FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

THE STATE OF FOOD AND AGRICULTURE 1959

Corrigendum

Page 3, para. 2, line 9, read: 0.9 percent instead of 9 percent.

Page 23, para. I, line 4, read: 0.9 percent instead of 9 percent.

Page 103, Figure 111-6, Japan, Urban, « Other food » includes fatsand oils which should not be shown separately.

Page 107, Figure III-8, key, read: Calories derived from other nutrientsinstead of Total number of calories consumed per day.

Page 107, Figure III-8, Ivory Coast, Calories derived from fat(about 8 percent) llave been omitted.

Page TR), Table Footnote 3 refers to all data for New Zealand.

Page 123, Table 111-16, Average hours of work per Ioo kilogramsof output, Greece, tobacco, read: 500 instead of so.

Page 193, Annex Table 14, read: Japan instead of Turkeyread: Jamaica instead of Japanread: Turkey instead of Jamaica

Page 196, Annex Table 17, India, Rural, Fat, read: 17 instead of169.

Page 196, Annex Table 17, Ivory Coast, Fat, Village, insert 19;

« Campement », insert 22.

TI-TE STATE OF FOOD AND AGRICULTURE 1959

T IE STATE OF 1400D

AND AGRICUT1TURI-1. 1959

AF.

r 0)-

C 59/7

FOOD AND AGRICULTURE ORGANIZATION OF THE UNFTED NATIONS

ROME 1959

The statistical material in this publication has

bee'n prepared from the information available

to FAO up to 30 June 1959

© FAO 1959

Printed in Italy

CONTENTS

Foreword

Summary3

World review and outlook 2

AGRICULTURAL PRODUCTION 13

Regional agricultural production in 1958/59 19Fishery production 22Forestry production 23The agicultural production outlook for 1959/60 23

CIIANGES IN STOCKS. 24

ECONOMIC ACTIVITY AND THE DEMAND FOR AGRICULTURAL PRODUCTS 27Short-term outlook 28

INTERNATIONAL TRADE IN AGRICULTURAL PRODUCTS 29The volume of trade 32Prices, terms of trade, and total earnings of agricultural exports 34Regional shifts in the volume of trade in 1958 41International trade in forest products 43Special measures to expand agricultural exports 44Agricultural trade of the U. S. S. R., Eastern Europe, and China 44

FARM PRICES AND INCOMES 46Farm incomes 48

CONSUMER PRICES 49Marketing margins so

AGRICULTURAL POLICIES AND DEVELOPMENT PLANS 50

North America 52

Australia and New Zealand 53Western Europe 54Eastern Europe and U. S. S. R 55Far East 5 8

Near East 6

Africa 63

Latin America 65

Fishery policies 67

Forest policies 68

RECENT TRENDS IN AGRICULTURAL INCOMES AND LEVELS OF LIVING 114Development of national incom,

- 116Agricultural incomes 118Agricultm-al wages 118

MAIN FACTORS INFLUENCING FARM INCOMES AND LEVELS OF LIVING 119Agricultural prices and price relationships 119Output per man . I21Pre-conditions for increased agricultin-al productivity .. s : . .126

COMMODITY SURVEY AND OUTLOOK 69

Wheat . 70

Coarse g-rains 71

Rice 72

Sugar . 73

Mcat 74Eggs 76

Dairy products 76

Fishery products 77Fats and oils 78Fresh fruit 8o

Dried fruit and wine 8o

Cocoa 82

Co ffce 83

Tea 84Tobacco 84Cotton 85

Wool 86

Jute 87Hard fibers 88

Rubber 89

Forest products 89

III. Agricultural incomes and levels of living in countries at different stagesof econoniic development 93

LEVELS OF INCOME IN AGRICULTURE 94National income data 94Wage rates 95Consumer expenditures 97Size of family 99Regional variations I 00

THE PATTERN OF EXPENDITURE To'Expenditure on food To'Future trends of food expenditure I asNutritional aspects 106Expenditures other than on food 109Amenities not involving direct expenditure ii I

vii

The transfer of labor from agriculture 127Income disparities and economic growth 130The effect of an expanding market for agricultural products 13 I

IV. Some general problems of agricultural development in less-devclopedcountries in the light of postwar experience 133

INTRODUCTION 133Characteristics of ag,riculture in economically less-developed countries 134Basic conditions for agricultural development 36

THE ROLE OF PRICE STABILIZATION 137

THE ROLE OF MARKETING 141Marketing and rural c-redit 142Storage 143Market infor 'nation 143Transportation 144Grading and. handling 144Export marketing 145

THE ROLE OF LAND TENURE 145Tenancy reform 146Promoting efficient cultivation of large holdings 147Public land policy 147Modifying tribal tenures 148

Stabilizing shifting cultivation '49Consolidation of holdings 149

THE ROLE OF INVESTMENT 150Financial investment ioMobilization of private funds for investment in ao-riculmre 152

Agricultural credit 152

Public investment in agriculture 154Nonfinancial investment 156

Rural industries and handicrafts 159

THE ROLE OF EDUCATION, EXTENSION, AND RESEARCH i6oEduca.tion through extension services 16T

Agricultural ed.ucation 164Agricultural research 165

THE ROLE OF GOVERNMENT 166

Annex tables . 171

List of figures

Average annual gain or loss in agricultural production in relation to popula-tion, SeleCted. COUlltrieS, average 1948-52 to average 1955-56 I 6

Esthmted level of per caput agricultural production, by region, in relationto the world average 17

Average annual growth of food production and of population 18

Indices of the main stocks of agricultural products in the world and. in NorthAmerica 26

11-5. Indices of the volume, real unit value, and total real earnings of agriculturalexports 30

II-6. Terms of tra.d.e for agricultural exports 31

Average export unit values (average prices) of selected agricultural products inworld tra.de, quarterly data, 1955-58 36-37

Real average unit values and total real earnings of exports of selected a.gricu1-tura.1 products 39-40Volume and real value of agricultural exports, by regions and groups ofrecionsb. 42

II-To. Indices of prices received and prices paic-I by farmers 47II-I . Production and consumption of centrifugal sugar, average 1949-53 and annual

1955-58 74II-1.2. Consumption of virgin wool in principal manufacturing Countries, 1953-58,

by quarters 86

II-13. Monthly prices of jute and jute goods, Calcutta 87

Per caput national income of selected countries and share originating fromagriculture 95

111-2. Percentage of population of selected countries dependent on agriculture andpercentage of domestic product originating- from agriculture 96Per caput income originating in agriculture in relation to per c.aput incomeoriginating in other occupations 97

iff-4. Per caput income in o.g,riculture in comparison with income in other occupa-tions as indicated by a) household surveys of expenditure, and b) nationalincome data 98Percentage of total expenditure on food (including home-produced 'food) atdifferent income levels, rural and. urban .102

Pattern of foocl expenditure (including home-produced food) by corrimodities;rural and. urban 103

IIT-7. Share of home-produced food in total food expenditure of farm families,United States and Japan 104

Intake of calories per caput per day and numbers of calories derived from pro-tein and fat, rural and urban 107

Percentage of illiteracy in rural and urban populations of selected countries. 112

vju

Recent trends in share of agriculture in populations and national product ofselected. countries 116

Long- and medium-term trends in share of agriculture in popula.tion and na-tional product of selected countries 117

III-12. Recent trends in total agricultural income of selected. countries 1181I1-13. Per caput national income originating in agr, iculture in selected countries in

relation to per caput agricultural output 122111-14. Average labor time expended per Too kilogra s of output in selected coun-

tries 125

III-i. Long- and medium-term movements of total, agi cultural, and nonagricultur-al population in selected countries 128

Recent average annual percentage change in agricultural and nonagriculturallabor force in selected countries 129

Iff-17. Long- and medium-term movements of total, urban, and nu-al population inselected countries 131

TV-I. India: Indices of wholesale prices of certain grains and of groundnuts, 1953to 1958 139

IV.2. Japan: Development of improved cultural practices and the use of mecha-nized implements 162

FOREWORD

The most pressing problems of food and agriculture at the present time are centered inthe economically less-developed countries of the world. In the more highly-developed countriesa level of productivity has been reached which makes it possible for the relatively small per-centage of the population engaged in agriculture to provide a nutritionally adequate diet forthe rest of the population, and aLo to earn it1C01110.5 which, even though they usually lagbehind incomes in other occupations, are far in advance of those of farmers in less-developedcountries. In some instances, as is well known, a major problem, and it is not a light one,is how to dispose of the abundant supplies resulting from the great advances in agriculturalmethods ¡nade during the last fetv decades.

In contrast, in the less-developed countries, although a large part of their populations isengaged in agriculture, production is often too low to satisfy even the simple, and generallynutritionally inadequate, diets imposed by their general poverty, the more so in view ofthe postwar upsurge in the growth of population. Many less-developed countries have there-

fore had either to curtail exports, thus reducing badly needed earnings of foreign exchange,or alternatively to rely increasingly on food imports. In either case their capacity to importcapital goods for general economic development has been seriously impaired.

In emergencies invaluable help has been received from time surplus supplies accumulatedin more developed countries. But welcome though such aid has been, in the long run thetwin problems of rural poverty and inadequate food supplies in less-developed countries canbe overcome only by building up their own agricultures. It is therefore of the highest im-portance to determine what social, economic, and technical improvements are needed to bringthis about. For until then, the extreme poverty of time cultivators in many less-developedcountries (scarcely imaginable by the people of more-developed countries) will continue, foodsupplies will remain precarious, and economic progress as a tvh,le w:11 be seriously delayed.

These are the central themes of this year's annual report 012 the state of food and agri-culture. After a brief general summary, there is the usual chapter analyzing current de-velopments in the world food and agricultural situation and in agricultural policies. Whilethe check to agricultural expansion in 1957/58 was overcome in 1958/59, the increased outputlargely represented a recovery in the more-developed countries, and nmch of this has servedonly to swell stockpiles of unsaleable commodities. Moreover, the recession in the more-industrialized countries led to a fall both in the volume and prices of agricultural exports,especially of raw materials. This seriously tveakened the economic position of agriculturalexporting countries, among them most of the less-developed countries.

The general survey is followed by two special chapters. The first of these examines thelevels of living among farm people in countries at different stages of economic development,and how they compare with those in other occupations. It goes on to consider the underlyingfactors which account for time disparities in incomes and levels of living between farm and non-farm people, and the still greater disparities between farm people in less- and more-developedcountries. Particular attention is given to the bearing of the gradual shift of manpower fromagriculture to other sectors of the economy on agricultural productivity and levels of living.

These considerations set the stage for the second of the special chapters, which examinesthe more practical problems of agricultural development in time less-developed countries. It

is not only concerned with the tvays of providing farmers with the technical knowledge and thecredit and investment resources without which no substantial improvement is possible; specialattention is also given to thc measures needed to create an economic and social environmentfavorable to agricultural expansion.

The more closely the situation is examined, the more one is impressed by the odds againstthe cultivator in many lessdeveloped countries. Handicapped by ignorance, poverty, anddebt, he must face great fluctuations of price, and because of his lack of resources must usuallysell immediately after the harvest when prices are lowest. If he improves his methods offarming, much of the benefit of his increased output may go to the merchant or landlord totvhom he is indebted. Often he has so little security of tenure that he has no real inducementto improve his holding. When all is considered, thc wonder is that agricultural production hasincreased as much as it has. Until these disabilities are reduced it seems inevitable that muchof the teachings of the farm advisory services will fall upon stony ground.

Within the limits of a single chapter it is of course impossible to go into these mattersin detail. The aim hus been rather to examine the interrelationships of thc various approaches,

for example, through improvements in conditions of land tenure, in marketing and price sta-bility, in education, and to examine also the preconditions which make agricultural developmentpossible. The whole report underlines once more the need for an integrated approach ifagricultural and general economic development is to be fully effective. It brings out that whileagricultural development must keep pace with other sectors, progress in these sectors in turnhinges 011 a parallel development in agriculture. Although in the early stages of economicdevelopment agriculture must be the main source of both manpower and investment resources,agriculture is none the less a key sector in its otvn right. There has been more than one ex-ample in posttvar history of overall economic development being hamstrung by inadequateattention to agriculture.

B. R. SEN

DirectorGeneral

AGRICULTURAL PRODUCTION

World agricultural production, excluding Main-land China, is provisionally estimated as morethan 4 percent higher in 1958/59 than in each ofthe two preceding seasons. While productionincreased in every region of the world., the bulkof the expansion was contributed by NorthAmerica, Oceania, and the U.S.S.R. Much of theincrease, especially in the two former areas andin some Far Eastern countries, amounted to recov-ery from the low level of production in 1957/58,when total world output had failed to increase.A very large rise in agricultural production is alsoreported in Mainland China in 1958/59.

Fishery production in 1958 appears to havebeen at about the same level as in the previous yearin most countries, though the catch is reportedto have doubled in Mainland China. The outputof forest products was affected by the recessionin economic activity in North America andWestern Europe and total removals of industrialroundwood are provisionally estimated to be ap-proximately 9 percent less in 1958 than in 1957.

In spite of the recovery in agricultural produc-tion in 1958/59, the slowing down in the growthof per caput production, already apparent in themore-developed parts of the world, seems to begradually extending to the less-developed regions,with the exception of Latin America as a whole.The situation varies from country to country, andin several countries of Southeast Asia and in partsof Latin America and Africa, agricultural produc-tion is falling behind or barely keeping pace withpopulation growth. For the less-developed re-gions as a whole, however, the average annualgrowth of agricultural production remains nearly

percent g,reater than the growth of population.Per caput agricultural production in both the

Far East and Latin America has not yet recovered

3

from the setback caused by the war, while inAfrica per caput food production appears recentlyto have fallen back to approximately the prewarlevel. In the Far East even an improvement tothe prewar level would leave per caput productionat less than half the low world average. Per caputproduction is not, however, a reliable guide toconsumption levels. Because of smaller exports orlarger imports, per caput supplies of food availablefor consumption in each of the less-developedregions are somewhat higher than before the war.

In the more-developed countries the slacken-ing in apicultural expansion appears to be mainlydue to the slow growth of demand. In the less-developed countries the demand, at least for food-stuffs, continues to expand rapidly, and any slowingdown of agricultural development is likely to bedue to other factors, e.g., lack of investment cap-ital or instability Of export markets.

Also largely as a result of demand factors, tireworld output of livestock products has been in-c-reasing filster tiran crop production throughouttire postwar period. In tire more-developed re-gions the rate of increase of livestock productionhas slowed down in the last few years, but in tireless-developed group it appears to have been main-tained, so that it is now approximately tire same asfor crops. In tire latter group of regions, however,the actual output of livestock products is relativelysmall and represents a much lower proportion oftotal agricultural production than in tire more-developed areas.

According to tire limited data available up tothe end of June, agricultural production will prob-ably again increase in 1959/60, though it is likelythat tire expansion will be somewhat smaller tiranin tire season just ended. North American agri-cultural production may well exceed tire recordlevel of 1958/59, given normal weather for theremainder of the season.

Chapter I - SU ARY

Chapter II - World review and outlook

CHANGES IN STOCKS

Much of the inc-rease in agricultural productionill 1958/59 did. 110 t 1110VC into consumption. Thelarge cereal harvests, especially in the United States,have led to a sharp inc-rease in stocks of wheat andcoarse grains, and there has also been a markedbuild-up of stocks of coffee and. sugar. A smallfurther reduction in cotton stocks in importingcountries during 1958/59 was partly offset byslightly larger stocks in the United States and othernet exporting countries. Total world stocks ofagricultural prod.ucts, which appear to have beenfairly stable for the last few years, are estimatedto llave increased by some io percent during1958/59. The value of stocks held by the United.States Commodity Credit Corporation, which haddeclined slightly in the previous two years, roseby more than 20 percent.

ECONOMIC ACTIVITY AND THE DEMAND FOR

AGRICULTURAL PRODUCTS

The demand for foodstuffs was generally wellmaintained during the 1957-58 recession. For rawmaterials of agricultural origin and also for forestproducts, however, demand fell sharply. As a resultof lower export earnings many of the less-devel-oped countries had to reduce planned expenditureson imports and on development programs.

At mid-1959 recovery from the recession appearsto be under way. Although this has not yet beenreflected in any marked revival in internationaltrade in agricultural products, the prices of somecommodities on world ntarkets llave shown signsof recovering. In spite of the relatively swiftpassing of the recession, however, the short-termoutlook is still uncertain. The level of economicactivity may remain relatively stable after regain-ing the pre-recession position. In the industrial-ized countries the demand for raw materials ofagricultural origin would then show only a moderateimprovement, while the demand for food, whichhas remained steady, is unlikely to change much.

INTERNATIONAL TRADE IN AGRICULTURAL PRODUCTS

For raw materials of agricultural origin, thecommodities that were the most severely affectedby the recession, the volume of exports fell by some8 percent in 1958 and their average price by about

4

16 percent, so that the total export earnings of thisgroup Were 23 percent leSS than in 1957. Thefall in export earnings was particularly markedfor wool, cotton, and rubber and also for forestproducts. Foodstuffs and beverage c-rops in gen-eral fared better than agricultural raw materials,though, hiere too, some commodities suffered heavylosses.

For agricultural products as a whole, the vol-une of trade in 1958 was about 3 percent lessthan in 1957, in contrast to the inc-reases that haveocc-urred in the last few years. Prices in worldmarkets fell by about 7 percent and total earningsfrom agricultural exports by about 9 percent.As the index of average prices of manufacturedgoods in world trade showed no change from 1957to 1958, the " terms of trade and the total pur-chasing power of agricultural exports for manu-factured goods were also reduced by about 7percent and 9 percent, respectively.

The " terms of trade for agricultural productsas a whole on world markets have fallen almostcontinuously since the Korean boom and in 1958were lower than in any other postwar year. Never-theless, they remain about one-third better thanthe depressed level prevailing just before the war,though this improvement applies almost entirelyto the exports of the less-developed countries,which, however, were partic-ularly affected by thedepression of the 1930's.

Since the war there has been a considerable fallin the volume of net exports of food and feed-ingstu ffs fi-om the less-developed to the more-developed regions. Because food production inthe former group of regions has in general notkept pace with needs, some countries llave liadto curtail exports, while others have become sub-stantial net importers of food.stuffs. Net exportsof beverage crops, on the other hand, have ex-panded fairly steadily, as the domestic market forthese products in the less-developed countries is

still too small greatly to affect the situation.. Netexports of raw materials llave fluctuated at roughlythe prewar average, in accordance with the levelof economic activity in industrialized countries,and export outlets llave been limited by syntheticsubstitutes and by the more economic use of rawmaterials in industry. Another factor limiting thevolume of world trade in agricultural productshas been increased domestic production in the more-ind.ustrialized countries of all except those commodi-ties that can be produced only in tropical zones.

In 1958 the sharpest fall in earnings from agri-cultural exports appears to have occurred in Oceania,where a decline of as much as 23 percent reflectedthe unfavorable situation for wool and dairy prod-ucts, together with reduced exports of cerealsfollowing the small Australian crops of 1957/58.In Latin America, the Far East, and the NearEast the fall was of the order of io percent.

- The value of exports from North America,including shipments under special terms, was alsosome To percent lower than in 1957, though, incontrast to other regi.ons, this reflected a declinein volume more than in prices. The volume ofNorth American cotton exports fell particularlysharply. United States exports of agricultural prod-ucts under special terins were 18 percent lower(in imputed value) than in 1957, but for thefiscal year 1958/59 they are expected to have beenapproximately the same as in 1957/58. In the firsthalf of 1958/59 shipments under these specialprograms represented about one third of totalUnited States agricultural exports.

Western European export earnings fell by only4 percent in 1958, as lower prices were partly offsetby larger volume. For Africa both the volumeand value of agricultural exports were maintainedat about the 1957 level, the latter chiefly becauseof consid.erably increased prices for cocoa.

On the import sid.c, the major change wasinevitably in Western Europe, which accounts formore than half of the world's imports of agri-cultural products.

