World Food Board Proposal

MAC/WFY

Page-22

0230_553559_07_cha03

194570. Early Attempts: FAO's Pioneering Work

the United Nations during the war as the fruits of victory to which the people of
the world might look forward'.

The natural resources and the knowledge required to produce the food needed

and with which to set off an upward spiral of economic expansion were avail-
able. But food could not be distributed and consumed by the people who needed
it unless purchasing power increased as rapidly as production. There were two
aspects to this problem, the national and the international. While developed coun-
tries had taken various steps to bridge the gap between the price of food adequate
for health and the purchasing power of families, developing countries, and those
devastated by war, were unable to make food sufficient for health available for the
whole population. It was advocated that the needed development of agriculture
and industry should be put on a business footing through the supply of capital
equipment on terms involving deferred payments and long-term credits to give
the countries concerned time to repay. These financial arrangements should be
made for an approved programme of development which would lead to the devel-
opment of all the natural resources of a country to enable it to repay by exports.
From whatever sources the funds were obtained, certain principles should be kept
in mind in financing a world food policy. The immediate credit-worthiness of the
borrowing country should not always be the primary test. In some transactions,
it may be desirable to forgo interest for a period of years while the effects of the
programme, in terms of increasing capacity to render a country self-supporting,
made themselves felt. It may also be necessary to defer the beginning of gradual
amortization, and introduce an element of flexibility by making the credit terms,
or the extent of debt service, subject to indices of growth within a country and
equilibrium in the external balance of payments. Such a proposal had been put
forward by the League of Nations Committee on Economic Depressions. In addi-
tion to credits for development purposes, it was recommended that a fund should
be provided to finance arrangements for countries in great nutritional need to
purchase the agricultural surpluses of other nations on special terms.

It was noted

that such surpluses might otherwise paralyze any price stabilizing operations and
bring ruin to farmers. A third type of financing could be connected with price
stabilizing operations.

But, if approved, how would the proposed WFB be implemented? Would it

be done by expanding the functions of existing organizations or by the setting
up a new body? For a long time, there had been efforts to set up international
commodity organizations. International agreements had been concluded for sugar,
rubber, tea and certain minerals. Most of them were quota agreements based on
the allocation among members of shares in the world markets. These agreements
were the `children of the depression', when the view was held that world markets
were limited and incapable of much expansion. They were inevitably restrictive
in character and did not counteract business cycle fluctuations. And they lacked
any overall agency to co-ordinate their activities. During the Second World War,
further developments took place along the same lines. An Inter-American Coffee
Agreement began operations in 1940. An International Wheat Council composed
of Argentina, Australia, Canada, the United Kingdom and the United States, was

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Useful links	World Food Board Proposal MAC/WFY Page-22 0230_553559_07_cha03 22 194570. Early Attempts: FAO's Pioneering Work the United Nations during the war as the fruits of victory to which the people of the world might look forward'. The natural resources and the knowledge required to produce the food needed and with which to set off an upward spiral of economic expansion were avail- able. But food could not be distributed and consumed by the people who needed it unless purchasing power increased as rapidly as production. There were two aspects to this problem, the national and the international. While developed coun- tries had taken various steps to bridge the gap between the price of food adequate for health and the purchasing power of families, developing countries, and those devastated by war, were unable to make food sufficient for health available for the whole population. It was advocated that the needed development of agriculture and industry should be put on a business footing through the supply of capital equipment on terms involving deferred payments and long-term credits to give the countries concerned time to repay. These financial arrangements should be made for an approved programme of development which would lead to the devel- opment of all the natural resources of a country to enable it to repay by exports. From whatever sources the funds were obtained, certain principles should be kept in mind in financing a world food policy. The immediate credit-worthiness of the borrowing country should not always be the primary test. In some transactions, it may be desirable to forgo interest for a period of years while the effects of the programme, in terms of increasing capacity to render a country self-supporting, made themselves felt. It may also be necessary to defer the beginning of gradual amortization, and introduce an element of flexibility by making the credit terms, or the extent of debt service, subject to indices of growth within a country and equilibrium in the external balance of payments. Such a proposal had been put forward by the League of Nations Committee on Economic Depressions. In addi- tion to credits for development purposes, it was recommended that a fund should be provided to finance arrangements for countries in great nutritional need to purchase the agricultural surpluses of other nations on special terms. 4 It was noted that such surpluses might otherwise paralyze any price stabilizing operations and bring ruin to farmers. A third type of financing could be connected with price stabilizing operations. But, if approved, how would the proposed WFB be implemented? Would it be done by expanding the functions of existing organizations or by the setting up a new body? For a long time, there had been efforts to set up international commodity organizations. International agreements had been concluded for sugar, rubber, tea and certain minerals. Most of them were quota agreements based on the allocation among members of shares in the world markets. These agreements were the `children of the depression', when the view was held that world markets were limited and incapable of much expansion. They were inevitably restrictive in character and did not counteract business cycle fluctuations. And they lacked any overall agency to co-ordinate their activities. During the Second World War, further developments took place along the same lines. An Inter-American Coffee Agreement began operations in 1940. An International Wheat Council composed of Argentina, Australia, Canada, the United Kingdom and the United States, was back to top Next page
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