International Commodity Agreements

MAC/WFY

Page-74

0230_553559_11_cha07

194570. Early Attempts: FAO's Pioneering Work

This series of intense international negotiations revealed clearly the position

not only of the United States, the biggest grains producer and exporter, but also
of the other major grains producing and importing countries on three controver-
sial issues: production policies, sales at special prices, and stocks. It was evident
throughout the protracted negotiations that while consumers were far from
forgotten, the primary initiative was with the producers. Even importing coun-
tries did not necessarily represent an exclusive consumers' interest. Many of them
produced more grain than they imported, and they were generally committed
to protecting their producers against low prices. This led to another overriding
concern, the recurrence of large grain surplus stocks. As a counter-weight, two
views had emerged strongly from the Second World War, which tended to play
down the fear of mounting surpluses. The first was the belief that a policy of full
employment would automatically obviate the prospect of burdensome surpluses.
The second was that large numbers of people in the developing countries lived at
below what was regarded as an acceptable nutritional standard. Increasing employ-
ment and raising nutrition levels were two objectives that would take care of any
concern about being overwhelmed by mounting surpluses. This led to a third view,
the need for providing more assistance to developing countries through greater
burden-sharing in international co-operation expressed in the declaration of the
first United Decade of Development of the 1960s (see above).

A major limitation to the reduction in market instability was the conflict

between national policies in many countries and the basic aims of international
wheat agreements. The dominant feature at the beginning of the 1960s continued
to be the persistence of production in excess of effective demand as reflected in
the large and increasing wheat stocks. The FAO Group on Grains concluded in its
third report in 1960:

The heart of the problem lies in the level of price or income guarantees to
producers of wheat and other grains in many exporting as well as in importing
countries. These guarantees, combined with other aspects of national agricul-
tural policies, if maintained substantially unchanged, together with techno-
logical advance, to stimulate, year after year, an output larger than can be
absorbed by normal effective demand. (FAO, 1960b)

This problem involved national adjustments in production, which could be
achieved only by voluntarily subordinating national interest for the broader inter-
national good.

In this context, from the beginning of the 1960s, as their large stockpiles of grain

were drawn down, the United States and Canada sought to share the burden of
providing food aid to poor food-deficit countries with other major industrialized
grain importing and exporting countries, especially in western Europe and Japan,
which had, up until then, provided little or no food aid. Those countries were, it
was argued, not strong enough economically to shoulder part of the burden. At the
same time, the European Economic Community (now the European Union) and
its member countries had accumulated large surpluses as a result of the agricultural

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Useful links	International Commodity Agreements MAC/WFY Page-74 0230_553559_11_cha07 74 194570. Early Attempts: FAO's Pioneering Work This series of intense international negotiations revealed clearly the position not only of the United States, the biggest grains producer and exporter, but also of the other major grains producing and importing countries on three controver- sial issues: production policies, sales at special prices, and stocks. It was evident throughout the protracted negotiations that while consumers were far from forgotten, the primary initiative was with the producers. Even importing coun- tries did not necessarily represent an exclusive consumers' interest. Many of them produced more grain than they imported, and they were generally committed to protecting their producers against low prices. This led to another overriding concern, the recurrence of large grain surplus stocks. As a counter-weight, two views had emerged strongly from the Second World War, which tended to play down the fear of mounting surpluses. The first was the belief that a policy of full employment would automatically obviate the prospect of burdensome surpluses. The second was that large numbers of people in the developing countries lived at below what was regarded as an acceptable nutritional standard. Increasing employ- ment and raising nutrition levels were two objectives that would take care of any concern about being overwhelmed by mounting surpluses. This led to a third view, the need for providing more assistance to developing countries through greater burden-sharing in international co-operation expressed in the declaration of the first United Decade of Development of the 1960s (see above). A major limitation to the reduction in market instability was the conflict between national policies in many countries and the basic aims of international wheat agreements. The dominant feature at the beginning of the 1960s continued to be the persistence of production in excess of effective demand as reflected in the large and increasing wheat stocks. The FAO Group on Grains concluded in its third report in 1960: The heart of the problem lies in the level of price or income guarantees to producers of wheat and other grains in many exporting as well as in importing countries. These guarantees, combined with other aspects of national agricul- tural policies, if maintained substantially unchanged, together with techno- logical advance, to stimulate, year after year, an output larger than can be absorbed by normal effective demand. (FAO, 1960b) This problem involved national adjustments in production, which could be achieved only by voluntarily subordinating national interest for the broader inter- national good. In this context, from the beginning of the 1960s, as their large stockpiles of grain were drawn down, the United States and Canada sought to share the burden of providing food aid to poor food-deficit countries with other major industrialized grain importing and exporting countries, especially in western Europe and Japan, which had, up until then, provided little or no food aid. Those countries were, it was argued, not strong enough economically to shoulder part of the burden. At the same time, the European Economic Community (now the European Union) and its member countries had accumulated large surpluses as a result of the agricultural back to top Next page
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