U.S.S.R. imports of such products as fruit,beverages, tobacco, wool, and rubber llave ex-panded sharply in recent years with the increasedemphasis on consumer needs. Increased domesticprod.uction has led to larger exports of manyproducts, including cereals, cotton, hemp, andflax, and reductions in net imports, especially ofvegetable oils and some animal products, whilethe country has become a net exporter of butterand cheese to Eastern Europe. U.S.S.R. grain ex-ports fell sharply in 1957/58 as a result of lowerharvests, but in 1958/59 they are expected to llaverisen to 8 million tons. Exports from MainlandChina, which is the U.S.S.R's largest supplier ofagricultural imports, appear to llave inc-reasedsharply in 1958, especially those of rice. While theagricultural trade of the U.S.S.R., Eastern Europe,and Chilla with the rest of the world is now muchg-reater, it seems likely that the bulk of their tradewill continue to be among them-selves.

5

FARM PRICES AND INCOMES

In spite of the fall in prices on world markets,farm prices and incomes appear to llave beenfairly well maintained in 1958 in those countries(mainly the more-industrialized) where effectiveprice support measures were operated. Some ofthe gains in gross returns, however, were ab-sorbed by higher costs. In most of the rnore-developed countries for which data are available,net farm incomes are estimated to llave increased.M 1958 (or 1958/59) in contrast to the ra.ther wide-spread declines in the preceding year. This waslaro-ely due, especially in North America andAustralia, to the substantial rise in output. Fewreliable data on farm prices and incomes are avail-able for the less-developed countries.

CONSUMER PRICES

Except in a few countries, the increase in foodproduction appears to have done little to stemthe rise in the cost of food to consumers, andretail food prices generally continued their slowrise during 1958. The tendency to higher retailprices seems to be greater in the less-developedthan in the more-industrialized countries. In a fewof the countries where there has been rapid in-flation, especially in Latin America, new measuresto stabilize prices llave had some success in 1958.

In most of the main ag-ricultural exportingcountries the retail cost of food has tended torise more slowly than the general cost of livingin the past five years, reflecting the weaknessof agricultural prices on world markets. In mostof the more-industrialized countries the twoindices llave kept fairly closely in step. In manyless-developed countries, however, where pop-ulation and the demand for food are rising quickly,food prices llave tended to increase faster than theCost of living as a whole.

AGRICULTURAL POLICIES AND DEVELOPMENT PLANS

The contrasting agricultural situations of themore- and less-developed countries are reflectedwith particular sharpness in their agicultural pol-icies. In the former group, where, althoughagricultural prod.uction can be increased quitereadily, the demand for food and agricultural

products is rising only slowly, agricultural poli-cies are increasingly concerned with problems ofsurplus production of certain commodities. Pol-icy changes in these countries in 1958/59 weremostly rather small adjustments designed to modifythe pattern of production and to safeguard farm

'incomes. In the United States the principal changewas the abandonment of the Acreage ReserveProgram of the Soil Bank, -which had failed toeffect the desired temporary check in the mo-mentum of agricultural expansion. In WesternEm-ope there were further modifications to pricepolicies, with the object of guiding productionaway fi-om commodities tending to be in over-supply, and in some countries price guaranteeswere reduced.

The emphasis of agricultural policies in theless-developed countries, on the other hand, is ona rapid increase in production to meet the steadilygrowing demand. In a number of these coun-tries policy changes in 1958/59 were compara-tively far-reaching, in line with the urgency of theneed to overcome obstacles to agricultural ex-pansion. While the introduction of the rural com-munes in Mainland China is the extreme example,a tendency toward more radical measures was inevid.ence in several other countries also. Oneinstance is the new land reform laws in Cuba,Iraq, Pakistan, and the Syrian Province of theUnited Arab Republic, together with increasedactivity under earlier lavvs in a number of othercountries. Th.( r has also been greater emphasison co-operative and credit facilities, especially forthe beneficiaries of the new lan.d reforms. Partic-ular stress is being laid on co-operatives in India,where substantial changes in rural organizationare under discussion. In certain Far Eastern coun-tries, where food price policies previously tendedto favor the consumer, there are signs of changesin these policies with the object of increasingincentives to the producer.

There is a growing interest in measuring theincomes and levels of living of agricultural pop-ulations, partly for social reasons and partly as aguide to policy, e.g., on agricultural support

6

Many of the new development plans an-nounced or begun in the less-developed countriesduring 1958/59 give significantly greater emphasisto agricultural production. Changes in planningmachinery were again made in a number of coun.-tries, especially in the Far East and Near East, andin the latter region most of thc semi-autonomousplanning bodies have now been abolished and theimplementation of development projects assignedto the different ministries.

The U.S.S.R. and the Eastern European coun-tries are to some extent special cases, not onlyin that their economies are centrally planned butalso because, although some of them are relativelyhighly industrialized, the demand for agriculturalproducts has long been unsatisfied and, as in theless-developed countries, is rising faster than pro-duction. The more recent plans of these coun-tries, including those begun in the U.S.S.R. andelsewhere in 1958/59, strongly emphasize the rap-id expansion of agricultural production. Consid-erable modifications in agricultural organizationare still being made, especially in the U.S.S.R.

The continuing tendency toward regional eco-nomic co-ordination affects both the more- andthe less-developed regions of the world and mayeventually have considerable influence on agricul-tural policies. The European Economic Com-munity started the operation of a commomi mar-ket at the beginning of 1959, and preparatory worktoward common market arrangements in LatinAmerica and the Near East has been intensified.

COMMODITY SURVEY AND OUTLOOK

The chapter is conluded by the usual shortnotes on the situation and short-term outlook foreach of the major agricultural, fishcry, and forestproducts. These are already highly condensedand do not lend themselves to further summary.

Chapter III - Agricultural incomes and levels of living in countriesat different stages of economic development

measures or on plans of agricultural development.From comparisons in the first sections of the chap-ter it appears that in all but a few countries aver-age incomes in agriculture are lower than those

in other occupations. Nevertheless, they bear arelationship to the general level of income of thecountry and., as would be expected, differencesbetween farm incomes in countries at differentstages of economic development are much greaterthan those between the farm and nonfarm sec-tor in the same country. Information on the socialamenities and welfare of farm people is evenmore scattered and incomplete than on incomes,but comparisons indicate that, here too, ruralpeople are less well served than those in towns.A second section, of the chapter discusses recenttrends in levels of living in agriculture so far asdata are available. The final section deals Withsonie of the factors which determine existinglevels of living in agriculture, in particular produc-tivity and the distribution of the population be-tween ag,riculture and other sectors of the economy.

AGRICULTURAL INCOMES

Average incomes in agriculture in relation tothose in other occupations have been estimated inthree ways: from national income data, from wagerates in agriculture and in industry, and fromsurveys of household expenditure and consump-tion. The disparities between agricultural and urbanincomes generally appear to be widest when wagerates are compared., partly because agriculturallabor is usually classified as unskilled. Measuredby national income data, the disparities are similar,though generally somewhat smaller, and in. mostcountries the " value added " per person in agri-culture lies betwen 40 to Go percent of the averagein other occupations. Household surveys in thelimited number of countries for which they areavailable usually show smaller disparities, partlybecause some portions of the agricultural incometend to be underestimated in national incomeestimates, and partly because in many countriessome income is derived from nonagriculturalsources, e.g., part-time employment in otheroccupations.

Agricultural incomes are higher than or approx-imately the same as the average in other occupa-tions in only a few countries, usually countriesin which a large part of the production is for exportor in industrialized countries heavily dependent onagricultural imports. Some factors, notably agri-cultural support measures, tend to narrow the gapin industrialized and to widen it in less-developed

7

countries. Nevertheless, disparities between farmand nonfarin incomes are not always greatest inless-developed countries, and there are some strik-ing examples to the contrary. Differences infertility and average size of family, which couldhave a bearing on disparities between rural andurban levels of living, are shown to be importantin some countries and rather negligible in others,including some with very low incomes wherebirth rates remain high in urban areas.

CONSUMPTION LEVELS

Data from consumer surveys indicate that insonic less-developed countries the calorie andprotein intakes of rural people are smaller than thoseof urban people. As the calorie requirements of therural people are usually likely to be higher becauseof the nature of their work, this indicates ratherclearly that in these countries they get less foodthan they need. When home-grown food is takeninto account it appears that the level and pattern offood consumption, and especially of expenditureon food, do not differ greatly between rural andurban people at about the same level of income.

The share of die income spent on food tends tofall with rising incomes, and the natural corollaryis a larger proportionate expenditure on otheritems. Expenditure by rural people on housingis usually smaller than in towns, partly becauseamenities such as water, electricity, etc. are fewer,and partly because of the higher site value of urbanhouses, though some of the apparent discrepancytoo may be due to different statistical treatment.Expenditure on clothing and household goods tendsto be rather more equal between town and countryat similar income levels, and in some countriesrural expenditure on clothing is rather higher,possibly because of the greater need of farm peoplefor protection against weather. In general, how-ever, differences between the pattern of expendi-ture of agricultural and nonagricultural populationsare mainly accounted for by differences in incomes.

SOCIAL SERVICES

From the limited data published, other amenitiessuch as education and medical services appearalmost everywhere to be less generally availablein rural than in urban areas.

The disparities are especially marked in less-developed countries, where the percenta.ge ofilliteracy is considerably higher in rural than inurban areas, while d.octors and other medical servicestend to be heavily concentrated in the larger towns.

RECENT TRENDS IN LEVELS OF LIVING

Direct indications of recent trends in levelsof living are available only for a few of the more-developed countries. They show a marked im-provement compared with the prewar period, andsome considerable improvement during the post-war years, though generally less than in otheroccupations. For example, agricultural wages inreal terms appear to have increased in most coun-tries for which data are available, though usuallysomewhat less than industrial wages.

The total output of agriculture in these coun-tries, as would be expected, has grown less rapidlythan the output of the nonagricultural sectors.Moreover, during the past decade price relation-ships have in most cases moved against agriculture,despite various measures of support. The effectof these f'actors is partly offset, however, by a sub-stantial decline in the agricultural population inmost ind.ustrialized countries. Thus, while thetotal agricultural income has shown a relativelyslow growth, it has had to be shared by fewerpersons, so that the trend of per caput income ismore favorable than the trend of total income.Data for a few countries suggest that disparitiesbetween farm and nonfarm incomes have notvaried greatly over long periods, though theytend to be widest when urban industries are expand-ing more vigorously. It is not entirely clear whythe disparities are much wider in some countriesthan in others with comparable levels of nationalincome. It is likely, however, that a somewhathigher income level in nonfarm occupations is animportant factor in economic development, en-couraging the movement of manpower from agri-culture to other occupations.

FACTORS INFLUENCING LEVELS OF LIVING

Levels of living and incomes in agricultureare shown mainly to depend on productivity perman. Differences in output per man and per hourare shown to be extremely wide between more- and

8

less-developed countries, though these differencesare greater in some branches of production, e.g.,cereals, than in others, e.g., livestock products and.horticultural crops.

Differences in the general level of agriculturalproductivity do not depend only on differencesin technical knowledge and equipment, but alsoupon the distribution of the population betweenagriculture and other occupations. For example,in highly-developed countries one farm familymay feed itself and ten or more other families out-side agriculture. But for this average level ofproductivity to be attainable, there must obviouslybe ten families outside ag,riculture to provid.e thenecessary market outlets. In inost less-developedcountries this condition is not fulfilled sincemore than half the population is engaged in agri-culture.

In a limited number of cases export marketsprovide the additional outlets which_ make possiblehigher levels of productivity, but their scope islimited as the level of world trade in agriculturalproducts is growing slowly and for some commod-ities tends to decline, e.g., because of increasedd.omestic production in the main importing coun-tries and the gowing use of artificial substitutesfor natural products.

While the percentage of the nonfarm populationin principle places a limit on the extent to whichagricultural productivity and levels of living canbe raised at any particular time, this does not meanin practice that further progress in less-developed.countries must wait upon industrialization.

In many of these countries, for reasons examinedin Chapter IV, agricultural production (especiallyfood production) is not at present increasing asquickly as the growth of urban deimuid. Theyhave experienced sharply rising prices and have tocurtail food exports or to rely increasingly on foodimports, often at the cost of balance-of-paymentdifficulties. Provided obstacles to agricultural ex-pansion can be overcome, there is a considerablebacklog of demand to catch up.

There are also ways in which farm incomescould be raised which do not depend on the levelof market demand for agricultural products. Inmany less-developed countries time not fullyutilized at present in agriculture could be put toprofitable use, e.g., in community developmentprojects, to provide wells, drainage, access roads,schools, and other needed amenities, with a mini-mum of financial investment. It rnight also be

used in part-time work outside agriculture, e.g.,in certain cottage industries. Filially, with strength-ened farm advisory services, including servicesin home economics, subsistence farmers could beshown how to overcome many of the worst defi-ciencies in the diets of their families, with littleor no cash outlay, by increased and more diversi-fied production for their own consumption.

The need for such approaches, especially incountries where the farm population is large inrelation to the available land, is underlined by astudy of the movement of population from agri-culture to other occupations in countries wherestatistics are available for fairly long periods. Whilethe percentage of the population dependent on agri-

In this chapter are discussed some of the contrib-uting factors which appear to have caused agri-cultural production in many less-developed cowl.-tries to lag behind the growth of demand resultingfrom rapidly rising populations and higher in-comes, together with some of the methods whichare being adopted to overcome current difficulties.The less-developed countries vary greatly in theirclimatic and other natural conditions, in the den-sity of their populations in relation to their agri-cultural and other resources, in educational levels,in cultural background, in systems of land tenureand other institutions, and so forth. Nevertheless,they have enough common features and problemsto inake a generalized discussion meaningful, aslong as proper allowance is made for nationalcharacteristics.

In. nearly all less-developed countries produc-tivity and, hence, incomes are low. Agricultureis nearly always the main occupation. Systemsof transport, communications, and marketing areinadequate to meet mod.ern need.s. The farmingmethods employed, together with concentrationon a few ba.sic commodities, often result in lack ofproductive employment for fairly long periodsand chronic underemployment or (for landlesslaborers) unemployment. Investment resources areinad.equate. Credit at reasonable rates of interestto finance improved methods of agriculture or cur-rent expenses, if available at all, usually meets only

9

culture tends to fall steadily with industrialization,in absolute numbers it tends to rise, at least until thenonfarm population exceeds the farm population. Asa rule, it is only after that stage that the actual rauin-bers engaged in agriculture begin to decline. Manyless-developed countries must therefore anticipatea further rise in their agricultural populations forsome decades to come, and hence an even smallerarea of land for each farm family. Unless this canbe offset by raising the output per man and perhectare (technically entirely possible), there is a

grave danger that levels of living in ag-,riculturewill become still lower, and that the problem offeeding the rapidly growing urban population willget still more acute.

Chapter IV - Some general problems of agricultural developmentin less-developed countries

a fraction of the needs of farmers. The incentive toinvest is often diminished by insecurity of land ten-tire and the great instability of agricultural prices,so that the farmer has little assurance that he wil.1benefit from any increased effort or expense toimprove his holding or increase his output. Mostfarmers know little of the method.s which wouldincrease their productivity. Even when known, thereis often much reluctance among farmers to tryinaproved methods which, if unsuccessful, would.further reduce their incomes or ad.c1 to their debtload.

The chapter does not lenci itself readily to sum-mary as it consists largely of an already condensedreview of postwar experience in a wide rangeof less-developed countries in tackling some of theproblems mentioned above. The general conclu-sions which, appear to emerge, however, are thatwhile it is clear that increased agricultural produc-tion must come primarily from improved methodsof farming and a better use of existing resources,technology of itself is only part of the answer.Farmers are not likely to incur the extra effort andexpense of trying new methods unless they expectto benefit thereby. An important step by govern-ments seeking to encourage agricultural expansionthus appears to be the provision of a favorableeconomic and social environment. Three basicconditions seem especially necessary in many less-developed countries at the present time:

reasonably stable prices for agriculturalproducts at a remunerative level;

ad.equate marketing facilities, anda satisfactory system of land tenure.

If in these and in other ways which may be ofimportance in particular cases, e.g., changes in theincidence of taxation, favorable economic andsocial conditions are established., private capitalis likely to flow increasingly into agriculturalprod.uction instead of being locked up in unproduc-tive investment as often happens at present. More-over, the initiative of the farmers themsel.ves wouldbe likely to lead to an increased nonfinancial invest-ment to improve their holdings. Farmers wouldbe more receptive to the teaching of extensionservices and the adoption of improved methods.They would be more eager to utilize credit forproductive purposes. Direct measures by govern-ments to expand production, such as the provisionof improved planting material or fertilizers atreasonable prices, as well as schemes of irrigation,land reclamation, or resettlement would be likelyto lead to better results. Some of these pointsare briefly amplified below, though inevitablythey lose much by the omission of the examples,supporting evidence, and qualifications includ.edin the chapter itself.

PRICE STABILIZATION

The wide fluctuations to which agriculturalprices are peculiarly liable bear especially heavilyon farmers in less-developed countries since, forlack of resources, they must usually sell immedi-ately after the harvest when prices are lowest. Al-though many governments in these countries haveadopted measures of price stabilization, these arehard to implement effectively and have usuallyhad as a primary objective the protection of con-sumers rather than the encouragement of produc-tion. Economic and social conditions in less-developed countries usually rule out high incentiveprices, but assurance of a basic minimum returnwould in itself be a considerable incentive to in-creased production. Recent experience tends to con-firm that price stability in less-developed countriesis best achieved by an officially controlled bufferstock, with the limited objective of reducing pricefluctuations rather than eliminating them alto-gether.

10

MARKETING

If a scheme of price stabilization is to be effec-tive in encouraging production, a network ofbuying points is necessary so that each producercan be assured of a basic minimum price. All thisentails an adequate marketing system, includingas a rule credit facilities, in view of th.e lack of re-sources of most farmers, c. g., of the kind provid.edby the " warehouse receipt " system now beingdeveloped in, e.g., India and. the Philippines. Otherdevelopments in marketing facilities made neces-sary by the extremely rapid growth of towns inless-developed countries are also discussed, includ-ing improved storage and transport, grading andhandling, market intelligence, etc.

LAND TENURE

The most important way in which land tenuresystems influence production is also by their effectas incentives to farmers. Security of occupancyand a more equit;-.tble division of farm incom.e be-tween tenant and landlord are powerful stimulantsfor investment to increase output, especially whencombined with other measures, including pricestabilization, the provision of farm credit, extensionservices, and so forth. The extensive experienceof land reform since the Second. World. War inless-developed countries confirms its importance,but underlines also some of the difficulties of effec-tive implementation.

INVESTMENT

Agricultural investment nearly always includesa substantial component of nonfmancial invest-ment in the form of unpaid work by farmers orgroups of farmers in agriculture or related under-takings. It is important in less-developed countries,where manpower is often abundant and financialresources scarce, to find ways of maximizing suchinvestment. In tire early stages of economic devel-opment the inain source of funds for industriali-zation must be agriculture; but in many instances,the means by which such transfers are effected,especially in the private sector, are liable to hamperunnecessarily agricultural expansion and to causeunnecessary hardship to agricultural producers.It is up to governments to minimize such harmfuleffects and to see that sufficient funds are left in

agriculture or channeled back, e.g., through farmcredit and public investment, to maintain an expan-sion of farm production commensurate with thegrowth of demand. Postwar experience in variousforms of fmancial investment and in encouragingnonfinancial investment, especially through com-munity development projects, is briefly reviewed.

EDUCATION, EXTENSION, AND RESEARCH

To be effective, agricultural education and ex-tension must take full account of the cultural andsocial background and of the day-to-day problemsof small farmers, even though radical changes inmethods of farming may be necessary if agricul-ture is to play its full part in economic develop-ment. Agricultural education and extension willbe more effective with the spread of generaleducation, but by suitable methods much can bedone in largely illi.terate populations. Specialimportance attaches in primitive and subsistenceagriculture to work in home economics. Postwarexperience in less-d.eveloped countries underlinesinter (Ilia the importance of the closest possibleworking relationships between the extension servicesand agricultural research stations. A large reserveof technical knowledge is today at the disposalof less-developed countries, but the methodsworked out in the technically more-ad.vancedcountries must be properly adapted to local con-ditions through adequate research before beingpassed on to farmers through the extension services.

THE ROLE OF GOVERNMENT

Since the war the governments of most less-developed countries have assumed an important

11

role in economic development, though the waysin which they do so and the extent to which theeconomy is planned or directed varies widely.One of the most important functions of govern-ment, as alread.y emphasized., is the provision offavorable conditions for general economic andagricultural expansion. In some countries whereplanning has been adopted it is limited to defin-ing general goals and deciding on programs ofpublic investment which often now represents alarge share of the total capital formation. Inother countries the role of planning extends to amiassessment of requirements in capital and otherscarce resources, the allocation of priorities andother detailed measm-es for ensuring the implemen-tation of a " balanced" development program inboth the public and private sectors. Experiencehas emphasized the need for a degree of flexibilityin accordance with changing circumstances ifplanning is to be realistic, and it is coming moreand inore to be regarded as a continuous process.The organization of planning in less-developedcountries varies in accordance with the tasks to beundertaken.

