A World Food Reserve

MAC/WFY

Page-44

0230_553559_09_cha05

194570. Early Attempts: FAO's Pioneering Work

entail were the complications in working out a scale of contributions on the basis
of agreed criteria, replenishment and location of stocks, and an administrative
mechanism that would require an international authority to ensure some central
control.

In an effort to combine the workability of a permanent relief fund with the

acceptance of contributions in kind, the FAO Council decided that a group of
experts should be appointed to explore the problem further.

The group proposed

the establishment of what was called the `Plan of the Three Circles' (FAO, 1953).
The `three circles' of the plan consisted of

(a) an inner circle of financial contributors to provide the nucleus of the plan and

to constitute a relief fund based on renewable financial contributions on an
agreed scale;

(b) a second circle of contributions in kind, which provided an additional

reserve; and

istrative expenses, but without any other advance commitments.

The group recommended that a `FAO Famine Unit' should be established to

administer the proposed plan with a budget of `not less than $150,000' to be drawn
from FAO regular budget. Although the plan was found to be technically sound
by the FAO Council and Conference in 1953, it was not pursued. Further steps
depended on the attitude of governments concerning the need for action and on
the prospects for their contributions in money and kind to an international pool
for emergency purposes. Insufficient support was obtained on either count and so
no action was taken.

Counteracting excessive price fluctuations

The other main objective referred to in the UN General Assembly's resolution
concerning the establishment of a world food reserve was that of counteracting
excessive price fluctuations. This was described in the FAO report as `a large subject
and a very important one'. It therefore felt that it might come as a surprise that
`in sharp contrast' to the number of proposals that had been put forward for the
operation of international commodity stabilization reserves, or buffer stocks, `the
history of the world since the days of Joseph yields no peacetime examples of
any such reserves ever having been operated on an international scale for any
foodstuffs, or group of foodstuffs'.

(A relatively small tin buffer stock managed

by producers operated in the 1930s was the only international buffer stock ever
established for any primary product.) Therefore, as there was no previous experi-
ence to draw on, the report turned to the nature and causes of price fluctuations
for agricultural products. Short-term movements in the prices of primary products,
and particularly agricultural commodities, if left entirely to the free play of market
forces, `tend to be excessive and harmful to the long-term interests of both produ-
cers and consumers'.

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Useful links	A World Food Reserve MAC/WFY Page-44 0230_553559_09_cha05 44 194570. Early Attempts: FAO's Pioneering Work entail were the complications in working out a scale of contributions on the basis of agreed criteria, replenishment and location of stocks, and an administrative mechanism that would require an international authority to ensure some central control. In an effort to combine the workability of a permanent relief fund with the acceptance of contributions in kind, the FAO Council decided that a group of experts should be appointed to explore the problem further. 18 The group proposed the establishment of what was called the `Plan of the Three Circles' (FAO, 1953). The `three circles' of the plan consisted of (a) an inner circle of financial contributors to provide the nucleus of the plan and to constitute a relief fund based on renewable financial contributions on an agreed scale; (b) a second circle of contributions in kind, which provided an additional reserve; and (c) an outer circle of ad hoc participants and financial contributors to its admin- istrative expenses, but without any other advance commitments. The group recommended that a `FAO Famine Unit' should be established to administer the proposed plan with a budget of `not less than $150,000' to be drawn from FAO regular budget. Although the plan was found to be technically sound by the FAO Council and Conference in 1953, it was not pursued. Further steps depended on the attitude of governments concerning the need for action and on the prospects for their contributions in money and kind to an international pool for emergency purposes. Insufficient support was obtained on either count and so no action was taken. Counteracting excessive price fluctuations The other main objective referred to in the UN General Assembly's resolution concerning the establishment of a world food reserve was that of counteracting excessive price fluctuations. This was described in the FAO report as `a large subject and a very important one'. It therefore felt that it might come as a surprise that `in sharp contrast' to the number of proposals that had been put forward for the operation of international commodity stabilization reserves, or buffer stocks, `the history of the world since the days of Joseph yields no peacetime examples of any such reserves ever having been operated on an international scale for any foodstuffs, or group of foodstuffs'. 19 (A relatively small tin buffer stock managed by producers operated in the 1930s was the only international buffer stock ever established for any primary product.) Therefore, as there was no previous experi- ence to draw on, the report turned to the nature and causes of price fluctuations for agricultural products. Short-term movements in the prices of primary products, and particularly agricultural commodities, if left entirely to the free play of market forces, `tend to be excessive and harmful to the long-term interests of both produ- cers and consumers'. back to top Next page
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