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STATEMENT BY THE DIRECTOR-GENERAL

Mr. Chairman, Excellencies, Distinguished Delegates and Observers, Ladies and Gentlemen,

On an occasion such as this, when the leaders of world agriculture gather under one roof, it would be easy to believe that we live in a global society. It would be easy - but it would be wrong. The idea that we find ourselves in a global society is an illusion, created by the spectacular advances in transport and communications which have marked our time. We do not find, in our world, the degree of mutual solidarity, the coherence of policies and institutions, which alone could give reality to that splendid ideal. On the contrary, international commitments are constantly subordinated to national interests. Political divisions are becoming more acute, economic gaps loom larger, the anxieties of the people are mounting. Ploughshares are beaten back into swords.

Nevertheless, the first World Food Day - with manifestations organized in over 140 countries, in every quarter of the globe - has shown beyond a shadow of doubt the extent to which humanity aspires to a better state in its affairs. Almost at the same time, the Cancún Summit has struck a responsive chord in peoples around the world, in opening up at least some possibility of negotiating a new deal for the world's under-privileged peoples. Let us do all we can to ensure that the global negotiations are swift, substantive, and oriented towards action in the real world - not towards two-dimensional agreements, born and entombed on paper.

Alongside World Food Day and Cancún, and connected with both, I find cause for hope in the unremitting dedication to international development among men and women in all walks of life, and of all ages. I wish to pay a special tribute to the non-governmental organizations which, in many industrialized countries, have moved against apathy and indifference, mobilizing public opinion in favour of the hungry and under-privileged.

If we are to build a global society, where could we start more appropriately than with food and agriculture? At the dawn of history, it was the development of a settled and productive agriculture which brought about the growth of civilization. And at the dawn of what we must hope will be a new age, there can surely be no foundations for a global society before we have completed the solution of man's ancient problem of hunger and malnutrition.

If this is to be achieved in our time, there must be a genuine reordering of priorities. The arms race should be transformed into a collective search for food security. Of what avail is a nuclear arsenal that could destroy every city in the world several times over? Indeed, the capacity to overkill the underfed is surely the foremost evidence of irrationality in human affairs. By no means is this irrationality confined to the great powers. The proportion of global arms expenditure accounted for by developing countries, although still low, has doubled in a decade. Yet the frenzied search for military security brings little but an intensification of rivalries, each tip in the balance of power provokes a counteraction, and there remains the barely thinkable prospect that all these weapons, made not to be used, may one day start firing.

Food security may seem remote from military affairs. Yet the tensions that stem from food shortages have proved to be one of the most powerful factors of destabilization. Even for some countries in Europe, the era of national food crises is not yet over. A government that fears for its security could do well to equip itself with an arsenal of grain, not bombs. The training of farmers may do more for peace-keeping than the drilling of soldiers.

The risk of military danger is truly worldwide, and so too is the danger created by food insecurity. Science and technology are doing much to insulate agricultural production against the fluctuations of weather and the impact of diseases. But man is still far from being master of nature. Where the climate is erratic, such as monsoon Asia and large parts of the Soviet Union, output may vary year by year over a considerable range. Even the United states is by no means immune from unexpected setbacks. It is therefore highly disturbing that carryover stocks of cereals at the end of the 1981-82 season are expected to be still below the 17-18 percent of world consumption which we regard as the very minimum necessary for food security.

What does this mean in practice? It means that there will be only about 60 million tons of cereals available to meet abnormal import requirements, if there should be widespread harvest failures next year. We regard an emergency of these dimensions as highly improbable, but not impossible. If it were to occur, prices would rapidly climb to unprecedented heights, There is no mechanism to ensure that poorer, food-deficit countries would be able to obtain the supplies they need. On the contrary, they would once again find themselves bidding against the economic giants for the cereals that represent their lifeline.

We had high hopes that these dangers could to some extent be avoided through an international grains arrangement, designed to ensure both market stability and food security. However, after almost a year, negotiations in Geneva broke down in February 1979. More recently, the world has seemed to be moving still further away from the establishment of an effective system of food security. Even the idea of international coordination of nationally held stocks does not at the present time appear acceptable to all the main parties concerned.

