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VII. Review of the world situation and outlook in food and agriculture

A. World food and agriculture situation
B. Utilization of food surpluses for economic and social development
C. Commodity problems
D. Freedom from hunger campaign (FFHC)
E. World food congress
F. World seed campaign
G. Africa survey

A. World food and agriculture situation

Production
Population and food supply
Changes in stocks of commodities
International trade in agricultural products
Farm prices and incomes
Agricultural policies and development plans
Marketing
Incentives to increase production
Land reform
Agricultural extension, education and research
Adjustments of national agricultural policies

13. The Conference had before it the Director-General's report, The state of food and agriculture 1961 (C 61/6), together with his supplementary review of developments in the world agricultural and commodity situation since the preparation of this report (C 61/6 - Sup. 1). It endorsed the general analysis of the situation and outlook presented in these documents. It took into account also in its discussions the review of the commodity situation, as set out in the FAO commodity review 1961 (C 61/13) and in the Report of the Thirty -Fourth Session of the Committee on Commodity Problems (CCP) (C 61/8), which was summarized by the Chairman of the Committee.

Production

14. The Conference recognized with concern that there had been some slackening in the expansion of world agricultural production in 1960/61, caused mainly by unfavorable weather, and that this situation appeared likely to continue in the 1961/62 crop year. In 1960/61 production was estimated to have increased by only about 1 percent, which was less than the average annual population growth of 1.6 percent. Indeed, world production would probably show a decline if the statistics made it possible to include mainland China, where there had been a series of natural calamities.

15. In contrast to agricultural products, it was encouraging that the steady expansion of fishery and forestry production had continued during the preceding year. The world fish catch was estimated to have increased by a further 6 percent in 1960. World roundwood removals rose by about 3 percent, and the output of each of the main categories of forest products also increased.

Population and food supply

16. While it was to be hoped that the setback to agricultural production was only temporary, it showed once again how precarious is the balance between population and food supply. Population growth was accelerating in many of the economically less developed countries, and several recent censuses have revealed higher rates of increase than previously expected. In India, for example, population growth was now estimated at 2.1 percent per year, in Pakistan 2.4 percent, in Turkey nearly 3 percent, and in Malaya 3.5 percent. The rate of population increase was also particularly rapid in many countries of Latin America. It was therefore suggested that future issues of The state of food and agriculture should include more detailed studies of the available data on population trends and of their implications for agricultural consumption and production in the years to come.

17. On a per caput basis, world production had changed little since the big increase in 1958/59. Over the longer term, the rate of increase of agricultural production had remained ahead of that of population growth, and per caput food production was now estimated to be about 14 percent more than before the second world war. Most of this improvement, however, had occurred in the more developed parts of the world. Among the less developed regions, where improved nutritional levels were urgently needed, it was only in the Near East that per caput food production was much above the low prewar level. In the Far East, outside mainland China, this level was regained only in 1960/61. This region had experienced three successive seasons of good harvests. As a result, the setback of the war years, during which production had fallen behind population growth, was at length overcome. Per caput food production in Africa appeared to have dropped below the prewar level in 1960/61. In Latin America, this level had been briefly regained in the three years 1956/57 to 1958/59, but there had since been a sharp decline, and in 1960/61 total as well as per caput production decreased because of widespread bad weather.

18. Countries where food production had failed to keep up with the rise in population had to import increasing quantities of food, or in some cases to export less. As a consequence, food supplies had improved more quickly than food production in the less developed regions. Even so, the gap between food supplies in these regions and in the parts of the world that were already better fed had tended to become wider.

Changes in stocks of commodities

19. In spite of the slower growth of production, stocks of some commodities had continued to accumulate. In 1960/61 there were particularly large increases in stocks of coarse grains, butter, and sugar. Wheat stocks rose again, after declining slightly in the previous season. While world stocks still consisted mainly of temperate zone products and remained to a large extent located in North America, the tendency for stocks to accumulate had spread in the last few years to certain tropical tree crops. Stocks of coffee again increased substantially in 1960/61, and cocoa production also had recently tended to outstrip consumption.

International trade in agricultural products

20. As at its previous session in 1959, the Conference was concerned at the deterioration in the terms of trade for agricultural exports in relation to manufactured goods. In 1960 export prices averaged slightly higher than in 1959, though they fell back somewhat during the second half of the year. Prices of manufactured goods rose by a further 3 percent, however, so that the terms of trade for agricultural exports declined for the sixth year in succession. So far in 1961 agricultural prices as a whole had continued to decline slightly.