" Balanced. development " does not precludeselecting some key sectors, e.g., steel, chemicals,for special attention, in the expectation that ifthese develop, prog,ress in other sectors will follow.Agriculture itself, however, appears to be a keysector. It i.s especially important in less-developedcountries, where food is the largest item of expen-diture in family budgets and the cost of food isa prime factor in th.e production cost of all indus-tries. If agriculture has not always been accordedsuch high priority it is perhaps because it has al-ways been there, and tends to be regarded as areserve of finance and manpower rather than a keysector in its own right.

Chapter II WORLD REVIEW AND OUTLOOK

There was a large expansion of agriculturalproduction in 1958/59 after the pause in the preced-ing year. Most of the increased output, especiallyof cereals, has not moved into consumption andthe growth of stocks was accelerated. The continu-ing fall in the prices of agricultural products onworl.d markets was made sharper by the recession,and total earnings of agricultural exports in 1958are estimated to have been some 9 percent smaller,in real terms, than the year before. The continueddeterioration in the terms of trade of agriculturalexporting countries, among which are includedmost of the less-developed parts of the world,has further limited their capacity to import, in-cluding imports of the capital goods essential foreconomic progress.

At mid-1959 recovery from the recessionin economic activity appears to be wider way,and though this has not yet been reflected in anymarked revival in international trade in agriculturalproducts, prices of some commodities on worldmarkets have shovvn signs of recovering. Whilethe recession did not greatly diminish the demandfor foodstuffs, it liad considerable repercussions onworld trade in raw materials of agriculturalorigin, especially wool, cotton, and rubber,and also on forestry production and trade.Prospects for the 1959/60 harvests at present indi-cate a still higher level of world agricultural pro-duction and surplus stocks are likely to continue toaccumulate.

These developments sometimes intensified, butdid not fundamentally change, the central problemsof world agriculture. The needs of the economicallyless-developed countries for food and agriculturalproducts are immense and continue to increaserapidly. Their domestic agricultural productionprovides only a small margin over populationgrowth which can go toward improving their lo-wlevels of living. This margin has recently tended tobecome smaller and, in sonie countries of LatinAmerica and Southeast Asia in particular, produc-tion is now barely keeping pace with, or is evenfalling behind, the gowth of population.

12

Only limited ways have yet been found of usingthe agricultural potential of the more-developedcountries to assist the most needy countries. Thissituation is reflected in the large unsaleable stocksof grains and other commodities which continueto pile up in North America and are emergingincreasingly often in other countries as well, inspite of intensified measures of surplus disposal andlarger exports of agricultural products under specialterms. Such measures are of great value, eventhough the final solution of the problems of ruralpoverty and inadequate food supplies in the less-developed countries must come primarily fromimprovements in their own agricultural produc-tivity.

Both groups of countries, industrialized and less-developed, are feeling their way toward agricul-tural policies which will diminish the tensions in-herent in this situation. Many of the industrializedcountries are seeking methods of maintaining farmincomes at levels which are not too disparate withincomes in other occupations, without at the sametime adding to the cost of support measures orfurther increasing unwanted. production. For, inthese countries, the demand for most agriculturalproducts is increasing rather slowly, in contrastto the great potentialities for expanding agriculturalproduction. Chang,es in agricultural policies inthis group of countries in 1958/59 were againmostly rather small, though it is noteworthy thatseveral Western European countries announcedreductions in their farm price and income supports.

In most of the less-developed countries, therelative growth of production and demand is thereverse of that in the more-developed parts of theworld. Thus, policy changes are designed to accel-erate agicultural production and in 1958/59 wereoften more far-reaching than in recent years.There has been, for example, renewed attention tomeasures of improving conditions of land tenure.Co-operatives and credit facilities appear to bereceiving more emphasis, especially in connectionwith the new land reform measures. Price policiesdesigned primarily for the protection of consumers.

are being reconsidered in some countries from theangle of their effect on production. A number ofthe new economic development plans announcedin 1958/59 give more attention to the agriculturalsector, in order to minimize any lag in agriculturalproduction likely to slow down general economicdevelopment. In Mainland China, the U.S.S.R.,and some of the Eastern European countries, the

Agricultural

After a pause in 1957/58, the volume of worldagicultural production again inc-reased substantiallyin 1958/59. Preliminary estimates for the world,excluc-ling Mainland China, set production at morethan 4 percent higher than in each of the two preced-ing seasons. The increase in total world productioninust have been even greater in view of the largegains in agricultural production reported fromChina.

In 1958/59, in contrast to the previous season,production inc-reased in every region of the world(Table The increase in Western Europe isprovisionally estimated at only about i percent,and in Latin America, the Far East, the Near East,and Africa at some 2 to 3 percent. The bulk of theexpansion in 1958/59 was contributed by NorthAmerica, Oceania, and the region comprisingEastern Europe and the U.S.S.R. ; in these threeregions increases ranging from 6 to io percent areestimated. In Oceania and especially in North

NOTE: These revised indices have been calculated by applying regional weig,hts, based on 1052-56 farm price relationsh'ps, to the p;oduction figures, insteadof the former prewar world weights. There have also been extensive revisions in the basic production data. Allowances for feed and seed are madeas before. The index for Eastern Europe and the U.S.S.R. is shown separately for the first time, as the production sta istics published for thisregion are now much more complete; the prewar and 1948-52 averages for this region are not fully comparable and therefore shown in parentheses,For Mainland China no estinlates are included, pending a detailed review of the available data.

13

most recent development plans also put moreemphasis on ag,riculture and extensive modifica-tions are being made in agricultural organization.

The main developments in 1958/59, togetherwith some longer-term as.pects of the situation, arereviewed more fully in the remaind.er of thischapter on the usual regional and commoditybasis.

production

America, however, a large part of the rise in pro-duction amourited to recovery from a poor seasonin 1957/58. In Eastern Europe and the U.S.S.R.agricultural prod.uction appears to have increasedrather slowly until 1954/55, but more recently hasshown a sharp upward movement.

The data in Table II-1, which in view of revisionsin the index series are shown for a fairly long periodof years, bring into clearer relief than usual thesometimes rather erratic course of production fromyear to year in some regions, caused by the interplayof the weather and the longer-term influences oftechnology and agricultural policies. Fluctuationsllave been particularly sharp in the last two produc-tion seasons, when alternately good and bad weatherin certain arcas has substantially affected harvests.

These year-to-year variations, as well as thelong-term rising trend in the volume of agriculturalproduction, must be viewed in relation to thecontinual growth of world population, which

TABLE II-I. - INDICES OF AGRICULTURAL PRODUCTION

Prewaraverage

Average1948/49-1952/53

1952/53 1953/54 1954/55 1955/56 1956/57 1957/58 1958/59(prelim.)

Western Europe 83 87 93

Indices, 1932153-1956157

101 101

average lot)

102 102 107 108

Eastern Europe and U.S.S.R (85) (87) 91 94 95 104 116 119 130North America 68 92 97 99 97 101 106 101 107Latin America 73 89 95 96 100 103 106 111 114

Oceania 78 90 96 98 98 104 104 100 110

Far East (excluding China) 86 87 93 98 100 103 106 '105 108

Near East 72 84 93 100 97 101 109 110 112Africa 70 87 94 98 101 101 106 103 106

ALL ABOVE REGIONS (77) (88) 94 98 98 103 107 107 112

averages about 1.6 percent per year, without anyoccasional breaks such as occur in the expansion ofproduction. It is evident from the indices of percaput prod.uction shown in Table II-2 that even thelarge production increases that occurred in 1958/59take on a quite different aspect on a per caput basis.Furthermore, the small improvements in per caputproduction that have been achieved in recent yearsin the less-developed regions are temporarily moreor less wiped out in a bad season, as for examplein Africa and the Far East in 1957/58. In a singlecountry the position may be far worse, as, in a badseason, production rnay fall much more drasticallythan in a whole region, while population growthmay be well above the world average.

The indices of per caput food production inTable II-2 concern only domestic production andtherefore give no indication of trends in the levelof a region's total food supplies, which have beengreatly influenced since the war by large changesin imports and exports. Such indices, however,and more especially the indices of per caput pro-d.uction of all agricultural commodities, are a roughindicator of the degree to which increases in agri-cultural production are meeting the needs of thegrowing population and providing, either directlythrough greater per caput d.omestic consumption

14

NOTE: For a description of the changes in Use calculation of these indices, see explanatorytea, tobacco, inedible oilseeds, fibers, and rubber.

ote to Table II-1. The index for food products excludes coffee,

or indirectly through a larger volume of exports, amargin for improved levels of living. This marginhas become appreciably smaller in the less-developedregions in the last few years, and in both the FarEast and Latin America per caput production hasstill failed, in the 13 prod.uction seasons that havenow elapsed since the war, to regain the prewarlevel. In Africa, as a result of the marked slacken-ing in the rate of agricultural expansion, per caputfood production now appears to be back almostto the prewar average, though the statistics bothof population and food production for that regionare still particularly unreliable.

As a measure of the ground that has to be madeup, it appears that in the Far East, where the war-time setback to prod.uction was especially severe,total agricultural production would have to rise byas much as ii percent for per caput production tocatch up in 1959/60 with the prewar level. InLatin America, with a particularly rapid rate ofpopulation growth, an increase of 7 percent wouldbe needed. Inc-reases in regional production of thisorder are exceptional, and even if achieved in onegood season would be difficult to maintain in sub-sequent years.

While world and regional indices of agricul-tural production give a useful over-all view, they

TABLE II-2. INDICES OF PER CAPUT AGRICULTURAL PRODUCTION

Prewaraverage

Average1948/49-1952/53

1952/53 1953/54 1954/55 1955/56 1956/57 1957/58 1958/59(prelim.)

Indices, 1952/55-1956/57 average -- 100

ALL AGRICULTURAL PRODUCTS

Western Europe 93 89 95 102 101 102 101 104 105

Eastern Europe and U.S.S.R (86) (92) 93 96 95 103 112 114 122

North America 87 99 101 101 97 99 102 96 99

Latin America 109 98 100 98 100 100 101 103 103

Oceania 104 99 102 100 98 102 100 94 101

Far East (excluding China) 111 92 95 99 100 102 : 103 100 101

Near East 94 90 95 100 97 99 105 104 104Africa 92 94 98 100 101 99 102 98 99

ALL ABOVE REGIONS (95) (94) 97 99 98 101 104 102 105

FOOD PRODUCTS ONLY

Western Europe 93 89 95 102 101 101 101 104 105Eastern Europe and U.S.S.R (87) (92) 93 96 94 103 113 114 123North America 85 98 100 100 97 99 103 99 102Latin America 104 97 99 98 100 99 103 103 102Oceania 110 102 103 103 99 102 103 90 102Far East (excluding China) 108 92 95 100 100 102 103 100 101

Near East 94 89 94 102 97 99 105 104 102Africa 95 96 99 101 101 99 101 96 97

ALL ABOVE REGIONS (95) (94) 97 100 98 l 101 104 103 106

inevitably cover up differences between individualcountries. It has not yet been possible to recalcu-late the FAO country indices of agricultural pro-duction on the revised basis used in the present re-port, but Figure II-1 shows the growth of productionrelative to population in certain countries from1948-52 to 1955-56, according to earlier FAOestimates.'

Production is seen to be falling behind or barelykeeping pace with population growth in several ofthe rice-producing countries of Southeast Asia andin some parts of Latin America. This situationreflects the rapid growth of population as much as thetrend of production. Among the countries showingthe most rapid relative gains in agricultural pro-duction are Mexico, Japan, the U.S.S.R., and anumber of Western European countries, includingAustria, Belgium, Greece, Ireland, and Italy. InFrance, Western Germany, and Yugoslavia too, theannual increase in agricultural production has ex-ceeded the rather slow growth of population bymore than 2 percent in recent years. The somewhatwide differences in the relative growth of produc-tion and population in Western European countries,which in some measure reflect differences in thetiming of postwar agricultural recovery, seem likelyto have an important bearing on the future importmarkets in this region.

In considering the relative development of agri-cultural production and population it is necessaryalso to take account of the actual level of per caputproduction, which remains much lower in theeconomically less-developed regions than in themore-industrialized parts of the worl.d. Thus,the four regions of Latin America, the Far East,the Near East, and Africa, with about two thirdsof the population, accounted. in 1954-58 for onlyabout one third of the agricultural production ofthe world. (excluding Mainland China). Figure II-2indicates that even an improvement to the prewaraverage per caput ag,ricultural production in theFar East would still leave this region's per caputproduction at less than half of the world average.

In. recent years there llave been some significantdifferences in the trend of production as between themore-and the less-developed regions. Althoughthese differences were examined in some detail inthe 1958 issue of this report, it may be useful torefer to them again. While there has been a sub-

Monthly Bulletin of Agricultural Economics and Statistics,FAO, Rome, April 1958, p. 31,

15

stantial decline in the annual average rate of in-crease of agricultural production in both groups ofregions in the last few years, the rate of increaseremains a good deal faster in the less-developedgroup (Table II-3). Thus, the main changes inagricultural production in 1958/59, when the largestexpansion was in the more industrialized regions ofNorth America and Oceania, were contrary tothe trend of recent years. If this latest season isexcluded, the fall in the rate of increase in the more-developed regions is much greater.

The sharpest decline in this rate is in WesternEurope, where, however, the rapid expansion inthe period 1948-52 to 1953-55 still reflected thefinal stages of postwar recovery. In North America,where the biggest production gains occurred duringthe war years, there has been no change in the aver-age increase since 1948-52, though here again thevery favorable 1958/59 season has raised the morerecent average rate. The slower expansion untilthat year was in fact largely the result of policiesdesigned to check the accumulation of surpluses.

Among the less-developed regions the greatestslowing down has occurred in Africa and the FarEast; in the former region the annual rate of in-crease is now estimated to llave fallen behindpopulation growth. In Latin America, on the otherhand, the rate of increase was slower in the period1948-52 to 1953-55 and in the more recent periodhas been raised to that achieved earlier in the otherless-developed regions. In this region and also in

TABLE 1I-3. - AVERAGE ANNUAL GROWTH OE AGRICULTURALPRODUCTION AND OF POPULATION

1948-52to 1953-55

1953-55to 1956-58

1943-52to 1953-55

1953-55to 1956-58

P rantave

Western Europe 3.9 1.4 0.7 0.8North America 1.9 1.9 1,8 1.9Oceania 2.6 1.7 2.4 2.2

Three above regions 2.7 1.7 1.2 1.2

Latin America 2.9 36 2.4 2.4Far East (excluding China) 3.7 2.0 1.5 1.5Near East 4.2 3,6 1.6 1.9Africa 3.5 1.6 1.7 1.8

Four above regions 35 2.5 1.7 1.7

ALL ABOVE REGIONS 3.0 2.0 1.6 1,6

Average annual in- Average annualcrease in agricultural increase

production in population

FIG

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FIGURE 11-2. ESTIMATED LEVEL OF PER CAPUT AGRICULTURAL PRODUCTION, BY REGION, IN RELATION TO

Indices, world ' average

1952/53-1956/57 = 100

600

500

400

300

200

Average1934-38

MS CM.= 6.1

...... pa901m,000 ..... mememoo....meoeuo.elleo.oealoseataa.e.moeoumnoeao.oe

enonann Aso gna plaxans n a raaa aß DnZOSt.14,.. szermma

Average 1952/53 1953/54 1954/55 1955/561948-52

' Excluding U.S.S.R., Eastern Europe, and China.

the Near East, in contrast to the other two less-developed regions, the margin of the rate of growthof production over population remains considerable.

Data for Eastern Europe and the U.S.S.R. arenot shown in Table II-3, as relatively completeproduction statistics are available only for the morerecent period.. It appears that from 1953-55 to1956-58 the average rate of increase was as high as7 percent, though this figure is sharply influenced bythe bumper harvests reported in both 1956/57 and1958/59 and by the large expansion of area in the

17

1956/57 1957/58 1958/59

Oceania

North America

Western EuropeLatin AmericaWorld ' average

Near East

THE WORLD AVERAGE

Africa

Far East (excl. China)

U.S.S.R. since 1953. Such data as are availablefor the earlier postwar years indicate a rather smallrate of increase. The effect of war damage onag,ricultural production was very severe in thisregion and it seems that in Czechoslovakia, EasternGermany, and Romania the prewar level of pro-duction has only just been regained.

Figure 11-3 makes the same comparison for foodproduction as that shown for total agriculturalproduction in Table 11-.3. Again, Latin Americais the only less-developed region where production

100

50

World

Less-developedregions 3

More-developedregions 3

Latin America

Far East (excl.China)

Near East

Africa

FIGURE AVERAGE ANNUAL GROWTH OF FOOD

PRODUCTION AND OF POPULATION

Western Europe

North America

Oceania

Food production St

Population

MrncekeY

Percentage per year

Average 1948-52 co average 1953-55ESSMSM Average 1953-55 to average 1956-58

' Excluding U.S.S.R., Eastern Europe, and China. - Latin A merica, FarEast (excluding China), Near East, Africa. - Western Europe, Nor th America,Oceania.

has increased more rapidly in the later of the twoperiods. While, for the 'world as a whole and forthe two groups of regions, trends in foodproduction and in total agricultural productionhave been broadly similar, in some regions therehave been rather sharp differences. In. NorthAmerica, the rate of increase of food productionhas expanded in recent years, though this partlyreflects the large crops of 1958/59, but this MOTC

rapid increase has been offset by an absolute decline

18

in the output of nonfood products, notably cotton.Nonfood or raw material production has also fallenin Western Europe, though in this region it is amuch smaller component of the total and hastherefore hardly affected the rate of increase ofagricultural production as compared with food.production. In the remaining regions, except forLatin America, the output of raw materials hastended to expand more quickly than food. prod.ucts.This tendency is particularly marked in Oceania,where the contrast between Table II-3 and FigureII-3 underlines the continuing increase in therelative importance of wool in the region's ag,ri-culture. In this region the notable excess ofpopulation growth over the expansion of foodproduction affects the exportable surplus ratherthan domestic consumption.

The different rates of g,rowth in the two periodsand in the two groups of regions discussed abovepartly reflect the more rapid increase in populationand the greater income elasticity of demand forfood and agricultural products in the less-developedregions than in most of the more-developed coun-tries. In the less-developed group any slowingdown in agricultural development is probably dueto such factors as lack of investment capital or theinstability of export markets. In Eastern Europeand the U.S.S.R., recent trends reflect the longperiod during which the demand for consumergoods, including all but the more basic foodstuffs,liad been left unsatisfied.

Demand factors also largely explain the differentpattern of expansion in crop and livestock produc-tion brought out in Table II-4. Throughout thepostwar period the world output of livestock prod-ucts, primarily located in the more-developed re-gions, has been increasing faster than crop produc-tion. In the more-developed regions the demand formany crop products has been satiated and for somehas tended to decline, but that for livestock productsgoes on increasing with rising incomes, though evenfor the latter group of products the pace at whichproduction has been expanding has slowed downappreciably in the last few years. In these regionsthe increase of crop production shown in Table II-4includes a considerable element of production forlivestock feeding, as well as production that hasaccumulated in surplus stocks.

In the less-developed regions the rate of gt,-owthof crop production has fallen, but the rate of ex-pansion of livestock products has been maintainedand is now approximately the same as for crops.

2 4

TABLE 11-4. - AVERAGE ANNUAL GROWTH OF CROP ANDLLVESTOCK PRODUCTION

Cross production, including feed and seed.

Statistics of livestock prod.uction in these regions aregenerally less reliable than those for crops, but itappears that there has been a slowing down in thegrowth of livestock production in the Far Eastand Africa and an increased rate both in LatinAmerica, where there is a considerable exportdemand as well as a large domestic consumption,and in the Near East. In all the less-developedregions the actual output of livestock productsis relatively small and represents a much lower pro-portion of total agricultural prod.uction than inthe more--developed arcas.