Let me reiterate that the requirements of a food security system are reasonably clear, and the main elements have been under discussion or negotiations for several years. At the national level, all countries should have a well defined policy on stock-holding: stocks should be held by importers as well as by exporters. Regional arrangements should supplement those made by countries individually. At global level, there should be a formal agreement comprising specific measures on prices and stocks, and arrangements, including financial provisions, to meet the special needs of developing countries. An agreement of this type should allow for the constitution of a global security reserve of at least 25 to 30 million tons of wheat. Here indeed is a matter for global negotiation, with conflicts of interest to be resolved not only between North and South, but also among developed countries.

The cost of a system of world food security, although certainly high, would be trivial compared to global military expenditures now running at about one million dollars a minute.

Pending the establishment of such a system, we must live with interim measures, and strive to make them more effective. I may briefly recall that this Conference, and the General Assembly of the United Nations, have endorsed the Plan of Action on World Foot Security which I put forward after the failure of the Geneva negotiations on a grains arrangement. The Plan of Action remains the only international policy framework for action on this subject - but its provisions need to be refined and strengthened. The International Emergency Food Reserve, established by the General Assembly at its Seventh Special Session in 1975, is the only security stock managed on a multilateral basis. I have spared no effort to attract additional donors, and have advanced various proposals, still under discussion, for strengthening the Reserve by its development into a convention, or by arranging multi-year pledges. The Reserve's modest target of 500 000 tons of cereals will be attained for the first time this year, thanks to generous initiatives by the European Economic Communities and the OPEC Special Fund. The Committee on World Food Security was created at the time of the crisis of the mid-seventies - but it still waits to be used by governments as a major negotiating forum.

The Food Security Assistance Scheme, a timely creation by the members of this Conference, has mobilized help for national ant sub-regional projects in developing countries. Yet far more resources are needed to finance - bilaterally or multilaterally - the projects it had drawn up together with governments. I would draw the special attention of donors to the need for support to the regional and national food security programmes of the Sahelian countries.

We have laid out the ground work. The need now is to advance towards a real food security system.

I make no apology for dwelling at such length on this subject. It is, I think, agreed by all that world food security must be high on the list of topics for the forthcoming global negotiations.

Food security is, by definition, a form of global insurance policy, of particular importance for the poorer countries while they work their way up the development ladder. But trade issues have a greater direct impact on the development prospects of these nations.

The problems of their agricultural trade must arouse the highest concern. Many of the developing countries entered the global economy in colonial times as exporters of tropical products for the metropolitan countries. After independence, agricultural exports continued in many cases to be the mainstay of their economy. Yet developments over the last two decades have whittled away the favourable balance of their agricultural trade. Recent price weakness in commodities such as sugar, coffee, cocoa, sisal, jute, rubber and tea lead us to fear that in 1981, for the first time in history, the credit balance in the agricultural trade of the developing countries may be eliminated.

There are three separate trends at work. In the first place, the developing countries' import needs have been going up faster than the demand for their exports. Sales of tropical commodities to relatively stagnant markets in the industrialized world have not kept up with the rapid growth of imports required by rising populations. Ten years ago, the raw material and beverage exports of low-income developing countries sufficed to finance all their food imports, with a margin to spare. Now, they are quite inadequate for this purpose, and cover only two thirds of the food import bills.

At the same time, certain commodities are in a long-term price decline. The most significant is tea, which is now fetching, in real terms, only one third of its value 20 years ago. In contrast, imports of oil and some manufactured goods have risen dramatically in price and represent a major burden on the balance of payments.

The third negative factor for developing countries is the chronic instability of prices in international markets, which can totally disrupt their development plans. The extreme example right now is sugar, which has gone down in less than a year from 40 cents a pound to 12 cents a pound.

On top of these difficulties come tariff and non-tariff barriers, which president the developing nations from exporting in processed form, and thus benefiting from the value added.

The deteriorating trade situation of the developing countries must be tackled on both sides of the balance. Imports must be lowered by increasing domestic production, a theme to which I shall return in a minute. And export earnings must be increased, by larger sales at equitable prices. The issues relating to exports lend themselves, par excellence, to international negotiation

But negotiation does not necessarily end in success, and International commodity agreements have, in most cases, proved elusive. The International Monetary Fund has developed useful schemes for compensating for export shortfalls and, recently, for increases in cereal import costs. The EEC Stabex Scheme is a valuable contribution towards stability of export earnings among the associated countries. Yet the total impact of these arrangements is not adequate in relation to the dimensions of the problem. The difficulties of the developing nations in agricultural trade need to be tackled on a comprehensive. across-the-board basis in any round of global negotiations. The mechanisms conceived by UNCTAD, in cooperation with FAO, and in particular the Common Fund, must be given a chance to play a role that is genuinely commensurate with the issues at stake.