21. In 1960 the volume of world agricultural exports rose by about 5 percent. Taking a longer view, the volume of commercial exports (i.e., excluding shipments on special terms, which during the last few years had represented 6 to 9 percent of total agricultural exports) had risen by about 33 percent since 1948-52. Their value at current prices, however, had increased by only about 14 percent over this period, and their " real " value, as measured by their capacity to purchase manufactured goods, by barely 4 percent.

22. The Conference stressed that falls in the terms of trade for agricultural products, on which most of the less developed countries depend for the major part of their foreign exchange earnings, had tended to outweigh the increasing quantities of financial aid made available by the more developed countries. The underlying causes of these trends in world agricultural trade included la) the low elasticity of demand for most foodstuffs at the high income levels prevalent in the economically more developed countries, (b) the increased output of many commodities in these countries, favored both by improved technological methods and by agricultural support and protection, and (c) the development of substitutes or the more economical use of raw materials in industry. In addition, production tended to be heavy in exporting countries, including many of the less developed countries. Because of their need to earn foreign exchange, and often also because their marketing systems were geared more toward the export sector, many less developed countries had put greater emphasis on increasing the output of export products than on raising the production of products for domestic consumption. The complex factors bearing on the terms of trade for agricultural commodities and desirable patterns of agricultural production were considered to warrant further study.

Farm prices and incomes

23. The sharp fluctuations that occurred in agricultural prices on world markets also caused difficulties for agricultural exporting countries. The Conference was of the opinion that no single method was likely to go very far toward alleviating this problem. It should rather be approached on a broad front, through a combination of such measures as the diversification of production and exports, domestic price stabilization measures, and a practical system of compensatory financing, as well as through international negotiations commodity by commodity aimed at securing a stable price fair to both producers and consumers. It was noted that compensatory financing was one of the major subjects to be discussed at the ordinary 1962 session of the Committee on International Commodity Trade.

24. In most countries agricultural incomes were continuing to lose ground in relation to those in other sectors. It was emphasized that raising efficiency and productivity remained the best means of increasing individual farm incomes. Especially in the industrialized countries, agricultural policies were increasingly directed to this end. At the same time, in many countries there had been a gradual reduction in the proportion of the population engaged in agriculture.

Agricultural policies and development plans

25. The Conference stressed that a sound development of agriculture, on which the vast majority of the populations of the less developed countries depended for their livelihood, was fundamental to the development of the economy as a whole. Without a solid agricultural foundation, industrial development might lead to serious inflation and to a waste of scarce resources.

26. This emphasized the need for careful planning, to integrate agricultural and over-all economic development. Many countries outlined the measures envisaged under their current development plans and programs. Financial and technical assistance, both bilateral and multilateral, would be of greatest benefit when they formed an integral part of such programs, based on a detailed assessment of the needs of each country. In the Latin-American region, the Alliance for Progress program, approved at the Conference held at Punta del Este, Uruguay, in August 1961, had provided a new stimulus for the preparation of co-ordinated national plans.

27. Many statements referred to the need of governments' for full information on which to formulate their agricultural policies and programs, including evaluations of the various techniques and policy measures, their effects on production and consumption, and their administrative costs. Assistance in the provision of such information would always remain one of the primary tasks of FAO.

28. The Conference also attached great importance to the need for an adequate administrative structure and for policy measures to ensure that the agricultural development programs of the less developed countries were translated into action. Agricultural development plans should be concerned not only with production goals but also with the necessary measures for their implementation. The plans must therefore consider institutional problems, and developments in related fields such as marketing and processing.

Marketing

29. Improved marketing arrangements were a major factor in the transition from subsistence to commercial agriculture and an incentive to producers to raise their output for the market and to improve quality; they contributed toward guaranteeing and bettering the food supplies of the rapidly growing urban population. The ever-increasing cost of distribution, however, was also a source of concern in many countries, since it tended to deprive consumers and producers of the benefits resulting from the improvement of productivity in agriculture.

Incentives to increase production

30. LOW and unstable prices were a serious disincentive to increased production. The Conference took note that some less developed countries had modified their agricultural price policies, hitherto mainly designed to protect consumers, toward the provision of a floor price to producers, to encourage larger production for the market. A number of countries had also taken steps to increase the supply of credit to farmers. There had been considerable development of co-operatives for marketing and for the provision of credit, fertilizers and other requisites. There was also increasing interest in crop insurance schemes. In some countries more integrated approaches were being made to the question of agricultural development, as in India and Pakistan through intensive agricultural district pro grams and in Pakistan also through the establishment of an Agricultural Development Corporation for each wing of the country.