REGIONAL AGRICULTURAL PRODUCTION IN 1958/59

Returning to the more recent situation, agri-cultural production developments in 1958/59 aresununarized below, region by region. For fullerd.etails of the regional production of the main com-modities, reference should be made to AnnexTables 2-9.

Western Europe

Agricultural production in Western Europe,vvhich had been more or leSS stable from 1953/54to 1956/57, expanded by 4 percent in 1957/58 andthere was a further small increase in 1958/59.

Grain production in 1958/59 was 3 percent

19

below the high output of 1957/58, though still wellabove the level of preceding years. Bad weather inNorthwestern Europe near harvest time red.ucedthe quantity and quality of the grain crops, espe-cially wheat in France. In Italy, however, theproduction of wheat and other grains increased..Potato production was also affected by the weatherand declined. by 7 percent. The production of sugarrose by more than a million tons (is percent) toreach a level just over double the prewar average.In sharp contrast to the disastrous harvest of 1957,the apple crop was very abundant in almost allcountries. Wine was another crop to make asubstantial recovery, but production remained lessthan in earlier years. Citrus production increasedsharply, the Spanish orange production exceedingthe level that liad prevailed before the frostof 1956.

The increase in the output of livestock productsappears to have been much smaller in 1958/59than in naost recent years. Milk production isestimated to llave increased slig-htly. In Denmark,Sweden, and. the United Kingdom there are signsthat policies to encourage some changeover frommilk to beef are taking effect and that the growthof milk production has slowed down. The region'sproduction of beef and pig meat is likely to haveshown a small rise, but pig numbers leveled offin several countries at the end. of 1958. Egg pro-duction rose again, encouraged by the favorablerelationship between egg and feed prices in thefirst half of the crop year. Poultry meat has con-tinued to increase and " broiler " prod.uction hasbeen started in a number of countries.

Eastern Europe and U.S.S.R.

The FAO index of the volume of agriculturalproduction for Eastern Europe and the U.S.S.R.,shown separately for the first time in this report,indicates an inc-rease of as much as 9 percent inthis region in 1958/59. All of this large expansionmust be attributed to the U.S.S.R., as it appearsthat in the Eastern European countries productionfailed to reach the high level achieved in 1957/58,owing to crop failure in the Danubian countries.

The U.S.S.R. had ami exceptionally good grainharvest in 1958/59, reported. at 139.4 million tons,compared with the CS timated 1953-57 average of102 million tons. Weather conditions were fa-vorable both in the Ukraine and in the grainprod.ucing areas further cast. Sugar-beet produc-

'

1948-52to 1953-55

1953-55co 1956-58

1948-52to 1953-55

1953-55to 1956-58

Pea- wage

Western Europe 3.1 0.9 4.9 2.5North America 0.4 1.8 2.8 2.3Oceania 2.6 - 0.9 2.6 2.4

Three above regions 1.5 1.4 3.6 2.4

Latin America 3.6 3.3 2.1 3.8Far East (excluding China) 3.9 2.0 2.9 1.6Near East 5.5 4.0 2.0 3.0A.f rica 4.0 1.7 2.5 1.2

Four above regions 4.0 2.5 2.4 2.5

ALL ABOVE REGIONS 2,7 1.9 3.3 2.4

Average annual in- Average annual in-crease in crop crease in livestock

production production

tion was even more striking, with a rise of 36 per-cent on an arca only 20 percent larger. The sun-flowerseed harvest was also large, but the produc-tion of cotton and flax was only slightly higher thanin 1957/58, and the production of potatoes andvegetables declined. The increase in cattle andsheep numbers was slower in 1958 and below theplanned level. Milk production rose but, withno improvement in yields, remained far belowthe 70 million tons called .for " to exceed the percaput production of the United States. " Theproduction of meat increased by 7 percent in-stead of the planned 14 percent and egg productionby 5 percent as against a planned increase of 13percent. Wool production, however, was slight-ly ahead of the target.

Among the Eastern European countries, har-vests differed markedly in 1958/59. Grain pro-duction rose in Eastern Germany, was unchangedin Poland, and fell slightly in Czechoslovakia.In the Danubian countries, however, there was asharp reduction in grain production, in Bulgariaand Romania mainly for maize and in Hungaryfor both bread g,rains and coarse grains. Sugar-beet harvests were generally large. Potato crops fellsharply, especially in Czechoslovakia (18 percentless) and Eastern Germany (14 percent), andalthough production increased in Poland it wasbelow the good harvest of 1956/57. The 1958producti.on of milk and pig meat was larger inall the Eastern European countries. Cattle numbersrose in Czechoslovakia, Eastern Germany, andHungary and sheep and pigs in Bulgaria andHungary, but pig numbers were reduced in Po-land., the major Eastern European producer ofpig meat.

North America

After declining sharply in 1957/58, agriculturalproduction in North America rose by no lessthan 6 percent in 1958/59 and slightly exceededthe record level of 1956/57. The entire increasewas in crop production, the region's livestockproduction for the 1958 calendar year sho-winga slight decline.

United States crop production, which in a fulldecade up to 1957 had ad.vanced. only 6 percentover the 1947-49 average, climbed by II percent in1958. With exceptionally good weather through-out the year there was a sharp rise in yields.Among the crops for which production had. been

20

lOW in 1957/58, wheat and linseed increased bymore than so percent and groundnuts by 30 per-cent. Maize increased by a further II percentand the steady expansion of soybean productioncontinued with a rise of nearly 20 percent. Al-though the cotton crop rose by 6 percent, it wasstill some 20 percent below the 1947-49 averageon account of acreage restrictions. There was avery sharp increase in maize utilization for animalfeedina- but this has been reflected so far in thebuilding up of livestock numbers, rather than inami increase in marketings of livestock products.

Canadian agriculture in general fared muchbetter in 1958 and calendar year production in-creased by about ro percent over the year before.While the weather was adverse in the PrairieProvinces for the second successive year, the har-vest was larger as a result of moisture-conservationmeasures and late sununer rainfall. Wheat pro-duction was unchanged from the low 1957/58 out-put, but there was some recovery in coarse grains.The principal improvement was in livestock pro-duction.

Latin America

In Latin America, where revised data revealan increase of 4 percent in agricultural productionin 1957/58, preliminary estimates indicate a furtherexpansion of about 3 percent in 1958/59.

Grain production is estimated to have increas-ed slightly. In Argentina a very large maize cropwas expected, but as a result of high winds andtorrential rains in the La Plata region at the be-ginning of 1959 the harvest is likely to have beenrather less than in 1957/58. Argentine wheat pro-d.uction rose by about 12 percent, however. InMexico, where the weather was very favorableafter the poor conditions of the previous year,maize production increased by ro percent.

The region's principal production gains in1958/59 were in coffee (12 percent) and sugar(io percent). In Brazil, coffee prod.uction roseby nearly 20 percent and exceeded the prewaraverage for the first time, but shortage of rainreduced Colombia's crop by 18 percent. Cubansugar prod.uction increased from 5.6 to 5.8 milliontons and there were substantial increases in severalsmaller producing countries. The output of copra,produced mainly in the Caribbean area, fell bymore than one third and tobacco and linseed pro-duction was also lower.

The total output of livestock products appearsto have been more or less unchanged in 1958,though beef and veal production is estimated tohave fallen slightly, with declines in both Argen-tina and Uruguay.

Oceania

In 1957/58 drought in Australia liad caused adecline of 4 percent in Oceania's ag,ricultural pro-d.uction, but preliminary figures indicate that in1958/59 the region's production increased by theunusually large amount of about To percent,exceeding the previous record level of 1956/57by some 6 percent. A particularly favorable sea-son in Australia was the chief factor, early officialestimates indicating a 14 percent increase in thatcountry in 1958/59. In New Zealand, where anaverage season in. 1958/59 followed a good onein 1957/58, there was probably a further smallincrease in 1958/59.

The region's grain production rose to 90 per-cent above the abnormally low 1957/58 level.Australian grain production was more than dou-bled, with especially large inc-reases in wheat andoats. There was a further increase in sugar pro-duction, but the production of copra in the Pacificislands fell slightly. Total output of livestockproducts is estimated to have increased by about3 percent in 1958 and to have slightly exceededthe record level of 1956. Beef cattle and sheepcontinued to increase at a rate well above thelong-term average and beef slaughterings werestimulated by a strong demand in the UnitedStates. Wool prod.uction increased slightly in bothAustralia and New Zealand, but the regional totalremained somewhat below the 1956 record.

Far East

In the Far East (excluding China), where agri-cultural production liad declined slightly in 1957/58,the increase in 1958/59 was disappointing, inspite of generally favorable weather, and onpresent estimates amounted to barely 2 percent.

With an increase of about io percent in riceproduction in 1958/59, the total output of grainsrecovered from the low level of 1957/58, thoughit was not significantly higher than in 1956/57.In India food grain production increased by 17percent, but Pakistan's rice crop declined. by 12percent. Copra production fell sharply in this

21

region also, owing to internal difficulties in Indo-nesia and drought in the Philippines. There wasa considerable expansion in the production ofjute and rubber. Livestock output is estimatedas only slightly higher. Livestock numbersinc-reased substantially in some countries, however,including Japan, the Philippines, and. South Korea,and in Japan milk production outstripped consump-tion.

In Mainland China a plii-npmenal expansionis said to have almost doubled agricultural produc-tion in 1958. In this single year, characterized byChinese officials as the year of the " great leapforward, total grain production (which inChinese statistics includes potatoes, soybeans, andother basic foods) is reported to have risen from185 to 375 million tons. Rice production report-edly increased from 87 to 170 million tons, wheatfrom 24 to 40 million, soybeans from io to 12.5million, groundnuts from 2.6 to 6.3 million, andcotton from 1.6 to 3.4 million tons. Crop areaswere raised only slightly and these increases arecredited almost entirely to higher yields, causednot only by good weather but also by such improv-ed methods as deep plowing, composting, closerplanting, elimination of weeds, and the divisionof fields imito blocks for more efficient cultivation.Irrigation is said to have been extended from 35to 65 million hectares, with ioo million peasantsemployed on irrigation works at the beginningof 1958, though it is reported that many of theirrigation channels could not yet be supplied withwater. Considerably more intensive use of man-power appears to have been made possible by theorganization of the rural communes, described laterin this chapter.

While it is too early for a final assessment, itseems likely that the new collective organizationin China may have greatly reduced the quantityof production escaping statistical enumeration. Italso appears significant that the increase in stateprocurements of grain is reported as only 24 per-cent. On the other hand, it has long been thoughtthat agricultural production in China could beconsiderably increased by improved methods.Recent visitors to China are of the opinion thatthe increase in the biological harvest has indeedbeen considerable, but that only a limited part islikely to be mobilized for nonfarm consumption.There are also indications that great difficulties havebeen encountered in distribution.

Livestock numbers are also reported to have

climbed sharply in Mainland China in 1958: pigsfrom 219 to 250 million, sheep and goats from Tooto 129 million, and cattle from 84 to 91 million.While these reported increases are impressive, theacxtal numbers are of course small in relation toa population of 6o0 million.

Near East

Agricultural production in the Near East is

estim.ated to have increased by only i to 2 percentin both 1957/58 and 1958/59. This is in strong con-trast to the large increases of inost other recent years,including an expansion of 8 percent in 1956/57.

Total grain production fell by about 8 percentin 1958/59 from the peak 1957/58 level. Becauseof drou,ht and locust infestation the combinedproduction of wheat and barley declined by nearly75 percent in Jordan and more than 6o percentin the Syrian Province of the United Arab Repub-lic, and the same factors caused smaller reduc-tions in Afghanistan, Iraq, and Israel. In Turkeygrain harvests slightly exceeded the high 1957/58level and there was only a small reduction inIran, but in the Egyptian Province of the UnitedArab Republic the rice acreage was 30 percentlower because of water shortage and rice produc-tion fell by 40 percent.

Sugar production again increased by about 8percent, with sharp expansions in Iran and. Tur-key. The principal increase was in cotton, how-ever, the region's production rising by almost20 percent to a new record. There were largeMercases in the Egyptian Province of the UnitedArab Republic and in Turkey. Sudan's pro-duction was nearly three times the disastrouslylow 1957/58 harvest, though in the Syrian Provinceof the United Arab Republic the rapid increaseof recent years was temporarily checked. It is

also estimated that there was a substantial inc-reascin the region's livestock output, which helpedto offset the decline in grain production.

Africa

Agricultural production in Africa, which fellby nearly 3 percent in 1957/58, is estimatedto have recovered to approximately the 1956/57level.

Grain production, in which there appears tohave been no very marked rising trend for some

22

years, made some recovery from the low 1957/58level. The combined production of wheat andbarley in Morocco rose by some 70 percentover the drought-affected harvest of 1957/58, butwas still a good deal less than in 1956/57. Thesetwo crops increased by one third in Tunisia, thoughin Algeria the increase was small. In the Unionof South Africa 1958/59 was a bad season for wheatand the crop fell by 17 percent. South Africanmaize production, however, was about To percentlarger than the reduced 1957/58 harvest. Riceproduction again slightly exceeded 1.1 milliontons in Madagascar:

Sugar prod.uction inc-reased by about 7 percentin the Union of South Africa. North African oliveoil output was the highest ever and about twicethe 1957/58 off season. level. The region'sgroundnut harvest was well below the previousseason's record, the Nigerian crop falling by about20 percent. Cocoa production rose by 17 percentfrom the unusually low 1957/58 level but wasstill 50,000 tons leSS than in 1956/57. Co ffecproduction registered the largest inc-rease since1955/56. There was little change in citr US pro-duction, which has been rather stable for the pastthree seasons. The limited available data indicatethat there was a small increase in the output oflivestock products.

FISHERY PRODUCTION

Preliminary estimates indicate that the 1958world catch of fish was considerably greater thanin 1957 (Table 1I-5). Most of the increase wasin Mainland China, where production is reportedto have doubled. Of the remainder of the sixlargest fish producing countries that account forover one half of total world production, only theU.S.S.R. and J pan caught substantially more fishthan in 1957. The United States catch was aboutthe same as in 1957. The catch was somewhatsmaller in the United Kingdom, and. in Norwayproduction was considerably below customarylevels because of the lower output of the winterherring fishery.

Several of the medium-sized producers re-corded significant increases in 1958, especially Den-mark, Iceland, and Peru. The latter country re-ported an increase in landings of as much as so per-cent. Data for individual countries are shown inAnnex Table

FORESTRY PRODUCTION

During most of 1958 there was a further slow-ing down in the growth_ of demand for forestproducts, and total removals of industrial round-wood are estimated as 9 percent less than in 1957(Table II-6). North America and Europe accountedfor the greater part of the decline in fellings, butrenewed demand in these regions toward the end.of 1958 has led to an upturn in output, first evi-dent in sawnwood production in North Anierica,which has continued into 1959. North Americanproduction of sawn softwood, plywood, andfiberboard was slightly higher in 1958, but sawnhardwood, wood pulp, and newsprint decreased by

to 4 percent. In Europe sawnwood prod.uctionhas not yet responded to the revival in demand,mainly because of the accumulation of exporters'stocks resulting froiii overproduction in 1958.European production of other forest productsshowed only minor changes.

In the U.S.S.R. the output of most forest prod-ucts increased. In other regions sawnwood pro-

TABLE II-5. - ESTIMATED WORLD CATCH OF FISH, CRUSTACEANS, AND MOLLUSKS

TABLE II-6. - ESTIMATED REMOVALS OF INDUSTRIAL ROUNDWOOD

23

duction was generally affected by the lower demandin North America and Europe, but the productionof wood pulp and pulp prod.ucts was somewhathigher (Annex Tables 1-9).

THE AGRICULTURAL PRODUCTION OUTLOOK FOR1959/60

According to the limited data available up tothe end of June, world agricultural productionwill probably again increase in 1959/60. It islikely, however, that the expansion will be ratherless than in the season just ended.

In Western Europe the total grain harvest islikely to be larger than in 1958/59 and barleyproduction may reach a record. Wheat produc-tion is expected to increase in France, Italy, andSpain in spite of reduced area in the former twocountries. The drought in the northwestern coun-tries may have reduced the yield of summer grains,however, especially in Belgium, Denmark, andWestern Germany. The first hay cut has also

1938 Average1948-52 1953 1954 1955 1956 1957 1958

(prelim.)

Million metric tons, live weig it

Western Europe 5.44 6.19 6.73 7,20 7.30 7.73 7.26 7.1Eastern Europe and U.S.S.R 1.70 1.99 2.27 2.57 2.82 2.97 2.92 2.9North America 3.15 3.60 3.54 3,91 3.89 4.26 3.94 3.9Latin America 0.24 0.50 0.56 0,63 0.77 0.82 0.97 1.4Oceania 0.09 0.09 0.11 0.11 0.11 0.12 0.13 0.1Far East 9.10 7.42 9.77 10.45 11.27 11.61 12.58 15.9Near East 0.33 0.38 0.43 0.43 0.41 0.44 0.42 0.4Africa 0.45 1.03 1.50 1.50 1.55 1.65 1.74 1.7

NVORLD TOTAL 20.50 21.20 24.91 26.80 28.12 29.60 29.96 33.4

Average1948-52 1953 1954 1955 1956 1957 1958 (prelim.)

Million cubic meters

Europe 172.6 176.0 188.4 197.7 192.8 193.6 184.0U.S.S.R 162.8 179.9 205.8 212,1 222.0 238.0 252.0North America 302,1 306.2 329.3 352,2 359.3 326.3 314,0Latin America 23.2 25.9 26.4 29.1 27.5 26.3 26.5Africa 7.4 9.3 10.4 11.1 9.4 9.9 10.0Asia 50.6 62.1 63.6 70.6 82.0 85.2 84.5Oceania 10.5 12.6 13.2 14,1 14.4 14.4 14.4

WORLD TOTAL 729.2 772.0 837.1 886.9 907.4 893.7 885.4

been relatively small because of the dry weatherand the increase in milk production may be ratherslight. Beef production should continue its slowgrowth, but pig meat production will show vary-ing trends in different countries according to thepoint that has been reached in the pig cycle.The low price for eggs in early 1959 is likely toreduce output in exporting countries.

North American agricultural production maywell exceed the record level of 1958/59, givennormal weather conditions for the remainder ofthe season. In the United States it is estimated thatwheat production will be about 20 percent belowthe 1958/59 peak, but the coarse grain acreage hasexpanded by 5 percent and, with the terminationof the Acreage Reserve, the cotton crop mightrise by as much as 16 percent. The rise in live-stock numbers that began in 1958 should be re-flected in larger marketings in 1959. Canadianfarmers are estimated to have increased wheatsowings by 6 to 7 percent, though the barley acreageis down by 6 percent. More normal yields shouldmean a significant increase in grain productionin Canada.

For other regions the available information iseven more scanty. The sown area, especially for

The large cereal harvests of 1958/59, especiallyin the United States, have led to a sharp increasein stocks of wheat and coarse grains. There hasalso been a marked build-up of stocks of coffeeand sugar during the year (Table 11-7).

The wheat stocks of the four principal exportingcountries fell by io percent in 1957/58, but bythe end of the 1958/59 season they are expectedto show a renewed increase of about 20 percent,bringing thein to a record level of more than somillion tons. In the United States some II millionof the 14 million-ton increase in wheat productionin 1958/59 is likely to go into stocks. Canadianstocks, though still high at nearly 14 million tons,have declined further from the peak of 1957, butin Australia they are again rising after the sharpreduction brought about by the low 1957/58 crop.

Stocks of coarse grains in North America haverisen continuously since 1952, and a further in-crease of about is percent is expected by the end

Changes in stocks

24

maize and sugar beet, is reported to have increasedin the U.S.S.R. in 1959, and data for the firstquarter of 1959 also indicate an expansion in deliv-eries of livestock products. In the Far East,India has had a record wheat harvest. MainlandChina's production objectives were raised follow-ing the bumper crops reported in 1958/59, butin June 1959 there WCTC severe floods in someareas. In the Near East early prospects for 1959/60orain harvests were unfavorable because ofdrought in several countries. Late rains partiallyeased the situation, but more recently heavy lo-cust infestation has brought further difficulties.There were severe floods in Madagascar at thebeginning of 1959, which are likely to cause sub-stantial reductions in the 1959/60 production ofrice, coffee, and other crops. In Latin Americaag-,ticultural production should generally increase,though in Argentina and Uruguay, where theweather was unfavorable at the beginning of1959, some decline in cereal production and afurther fall in livestock output is expected.A further increase of about io percent is fore-cast for the Brazilian coffee c-rop. Cotton plan-tings have been reduced by 25 to 30 percent inMexico.

of the 1958/59 season 111 the stocks Of the twomajor exporters. Here, too, Canadian stocks arelikely to have fallen slightly and the entire rise isin the United States, where almost ro million tonsof the 13 million-ton increase in coarse grainproduction in 1958/59 will be added o stocks.

