing consumption in the developing countries. It was recognized at the same time that the movement of surpluses into consumption required consideration of the possible international repercussions of such measures, including their effects not only on the commercial exports of similar products of competitors, but also on production and economic development within receiving countries.

4. Accordingly, the Conference instructed the CCP to consider: (i) the most suitable means of disposing of surpluses; (ii) the principles which should be observed in order that the disposal of surpluses could be made without harmful interference with normal patterns of production and international trade; and (iii) the strengthening of intergovernmental machinery for consultations on these matters². These three concerns expressed by the FAO Conference were followed up by a series of actions over the next decade and a half. In 1954, FAO carried out a major study on surplus disposal³ which pioneered some very creative ways of making appropriate uses of food aid to address humanitarian needs in developing countries and was the first major step in the conceptual evolution of food aid towards its eventual food security role. That study had profound implications both at the conceptual and institutional level. It launched new ideas for utilizing food surpluses in food-for-work projects, for food stabilization purposes, in special feeding programmes for the most vulnerable target groups, and in support of government programmes to subsidize consumption.

5. Closely related, in timing and significance, was another FAO study that followed in 1955⁴ concerning the possible contribution of food aid to economic development. A clear distinction was made for the first time between food assistance for welfare and support for general development programmes. That study stressed the role of food aid as an additional capital to finance economic development, including its balance of payments and budgetary support roles.

6. In parallel with the identification of appropriate ways to make use of surpluses, a CCP working party, which met in Washington DC (February-March 1954), drafted the FAO “Principles of surplus disposal and guiding lines for dealing with agricultural surpluses”⁵. In June 1954, the CCP commended to Member Governments the proposed Principles and established the CSSD as a subsidiary body of the FAO CCP⁶. On 27 July 1954, the CSSD held its first meeting with a membership of 21 governments. In December 1954, the first edition of “Disposal of agricultural surpluses: principles recommended by FAO” was published and in November 1955, 37 Member Nations indicated readiness to adhere to the FAO Principles⁷ (this number increased to over 50 by the early 1970s). In 1959 the CSSD submitted to CCP its report on “Consultative machinery and procedures and operations and adequacy of the FAO principles of surplus disposal”, which set down the procedures for bilateral consultations in accordance with the Principles⁸.

7. As several countries moved from a net importing position to an exporting position of basic foodstuffs in the 1960s, certain concerns about food aid transactions emerged and a CSSD ad hoc group was formed in 1963 on “Changing attitudes toward agricultural surpluses”. Its report, in April 1963, pointed out to CCP new developments in the scope and nature of “near-commercial” and “extra-commercial” transactions⁹ and in April 1965 the CSSD submitted to CCP the “Grey Area Panel Report” on developments and problems arising from concessional transactions with commercial features and commercial transactions with concessional elements¹⁰.

8. In July 1969 a CCP working party developed the Register of Transactions as an internationally accepted basis for classifying concessional transactions and in December of the same year the CCP agreed on new consultative and reporting procedures (procedures for notification and consultation on transactions identified as likely to cause harmful interference with normal patterns of production and trade)¹¹. Finally, in October 1970, the CCP agreed on procedures for the establishment of Usual Marketing Requirements (UMRs), which were endorsed by the FAO Council in the same year. After the Uruguay Round of Multilateral Trade Negotiations had been concluded, the reporting procedures and consultative obligations of the Members of the CSSD were revised and endorsed by the FAO Council at its 113^th Session in Noember 1997.

III. FROM SURPLUS DISPOSAL TO FOOD ASSISTANCE: CREATION OF MULTILATERAL MECHANISMS

9. The establishment of the World Food Programme (WFP) in 1962 marked the beginning of multilateral food aid. The first move in this direction was the UN General Assembly resolution in 1960 on the “Provision of food surpluses to food deficient peoples through the United Nations system”. Following this resolution and further intensive studies in the United Nations (UN) and FAO¹²10. The next milestone was the first Food Aid Convention (FAC) in 1967 as one of the two instruments - the other being the Wheat Trade Convention - which constituted the 1967 International Grains Agreements. The adoption of the FAC coincided with a major reversal in the world supply/demand situation, from surpluses to relatively tight supplies, and with the related efforts of the traditional food aid donors to involve more countries as donors, especially in Western Europe and Japan, which until then had given little or no food aid.

