A World Food Reserve

MAC/WFY

Page-55

0230_553559_09_cha05

Party on Surplus Disposal was established by the CCP in pursuance of recom-
mendations made by the seventh session of the FAO Conference to consider the
most suitable means of disposing of agricultural surpluses, including the setting
up of consultative machinery and the principles which should be observed by
FAO member nations.

This led to the formulation of recommendations by FAO

of Principles of Surplus Disposal, which were forwarded to FAO member govern-
ments in June 1954 and endorsed by the FAO Council at its twentieth session in
September/October 1954.

The Principles are not legally binding but provided guidelines, a code of conduct,

or what were called `consultative obligations', for FAO member nations, and
represent a commitment by 46 signatory countries. They embodied three general
principles. First, solution to problems of agricultural surplus disposal should be
sought, wherever possible, through efforts to increase consumption rather than
through measures to restrict supplies. Second, disposal of excess stocks should be
done in an orderly manner to avoid sharp falls in world market prices, particu-
larly when prices were generally low. And third, where surpluses were disposed
of under special terms, there should be an undertaking by both importing and
exporting countries that such arrangements would be made without harmful
interference with the normal patterns of production and international trade, by
assurance against re-sales or trans-shipments of commodities supplied on conces-
sional terms, and by the introduction of the concept of `additional consumption',
defined as `consumption that would not have taken place in the absence of the
transaction on special or concessional terms'. The normal mechanism of assuring
such `additionality' is the usual marketing requirement (UMR) provision of the
food aid agreement, negotiated between the supplying and recipient country,
which is included in the contractual arrangements. Following its use in the US
assistance programmes, the UMR technique was adopted by FAO in 1970. It is
`a commitment by the recipient country to maintain the normal level of commer-
cial imports of the commodity concerned, in addition to the imports provided
under the concessional transactions'.

To monitor the implementation of the Principles and provide a forum for

consultation, a special Consultative Subcommittee on Surplus Disposal (CSD),
a subcommittee of FAO's Committee on Commodity Problems, was set up in
Washington, DC in 1954 consisting of representatives of 45 member nations (27
developing and 18 developed), the European Union and 21 observer countries.
The membership includes the major exporting countries of basic food commod-
ities as well as others with significant export trade. The CSD meets monthly and
is able to monitor the trade effects of the flow of food aid (as defined under the
Principles) from supplying to recipient countries on a continuing basis. Member
nations are generally represented by their agricultural or commercial counsellors
or attaches. About 10 food aid supplying countries and the EU notify, consult and
report on their food aid transactions.

When the Principles were first adopted in 1954, distinction was made between

`sales on concessional terms' and `commercial sales'. It was `assumed' that
distinction between these two types of transactions would be `self-evident'.

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Useful links	A World Food Reserve MAC/WFY Page-55 0230_553559_09_cha05 A World Food Reserve 55 Party on Surplus Disposal was established by the CCP in pursuance of recom- mendations made by the seventh session of the FAO Conference to consider the most suitable means of disposing of agricultural surpluses, including the setting up of consultative machinery and the principles which should be observed by FAO member nations. 24 This led to the formulation of recommendations by FAO of Principles of Surplus Disposal, which were forwarded to FAO member govern- ments in June 1954 and endorsed by the FAO Council at its twentieth session in September/October 1954. The Principles are not legally binding but provided guidelines, a code of conduct, or what were called `consultative obligations', for FAO member nations, and represent a commitment by 46 signatory countries. They embodied three general principles. First, solution to problems of agricultural surplus disposal should be sought, wherever possible, through efforts to increase consumption rather than through measures to restrict supplies. Second, disposal of excess stocks should be done in an orderly manner to avoid sharp falls in world market prices, particu- larly when prices were generally low. And third, where surpluses were disposed of under special terms, there should be an undertaking by both importing and exporting countries that such arrangements would be made without harmful interference with the normal patterns of production and international trade, by assurance against re-sales or trans-shipments of commodities supplied on conces- sional terms, and by the introduction of the concept of `additional consumption', defined as `consumption that would not have taken place in the absence of the transaction on special or concessional terms'. The normal mechanism of assuring such `additionality' is the usual marketing requirement (UMR) provision of the food aid agreement, negotiated between the supplying and recipient country, which is included in the contractual arrangements. Following its use in the US assistance programmes, the UMR technique was adopted by FAO in 1970. It is `a commitment by the recipient country to maintain the normal level of commer- cial imports of the commodity concerned, in addition to the imports provided under the concessional transactions'. To monitor the implementation of the Principles and provide a forum for consultation, a special Consultative Subcommittee on Surplus Disposal (CSD), a subcommittee of FAO's Committee on Commodity Problems, was set up in Washington, DC in 1954 consisting of representatives of 45 member nations (27 developing and 18 developed), the European Union and 21 observer countries. The membership includes the major exporting countries of basic food commod- ities as well as others with significant export trade. The CSD meets monthly and is able to monitor the trade effects of the flow of food aid (as defined under the Principles) from supplying to recipient countries on a continuing basis. Member nations are generally represented by their agricultural or commercial counsellors or attaches. About 10 food aid supplying countries and the EU notify, consult and report on their food aid transactions. When the Principles were first adopted in 1954, distinction was made between `sales on concessional terms' and `commercial sales'. It was `assumed' that distinction between these two types of transactions would be `self-evident'. back to top Next page
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