Grain stocks have long been very much largerthan the surpluses that arose in the 1930's, evenallowing for the increase in population since thattime. Sugar stocks, which are expected to in-crease by 20 percent to about 12 million tons bythe end of the 1958/59 season, also appear to begreater than at any time before. For coffee thepostwar accumulation of stocks in producing coun-tries began as recently as 1955/56, and the level ofstocks remains somewhat lower than that reachedin the 1930's, when large quantities were destroyed.End-of-season stocks of coffee in Brazil are esti-mated to have increased by more than so percentto 1.31 million tons in 1958/59. Stocks held by

TABLE It-7. - tSTIMATED STOCKS OF M.AJOR AGRICULTURAL AND FOREST PRODUCTS

Month

1952 I 1953 I 1954

25

1955 I 1956

Million metric tons

Stocks

1957 1958 1959(forecast)

(continued on next page)

WHEATUnited StatesCanada

ArgentinaAustralia

1 July

1 Aug.1 Dec.1 Dec.

7.05.90.10.5

16.510.42.01.0

25.416.81.62.6

28.214.62.42.6

28.115.8

1.22.4

24.719.91.51.2

24,016.81,30.3

34.913.81.20.9

Total four major exporters 13.5 29.9 46.4 47.8 47.5 47.3 42.4 50.8

Franca 1 Aug. 1.2 0.8 1.0 1.4 0.9 0.8 0.7Italy 1 Aug. 2.1 1.4 2.0 2.1 1.6

RICE (milled equivalent)Asian exporters' 31 Dec. 0.7 1.4 1.3 0.5 0.5 0.4 0.3United States 31 july 0.1 0.4 1.4 1.0 0.6 0.5 0.4

Total of above 0.8 1.4 1.7 1.9 1.S 1.0 0.8

COARSE GRAINS

United States 1 July' 18.5 24.7 29.4 37.3 39.2 44.4 53.6 63.0Canada 1 Aug. 3.6 5.1 5.6 3.7 4.2 6.6 5.0 4.2

Total two major exporters 22.1 29.8 35.0 41.0 43.4 51.0 58.6 67.2

BUTTER

United States 0.03 0.13 0.17 0.07 0.01 0.04 0.03Canada 0.02 0.03 0.04 0.05 0.04 0.03 0.04European countries" 0.04 0.06 0.05 0.04 0.09 0.09 0.06Australia and New Zealand 0.05 0.05 0.06 0.06 0.05 0.06 0.06

Total of above 31 Dec. 0.14 0.27 0.32 0.22 0.19 0.22 0.19

CHEESE

United States 31 Dec. 0.11 0.20 0.25 0.24 0.20 0.19 0.13

CONDENSED AND EVAPORATED MTLK

United States 31 Dec. 0.18 0.12 0.10 0.10 0.11 0.10 0.09

DRIED SKIM MILK

United States 31 Dec. 0.06 0.03 0.02 0.04 0.03 0.04 0.04

LINSEED AND OIL (Oil equivalent)United States 1 July 0.41 0.37 0.28 0.16 0.10 0.22 0.12Argentina 1 Dec. 0.30 0.23 0.08 0.03 .

Total of above 0.71 0.60 0.36 0.19 0.10

LIQUID EDIBLE VEGETABLE OILS AND

OILSEEDS (Oil equivalent)United States' 1 Oct. 0.24 0.58 0.56 0.33 0.28 0.28 0.18 0.20

SUGAR (raw value)United States 31 Aug. 0.2 0.3 0.4 0.3 0.3 0.2 0.3Cuba 31 Dec. 2.2 1.5 1.9 1.6 0.6 0.7 0.7

World total 31 Aug. 10.9 10.3 11.8 11.4 10.4 10.3 10.1 12.2

COFFEE

Brazil 0.18 0.20 0.20 0.20 0.63 0.44 0.84 1.31of which government-held (--) ( --) (--) (0.22) (0.22) (0.52) (0.84)

United States 0.22 0.21 0.21 0.08 0.17 0.16 0.15

Total of above 30 June 0.40 0,41 0.41 0.28 0.80 0.60 0.99

TOBACCO (farm weight)United States 1 Oct.' 1.56 1.66 1.69 1.83 1.89 2.00 1.89 1.81

TABLE II-7. - ESTIMATED STOCKS OP MAJOR AGRICULTURAL AND FOREST PRODUCTS (CONCLUDED)

the Brazilian Government increased from 520,000to 840,000 tons as a result of the Latin Americanexport retention scheme.

Since 1955/56 there has been some decline inworld stocks of cotton (excluding the U.S.S.R.,Eastern Europe, and China), but in 1958/59 thesmall further reduction was limited to the im-porting countries and was partly offset by slightlylarger stocks in the United States and other netexporting countries. For the other agriculturalproducts for which data are available, there wasno marked change in stock levels during 1958/59.

While stocks of some forest products, especiallyin the United States, declined slightly in 1958,there were a number of sharp increases, reflectingthe reduced demand for forest products resultingfrom the recession. Stocks of newsprint rose inCallada and sawn hardwood stocks were d.oubledin that country. Stocks of sawn softwood in-creased substantially in Sweden and other Europeanexporting countries.

Figure II-4 presents the usual price-weightedindex of the stocks (except for forest products)

NOTE: Quantities shown include normal carry-over stocks.' Excluding Mainland China. - 2 Rye, barley, oats, maize, SOrghtun. - Maize and sorghtun, T October. - 4 Austria, Belgium, Finland, Western Ger-

m,my, Ireland:Netherlands, Norway, Sweden, Switzerland, United King,dom. - Cottonseed, T August. - Flue-cured types r July. - Excluding U.S.S.R.,Eastern Europe, and China and including estimates of cotton afloat. - Including estimates of rubber afloat, but excluding strategic stockpiles (probably aboutT.5 million tons). United States and Canadian mills and United States consumers. - Belgium-Luxembourg, Denmark, Western Germany, Netherlands,Switzerland, United Kingdom. - " Austria, Norway, Sweden, Yugoslavia. - Belgium-Luxembourg, Western Germany, United Kingdom. - Austriaand Yugoslavia.

26

FIGURE II-4. - INDICES OF THE MAIN STOCKS OF AGRICULTURAL

PRODUCTS IN THE WORLD AND IN NORTH AMERICA

Indices, world stocks1952 100

Stocks

1952 1954 1956 1958

-F-World

NorthAmerica

Month1952 1953 1954 1955 I 1956 1957 1958 1959

(forecast)

Million metric tons

COTTON (lint)United States 0.60 1.22 2.11 2.43 3.14 2.47 1.89 1.97

Other net exporters 1.00 1.08 0,78 0.80 0.56 0.65 0.80 0.87

Importers 1.34 1.21 1.26 1.26 1.08 1.30 1.30 1.08

World total 31 July 2.94 3.51 4.15 4.49 4.78 4.42 3.99 3.92

NATURAL RUBBER

World total 31 Dec. 0.73 0.72 0.73 0.76 0.74 0.76 0.75

NEWSPRINTNorth America 31 Dec. 0.89 0.80 0.77 0.69 0.92 0.92 1.01

Ívlillioit ct bic meters

SAWN SOFTWOOD

European importers'° 31 Dec. 5.74 6.19 5.56 6.12 5.27 5.65 5.39

European exporters 31 Dec. 4.31 3.63 4.05 4.50 4.06 3.79 5.49

North America 31 Dec. 14.25 16.05 14.60 14.84 16.96 16.70 15.35

SAWN HARDWOODEuropean importers " 31 Dec. 1.29 1.15 1.06 1.22 1.21 1.20 1.20

European exporters" 31 Dec. 0.31 0.28 0.27 0.32 0.47 0.45 0.41

North America 31 Dec. 7.90 7.90 9.54 7.86 8.74 8.66 8 35

NOTE: Index based onproducts.

stocks shown in Table II-7 only and excluding forest

included in Table IT-7. While total stocks hadpreviously been comparatively stable for someyears, the index shows a renewed increase of aboutTo percent in 1958/59, which should be comparedwith the rise of 4 percent in total world production.More significant, however, iS that in 1957/58, whenworld agricultural production failed to increase,stocks fell by only about 3 percent. It appears thatstocks are now so large that only a succession ofpoor harvests would reduce them materially. Thestocks included in the table and figure currently

The United States economy recovered fasterfi-om the 1957-58 recession than was anticipatedlast year. By the spring of 1959 almost all ofthe lost ground had been regained, except thatunemployment was still relatively high in spiteof some irnprovement in early 1959. The up-swing in economic activity which started in thesecond quarter of 1958 was clue in large part togovernmental spending, which resulted in 1958/59in the biggest deficit in the federal budget sincethe war. Government intervention, reinforced bybuilt-in stabilizers, such as unemployment insuranceand farm price supports, helped to increase dispos-able personal incomes, even during the recession.Thus, consumer demand generally rem.ained highand for food it even increased. A boom in con-struction and a change-over to a mild stock accu-mulation in early 1959 llave accelerated the up-swing. Prices continued their slow increase bothduring and after the recession, but farm pricesstarted to decline again in mid-1958. In Calladathe recession was less severe than in the United.States but recovery has been slower. As in. theUnited States, employment: is lagging behind thegrowth in industrial production. Personal in-comes have continued to increase, however, andthe demand for agricultural prod.ucts has thereforebeen maintained at a relatively high level.

In Western Europe economic expansion slow-ed down or ceased without, however, leadingto an actual recession. Coal and textiles havebeen particularly affected, but automobile produc-tion has remained high so far and the constructionboom has continued. Unemployment has in-creased but has not reached serious proportions,

27

amount to well over ro percent of annual worldproduction, excluding the U.S.S.R., Eastern Eu-rope, and China.

North American stocks increased by about thesame proportion in 1958/59 as the world total,of which they now represent some 8o percent.After declining slightly in the last two years, thctotal value of stocks held by the United StatesCominodity Credit Corporation rose by morethan 20 percent between April 1958 and April1959 (Annex Table II).

Economic activity and the demand for agricultural products

except in countries with structural lulemployment,and in sonic countries it is al.ready on the decline.Prices and wages llave changed little and consumerpurchasing power has hardly been curtailed. Thedemand for foodstuffs has therefore been main-tained., although greater domestic availabilities havereduced import requirements for some products.In rnid-1959 there are signs of a moderate revivalof economic activity. In Japan, too, the recessionwas relatively short-lived and industrial productionstarted to rise slowly again early in 1959.

Recovery has generally been initiated by thebuoyancy of consumer expenditures and by gov-ernment intervention. The latter, however, hasbeen greatest in North America, being limitedmainly to monetary measures in Western Europeand Japan. In the first half of 1959 there werestill few signs of increased investment by privatebusiness in plant and equipment, though inven-tory liquidation has stopped and stocks are beingslowly replenished. In spite of rising industrialoutput there is much unused capacity, both inmachinery and manpower, which provides sub-stantial leeway for further expansion of productionwithout additional investment. Private dwellingconstruction, encouraged by easier credit, has help-ed to maintain the level of economic activity.

The 1957-58 recession liad very few unfavor-able repercussions on the foreign exchange posi-tion and the international balance of paymentsof the more-industrialized countries. Their termsof trade improved as prices of imported agricul-tural products (especially raw materials) generallycontinued to decline, while the prices of their ex-ports of manufactured goods were maintained.

Thus, the Western European cotmtries and Japanhave been able to strengthen their gold and foreignexchange reserves and many countries have foundit possible to establish limited currency converti-bility. France, the United Kingdom, and West-ern Germany have also relaxed some of theirrestrictions on dollar imports.

In the first feW MOnthS Of 1959, however, thevolume and value of international trade had notyet followed the partial economic recovery of theindustrialized countries, whose imports of rawmaterials and foodstuffs have not greatly increased.Thus, thc foreign exchange position of many ofthe less-developed countries, and also of those ofthe more-developed countries which rely on agri-cultural exports, remains difficult. In the earlymonths of 1959, however, there has been somerecovery in export prices for certain products,including butter, cheese, wool, and rubber.

Inflation has continued in many Latin Americancountries, where lower prices for ag-ricultural ex-ports, particularly coffee and cotton, together withthe need to finance retained quotas of coffee, havecaused further difficulties. Some countries in theFar East, as for example India, Indonesia, Pakistan,and the Philippines, have had to cut planned ex-penditures on imports and on development pro-grams. Australia's surplus balance of trade turn-ed into a deficit in the first nine months of 1958/59.This was mainly due to smaller revenue fromwool exports, but wool prices began to recoverin 1959. Lower returns from agricultural exportsare also responsible for difficulties in the balanceof payments of New Zealand, though some relax-ation of import restrictions has been possible in1959.

Loans and grants from international institutionsor from the United States and other countries llavehelped to augment the resources of countries withlarge development programs and considerablerequirements of capital imports. They have notbeen large enough, however, to offset the fallin earnings from agricultural and other raw mate-rial exports. In spite of these difficulties and therather widespread slowing down in the speed ofeconomic development, rapidly growing popula-tions have continued to increase the demand foragricultural products in the less-developed coun-tries. The disposal of agricultural surpluses hashelped to limit the pressure on the balance of pay-ments of food importing countries.

In the centrally-planned economies of the

28

U.S.S.R. and Eastern Europe, industrial and agri-cultural development has continued rapidly. Inthese countries the dernand for agricultural productsis less influenced by variations in the general eco-nomic situation. Recent policy has been to givegreater satisfaction to consumer ¡needs, but it is

not certain to what extent this will affect futureagricultural imports and exports. In MainlandChina, where the volume of agricultural and in-dustrial output is said to have doubled in 1958,acute difficulties were reported in distribution, asthe transport system could not keep pace withexpanding production. Consequently, in spite ofthe larger agricultural output, there has beenstricter food rationing in some cities, while someexport commitments have not been met. ShouldChina's apparent potential ability to increase itsexports to countries outside the Communist blocmaterialize, however, it might considerably affectinternational trade in such agricultural productsas rice and tea, as well as in manufacturedproducts such as textiles. On the other hand,the U.S.S.R., Eastern Europe, and China haverecently sharply increased their imports of rub-ber and some other agricultural products fromthe rest of the world.

SHORT-TERM OUTLOOK

Although the situation in most of the more-de-veloped countries is not unfavorable, after therelatively swift passing of the recession, theshort-term outlook is still uncertain. Consumerdemand is not yet expanding very vigorously,while, in the face of budgetary deficits and thedanger of inflation, public expenditures are notlikely to be increased further. The existence ofsubstantial unused capacity, which could be putinto operation with relatively little additionalinvestment and employment, means that furtherrecovery in production may not necessarily beaccompanied by the normal secondary andtertiary effects.

Thus, it is not clear from where the impetusfor a further substantial expansion could come,unless the trend in private investment is reversedor consumer buying stepped up considerably.Without such a change in the attitude of businessor in the cautious behavior of governments andconsumers, the probability is that the level of eco-nomic activity may remain relatively stable after

regaining the pre-recession position. In the in-dustrialized countries the d.emand for raw materialsof ag-ricultural origin would then expand very little,while the demand for food, which has remainedsteady, is unlikely to show much change. Theexcess of supplies, with its price depressing effectsin world markets, would thus tend to continue.

Many of the less-developed countries continueto encourage a rapid expansion of agricultural pro-duction in order to replace imports or increaseexports. Nevertheless, their growing needs offoodstuffs and agricultural raw materials for theirrapidly expanding populations are still being met

The impact of the 1957-58 recession fell un-evenly upon international trade in ag,riculturalproducts. Raw materials of agricultural originwcrc much the most severely affected. The vol-ume of world exports of these products in 1958 fellby some 8 percent and the average price (unitvalue) by some 16 percent below the level of theprevious year, so that total export earnings werereduced by no less than 23 percent. The fall inexport earnings was particularly marked for wool,but cotton, rubber, and also forest products werebadly affected.

Including imports from and exports to the U.S.S.R.,Eastern Europe, and Mainland China reported in the statisticsof trading partners in the rest of the world, but excluding(except for forest products) trade within this group of countries.

TABLE II-8. INDICES OF THE VOLUME, AVERAGE UNIT VALITE (AVERAGE PRICE) ANO TOTAL VALIJI3 OF WORLD EXPORTS OP

only in part from inc-reasing domestic production.Larger commercial imports will in many instancesbe impossible, however, as long as the tight for-eign exchange position and the unfavorable pricesituation for exports from these regions continues.The expanding needs of the less-developed regionswill begin to effect the international demand foragricultural products only if a substantial expansionof economic activity in the more-industrializedcountries induces increased imports of agriculturalproducts at higher prices, thus increasing the ex-port revenues and purchasing power of the formergroup of countries.

Foodstuffs and beverage crops in general faredbetter than agricultural raw materials in 1958,though, here too, some commodities suffered heavylosses. The volume of world trade in food andfeedingstuffs as a whole showed little change in1958 from the year before, while the fall in priceswhich liad continued more or less unbroken since1952 was slightly accelerated and the total valueof exports fell by about 5 percent. Average pricesand export earnings of dairy products, however,fell by more than io percent and smaller declinesoccuned for cereals, edible oils, and oilseeds.The situation within the beverages and tobaccogroup was also variable. For the group as awhole, the volume of exports in 1958 fell slightly,mainly because of the small cocoa crops. Averageprices and total export earnings of cocoa rose by

29

' Exluding the U.S.S.R., Eastern Europe, and Mainland China Deflate I by the United Nations index of average unit values of manufacturedgoods in world trade.

AGRICULTURAL PRODUCTS

Average1934-38

Average1948-52 1953 1954 1955 1956 1957

Indices, 1952-53 average Ioo

Volume 98 95 102 102 109 119 122

Average unit valueat current prices 32 100 97 100 95 92 94

in real terms 64 103 99 104 98 91 90

Total valueat current prices 32 95 100 101 103 109 114

in real terms 63 98 102 105 106 108 109

International trade in agricultural products 2

I1958 (prelim.)

119

87

83

104

99

Indices, 1952-53average = 100 ALL AGRICULTURAL PRODUCTS

120 -

110 -

100 -

90

80 -

FIGURE H-5. - INDICES OF THE VOLUME, REAL UNIT VALUE, AND TOTAL REAL EARNINGS OF AGRICULTURAL EXPORTS

AVERAGE

1934-38

FOOD AND FEED

AVERAGE

1948-52 '53 '54 '55 '56 '57 '58

some 54 percent and 25 percent respectively incomparison with 1957. On the other hand, aver-age prices for coffee were again lower, in spiteof the Latin American export retention scheme,and export earnings for coffee were some 15 per-cent less in 1958 than the year before. The totalvalue of exports for the beverages and tobacco groupas a whole declined only 3 percent. More de-tailed figures for commodity groups and individualcommodities are given in the fuller analysis whichfollows later in this section.

For agricultural products as a whole, the volumeof exports in 1958 was about 3 percent less than in1957; prices in world markets fell by about 7 per-cent and total earnings from agricultural exports byabout 9 percent. As the index of average prices ofmanufactured goods in world trade showed nochange from 1957 to 1958, the import capacity fromcurrent earnings of agricultural exporting countriesfor manufactures was reduced to roughly the same

30

120 -

110 -

'WO -

90

80 -

70 -

60 -

RAW MATERIALS

Volume of world exportsTotal real earnings of world exports (total value deflated by United Nations index of averageunit value of manufactured goods in world trade)Real unit value of world exports (average export unit value deflated by United Nations index ofaverage unit value of manufactured goods in world trade)

extent. Recent trends in the volume, prices, andtotal value of world trade in agricultural productsas a whole are set out in Table TI-8, while similardata for the three main groups of agriculturalcommodities are shown in Figure II-5.