11. The FAC is a treaty that was intended to enhance the capacity of the international community to respond to food aid needs by guaranteeing a predictable flow of food aid per year, irrespective of price or supply fluctuations. Under the FAC 1967, an aggregate annual minimum guaranteed volume of 4.2 million tonnes of food aid in cereals (in wheat equivalent) was committed¹³. The Convention was renegotiated in 1971 maintaining the same minimum commitment, and again in 1980, when the minimum guaranteed level was raised to 7.6 million tonnes of cereals. The number of donors also rose to 22 and cereal coverage was extended to rice.

12. The FAC was renewed and renegotiated a number of times through the 1980s and early 1990s, with the aggregate minimum commitment essentially being maintained at about 7.6 million tonnes, until the 1995 Convention when donors lowered their minimum commitment by more than a quarter to about 5.5 million tonnes. The Convention presently in effect is the 1999 FAC.

13. Together with the minimum guaranteed volume of food aid, a set of guidelines form part of the FAC, related to the provision of food aid to ensure that it is targeted effectively and directed towards the neediest countries. The Convention also cross-references donors’ obligations to the CSSD by stating that food aid should be provided in a manner consistent with the FAO “Principles of surplus disposal and consultative obligations”. While the FAC, as a treaty, is a legal instrument and as such goes beyond the CSSD, it, like the CSSD, lacks a binding enforcement mechanism whereby donors not meeting their commitments and/or not observing agreed guidelines and principles could face discomfiture and possible penalties under a WTO-like dispute settlement/resolution mechanism.

14. Another major step in the evolution of food aid was the decisions and recommendations of the World Food Conference in 1974. In particular, the Conference established the WFP Committee on Food Aid Policies and Programmes (CFA), and the FAO Committee on World Food Security (CFS). Both of these committees promoted innovative approaches in the use of food aid to support food security and economic development in vulnerable countries.

15. In addition, the World Food Conference recommended the acceptance by all donor countries of the concept of forward planning of food aid and of a global food aid target of 10 million tonnes of cereals. It also suggested the need for raising the share of food aid channeled through WFP, the grant component of the bilateral food aid programmes and the cash resources available for commodity purchases from developing countries. The Conference recommended measures for meeting international food emergency requirements particularly in order to enhance WFP's capacity to render speedy assistance in emergencies.

16. The latter recommendation led to the establishment of the International Emergency Food Reserve (IEFR) by the UN General Assembly in September 1975, with a minimum target of 500 000 tonnes of cereals, placed at the disposal of WFP, in addition to regular WFP pledges, and subject to the existing WFP procedures for approval of emergency requests. The CFA approved modalities for the operation of the IEFR at its First Session in 1976, which were revised by the Committee at its Sixth Session in 1978.

17. At its Seventh Session in May 1979, the CFA recommended guidelines and criteria for food aid to guide food aid programmes and policies of bilateral as well as multilateral donors. The latest policy framework for WFP operations was approved by its Board in May 2004.

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¹ The acronym of the subcommittee was changed to CSSD in October 1995 in order to avoid confusion with another UN body created at that time.

² Conference Resolution No. 14 (53).

³ "Disposal of Agricultural Surpluses", FAO Commodity Policy Studies No. 5, 1954.

⁴ "Uses of Agricultural Surpluses to Finance Economic Development in Under-Developed Countries", FAO Commodity Policy Studies No. 6, 1955.

⁵ Report of the Working Party on Surplus Disposal to CCP (CCP 54/2).

⁶ CCP Resolution No. 1 (23).

⁷ Report of the eighth session of the FAO Conference.

⁸ CCP/CSD/59/23 and Conference Resolution No. 11/59.

⁹ CCP/CSD/63/27.

¹⁰ CCP/CSD/65/19.

¹¹ Twentieth report to CCP (CCP/CSD/70/70).

¹² UN General Assembly Resolution 1496 (XV); ECOSOC Resolution 832 (XXXII) requesting the UN and FAO to formulate more detailed proposals regarding procedures and arrangements for a multilateral programme; FAO/UN Joint Report on Proposals Regarding Procedures and Arrangements for the Multilateral Utilization of Surplus Food (FAO document C 61/18, Rome 1961); FAO Resolution No. 1/61 on Utilization of Food Surpluses - World Food Programme and UN General Assembly Resolution 1714 (XVI) on a World Food Programme.

¹³ Individual donor shares were negotiated in the GATT Kennedy Round of trade negotiations. The nineteen participants in the 1967 Convention included grain-importing countries as food aid donors.