Land reform

31. Improvement of land tenure conditions was a particularly difficult problem, shared by the economically more and less developed countries alike. The Conference therefore commended the inclusion of a special review of land reform and institutional change in The state of food and, agriculture 1961. Especially in many less developed countries, systems of land tenure more in accordance with present-day needs were an essential prerequisite for agricultural development. Unless producers had reasonable security of tenure, and could expect to benefit directly from improved practices, they were not likely to make the effort and incur the expense required for increased productivity.

32. The Conference stressed, however, that agrarian reform was a very complex and delicate question. There was no blueprint that could be applied to all countries, but the measures adopted had to be closely tailored to the conditions, especially the social and political conditions, of each country. It was suggested that more detailed studies should be made of the economic and social effects of land reform measures. Many delegations described the measures that were being undertaken in their countries. This information would be taken into consideration when a further report was prepared on land reform.

Agricultural extension, education and research

33. The Conference also welcomed a second special study contained in the Director-General's report, concerning agricultural extension, education and research in Africa, Asia and Latin America. It was essential that these services too should be closely adapted to the particular circumstances of individual countries. Emphasis was laid on the importance in less developed countries of closer contact between extension workers and the farm population. Some emphasis was also placed on more effective dissemination through radio and other mass media as an aid toward more rapid application of improved techniques by farmers.

Adjustments of national agricultural policies

34. While the economically less developed countries were attempting to increase their agricultural production through better planning of agricultural development, the removal of institutional obstacles, the provision of improved services to farmers, and allied measures, some of the more developed countries were adjusting their agricultural policies to prevent the accumulation of surplus stocks. Japan's new Basic Agricultural Law, for instance, was designed to adjust production more closely to the changing pattern of demand that was arising with higher incomes. In Canada the Agricultural Rehabilitation and Development Act included provisions for alternative uses of land and labor.

B. Utilization of food surpluses for economic and social development

Multilateral food disposal schemes
Food surpluses for economic development
Conformity of operations with the FAO principles of surplus disposal
Co-ordination of projects
Use of surpluses
System of contributions
Implementation of proposals
Intergovernmental committee
Withdrawal from working capital fund

35. The Conference considered this item on the basis of the Report of the Director-General, Development through food: a strategy for surplus utilization and the Joint Report of the Secretary-General and the Director-General, FAD/UN proposal regarding procedures and arrangements for multilateral utilization of surplus food (C 61/18). As stated in the Joint Report, this proposal :

Multilateral food disposal schemes

36. The Director-General's report to the Economic and Social Council (ECOSOC), Development through food: a strategy for surplus utilization had delineated the part that food surpluses might be capable of playing over the ensuing five years in a greatly expanded program of international assistance in order to speed up the rate of development in less developed countries, and so help correct the current situation where increase in food production was only barely exceeding population growth in less developed countries generally. While the report indicated the part that multilateral food disposal might play in such expanded surplus distribution, and some of the essential conditions that would need to be met to achieve maximum effectiveness, it recognized that distribution through bilateral arrangements would continue to be the dominant part of such a program.

37. The Director-General emphasized the dual role of food in development projects, pointing out that the distribution of food in the areas of need and the use of food surpluses for economic development could not be separated from one another. Food aid and economic development are " two sides of the same coin." He advocated that these two elements should be planned and operated as an integrated activity, carefully balanced with each other, both as to timing and location.

38. Following consideration of the Director-General's report at the Thirty -Fifth Session of the FAO Council (June 1961) and at the Thirty -Second Session of ECOSOC (July 1961), the Secretary-General and the Director-General prepared the Joint Report requested in the ECOSOC resolution. A preliminary debate on the Joint Report took place at the Thirty -Sixth Session of the FAO Council immediately prior to the present Conference session. At this session of the Conference the specific proposals for implementation of the initial program contained in that Report were carefully discussed. The joint proposals of the Director-General and Secretary-General aroused great interest and commanded widespread support.

Food surpluses for economic development

39. There was general agreement as to the importance of raising the level of international assistance for the economic development of less developed countries, and for increased use of available food surpluses for that purpose. There was also general recognition of the desirability of establishing a multilateral approach both for emergency relief and for the use of food surpluses for economic development, on an initial experimental scale. While several countries questioned the desirability of agricultural production being deliberately expanded to provide products for such purposes, it was recognized that with the rapid increase in agricultural productivity in many countries and the limited possibilities for increased food consumption in developed countries even with continued improvement in the buying power of their people, substantial and possibly even increasing supplies of food would be generated that could be available for distribution on special terms.