It needs to be borne in mind that, whereas a manufacturer can make quick and rational decisions regarding the volume of his production and the price of his product, the exporters of tropical commodities have far more difficulty in controlling production levels and have almost no control over prices on international markets. Ideally, there should be some form of indexation linking the prices of the major export items and the most significant imports of the more vulnerable developing nations.

Long-term global negotiations should also support the efforts of the developing countries to foster trade among themselves. There is a paradox in the concentration of trade along historical routes, accompanied by a relative neglect of import-export markets in the South. Economic cooperation among developing countries must, in the eighties, become more than a concept: it must be translated into practical economic relations, involving the development of the necessary infrastructure, transportation links, and financial arrangements. Indeed, a rational development path must be mapped out for global trade as a whole if the future is to be guided, and not left to the random working of uncontrolled forces.

While trade can make a major contribution towards solving world food problems, the heart of a lasting solution must be increased agricultural output by developing nations, combined with greater purchasing power for the poor, enabling them to buy more food and better food.

Fortunately relatively good production results have been achieved in recent years by the largest developing countries, particularly China and India, and by the middle-income countries, especially in Latin America. As a result, the overall growth of food production in developing countries during the decade of the seventies has reached a figure of 3.3 percent per annum, substantially below the 4 percent target but well above population growth, and better than the figure for the sixties. However, this is an average, which covers wide differences between countries, and in particular masks the enormous difficulties of a great many smaller countries, especially in Africa. While we must recognize the unprecedented challenge of population growth, it is nevertheless more than disturbing that in about half the developing Member Nations of FAO, food production is failing to keep up with the increase in the numbers to be fed. A few of these countries are relatively well off, but most of them are among the poorest countries of the world. The acute, even disastrous, situation of their agriculture is one of the most urgent and compelling challenges that face FAO and the international community at large.

At global level, the situation calls for an increase in the level of external aid to agriculture. In fact, we find that the reverse is happening: official commitments of assistance to the sector have been falling in real terms since 1978. In the context of an increase in total aid for all purposes, the proportion of bilateral aid devoted to agriculture should be raised to a third, following the example of the multilateral funding organizations.

Food aid can be an important form of developmental assistance, as long as it is regarded neither as a means for solving the problems of the donor, nor as an alibi for failure to increase domestic production in the recipient. With that proviso, cereal aid should attain and surpass the target of 10 million tons, set at the World Food Conference. In the seven years since it was established, the cereal imports of the developing countries have gone up by over 60 percent. Yet food aid has still not reached the 1974 target figure, and is even tending to decline.

The food-deficit developing countries themselves must re-examine their policies in the widest possible framework. Agricultural weakness must be redressed not merely by action in the agricultural sector: for many countries, a re-orientation of their overall development towards the achievement of agricultural objectives is necessary in order to bring about a major improvement in the trend. The allocation of resources for domestic investment, the impact of changed price policies, the merits of import substitution versus export promotion, the effect of exchange rates, these are just a few of the basic issues affecting the whole economy which may need to be considered. For this reason, we consider that national food strategies should generally be prepared as an integral part of the overall development plan, and not as an independent exercise.

Such strategies will normally need to embody specific programmes or projects on which action can be started quickly. Indeed, a great many governments are probably ready to under take significant new action programmes without going through a major planning exercise. It is, in any event, the Member Nations themselves that must decide, and if they want our help in this field we are ready to assist in any way that is technically and financially possible for us.

Particular attention needs to be paid to the role of small farmers, and to the general development of traditional agriculture. It is not merely that social justice demands the possibility of development for all. In many areas, and particularly in Africa, the necessary increases in production must come mainly from the small farm sector.

The World Conference on Agrarian Reform and Rural Development has pointed the way. Structural reform must enable the under-privileged to have equitable access to resources of land and water. The re-orientation of services for extension, credit, inputs and marketing must bring the small producer the means to contribute increasingly to national food supplies, and especially towards meeting the requirements of urban populations.