The effect of the developments summarizedabove on countries exporting agricultural productsnaturally varied -widely according to the com-modity composition of their exports. This aspect,too, is analyzed more fully below on a regionalbasis. Briefly, however, it may be said that thesharpest fall in earnings from agricultural exportsin 1958 appears to have occurred in Oceania,where a decline of 23 percent reflected the unfav-orable situation for wool and dairy products,together with sharply reduced exports of cerealsfollowing the small Australian crops of 1957/58.In Latin America, the Far East, and the Near Eastthe fall was of the order of io percent. The valueof exports from North America was also some Io

AVERAGE AVERAGE

1934-38 1948-52 '53 '54 '55 '56 '57 '58

Indices, 1952-53average = 100 BEVERAGES AND TOBACCO

AVERAGE AVERAGE

193 4-3 8 1948-52 53 '54 '55 '56 '57 '58

AVERAGE

1948-52 '53 '54 '55 '56 '57 '58AVERAGE

1934-38

percent lower than in 1957, though this figureincludes both commercial exports and the imputedvalue of shipments under special terms, and re-flects a decline in the volume of exports ratherthan in prices. Western European export earn-ings fell by only 4 percent, as lower prices werepartly offset by a larger volume of trade, mainlyintra-regional. FOt Africa both the volume and val-ue of agricultural exports were maintained approxi-mately at the 1957 level, the latter chiefly becauseof the considerably increased returns for cocoa.

The almost continuous fall, since the Koreanboom, in the " terms of trade " for agriculturalproducts as a whole on world markets is evidentfrom Table 11-8. The separate movement' s ofagricultural and manufacturing prices which com-bine to give this result are shown in Figure 11-6.A brief recovery in the purchasing power of agri-cultural products after the 1953-54 recession re-sulted from a temporary rise in agricultural prices(reflecting mainly the boom in coffee and cocoa)which coincided with a transient fall in pricesof manufactured goods. The fall in the terms oftrade slowed down in 1957, but in 1958 the de-cline became much steeper. 3

The effeets on international trade of the 1957-58recession, and indeed general experience duringthe past decade, underline how greatly the posi-tion of countries heavily dependent on primaryexports, including most less-developed countries,is influenced by the economic situation in the more-industrialized countries. Both the prices of the

Long-term trends in price relationships for agriculturalproducts on world markets were considered in a special chap-ter in the 1956 issue of this report. There appears to havebeen a slow decline in the purchasing power of agriculturalproducts from the 1870's, when an increasing flow of suppliesfrom North America and Oceania cauce onto world markets,until the First VVorld War. After a temporary rise and fallduring the wartime boom and postwar depression, agriculturalprices were stabilized in the late 1920's at around 90 percentof their prewar purchasing power, but during the depressionthat followed they fell to some Go percent of that level, thelowest prices (in real terms) recorded in economic history.The Second World War brought about a recovery, and dur-ing the subsequent Korean boom agricultural prices as a wholereached a level which had not been matched since the 1870's.By 1956-57, however, they had fallen to rather less than theywere (again in real terms) before the First World War, whilethe index provisionally estimated for 1958 corresponds roughlyto the price level during the late 1920's. The purchasing powerof agricultural products still appears to be about one-thirdbetter than the depressed level immec-liately prior to theSecond World War. But, as is shown later, the improvement

31

FIGURE II-6. TERMS OF TRADE FOR AGRICULTURAL EXPORTS

Indices, 1952-53 average = 100

120 -

110 -

100

90

80

1947 '49 '51 '53

Average unit value of agricultural exportsAverage unit value of manufactured goodsin world trade (United Nations index)Terms of trade: purchasing power of agriculturalexports for manufactured goods.

manufactured goods which the less-developed coun-tries import, and the prices of the agricultural andother primary products on which they dependfor essential earnings of foreign exchange aredetermined primarily by demand/supply rela-,tionships in the more-industrialized countries.Moreover, the demand for agricultural imports inthe latter countries is greatly influencec-1 by theirfood and agricultural policies and by technologicaldevelopments. For example, technical develop-ments and policy measures tending to inc-rease do-mestic agricultural production in the industrializedcountries correspondingly reduce their demand forimports of temperate zone agricultural products(e.g., cereals, meat, dairy products) and also ofsome commodities, such as fruit, sugar, anc-1 oil-seeds, grown in both temperate and tropical Z011eS.Similarly, the traditional revenue taxes in manyindustrialized countries on, e.g., coffee, tea, andtobacco, as well as the development of man-madefibers, synthetic rubber, and other substitutes for

in the terms of trade for agricultural products at the presenttime in relation to 1934-38 applies almost entirely to the ex-ports of the less-developed countries, which were particularlybadly affected by the depression of the 1930's. The termsof trade of the temperate zone agricultural products exportedby the more-developed countries were only slightly higherin 1958 than before the war.

Such estimates of long-term price trends can of coursebe no more than rough approximations. In particular, whilethe nature of primary products remains fairly stable, the qualityand composition of exports of manufactured goods are subjectto continuous change. Nevertheless, the data in Table II-8and Figure II-6, covering only the period from 1934-38, arein broad agreement with independent estimates and seem_ loreflect the general picture without serious distortion.

natural raw materials, limit the need for agricul-tural imports from semitropical and tropical areas.So long as the primary exporting countries needimports of manufactured goods and can pay forthem only by primary exports, this dependenceseems likely to continue, though more might bedone, e.g., by commodity agreements, to limit thewidc fluctuations in their earnings of foreign ex-change which so badly disorganize their economies.

The situation in thc primary exporting coun-tries does, however, react back on the export mar-kets of the industrialized countries for their manu-factured goods. In 1958, for the first time sincethe Second World War, there was a decline inboth the volume and total value of exports ofmanufactured goods. There can be little doubtthat the reduced export earnings of primary pro-ducers contributed to this result.

Developments in world tradeTin agriculturalproducts in 1958, which are examined below ingreater d.etail, must be seen against this generalbackground.

TIIE VOLUME OF TRADE

Until 1954 the total volume of world trade inagricultural products (average of exports and im-ports) liad remained fairly stable for some yearsat or slightly below the prewar level. In 1955

TABLE II-9. - INDICES OF THE VOLUME OF WORLD TRADE IN AGRICULTURAL PRODUCTS, BY MAIN COMMODITY GROUPS

32

there was a rise of some 7 percent in which nearlyall regions of the world participated. In the fol-lowing year the volume of agricultural tradeincreased by a further 8 percent and in 1957 bysome 4 percent, but these latter increases were of asomewhat different character, reflecting to a consid-erable extent intensified surplus disposal operationsin the United States.

The reduction of 3 percent in the volume ofagricultural trade from 1957 to 1958 was largelyaccounted for by a decline in United States exports,especially of cotton; this decline was largely inthe commercial sector. There were also someother factors, including lower cereal harvests in1957/58 in Far Eastern rice exporting countriesand in Australia, and a reduced output of cocoaand copra.

For most of the main commodity groups thevolume of trade in 1958 showed little change fromthe previous year (Table II-9 and. Annex TableI13). The sharpest movement, a fall of some8 percent in shipments of agricultural raw materialsto a level somewhat below the prewar average,reflected chiefly a reduction of 14 percent incotton exports. The recession also led to a de-cline of 4 percent in world trade in forest prod-ucts. In the beverages and tobacco group therewas a 19 percent reduction in shipments of cocoa,following the small crop of 1957/58. In the foodand feedingstuffs group, trade in maize registered

' Average of indices of world i nports and world exports (including imports from and exports to the U.S.S.R., Eastern Europe, and China reported in thestatistics of trading partners in the rest of the world, but excluding, except for forest products, trade within this group of countries). - United Nations indexof world exports adjusted to 1952-53 base; comparable League of Nations estimates included for 1934-38. - Not included in index of agricultural products

Average1934-38

Average1953 19541948-52 1955 1956 1957 1958 (prelim.)

Indices, average 1952-53 - lea

Total trade (agricultural and non-agricultural). 66 87 103 108 118 128 135 133

All agricultural products 99 94 102 101 108 117 121 118Forest products 92 91 102 117 131 128 128 123

Food and feedingstuffs 98 93 102 101 109 122 126 127Cereals 100 93 97 92 97 119 117 117Sugar 79 89 108 101 108 110 119 118Oilseeds and vegetable oils

(edible) 120 96 102 115 127 140 145 142Fruit, fresh and dried 89 83 106 108 115 107 122 120Livestock and livestock products

(edible) 97 94 104 107 116 125 133 135

Beverages and tobacco 86 95 104 99 108 115 116 113

Agricultural raw materials 110 97 102 103 105 112 117 106

an exceptional increase of 16 percent, but therewere declines for most other cereals and also foredible oils and oilseeds. With the sharp fall inapple production in Western Europe, internationaltrade in fruit in 1958 failed to maintain the largeincrease of 1957. Trade in livestock and livestockproducts increased, but this mainly reflected im-ports from neighboring countries and from Oce-ania to make good the temporary meat shortagein the United States.

Among the main regions of the world, WesternEurope and Africa slightly increased their gross

33

exports of ag-,ricultural products in 1958 (TableII-io and Annex Tables 2-9). In Latin Americathere was a fairly substantial recovery from thelow level of 1957, when exports of cereals, cotton,and coffee had fallen sharply. The volume ofexports from North Am.erica fell by io percentand was somewhat less than in 1956. There weredeclines of some 6 to 9 percent in Oceania and. theFar East (excluding China) and a small reductionin the Near East. Gross agricultural imports increas-ed in North America, Latin America, an.d Oceaniain 1958. The major decline was inevitably in

TABLE - REGIONAL INDICES OF THE VOLUME OF GROSS AND NET TRADE IN AGRICULTURAL PRODUCTS

Average1934-38

Average1948-52 1953 1954 1955 1956 1957 1958 (prelim).

Indices, average 1952-53 - zoo

GROSS EXPORTS (all agriculturalproducts)Western Europe 106 81 103 114 125 124 136 139North America 61 101 92 89 91 126 137 123Oceania 79 97 103 94 105 111 113 104Latin America 105 100 109 103 109 117 111 115Far East (excl. China) 160 96 100 102 111 112 112 106Near East 83 87 114 108 104 103 112 110Africa 76 90 103 113 122 128 131 132

GROSS IMPORTS (all agriculturalproducts)Western Europe 113 95 104 106 112 122 126 123North America 80 100 99 86 94 96 96 99Oceania 66 99 104 122 127 123 131 134Latin America 58 91 102 106 106 103 118 119Far East (excl. China) 106 80 99 98 99 119 127 121Near East 50 91 99 96 114 133 145 139Africa 66 86 103 108 118 128 135 133

NET EXPORTS (all agriculturalproducts)North America ' ( ) ( 2 ) ( 2 ) ( 4 ) ( 2 ) 100 140 77Oceania 80 97 103 91 103 109 111 101

Latin America 115 102 111 102 109 120 109 114Far East (excl. China) 496 193 107 124 187 70 14 15

Near East 118 82 130 120 94 71 78 79Africa 79 91 103 115 124 129 130 132

NET /MPORTS (all agriculturalproducts)Western Europe 115 99 105 104 108 121 123 118North America' 208 32 100 6 67 ( 4 ) ( ) )

NF.T EXPORTS (food atad feed-ingstuffs)North America ( 4 ) 94 88 65 86 143 126 116Oceania 87 96 107 94 106 115 106 97Latin America 177 121 119 126 129 146 151 160Africa 94 95 106 137 125 129 118 140

NET IMPORTS (food atad feed-ingstuffs)Western Europe 125 106 102 94 103 129 120 124

Far East (excl. China) ( 4 ) 60 99 82 63 100 121 146

Near East ( ) 110 56 67 149 207 251 215

' 1956 = I00. - Net importer. - 3 1953 = 10o. - 4 Net exporter.

Western Europe, which accounts for more thanhalf the world's imports of agricultural products.

Regional changes in the volume of trade in 1958were larger than usual and are discussed separatelylater in this section. They do not, however, modifysubstantially the postwar trend, emphasized inseveral recent issues of this report, toward a con-siderable fall in net exports of food and feeding-stuffs from the less-d.eveloped regions to the more-developed regions of the world. Because foodproduction in the less-developed regions has ingeneral not kept pace with needs, some countrieshave had to curtail food exports, while othershave become substantial importers of foodstuffs.As a result, net exports of food and feedingstuffsfiom the less-developed countries as a whole arerunning currently at about one third of the1934-38 level (Table II-IT).

These considerations do not apply to exportsof beveracres and raw materials, since the domesticmarket for these products is stili too small greatlyto affect the situation. Net exports of beveragecrops have expanded fairly steadily since the pre-war period. Net exports of agricultural raw ma-terials, on the other hand, have fluctuated at rough-ly the prewar level, in accordance with the levelof economic activity in industrialized countries.Export outlets for many of these products havebeen limited by the more economic use of rawmaterials in industry, and especially by the emer-gence of synthetic substitutes.

These trends are mirrored in the net importsof the more-industrialized regions, where there

34

has been a similar 6.11 in net imports of food andfeedingstuffs, caused not only by the reduced ex-port supply from the less-developed regions butalso by increased domestic production.

PRICES, TERMS OF TRADE, AND TOTAL EARNINGS OFAGRICULTURAL EXPORTS

It is evident fi-orn Table TI-12 that, as withthe volume of trade, the main decline in averageexport unit values during 1958 was in the agricul-tural raw materials group, the products most di-rectly affected by the lower level of economicactivity. Average unit values for this g-roup ofproducts liad been falling since the beginning of1957, but the decline was accelerated during thefirst nine months of 1958 and the average for theyear was 16 percent less than in 1957. FigureII-7, and al.so the data on average unit values as-sembled in Annex Table 12, indicate that pricesdecreased for all the main commodities in thisgroup, except sisal, linseed and linseed. oil. Forthe first few months of 1959, however, price seriesshow some recovery for both wool and rubber.The year 1958 also saw the end of the long periodof stability for internationai prices of roundwoodand timber, as is discussed later in a separate sec-tion on the trade in forest products.

Average unit values for the food and feeding-stuffs group fell by 4 percent in 1958, after risingslowly over the previous two years. Prices forcereals were again more or less unchanged, as

' Latin America, Far East (excl Kling China), Near East, Africa. Western Europe, North America, Oceania.

TABLE II-II. INDICES OF TI-IE VOLUME OF NET TRADE BETWEEN LESS-DEVELOPED REGIONS AS A WHOLE AND MORE-INDUSTRIALIZED REGIONS AS A WHOLE

Average1934-38

Average1948-52 1953 1954 1955 1956 1957 1958 (prelim.)

Indices, average 1952-53 100

NET EXPORTS OP LESS -DEVELOPED

REGIONS

All agricultural products 132 104 110 109 118 116 106 110Food and feedingstuffs 491 169 138 203 193 175 148 154Beverages and tobacco 87 95 104 95 105 115 114 109Raw materials 99 99 110 102 116 101 85 98

Nra IMPORTS OF MORE-DEVELOPED

REGIONS

All agricultural products 137 100 109 105 111 105 101 105Food and feedingstuffs 451 143 127 157 134 118 125 172Beverages and tobacco 88 95 102 99 106 111 115 109Raw materials 99 91 113 96 110 90 72 76

TABLE INDICES OF AVERAGE EXPORT UNIT VALUES (AVERAGE PRICES) OF AGRICULTURAL PRODUCTS IN WORLD TRADE 1

Food and feedingstuffs

' Excluding the U.S.S.R., Eastetn Europe, and China (exc: t tor forest products). Including eggs. 3 Not included in the general index for allagricultural products. a United Nations index of average export un't values adjusted to 1952-53 base.

lower maize prices were counterbalanced by in-creased prices for rice, following the poor 1957/58harvests in most Far Eastern countries. Sugar prices,1which had climbed in 1957, fell substantially.Trends for the different edible oils and oilseedsvaried considerably, but for the group as a wholethere was a further slight decline in prices. Whileprices rose for all types of meat except muttonand lamb, heavy supplies on the main WesternEuropean markets for butter and cheese broughtabout a rapid fall of 14 percent in prices of dairyproducts. The decline in food and feedingstuff'prices appears to be continuing, for during theearly months of 1959 only price series for someoilseeds, butter, and cheese have shown muchrecovery.

4 Thc data for sugar include both sales on the free marketand under the various bilateral and multilateral agreements.

35

In spite of a rise of more than 50 percentprices fOr the small cocoa crop, average unitvalues for the beverages and tobacco group fellslightly in 1958. Coffee prices fell 16 percent andthere were small declines for tea and tobacco. Fromthe beginning of 1959 prices of cocoa have alsojoined in the general downward movement.

The reduction of 7 percent in 1958 in averageexport unit values for agricultural products as awhole took them to their lowest level since thewar. The " terms of trade for agriculturalproducts, that is to say their purchasing powerfor the manufactured goods which are the mainimports of agricultural exporting countries, werealso lower than in any postwar year, though, asalready noted., they were still some 30 percenthigher than in the 1934-38 period. In makingthese comparisons, however, there is no means ofjudging what woul.d be "normal price rea-

CerealsEdible oils

andoilseeds

MeatDairy

products. Total

Beveragesand

tobacco

Agricul-tural rawmaterials

Forestproducts

All agri-culturalproducts

Manufac-tu red

goods"Terms of

trade

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (9)÷(10)

Indices, average 1952-53 = 100YEARLY INDICES

1947 108 102 69 99 106 72 71 83 88 97 901948 125 128 81 118 117 76 88 93 99 101 981949 101 107 86 110 102 72 83 81 89 95 941950 85 95 82 83 91 88 102 72 94 84 1121951 92 122 93 95 103 99 158 114 119 101 1171952 100 98 100 101 101 99 108 107 103 102 1011953 100 102 100 99 99 101 92 93 97 98 991954 85 97 103 95 93 125 91 93 100 96 1041955 79 87 102 95 89 107 96 94 95 97 981956 76 94 101 97 90 99 91 95 92 101 911957 75 91 100 91 91 100 94 94 94 105 901958 (preliminary) 75 90 104 78 87 99 79 90 87 105 83

QUARTERLY INDICES

1955 I 82 89 104 95 91 118 97 99 96 10381 86 100 91 89 108 95 95 97 98

Ill 78 87 99 93 88 98 95 93 98 94IV 75 87 104 95 88 105 95 94 99 95

1956 I 75 89 102 101 88 97 94 92 100 9276 92 102 93 91 101 91 93 101 9276 93 98 95 88 98 88 90 101 89

IV 78 90 100 96 90 99 92 93 102 91

1957 I 77 93 103 90 92 102 97 96 104 9276 93 98 88 92 99 96 95 104 91

75 90 97 93 92 98 94 94 105 90IV 74 89 101 92 90 100 90 92 105 88

1958 I (preliminary) 75 90 99 81 88 99 85 89 106 84II (preliminary) 75 91 103 74 88 100 81 89 105 84

III (prelimi nary) 76 88 105 74 87 103 75 87 104 84IV (preliminary) 75 90 109 81 88 96 76 86 104 83

FIGURE 11-7. AVERAGE EXPORT UNIT VALUES (AVERAGE PRICES) OF SELECTED AGRICULTURAL PRODUCTS IN WORLD TRADE,

QUARTERLY DATA, 1955-58

(Semi-logarithmic scale)

US$/metric ton

2000

1500

1000

900

800

700

600

500

400

300 '

200

100

90

80

70

60

50

o. 0..

CM .1 CM ED CISI

12.1 621148911,2510 059 aza en) a= 101011e. =Oa= QM CO CO 11.118/H0 E.911 0= MS

II III

1955

'10 ......

IIVjII III I\/1956

tionships for agricultural products, though in com-parison with the situation over the last few dec-ades those in 1934-38 were -unusually low andthose in 1952-53 (the base period for Table II-12)rather high.

The main significance of changes in the termsof trade for agricultural products lies in theirinfluence on the earnings of foreign exchange ofagricultural exporting countries. The latter inturn will obviously depend on the particular prod.-ucts exported. Export earnings of many of theless-developed countries are very narrowly basedand depend heavily on onc or two agriculturalproducts, as, for example, cocoa in Ghana or coffeein Colombia.