40. There was wide support for the general proposal, and for a number of its specific elements: one was that the new activity would be an initial experimental program for three years, with subsequent multilateral activities to be determined in the light of this experience; another, that the program would be financed by voluntary contributions; a third, that FAO should have a major role in the new activity; and a fourth, that guidance would be provided by a special intergovernmental committee.

Conformity of operations with the FAO principles of surplus disposal

41. There was also full agreement that the operations should be conducted in accordance with the FAO Principles of Surplus Disposal and Guiding Lines, so as to ensure that all foods so distributed went into increased consumption in the recipient countries and did not interfere with commercial imports or with the production plans of farmers in the recipient countries themselves. In this connection, it was noted that the proposed unit in the administering organization would assist materially in seeing that projects were carried out in full conformity with the FAO Principles. Consultations with countries whose normal marketings involved similar commodities in a country to which food aid was to be extended should be conducted through the machinery for consultation already established by FAO.

Co-ordination of projects

42. It was also agreed that any project developed under this program should be undertaken only on the request of the recipient country concerned. Projects for economic or social development should be related to and consistent with the country's plans or programs for its own development, and should be coordinated with other projects already under way or projected in that country, to make the aid most effective.

43. Many less developed countries stressed that as a result of the setting up of the multilateral program the flow of bilateral assistance to such countries as prefer that channel should not be affected. They in fact visualized that multilateral assistance would be distinct from and supplementary to bilateral arrangements which might even expand further.

Use of surpluses

44. Differences of opinion were expressed, however, on a number of other points. Some less developed countries stated that they had no need for food aid themselves, in as much as they were already food exporting countries with a reasonable level of diet within the country. There was particularly keen debate on the question of whether greater attention should be paid, in this initial program, to the use of surpluses for emergency and relief purposes, or for economic and social development. The majority took the latter view, particularly so far as development for rural welfare was concerned. Similarly, in regard to the proposal that the administrative unit be a joint FAO/United Nations unit reporting jointly to the Director-General and the Secretary-General, some countries favored an FAO unit merely co-operating with the United Nations, but a much larger number supported the joint operation. It was pointed out that there had been long experience and satisfactory results with the use of the technique of joint FAO/United Nations units, e.g., the Joint FAO/United Nations agricultural divisions that operate at each United Nations economic commission.

System of contributions

45. While it was generally agreed that pledges to the program should be voluntary, and composed of suitable commodities, services and cash, some countries questioned the effect that the donation of services might have on normal commercial practices, e.g. the charter terms for shipping freights.

46. There was general agreement that at least one-third of the total contributions subscribed should be in cash. A number of delegates thought that a minimum proportion in cash should be required of each country contributing commodities or services, but most preferred the completely voluntary system proposed by the Secretary-General and the Director-General.

47. In this connection, the question of meeting the administrative expenses was discussed. Although a few countries had differing views, it was generally agreed that all expenses of both operation and administration of the new program should be met from the contributed funds.

48. Another subject given considerable attention was the suggestion in the Joint Report that part of the cash contributions could be used for the commercial purchase of foods not in surplus but needed to improve the dietary adequacy of food supplies furnished to recipient countries, particularly with regard to important components such as desirable proteins. While this was strongly supported by most countries, others had doubts as to the wisdom of the proposal.

Implementation of proposals

49. The Conference also considered the steps by which the proposals would be approved and implemented, and the special problems of securing joint and agreed approval of the proposals from both FAO and the United Nations. As stated in Resolution No. 1/61 (paragraph 54 below), the following sequence of steps was agreed upon, subject to the concurrence of the United Nations:

50. The Conference also made provision for an advance of funds to meet expenses in connection with these meetings and with any preparatory work for the program.

Intergovernmental committee

51. The outcome of the Conference's consideration of this matter is contained in the two resolutions set out below. In the first (Resolution No. 1/61) there is discussion of various factors that should be taken into account in determining the countries to be chosen as members of the Intergovernmental Committee. In addition to the obvious need for balance between developed and less developed countries, among other considerations would be geographic distribution, representation of commercial exporting countries, both developed and less developed and representation of countries which are major contributors to the resources for the program. The phrase " other relevant factors " used in paragraph 1.4 of that resolution covers all such factors, it being left to the judgment of the two Councils what weight to attach to each in making their selection.

52. During the discussion, some delegates further expressed the view that the Committee should be composed only of countries actively participating in the program, either as contributing countries or as recipient countries, or as commercial exporters closely concerned. It would, however, be impossible at the start to tell which countries would in fact be contributors or likely recipients. It is for this reason that provision is made in the resolution for the two Councils, after the Pledging Conference, to reexamine the country composition of the Committee.

