A World Food Reserve

MAC/WFY

Page-56

0230_553559_09_cha05

194570. Early Attempts: FAO's Pioneering Work

However, with experience gained from applying them, it became apparent that
views on the meaning of `normal commercial practices' differed among govern-
ments. Furthermore, as the objectives of economic assistance gradually took
precedence over those of surplus disposal, related issues arose as to whether certain
kinds of transactions should be regarded as `concessional' or `commercial' sales.
Subsequently, various attempts have been made to find a generally acceptable
distinction.

None has provided a definitive answer and the issue remains unre-

solved. Faced with this dilemma, a list of transactions was drawn up that were
regarded as constituting `food aid' that fall within the area of responsibility of
the CSD. These transactions include: gifts or donations of food commodities by
governments, intergovernmental organizations (principally WFP), and private,
voluntary or non-governmental organizations (NGOs); monetary grants tied to
food purchases; and sales and loans of food commodities on credit terms with a
repayment period of three years or more (FAO, 1992, pp. 79 and Annex F). The
list is not exclusive and other transactions may be included. Lack of clarity and
agreement has led to an expanding `grey area' between food aid, thus defined,
and outright commercial transactions with no concessional element. A large part
of agricultural exports of the major food exporting developed countries now take
the form of credit and guarantee, and export enhancement, programmes (Shaw
and Singer, 1995).

The vexed question of the disposal of agricultural surpluses was discussed at

the eighth session of the FAO Conference in November 1955 (FAO, 1955b). The
Conference reaffirmed the view, expressed two years previously, that measures
to dispose of surpluses already in existence could not solve the surplus problem
unless parallel measures were taken to avoid new surpluses. Consultations and
action therefore had to be concerned with both the disposal of existing surpluses
and the prevention of new surpluses. The latter implied the selective expansion
of production and increased consumption, more efficient distribution, and higher
nutritional levels, the co-ordinated development of agriculture, and the lessening
of obstacles to trade.

Concerning the disposal of existing surpluses, the Conference took note of

action taken on the three main aspects of the problem: the formulation of prin-
ciples to be observed in the disposal of agricultural surpluses; the development
of suitable methods of disposal; and the strengthening of intergovernmental
machinery for consultation on these matters. It commended the guidelines and
principles of surpluses disposal for all FAO member states that had been drawn
up by the CCP and endorsed by the FAO Council. Regarding methods of surplus
disposal, the Conference identified the use of surpluses for raising nutritional
levels of vulnerable and under-privileged groups and for meeting famine condi-
tions as `one of the most desirable ways' of disposing of surplus products. It also
commended the use of surpluses for aiding economic development in developing
countries. It noted that the pilot study in India referred to above had shown
that this could be done without harm to domestic or foreign producers when
then unemployed or under-employed workers could be put to work on additional
development projects and when the surpluses were fed into domestic markets at

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Useful links	A World Food Reserve MAC/WFY Page-56 0230_553559_09_cha05 56 194570. Early Attempts: FAO's Pioneering Work However, with experience gained from applying them, it became apparent that views on the meaning of `normal commercial practices' differed among govern- ments. Furthermore, as the objectives of economic assistance gradually took precedence over those of surplus disposal, related issues arose as to whether certain kinds of transactions should be regarded as `concessional' or `commercial' sales. Subsequently, various attempts have been made to find a generally acceptable distinction. 25 None has provided a definitive answer and the issue remains unre- solved. Faced with this dilemma, a list of transactions was drawn up that were regarded as constituting `food aid' that fall within the area of responsibility of the CSD. These transactions include: gifts or donations of food commodities by governments, intergovernmental organizations (principally WFP), and private, voluntary or non-governmental organizations (NGOs); monetary grants tied to food purchases; and sales and loans of food commodities on credit terms with a repayment period of three years or more (FAO, 1992, pp. 79 and Annex F). The list is not exclusive and other transactions may be included. Lack of clarity and agreement has led to an expanding `grey area' between food aid, thus defined, and outright commercial transactions with no concessional element. A large part of agricultural exports of the major food exporting developed countries now take the form of credit and guarantee, and export enhancement, programmes (Shaw and Singer, 1995). The vexed question of the disposal of agricultural surpluses was discussed at the eighth session of the FAO Conference in November 1955 (FAO, 1955b). The Conference reaffirmed the view, expressed two years previously, that measures to dispose of surpluses already in existence could not solve the surplus problem unless parallel measures were taken to avoid new surpluses. Consultations and action therefore had to be concerned with both the disposal of existing surpluses and the prevention of new surpluses. The latter implied the selective expansion of production and increased consumption, more efficient distribution, and higher nutritional levels, the co-ordinated development of agriculture, and the lessening of obstacles to trade. Concerning the disposal of existing surpluses, the Conference took note of action taken on the three main aspects of the problem: the formulation of prin- ciples to be observed in the disposal of agricultural surpluses; the development of suitable methods of disposal; and the strengthening of intergovernmental machinery for consultation on these matters. It commended the guidelines and principles of surpluses disposal for all FAO member states that had been drawn up by the CCP and endorsed by the FAO Council. Regarding methods of surplus disposal, the Conference identified the use of surpluses for raising nutritional levels of vulnerable and under-privileged groups and for meeting famine condi- tions as `one of the most desirable ways' of disposing of surplus products. It also commended the use of surpluses for aiding economic development in developing countries. It noted that the pilot study in India referred to above had shown that this could be done without harm to domestic or foreign producers when then unemployed or under-employed workers could be put to work on additional development projects and when the surpluses were fed into domestic markets at back to top Next page
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