36

1 I-I H III IV

1957

I I

II III IV

1958

Tea

Wool (greasy)

Cotton

Butter

Mutton and lamb

Wine

Jute

Rice

Sugar (raw)

Wheat

Export earnings, however, are influenced notonly by " real" prices, but also by the volumeof exports, and in spite of the declining prices ofagricultural products in world trade the total valueof agricultural exports has been slightly increasedin thc past few years, as a result of the expansionin their volume. In 1958, however when bothprices and the volume of trade declined, there wasa fall of about 9 percent in the total real value ofearnings from world agricultural exports to ap-proximately the level of 1952-53 (Table II-13). Thevolume of exports in 1958 was some 19 percentlarger than in 1952-53 and 25 percent larger thanin 1948-52, but these inc-reases in volume llavebrought virtually no improvement in total real

FIGURE II-7. - AVERAGE EXPORT UNIT VALUES (AVERAGE PRICES) OF SELECTED AGRICULTURAL PRODUCTS IN WORLD TRADE,QUARTERLY DATA, 5955-58 (CONCLUDED)

(Semi-logarithmic scale)

US$/metric ton

1500

1000

900

800

700

earnings from agricultural exports. Indeed, sincethe figures for 1958 include a considerable propor-tion sold under special terms in the course of va-rious schemes of surplus disposal, earnings fromcommercial exports in that year must have beensubstantially less than in 1952-53. In comparisonwith thc prewar period, however, whereas the1958 volume of exports was only about zo percentgreater, the real value still showed an increase ofnearly 60 percent.

Table 11-13 shows the broad position for agri-cultural products as a whole and for the maingroups of commodities. Of even greater interestin some respects are the data in Figure II-8, which

37

I I

I II III IV

1957

I II III IV1958

Tobacco

Coffee

Cocoa

Rubber

Linseed oil

Sisal

Oranges

Maize

show for certain representative commodities orgroups of commodities both average real priceson world markets and total real earnings duringthe past decade, together with comparable datafor 1934-38. It is remarkable for how many com-modities the curves for average prices and totalearnings follow each other closely, indicating thatthe price rather than the volume of exports hasbeen the main factor in determining export earn-ings. Rubber (since 1949), coffee, and cocoa areparticularly striking examples. In other instancese.g., meat, edible oils and oilseeds, and recentlydairy products, the separation of the two curvesin recent years shows that the volume of exports

I II III IV

1955

I II III IV

1956

TABLE III3. INDICES OF TILE VOLUME AND R_EAL VALUE OF AGRICULTURAL EXPORTS, 2 BY MAIN COMMODITY CROUPS

has also significantly affected the total revenuefrom exports.

Finally, Table H-14 summarizes the position foreach of the main regions; the same data are repro-duced graphically in Figure II-9. The situationis seen to have varied consid.erably from region toreoion and data for single countries would cer-tainly show still greater variation. Thus, in Oce-ania the volume of exports in 1958 was about 8percent less than the year before, and the corre-sponding export earnings in real terms some 23percent less, indicating a fall of around 17

percent in the terms of trade. In Latin Americaan inc-rease of 4 percent in the volume of exportswas accompanied by a decline of 7 percent inexport earnings, so that the terms of tradefell by some 12 percent.

In the Far East earnings from agricultural ex-ports fell by II percent in 1958, but abOut halfof this movement reflected a decline in the volumeof shipments. The Near East and Africa bothmaintained about the same volume of agriculturalexports in 1958 as the year before, but while exportearnings in the latter region were at about the 1957level those in the Near East fell by some To percent.

In Western Europe lower prices were partiallyoffset by an increase in the volume of trade in1958, so that export earnings fell by only 4percent. The situation in North America iscomplicated by the surplus disposal programs.However, if both commercial exports and theimputed value of exports under special terins are

38

' Total export earnings (f.o.b.) of all agricultural exporters, deflated by United Nations index of average export unit values of manufactured goods.u Excluding the U.S.S.R., Eastern Europe, and China.

taken together, there appears to llave been nosignificant change in the terms of trade. A declineof some io percent in the volume of exports ledto a roughly comparable fall in the total value ofexports, including noncommercial shipments.

Over the longer term, in. the more-developedregions as a whole the volume of exports was justunder 60 percent greater in 1958 than in 1934-38,and their value somewhat over 60 percent larger.Compared with 1948-52, however, the 30 per-cent increase in volume had brought only a 4.

percent increase in real value. For these countries,therefore, the terms of trade for agricultural ex-ports in 1958 were about 20 percent WOTSC thanin 1948-52 and only about 5 percent better thanin 1934-38. In North America, where the increasein the volume of gross exports since the prewarperiod has been much greater than in Oceania orWestern Europe, both the volume and.*real valueof farm exports roughly doubled betWeen 1934-38and. 1958. Their real values were lower, however,in 1958 than in 1948-52, when the volume ofexports was nearly 20 percent smaller.

In the less-developed countries, on the otherhand, the volume of agricultural exports in 1958was only slightly above the prewar level, whiletheir real value was about so percent higher.This indicates a similar improvement in their termsof trade. It should be added, however, that pricesof some tropical exports were even more depress-ed. in 1934-38 than prices of agricultural exportsfrom the more-developed regions. In comparison

Average1934-38

Average1948-52

1953 1954 1955 1956 19571958

(prelim.)

Indices, average 1952-53 = 100

ALL AGRICULTURAL PRODUCTS

Volume 98 95 102 102 109 119 122 119

Real value 63 98 102 105 106 108 109 99

FOOD AND FEEDINGSTUFFS

Volume 97 93 102 103 111 124 127 126

Real value 66 98 102 100 102 109 111 105

BEVERAGES AND TOBACCO

Volume 86 95 104 97 107 116 116 113

Real value 47 84 108 126 116 113 110 106

RAW MATERIALS

Volume 109 99 102 104 106 114 119 110

Real value 70 110 96 98 105 102 106 83

160

140

120

100

00

60

FIGURE II-8. - REAL AVERAGE UNIT VALUES AND TOTAL REAL EARNINGS OP EXPORTS OF SELECTED AGRICULTURAL PRODUCTSIndices: average 1952-53 -= 100

' Average1934-38

/940 '50 '52 '54 '56 'SI

39

Avereno1934-35

LINSEED OIL

DAIRY PRODUCTS

1948 '50 '52 '54 '56 '58

200

180

160

140

120

100

CO

60

240

220

200

180

160

140

120

_ 109

80

_ 60

40

(continued on next page)

FIGURE II-S. - REAL AVERAGE UNIT VALUES AND TOTAL REAL EARNINGS OF EXPORTS OF SELECTED AGRICULTURAL PRODUCTS (CONCLUDED)

140

120

100

30

60

120

100

00

60

40

CEREALS

COFFEE

Average113430 19112

I 17--

Average'50 '52 '51 '56 '50 1931-38

' Deflated by United Nations index of average unit value of manufactured goods in world trade. - Average unit values refer co greasy wool only.

Average unit values in real terms

Total export earnings in real terms

4,

ç.

with 1948-52, the fall in the terms of trade ofagricultural exports of the less-developed countrieshas been nearly as great as for the more-industrial-ized group.

In the Far East the volume of agricultural ex-ports has Pillen sharply since the prewar period,but the decline in real value was comparativelysmall; in fact, up to 1958 real export earnings weresomewhat larger than before the war. Th.c otherthree underdeveloped regions have increased theirtotal volume of agricultural exports since 1934-38,and in each case the increase in real export earn-ings has been substantially greater than in voltune.The difference is particularly striking in Latin Amer-

Indices: average 1952-53 = 100

EDIBLE OILS AND OILSEEDS

40

Bueam,

1948 '50 '52 51 56 '58

0

20

100

80

60

180

60

140

120

100

80

60

10

ica, where the volume of agricultural exports hasincreased by only io percent since 1934-38, whilereal export earnings in 1958 liad gone up by noless than 8o percent.

To summarize, therefore, while the terms oftrade for agricultural exports as a whole have de-clined almost continuously since the Korean warperiod, with an accelerated fall in 1958 as a resultof the recession, they are more favorable by aboutone third than in the immediate prewar period.,and roughly comparable to those ruling duringthe late 1920's. The improvement in comparisonwith 1934-38, however, is due primarily to morefavorable price relationships for the ag-ricultural

exports of the less-developed regions, WillCh Wereparticularl.y depressed immediately before the war.Price relationships for the exports of .the more-developed regions were only slightly more fav-orable in 1958 than in 1934-38.

To complete the section on international trade,brief notes are appended on regional shifts in thevolume of trade in 1958, on trade in forest products,on surplus disposal operations, and on the ag-ricul-tural trade of the Communist group of countries.

REGIONAL SHIFTS IN THE VOLUME OF TRADE IN 1958

The El1 in the volume of world agriculturalexports in 1958 was reflected mainly in smaller

41

Total export earnings, deflated by United Nations index of average export unit values of manufactured goods.

imports into Western Europe, as this is by fiar thelargest deficit arca of the world and (as in the(wo previous years) the only net importing regionfor agricultural products as a whole. Gross importsinto the region fell by 3 percent in 1958, thelargest single item being a fall of 285,000 tons(17 percent) in imports of cotton. Net agriculturalimports fell by about 5 percent because of the3imultaneous fall in agricultural exports. The maindecline in imports, however, was in raw materials,and net imports of food and feedingstuffs weresome 3 percent higher than in 1957.

Gross imports of cereals, especially maize, in-creased, but wheat and flour imports were lowerin spite of the poor wheat crop in France. Withthe steady increase in sugar-beet production, the

TABLE INDICES OF THE VOLUME AND REAL VALUE OF AGRICULTURAL EXPORTS, BY REGIONS ANL) GROUPS OF REGIONS

Average193 4-3 8

Average1918-52 1953 1954 1955 1956 1957 1953 (prelim.)

Indices, average 1952-53 = lopWESTERN EUROPE

VolumeReal value

106

87

81

87

103

102114

111

125

118

124

117136

125139

120

NORTI/ AMERICAVolumeReal value

61

47101

105

92

92

89

88

91

85126

109

137

112123

100

OCEANIAVolumeReal value

79

59

97

99

103

11094

97

105

101

111

101

113

108

104

83

THREE ABOVE REGIONS

Volume 79 94 98 97 104 122 131 123Real value 62 98 99 97 99 109 115 102

LATIN AMERICA

Volume 105 100 109 103 109 117 111 115Real value 51 96 110 115 105 105 100 92

FAR EAST (CXGL China)Volume 160 96 100 102 111 112 112 106Real value 99 107 96 100 115 105 101 90

NEAR EASTVolume 83 87 114 108 104 103 112 110Real value 60 100 104 108 102 103 110 99

AFRICA

Volume 76 90 103 113 122 128 131 132Real value 45 89 102 122 116 113 113 114

FOUR ABOVE REGIONS

Volume 113 96 106 105 112 117 115 115Real value 65 98 104 111 110 106 104 97

ALL ABOVE REGIONS

Volume 98 95 102 102 109 119 122 119Real value 63 98 102 105 106 108 109 99

120

110

100

90

120

100 -

90

120

110

100

90t120

110

100

90

FIGURE 11-9. - VOLTJME AND REAL 1 VALUE OP AGRICULTURAL EXPORTS, BY REGIONS AND GROUPS OP REGIONS

LATIN AMERICA

FAR EAST

110 (excl. Mainland Chi na)

_ _

NEAR EAST

Port raga1941,52

FOUR ABOVE REGIONS

53 5i

Indices, average 1952-53 = Ioo

sa.

55 II 57 50

NORTH AMERICA

WESTERN EUROPE

C. are 0 in Z.

OCEANIA

tooeeeemeaa.ea

ea-am. an..

THREE ABOVE REGIONS

Average1949-52

Deflated by United Nations index of average unit value of manufactured goods in world trade.

Volume

Real value (earnings)

42

53 5.1

IA

55 56 57 58

- 130

- 120

110

- 90

140

- 130

- 120

- 90

80

- 110

100

90

80

30

120

110

100

90

130 -AFRICA

120 -

110 -

100 -

90 - ORO UM IMP 4.11.C2.2221,11I01.6.1.

net import of sugar fell slightly and. West Germansugar factories announced that they could noloncrer take sucrar hect from neio-hborina countries.Apple exports were almost halved as a result ofthe very small 1957/58 c-rop. Although totalimports of butter were comparatively stable, thisconcealed a very complicated situation, UnitedKingd.om imports rising by 16 percent and im-ports into Western Germany, the other mainimporter, falling very sharply.

With a sharp decline in gross exports and littlechange in. gross imports. North America's netexports of agricultural products fell by more than40 percent in 1958, though for food and feeding-stuffs the decline was only about 8 percent. Thesharpest decline was in United States exports ofcotton, which fell by 36 percent fr OM the high1957 level and were about the same as the 1948-52average. The fall in total agricultural exportstook place entirely in the United States, andCanadian exports rose in 1958, mainly because ofan increase of 36 percent in meat exports to theUnited States. On th.e import side, changes wereless marked, lower North American importsof cocoa, wool, and rubber being offset byinc-reases in sugar, meat, and sisal.

Oceania's exports of agricultural products fellby nearly io percent. Following the poor grainharvest in Australia, -wheat and flour exports de-clined by more than 40 percent and barley exportswere halved in 1958. The volume of wool ex-ports fell by 8 percent, exports of mutton andlamb rose by 14 percent, and in spite of difficul-ties on traditional European markets butter ex-ports were increased by nearly 12 percent.

After a sharp decline in 1957, Latin America'snet exports inc-reased by 4 percent, though theyremained lower than in 1956. The major changewas a doubling of maize exports, while exports ofwheat and flour were is percent smaller. Sugarexports expanded a further 4 percent and, incontrast to other regions, cotton exports recoveredconsiderably.

In the Far East (excluding China) both grossexports and gross imports of agricultural productsas a whole declined by about 5 percent, leavingthe net position imchanged. However, as a resultof a drop of 16 percent in rice exports, followingthe poor harvests in Thailand and other exportingcountries, net imports of foodstuffs rose by about20 percent, even though several countries reducedcereal imports in order to save foreign. exchange.

43

Mainland China became the principal supplier ofrice to Ceylon and Indonesia. Gross exports ofvegetable oils and oilseeds (in oil equivalent) fellby as much as 13 percent because of poor harvests,especially of coconuts. Imports of cotton werereduced by is percent.

With the better harvests of 1957/58 in the NearEast, imports of wheat and flour fell by 14percent and the net imports of food and feeding-stuffs were also some 14 percent below the highlevel of 1957. The total cotton exports of theregion were comparatively stable, though therewere considerable changes in the exports of indi-vidual countries.

In Africa there was a small rise in net exportsof all agricultural products and an increase of T8percent in net exports of food and feedingstuffs.Cereal exports from North Afi-ica, especially bar-ley, recovered substantially and there was a cor-responding reduction in imports. African exportsof 0-roluidnuts and oil, coffee, cotton, and sisalreached record levels, but cocoa exports were thesmallest for some years and less than the prewaraverage.

INTERNATIONAL TRADE IN FOREST PRODUCTS

The decline in the volume of world trade inforest products in 1958 was shared by all round-wood categories with the exception of broad-leaved logs from tropical regions. The demandfor tropical logs was sustained in Europe and re-vived in North America, so that exports fromWestAfrica showed a further increase. Trade in pit-props fell sharply, however. The sawnwood tradewas generally lower, but the latter part of the yearsaw a marked revival in United States imports.Exports fi-om the U.S.S.R., both of round.woodand sawnwood, were maintained or inc-reased.Trade in wood pulp, newsprint and other paperswas lower in most regions.

By the beginning of 1959, the volume of tradewas reflecting the general upturn in demand formost forest products. In Europe and North Amer-ica, 1959 imports of sawnwood and roundwoodwill probably surpass 1958 levels, the revival indemand being assisted by the modest level of im-porters' stocks of many commodities, though theupturn has not yet extended to small-sized round-wood. Owing to favorable shipping conditionsand some increase in demand, exports of wood

pulp were higher in the spring of 1959 than a yearearlier. North American exports of newsprinthave yet to reflect any strengthening in demand,ho-wever, though they w.ill probably increase laterin the year.

The year 1958 saw the end of the long periodof stability for international roundwoocl and tim-ber prices. Prices of sawn softwood in Europewere about 15 percent lower at the beginning of1959 than a year earlier, though they appear nowto be more stable. Declines in the prices of conif-erous sawlogs ranged from io to zo percent. Theprices of sawlogs of certain hardwoods, notablybeech, have also weakened in those parts ofWestern Europe where there had been a strongdemand for tropical timbers, the prices of whichwere in general maintained during 1958. In NorthAmerica, -where prices liad already declined in1957, they had begun to recover for mostcommodities, including sa-wnwood and plywood,by the middle of 1958. By the beginning of1959 North American prices for sawn softwoodhad regained or slightly exceeded the level of ayear earlier and they have subsequently continuedto rise.

Prices of pul.p and pulp products decreased inEurope during the second half of 1958. Thisdecline continued into the early months of 1959,with falls ranging from 4 percent for newsprintto around. 7 percent for certain grades of chemicalpulp, but prices now appear to be fairly steady.North American prices for pulp and pulp productschanged little during 1958 and have generallyincreased slightly SO fiar in 1959.

SPECIAL MEASURES TO EXPAND AGRICULTURAL

EXPORTS

The 1958 issue of this report incluc-led an ac-count of the various special arrangements underwhich a large part of world trade in agriculturalproducts now MOWS. The development of Unit-ed States surplus disposal measures was reviewedfrom their inception and some data were alsopresented on direct and indirect subsidies to ex-pand exports fi-om other countries, especially ofbutter, meat, grains, and fruit from certainWestern European countries.

During the calendar year 1958 United. Statesexports under special programs (excluding c-reditsales and donations), at 1,277 million dollars, were

44

18 percent lower than in the calendar year 1957.For the fiscal year 1958/59, however, exports underPublic Laws 480 and. 665 are expected to be ap-proximately the same as in the fiscal year 1957/58.New agreements signed imd.er Title I of PublicLaw 480 included one with India for the supplyof 3 million tons of grains, worth about zoo mil-lion dollars at export market prices. Congresshas been asked to extend. Public Law 480, whichexpires in December 1959, for a further year,with the additional authorization of 1,5oo milliondollars for sales under Title I and of 300 milliondollars for Title If grants for famine relief andother assiS tance. In the first SiX 1110IltilS of 1958/59,exports under special programs amounted to33 percent of the total value of United Statesexports, though for dairy products the proportionwas as high as 72 percent and for wheat and. flour67 percent. For cotton the proportion movingunder special terms rose fi-om 48 percent in1957/58 to 65 percent in the first half of 1958/59,largely because of the decline in commercialexports.

Special measures to encourage exports of sur-plus commodities are increasingly in evidence inother countries, including concessional prices, lowinterest c-redits and grants, foreign exchange rateadjustments, export bonuses or barter arrange-ments.

AGRICULTURAL TRADE OF THE U.S.S.R., EASTERNEUROPE, AND CIIINA

The data on the volume of world trade givenin this chapter include imports from andexports to the U.S.S.R.., Eastern Europe,and China reported in the statistics of tradingpartners in the rest of the world. Except forforest products, however, they exclude tradewithin this group of countries, for which onlylimited information is available, though rather moreis now published than in the past. In view of thegrowing importance of these countries in worldtrade in agricultural produ.cts, and because theavailable data are often somewhat inaccessible, aseparate note on what is known of their total agri-cultural trade is presented here, as in the pastfew years. Annex Table 3B assembles the avail-able statistics for 1955-57 of the agricultural imrports and exports of the U.S.S.R. and of the fou-principal trading countries in Eastern Europe.

In recent years agricultural products have rep-resented about 40 percent of the total value ofboth exports and imports in the U.S.S.R. Withthe increased emphasis on consumer needs, importsof such products as fi-uit, beverages, tobacco,wool, and rubber have expanded sharply. In-creased domestic production has caused larger ex-ports of many products, including cereals, cotton,hemp, and flax, and red.uctions in net imports,especially of vegetable oils and some animal prod-ucts. In fact, the U.S.S.R. has become a netexporter of butter and cheese, for which it waspreviously a net importer. Mainland China is themajor source of U.S.S.R. imports of ag,riculturalproducts, which in 1955-57 were approximatelyhalf of the total value of Chinese exports to theU.S.S.R. The U.S.S.R's agricultural exports areparticularly directed to the industrialized countriesof northeastern Europe, namely Czechoslovakia,Eastern Germany, and Poland, but trade linkswith the rest of the world, especially with someNear East countries, have been growing rapidly.For example, exports of rice and cotton to theU.S.S.R. and Eastern Europe increased from 28percent of the total value of exports of the Egyp-tian Province of the United Arab Republic in1956 to 38 percent in 1957.

