The Development of Food Aid

MAC/WFY

Page-86

0230_553559_13_cha09

194570. Early Attempts: FAO's Pioneering Work

surpluses led to further considerations of the means of adjusting production to
world needs. Hence, emphasis was placed on the concept of supply management.
This included the idea of direct control of production by restricting quotas for
specific commodities to those quantities required to meet commercial demands
and food aid needs. Views were expressed in some international bodies concerning
the possibility of accepting and justifying surplus production on the assumption
that surpluses could be disposed of in non-commercial markets, primarily through
international operations. Surplus accumulations could therefore be the result of:
either unintentional or unplanned over-production; production efforts justified
by domestic economic and social considerations; production to include commit-
ments for bilateral or multilateral aid to developing countries; or a combination
of these possibilities, in which case it was recognized that it would not be easy to
distinguish the role played by each factor.

The possibility of European surpluses arising from the EEC Common Agricul-

tural Policy (CAP) adding to an already over-burdened supply situation in North
America, coupled with food deficiencies on many developing countries, led the
French Ministers of Agriculture and Finance (M. Pisani and M. Baumgartner) to
propose a fundamental change in the structure of world agricultural trade. Their
central idea consisted of substituting a `free' world market price by a `managed
minimum price', which would reflect the production price in the main importing
countries. The countries participating in the scheme would see that all interna-
tional commercial trade took place at or above the agreed price and would elim-
inate export subsidies. In the case of wheat, for example, the arrangement would
be carried out through a progressive increase in the prices fixed by the Interna-
tional Wheat Agreement. An understanding would be reached among exporting
countries on the amount of products to be sold on commercial markets with a
view to reaching an agreed balance between commercial demand and sales. This,
in turn, would determine the amount of a given commodity available for conces-
sional transactions and grants. The more remunerative commercial markets would
help the exporting countries to increase their participation in special sales and
donations. Their share of the concessional markets would also be agreed upon
to avoid any conflict. Under this concept, the twin reorganization of commercial
and concessional markets would be closely linked.

Second, attention turned to the question of the use of surpluses. It was clear that

there had been a shift from spasmodic programmes to relieve distress to highly
organized and sophisticated long-term programmes for nutritional improvement
and economic development. As the 1950s drew to a close, a number of forces came
together to produce results. US food surpluses continued to accumulate. US food
aid increased rapidly with the passage of PL 480. By the 1960s, it reached over 18
million tons a year at a cost of $1.6 billion (US, 1964b). At the same time, the US
food aid programme became the subject of increasing criticism by politicians and
academics alike. Senator Hubert Humphrey of Minnesota, who later became vice
president in the administration of President Lyndon B. Johnson, wrote a scathing
report that called for major reform measures and the establishment of what he
called a `food for peace' programme (Humphrey, 1958). `Food will win the war

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Useful links	The Development of Food Aid MAC/WFY Page-86 0230_553559_13_cha09 86 194570. Early Attempts: FAO's Pioneering Work surpluses led to further considerations of the means of adjusting production to world needs. Hence, emphasis was placed on the concept of supply management. This included the idea of direct control of production by restricting quotas for specific commodities to those quantities required to meet commercial demands and food aid needs. Views were expressed in some international bodies concerning the possibility of accepting and justifying surplus production on the assumption that surpluses could be disposed of in non-commercial markets, primarily through international operations. Surplus accumulations could therefore be the result of: either unintentional or unplanned over-production; production efforts justified by domestic economic and social considerations; production to include commit- ments for bilateral or multilateral aid to developing countries; or a combination of these possibilities, in which case it was recognized that it would not be easy to distinguish the role played by each factor. The possibility of European surpluses arising from the EEC Common Agricul- tural Policy (CAP) adding to an already over-burdened supply situation in North America, coupled with food deficiencies on many developing countries, led the French Ministers of Agriculture and Finance (M. Pisani and M. Baumgartner) to propose a fundamental change in the structure of world agricultural trade. Their central idea consisted of substituting a `free' world market price by a `managed minimum price', which would reflect the production price in the main importing countries. The countries participating in the scheme would see that all interna- tional commercial trade took place at or above the agreed price and would elim- inate export subsidies. In the case of wheat, for example, the arrangement would be carried out through a progressive increase in the prices fixed by the Interna- tional Wheat Agreement. An understanding would be reached among exporting countries on the amount of products to be sold on commercial markets with a view to reaching an agreed balance between commercial demand and sales. This, in turn, would determine the amount of a given commodity available for conces- sional transactions and grants. The more remunerative commercial markets would help the exporting countries to increase their participation in special sales and donations. Their share of the concessional markets would also be agreed upon to avoid any conflict. Under this concept, the twin reorganization of commercial and concessional markets would be closely linked. Second, attention turned to the question of the use of surpluses. It was clear that there had been a shift from spasmodic programmes to relieve distress to highly organized and sophisticated long-term programmes for nutritional improvement and economic development. As the 1950s drew to a close, a number of forces came together to produce results. US food surpluses continued to accumulate. US food aid increased rapidly with the passage of PL 480. By the 1960s, it reached over 18 million tons a year at a cost of $1.6 billion (US, 1964b). At the same time, the US food aid programme became the subject of increasing criticism by politicians and academics alike. Senator Hubert Humphrey of Minnesota, who later became vice president in the administration of President Lyndon B. Johnson, wrote a scathing report that called for major reform measures and the establishment of what he called a `food for peace' programme (Humphrey, 1958). `Food will win the war back to top Next page
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