53. Reference is also made in the first resolution to further studies on the use of food in multilateral programs. It was accepted that the Intergovernmental Committee might consider at its first meeting the nature of such studies, taking as a basis for selection the examples given in paragraph 33 of the Report of the Thirty -Fourth Session of the Committee on Commodity Problems (CCP). Such studies could be undertaken by the Organization and its subsidiary bodies, especially CCP, by other United Nations agencies or other interested intergovernmental bodies.

54. The resolution adopted by the Conference reads as follows:

RESOLUTION No. 1/61

Utilization of food surpluses - World Food Program

THE CONFERENCE

Having considered Resolution 1496 (XV) of the United Nations General Assembly and Resolution 832 (XXXII) of the United Nations Economic and Social Council,

Having studied the report of the Director-General on Development through food: a strategy for surplus utilization, and the joint proposals of the Secretary-General, of the United Nations and the Director-General of the Food and Agriculture Organization, Document C 61/18, FAD/UN proposal regarding procedures and arrangements for multilateral utilization of surplus foods, and

Having reviewed the observations of the FAO Intergovernmental Advisory Committee, the Committee on Commodity Problems (CCP) and the Council, as well as the relevant reports of the FAO Council and of other interested intergovernmental groups or agencies,

Records its appreciation for the documentation prepared by the Secretary-General and the Director-General, for the full co-operation provided by the interested international agencies, and for the proposals put forward jointly by the Secretary-General and the Director-General,

I

Resolves, subject to the concurrence of the General Assembly of the United Nations, that:

II. Requests the Director-General:

III

Authorizes the Director-General to implement the program under this resolution as promptly as possible, in co-operation with the Secretary-General, and to take all necessary steps in line with the decisions taken by the FAO Conference, the United Nations General Assembly and the special session of the Council referred to in paragraph II.2 above.

IV

Decides to consider at its Twelfth Session the conditions under which a general review should be made of the results attained with a view to taking such action as may be deemed desirable and to recommend to the General Assembly of the United Nations the next steps to be taken.

Withdrawal from working capital fund

55. The Conference recognized that in connection with the initial steps of the World Food Program, some expenditures may have to be incurred by the Director-General for which no budgetary provision exists. The Conference noted that the Financial Regulations provide for reimbursable loans from the Working Capital Fund for such purposes as the Council may authorize in specific cases, Financial Regulation 6.2 (a) (iii). In this connection, the Conference considered that the authority to approve reimbursable loans from the Working Capital Fund extends to the Conference as well. The Conference therefore decided to authorize a loan from the Working Capital Fund on which the Director-General might draw for such expenditures. This loan is to be reimbursed to the Working Capital Fund from the receipt of cash contributions to the World Food Program as soon as the first monies are received.

56. The Conference therefore adopted the following resolution:

RESOLUTION No. 2/61

Utilization of food surpluses - Withdrawal from Working Capital Fund

THE CONFERENCE

Considering that the implementation of the World Food Program may require some limited expenditure before any cash contributions are received,

Decides in accordance with Financial Regulation 6.2 (a) (iii) to authorize the Director-General to borrow from the Working Capital Fund for this purpose an amount not to exceed $100,000 to be reimbursed to the Working Capital Fund from the first receipts of cash contributions to the World Food Program.

C. Commodity problems

Utilization of agricultural surpluses
Guiding principles for national agricultural price stabilization and support policies
National and international commodity arrangements
Agricultural commodity aspects of regional economic integration
Future work on commodity problems
Agricultural trade policies and commodity problems
Other commodity matters

57. In its examination of commodity problems, the Conference considered that the outstanding subjects fell under the following four main headings set out in the Report of the Thirty -Fourth Session of the Committee on Commodity Problems (CCP):

Because of their importance, some of the matters falling under these broad headings were considered as separate items of the Conference agenda and are dealt with in other sections of this report. Some of the relevant findings and recommendations, however, are referred to in the following paragraphs in order that the Conference's consideration of commodity matters and its directives for future activities, particularly those of CCP, may be available in a consolidated form. The Conference noted for future reference the views of a number of delegations who desired that the various aspects of commodity problems should be taken together as early as practicable in Conference discussions.

SALIENT FEATURES

58. The Conference concluded, on the basis of the findings of the Report of the Thirty -Fourth Session of the Committee on Commodity Problems and of the FAO commodity review 1961, that the salient features of the world agricultural commodity situation still remained broadly those singled out for special attention at its previous session, except that they had been sharpened further and given added significance by developments during the preceding two years. These main features were:

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