The WCARRD Programme of Action has also brought out the importance of organizations of the people for the people, organizations which allow them to shape their own development. Ideally, such organizations should be spontaneous, not sponsored from outside. In practice, some degree of encouragement may be necessary, and FAO in cooperation with governments is now in the early stages of a programme for this purpose.

For no social group is the concept of participation in development more vital than for women. Agricultural modernization can very quickly break up the patterns of village life, and the division of labour between the sexes, to the disadvantage of the women unless deliberate action is taken. Improvement of the woman's life needs to be a constant objective of agricultural and rural development schemes.

As cropping patterns change, so there may be a gradual evolution in the diets of rural areas. Because of the woman's traditional role in the home, it is important that she be made aware of basic nutritional considerations. Ignorance must be ranked along with poverty as a main cause of malnutrition. In the age of the universal transistor radio, is it unrealistic to aim at bringing a message on nutrition into every village, and intro every home?

The overall challenge of the transfer of technology is one of the most difficult with which we have to deal. Not only is there the problem of reaching the farmers, there is often a much more basic issue of "which technology'>" For increasing productivity, it is true that the transfer of technology from the highly successful agriculture of the advanced countries is of major importance for the developing nations. But the fact remains that this technology was conceived in an entirely different agro-ecological, social and economic environment from that found in tropical countries.

There are major gaps. For instance, there is no technology that is ecologically sound and economically viable for intensive production on fragile tropical soils in the humid and sub-humid zones, except for tree crops and rice. In other cases, the technology of industrialized countries is ill-adapted to the circumstances of most developing areas. The international community must strengthen its support, not only for the Consultative Group on International Agricultural Research and the network of international centres connected with it, but even more for national research stations in individual developing countries. Research networks can link centres in different areas working on similar problems: indeed the concept of TCDC is one that needs to be increasingly fostered in the years ahead.

The existing technology for intensifying productivity is unfortunately energy-intensive While research must aim at developing approaches based on renewable energy sources, there is at the moment no viable alternative to the expanded use of fossil energy for fertilizer, pesticides, mechanization and pumping. Of these, the most expensive in energy, and the most vital for increasing yields, is the provision of fertilizer.

After expanding at high rates for many years, the level of fertilizer use in developing countries now has serious economic consequences.

These countries need to invest an estimated a billion a year in new manufacturing capacity (at 1980 prices), and must also finance imports that in 1979 were over $4 billion. A comprehensive fertilizer strategy must be built on the work already accomplished by our Commission on Fertilizers.

A different aspect of the energy problem is the fuelwood crisis. At present there are about 100 million people living in areas of serious fuelwood shortage. By the end of the century, if nothing were done, over two billion people would be affected - a third of the entire population of the globe.

The main lines of action are clear, although the achievement of solutions will be neither easy nor quick. The productivity of existing fuelwood resources must be improved through conservation and management; the level of planting must on average be increased fivefold to create new resources; the distribution of firewood, including the long-distance transportation of wood in the form of charcoal, must be rationally and economically organized; the efficiency of fuelwood use must be increased, so as to make better use of available supplies; and where necessary, substitutes for fuelwood must be made available. It is surely a devastating comment on the lopsided and distorted way in which the world is progressing that while some regions are graduating from pocket calculators to personal computers, others are less and less able to find the fuel for cooking and heating on which they have beer. able to count since the first days of civilization. FAO must play a leading role in the international attack on this problem, at once so simple and so complex.

The oceans, too, are in crisis. World production of fish for human consumption providing one sixth of our animal protein requirements - has failed for several years to expand in line with population growth. Some species have been over-fished, while the technology for the development of non-conventional species is not yet ready. At the same time, the establishment of Exclusive Economic Zones is leading to a re-distribution of the present catch among countries. Only an international approach by all concerned countries, both regionally and globally, will enable the fisheries sector to meet the dual challenge of coping with structural change and an increase in production. FAO's programmes are helping to meet these requirements. Countries are being assisted to build up their capacity to manage their Exclusive Economic Zones, The rational exploitation of over-fished species is being promoted, waste is being reduced, processing and distribution are being made more efficient. At the same time, production increases are being sought through aquaculture, and work is being promoted in view of the exploitation of non-conventional species.

The international dimension of the fisheries sector is perhaps more obvious than that of certain agriculture problems. Yet if there is one thought I wish to leave behind today, it is that virtually every aspect of food and agriculture is caught up in the web of international economic relations. Agricultural weakness in the poorest countries drives up their cereal import needs, and may thus put pressure on international food prices and ultimately contribute to inflation in the industrialized world. Subsidies or tariffs in the advanced nations affect the livelihood of producers in the tropics.

We have had in recent years an impressive series of important international meetings and seminal texts: the resolutions of the World Food Conference in 1974; the Declaration of Principles and Programme of Action of WCARRD, and the Lagos Plan for the Development of Africa, both in 1979; the report of the Brandt Commission and the adoption of the New International Development Strategy in 1980; while this year we have seen important development at the Western Economic Summit in Ottawa, the Nairobi Conference on New and Renewable Sources of Energy, the Paris Conference on the Least Developed Countries, the Commonwealth Heads of Government Meeting in Melbourne, and the North-South Summit in Cancún. It: would be comforting to think that this cascade of conferences was the outward and visible sign of a growing commitment to internationalism. But what do we find? What is actually going on in the read world?

Protectionism is denounced in international fora, and new protectionism legislation is introduced at national level. The new International Development Strategy is a remarkable text, almost eleven months old. I have yet to see a serious attempt by governments to start implementing it.

The replenishment of IFAD is about to be accomplished, yet we are already at the end of the first year of the triennium 1981-83 for which funds were sought, and new contributions will be at a level which in real terms is lower than the first cycle. The sixth replenishment of IDA is, de facto, to cover a period of four years rather than three. UNDP is up to 27 percent underfinanced in its next five-year programming cycle. The World Food Programme is still more than 25 percent short of its 1981-82 target and, allowing for inflation, the commodities available to the Programme in this biennium are less than for a long time past. In total, ODA for agriculture has been falling in real terms since 1978.

The gulf between what governments say collectively, and what they do individually, has perhaps never been wider. We shall see a test case.

At Cancún, twenty-two Heads of States not only declared that the eradication of hunger was the "first priority both at the national level and in the field of international cooperation", but also that "increasing self-sufficiency in food production... requires timely and sufficient international technical and financial support".

Mr. Chairman, FAO is a unique and indispensable instrument in achieving precisely those objectives. It is not an alternative but an adjunct and partner to bilateral aid. We can gain acceptance and achieve impact in geographic or sub-sectoral areas where bilateral aid cannot go, and in so doing make all sources of aid to agriculture and other sectors more complete and effective.

In all the circumstances, my budget proposals envisage what is a very modest increase indeed - on an annual basis only about the same as the rate of increase in population growth.

Yet, some major contributors, among whom several were at Cancún, nave hitherto signalled their reservations about this increase, although their respective shares of the total increase could be said to be minuscule.

It would be a strange post-script to Cancún if virtually their first public act thereafter were to vote against FAO's budget.

In saying that, I am fully aware that reference will be made to the need for effective use of resources and greater efficiency.

This is undoubtedly important. We must and will pursue these objectives with concrete measures. I must, however, plead that these objectives are considered in the light of the facts of our record.

I am circulating to the Conference a summary of the facts, comparing our situation now with that six years ago. This, I believe, demonstrates clearly our unparalleled record of a much larger field programme totalling some $3 billion per annum, in the form of investment, emergency action, support for food aid, for development and technical cooperation for development projects in the field, having been delivered by a smaller force of established posts at Headquarters, Regional and Liaison Offices, and Joint Divisions. The proportion of the budget which goes to established posts has been brought down from 75 percent in 1972 to 55 percent in 1982-83. The proportion devoted to administration and common services will also be further reduced.

This is our record. It speaks for itself of our steadily increasing effectiveness and efficiency. It speaks also of our consistent and persistent will to improve further whenever and wherever possible.

I ask respectfully that this record be remembered in the next few days when you come to discuss my proposed Programme of Work and Budget and, I hope, reach a positive and willing conclusion thereon.

The scandal of death by hunger and malnutrition has entered the world's conscience. The message of World Food Day has echoed round the globe. Let us work together to solve, finally, man's oldest problem. Let us seek to create, in food and agriculture, the foundations of a truly global society.

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