Czechoslovakia and Eastern Germany are themain Eastern European importers of agriculturalproducts, which represent some 30 tO 40 percent ofthe total value of their imports. Like the U.S.S.R.,these two countries, as well as Pol.and, irn-port considerable quantities of rice, oilseeds, tea,etc. from China, various specialized products fromsoutheastern Europe, and tropical products fromthe rest of the world. These imports supplementthe grains, cotton, etc. received from the U.S.S.R.On the export side, both Hungary and Poland areimportant exporters of livestock prod.ucts, partic-ularly to Western Europe. The large prewargrain exports of the countries of southeasternEurope have disappeared and their principal ex-ports are now tobacco, fruit and vegetables, mainlyto the U.S.S.R. and other Eastern European coun-.

With the lower harvests Of 1957/58, U.S.S.R.grain exports fell from 6.8 million tons in 1956/57to 4.7 million tons in 1957/58, but in 1958/59they are expected to rise to arotmd 8 milliontons. The main decline in 1957/58 was in barleyexports, which fell by 90 percent, but wheat ex-ports were better maintained by drawing on stocks.

45

Cereal exports to the Eastern European countriesfell by only 800,000 tons, however, and the reduc-tion in these exports was entirely in barley. Cerealshipments to Western Europe were halved. in1957/58, falling to 800,000 tons. While there wasa reduction i.n the net import of total cereals ofthe Eastern European countries, net imports ofbread grains increased by 18 percent. U.S.S.R.rice imports fell from 637,600 tons in 1956 to370,500 tons in 1957, of which about half camefrom China.

Apart from imports fi-om Czechoslovakia andPoland, for which data are not available, U.S.S.R.sugar imports were halved in 1958 as a result ofthe large domestic harvests; 201,500 tons wereimported, almost entirely from Cuba, and 216,20otons exported, mainly to Afghanistan, China, andIran. Total exports of sugar from Czechoslova-kia rose from roo,roo tons in 1957 to 276,900 tonsin 1958 and there was a similar inc-rease in Polishexports.

Data for livestock products are available onlyup to 1957, when there was a further sharp fall inthe U.S.S.R's net imports of livestock and meat.Mainland China and Mongolia provided 54 per-cent of the U.S.S.R's meat imports and 92 per-cent of cattle imports in that year. Among theEastern European exporting countries, the mainevent in 1957 was a decline of more than so per-cent in pig exports from Htmgary. With ex-ports to Eastern Europe of 49,100 tons andimports of only 8,300 tons in 1957, the U.S.S.R.was one of the world's major net exporters ofbutter. Trade agreements for the import of some19,000 tons from Denmark and Finland may,however, have modified this position in 1958.

In the last few years U.S.S.R. imports of freshand preserved frui.t and vegetables have grownconsiderably, their value having ahnost doubledbetween 1955 and 1957. In the latter year themajor items were 86,00o tons of apples, almostentirely from China and North Korea, 19,000 tonsof grapes from Bulgaria and .Romania, 45,000tons of oranges, mainly. from MoroCco and 'Italy;20,100 tons oflemons, mostly from Italy, and 42;906tons of tangerines from China. Citrus 'importsfrom Western Europe were 30 percent lower,however, in the fi.rst To months of .1958 than inthe corresponding period of 1957.

Even more striking is the increase in importsof beverages. For the U.S.S.R., Czechoslovakia,Eastern Germany, Hungary, and Poland together,

imports of COffCe TOSC by 17 percent in 1957, oftea by 36 percent, and of cocoa beans by 76 per-cent, and there appear to have been further in-creases in 1958. Eastern Germany is the mainimporter of coffee and the U.S.S.R. of tea andcocoa beans. China provid.ed more than half ofthe U.S.S.R. tea imports in 1957, while a largepart of the purchases of coffee and cocoa camethrough the United. Kingd.om and. other WesternEuropean countries.

U.S.S.R. exports of cotton were at about thesame level in 1956 and 1957, though, owing togrowing imports from the Near East, net exportshave fallen. Three quarters of the cotton importsof the Eastern European countries came fiom theU.S.S.R. in 1957. U.S.S.R. exports of flax pro-vided about one third of Western Europeanimports in 1957, the United Kingd.om beingthe major customer, though exports appear tollave fallen in 1958. The U.S.S.R. is now one ofthe world's major importers of natural rubber andimports appear to llave risen heavily in 1958with the fall in world prices.

Data on the total agricultural exports and im-ports of Mainland China are still lacking. Anapproximate idea of the total can be obtained,however, by adding the volume of trade with

Farm. prices

As with export prices, the movement of pricesreceived by farmers tells very little unless it canbe related to movements in the general price leveland in particular to the prices of things farmersbuy. Rather fcw countries, however, publishregularly indices of prices received and paid byfarmers. The data available are shown in Figure

In spite of the fairly general use of pricesupports, the price relationship moved againstfarmers in most countries during the period cov-ered by the figure (i.e., since 1952-53). WesternGermany and Finland are the only countrieswhere the prices farmers received rose more thanthe prices they paid during this period, and evenin these countries the gap narrowed during 1958.

Of the countries included in Figure thesharpest movement of prices against farmers in 1958took place in Australia, where the slow andfluctuating downward trend in 1956 and 1957 of

46

the non-Communist countries, which is reportedin their statistics, to that with the U.S.S.R. andthose Eastern European countries for which dataare available. In 1957 China exported to thesecountries about 460,000 tons of rice (milled),185,o0o tons of groundnuts, 913,000 tons of soy-beans, 83,000 head of cattle, 600 million eggs,68,000 tons of apples, 87,000 tons of pulses, 42,000tons of tea, 48,000 tons of tobacco, and 3,000 tonsof silk. In 1958 exports of rice in particular appearto have expanded very substantially. PrincipalChinese imports from the same sources in 1957 were65,000 tons of sugar, 83,000 tons of cotton, and150,000 tons of natural rubber.

The agricultural trade of the U.S.S.R., EasternEurope, and China with other countries has in-creased sharply for certain products and certaintrading partners, and long-term agreements havebeen concluded with a number of countries inWestern Europe, the Near East, Latin Americaand elsewhere. But this external trade is stillrelatively small, and there seems little doubt, espe-cially in view of the decisions of the Ninth Sessionof the Council of Mutual Economic Aid on eco-nomic co-operation among the Communist coun-tries, that the great bulk of their trade will con-tinue to be among themselves.

and incomes

prices received by farmers gave way to a rapiddecline as a result of less favorable world markettrends for wool and dairy products. Prices paidby farmers showed little change and the ratiobetween the two indices declined by more thanio percent. With the progressive recovery ofworld markets for both dairy products and woolin 1959, however, the index of prices received byfarmers has probably since moved upward again.

Changes in the relationship between the twoprice indices in countries less dependent on exportmarkets than Australia are usually smaller, as farmsupport measures and general policies for economicstabilization tend to prevent drastic movements.Small changes in the ratio in favor of farmers tookplace during 1958 in Callada, the United States,Norway, and Japan. In Norway, where the ratioimproved by 4 percent, this represented a reversalof a. downward movement during the two preced-

130

120

110

100

110

100

90

80

FIGURE III INDICES OF PRICES RECEIVED AND PRICES PAID BY FARMERS

Indices, average 1952-53

CANADA

SWiTZE7sLA.ND

.

Of'

VVESTERN GERMANY

UNITED STATES'

ep cemo

120

110

100

140

130

120

110

100

50

80

110

oar ao,

100

JAPAN

cc

130

- 120

110

- 100

- 90

NETHERLANDS

110

eyaga0

esao

CO

Average Average1952-53 1956 1957 1958 1952-53 1956 1957 1958

Pri ces receive CMS MI WM WM CM Prices paid

ing years. In the United States farm prices roseappreciably in the first and second quarters of 1958and fell only slightly in the second half of the year,while prices paid remained fairly stable. Therewere similar but rather sharper price movementsin Canada. In the Netherlands there was a markeddecline in prices received and an increase in pricespaid until the third quarter of 1958, but thereafterprices received rose steeply and the average ratiofor the year was only about 3 percent lower thanin 1957.

For Japan, Figure II-To suggests only a veryslight improvement in the ratio during 1958, butaccording to the official index for the average ofthe whole year the ratio was 3 percent higher thanin 1957. In this country the annual ind.ex of pricesreceived by farmers is obtained by weighting themonthly figures in accordance with the quantitiesmarketed, with further adjustments for subsequentgovernment payments, such as back payments andbonuses to offset low crop yields. In most countriesno such adjustments are made, and the indices maysometimes distort the situation, especially whenmarketings are highly seasonal or when varioussubsidies or other payments are made to farmers atsome date after their produce has been sold.

FARM INCOMES

Farm incomes and levels of living are discussedin some detail in Chapter III of this report, and nomore will be attempted here than a brief summaryof recent developments in the few countries forwhich up-to-date information is available. Suchinformation is limited to the more-developed coun-tries, and in most of these countries farm incomesappear to have increased in 1958, in contrast to therather widespread declines in the preceding year.This was largely due to the substantial rise in out-put, especially in North America and Australia.

In the United States there was only a smallincrease in prices received by farmers, but increasedproduction, together with larger government pay-ments, led to a rise of over II percent in cash re-ceipts and of some 20 percent in farm operators'realized net income in 1958. The per caput incomeof the total farm population is estimated at 1,068dollars, or io percent more than in 1957, while theper caput income of the nonfarm population isestimated to have fallen by 2 percent to 2,034 dol-lars in 1958. Some decline in United States farm

48

incomes is expected, however, in 1959. Supportprices are lower, especially for feed grains, whilepig prices will come down as supplies increase.To any fall in cash receipts must be ad.ded smallergovernment payments, e.g., from the eliminationof Ac-reage Reserve payments, and these, togetherwith some further increase in production expenses,are likely to reduce farm operators' realized netincoines by about 8 percent in 1959 and probablyby still more in the 1959/60 season.

Increased marketings and higher prices forlivestock brought farm cash receipts in Callada to2,847 million d.ollars in 1958, 8 percent more thanin the previous year. Farmers in western Callada alsoreceived a substantial supplement to their incomesfrom payments under the Prairie Farm AssistanceAct and through acreage payments to westerngrain producers. Operating expenses appear to haverisen less than cash incomes. Cash receipts areexpected to be unchanged in 1959, but higher oper-ating expenses may slightly reduce net incomes.

In Australia the large harvests of 1958/59 morethan offset the fall in wool prices and preliminaryestimates indicate an increase of ii percent in farmincome over the low 1957/58 level, though itremained about 25 percent less than in 1956/57.In New Zealand, where farm incomes were rela-tively high in 1957/58, a fall of some 15 percenthas been estimated. for 1958/59, largely because of areduction of percent in the guaranteed priceof butterfat. The lower levels of farm incomes inrecent years do not yet appear to llave had anysignificant effect on agricultural investment in eitherAustralia or New Zealand.

In 1958 and 1958/59 farm incomes increased inseveral countries of Western Europe, though,except in Denmark, the upward movement depend-ed largely on the degree of government support.With production moving ahead of demand for anumber of commodities, further increases in pro-duction have sometimes reduced prices so muchthat the larger outplit has brought smaller returns,e.g., for pigs in Western Germany in 1957/58.In other cases increased returns llave not coveredadditional prod.uction expenses, e.g., for feed orlabor.

In Denrnark the fall in farm incomes in recentyears owing to lower prices in export marketsmay be reversed in 1958/59. Farm prices, whichfell by 13 percent in 1957/58, again rose in the firsthalf of 1958/59, while wage costs were reduced by4 percent because of the outflow of hired labor.

In Norway fari incomes in 1958 were some 6percent higher than the year before, mainly be-cause of higher livestock prices, and a further in-crease of 2 percent is expected in 1959. Price changesunder the new regulations in Finland should resultin some increase in the gross value of agriculturalproduction in 1958/59, though much less than underthe previous law. Although, as noted earlier, pricerelationships moved unfavorably for farmers during1958 in the Netherlands, livestock production washigher than the year before and net incomesprobably fell little, if at all.

First estimates of farm incomes in France during1958 indicate an increase in total receipts of about12 percent over the previous year. Expenditureon goods and services rose by is percent, but expen-diture on wages, rents, taxes, etc. increased lesssharply, and net incomes improved by about14 percent. In Western Germany both gross andnet cash receipts in 1958/59 are estimated to llave

Except in a few countries, the inc-rease in foodproduction appears to llave done little to stem therise in the cost of food to consumers. Of the 89countries for which retail food price indices areavailable, 70 showed an increase d.uring 1958(compared with 69 in the preceding year), and ofthese 56 had also shown a rise in retail food pricesduring 1957. In general the rate of increase wasonly a little slower in 1958 than the year before.In both years the tendency to higher retail pricesappeared to be greater in the less-developed thanin the more-industrialized countries.

It is difficult to disentangle the trend of retailfood prices fi-oin general inflationary or deflation-ary price movements. If, however, changes in thecost of food and the cost of living generally arecompared over the five years since 1953 a fairlyconsistent trend emerges, though in some individualcountries it may be obscured by seasonal factors.In most agricultural exporting countries the cost offood has tended to rise more slowly than the costof living, reflecting the weakness of agriculturalprices on world. markets. In the United Kingdom,where price supports do not directly influenceconsumer prices as they are implemented by de-ficiency paymen.ts, data (from 1956) also indicate

19

increased by about 4 percent, and the share of agri-culture in the total national income, after fallingfor some years, rose from 7.7 percent in 1956 to7.9 percent in 1957 and 1958. The decline in thefarm labor force has continued and it is estimatedthat in 1957/58 the number of " labor units(full-time workers) dec-reased by 0.9 per ioohectares.

There was a good harvest in Italy in 1958 andtotal prod.uction is estimated to have inc-reased byII percent. Gross receipts, however, rose by only6 percent, as producer prices were stable or fell;prices paid by farmers increased so that the rise innet receipts was probably smaller. In Greece,1958 agricultural incomes are estimated to llavefallen by 5 percent at constant (1954) prices and byabout io percent at current prices, while the shareof agriculture in the total national income wasreduced from. 35 percent 1.11 1957 to 32 percentin 1958.

a similar tendency. In most of the more-industrializ-ed countries of Western Europe, however, and inNorth America, the cost-of-food and cost-of-living indices kept fairly closely in step. On theother hand, in a considerable number of the less-developed countries in Latin America, in North,West and Central Africa, and in Southeast Asia,where population and the demand for food arerising quickly, food prices tended to rise faster thanthe cost of living as a whole. As the cost of food isthe largest component of the cost-of-living inclexin less-developed countries, the rise in food pricesmust llave been substantially greater than the risein other components of the index for a noticeabledifference to be apparent.

In France and Norway, where " true pricepolicies, involving the elimination of a number ofsubsidies, liad been introduced in late 1957, foodprices rose substantially in 1958. In Norway, thecostTof-living index approached the level at whichadjustments in wages and farm prices would be-come necessary, and in ord.er to avoid such adjust-ments various mea sureses. were adopted early in 1959,including tax remissions and the reintroduction ofa subsid.y on milk and cheese. In France, food pricesrose sharply in the last three months of 1957 and

Consumer prices

the first three months of 1958. The rising trendwas then slowed down by such measures as theliberalization ot meat, vegetable, and fruit markets,a smaller increase in the guaranteed price for wheat,and the reintroduction of a bread subsidy. Ingeneral, the true price " policy is being continuedand, following the devaluation of the franc, somefurther subsidies, including those for bread andmeat, were abolished. The resulting increase inthe cost of food was less than expected. In Swedenthe government reduced substantially claims forhigher wages and farm prices, though provisionwas made for greater protection through tariff's.The above are some examples of the different waysin which governments shift the burden of pricestabilization measures between consumers, tax-payers, and producers. Nevertheless, the more orless pronounced inflationary trend continues inmost Western European countries. In most of themore-developed countries outside Western Europe,retail food prices also tended to rise in 1958.

In the Far East the poor 1957/58 crops accen-tuated inflationary trends in many countries in1958. The index ofretail food prices rose by as muchas 46 percent in Indonesia, where food importshad to be reduced because of the shortage of foreig,nexchaiwe, and the rice ration was reduced. InThailand rice exports had to be suspended in somemonths, asid thc comparative shortage of suppliesand rising export prices were reflected in a con-tinuing rise of prices on domestic markets. In.

India, however, efforts to stabilize food prices suc-ceeded in holding the increase to the same rate(6 percent) as in 1957, in spite of the very 10Wharvests of 1957/58. In Pakistan the stabilizationpolicy of the new government considerably re-duced thc rate of inflation by curbing smugglingand enforcing price ceilings.

Three Latin American countries have recentlyreplaced their multiple exchange rate systems by asingle exchange rate, as a step to general economic

Agricultural policies

The 1958 issue of this report drew attention tothe growing divergence in the food and agricul-tural situation of the economically more-andless-developed parts of the world and analyzed insome detail the contrasting background of agri-

and development plans

cultural policies in the two groups of countries.It was pointed out that, in the more-industrial-

ized countries, technical progress and adequatecapital enabled a rapid increase in ag,riculturalproduction to be achieved fairly readily. At the

so

stabilization. In Chile and Bolivia the rise in priceswas slowed down considerably, but in Argentinathe index of food prices rose by about 30 percentin 1958, the same rate as in the previous year.In Brazil and Colombia the difficulties of economicstabilization are increased by the problem of financ-ing the coffee retention quotas, and in Brazil anew anti-inflationary austerity program was an-nounced in October 1958, involving a rise in pricesof essential foods such as bread, milk, and sugar.A striking development is the sharp move fromstability or even declining food prices in a numberof Central American countries (Costa Rica, ElSalvador, Guatemala, Honduras, Nicaragua) torising prices in 1958.

MARKETING MARGINS

While farm prices have fallen in many countriesand world prices for many foodstuffs have also de-clined, retail food prices have generally continued torise in 1958. Retail food prices often show a greaterresistance to decline and a stronger tendency to risethan farm prices. These differences are usually d.ue,apart from the influence of consumer price policies,to the comparative rigidity of marketing margins.

Information on this important aspect of agri-cultural prices is still as scarce as before and currentdata are, as usual, available only for the UnitedStates. After rising sharply in late 1957 and thefirst quarter of 1958, the farm value of thc " marketbasket" of farm foods declined steadily in theUnited States until December, and has been fairlystable since. The annual average farm value for1958 was some 6 percent above 1957, while themarketing margin increased by 5 percent and theretail cost by 6 percent. The " farmer's shareof the retail cost was stable at 40 percent. Duringthe first quarter of 1959, both farm value andmarketing margin have declined slightly.

relatively high levels of income already current inthese countries and with their generally low ratesof population growth, however, the dernand foragricultural products rose only slowly. In theeconomically less-developed countries, in contrast,considerable obstacles had to be overcome toexpand production, but demand rose very rapicilywith population growth and with even the slight-est improvement in income.

Thus, in the more-developed countries ag,ri-cultural policies were increasingly concerned withproblems of surplus production of certain commod-ities, while most of the countries in the othergroup continued to grapple with the problem ofshortages of basic foodstuffs. It was also suggested,however, that ag,ricultural price policies had oftentended to exacerbate this situation. In the firstgr, oup of countries farrn prices were usually keptfairly high, in the interest of producers, and sotended to stimulate production. In the less-develop-ed countries, on the other hand, they were generallyheld rather low, in the interest of consumers, andthe incentives to expand output were thereforesmaller.

Changes in agricultural policies in 1958/59continued to reflect these divergent situations.In the more-developed countries most of suchchanges as occurred were again rather delicateadjustments designed to modify the pattern ofproduction and to safeguard farm incomes. Thus,in. the United States, although radical solutions tothe problems of overproduction are being soughtand discussed, changes during the year underreview were relatively minor, except for the finalabandonment of the Ac-reage Reserve Program,which liad failed to effect the desired temporarycheck in the momentum of ag,ricultural expansion.Also in Western Europe there were further smallmodifications to price policies, with the objectof guiding production away from com.moditiestending to be in oversupply. Some countries inthis region laid increasing stress on measures topromote more efficient production and there wassome tendency to reduce farm price guarantees.In Australia and New Zealand a main feature ofagricultural policy has continued to be thesecountries' efforts to preserve traditional marketsin Western Europe and to develop new outletsin other regions.

In the less-developed countries, many of thepolicy changes in 1958/59 were much more far-reaching, in line with the urgency of the need to

51

overcome obstacles to agricultural progress andto increase production as fast as possible. Whilethe introduction of the system of rural comnnmesin Mainland China is the extreme example, a ten-dency to attempt more radical measures was inevidence in several other countries also. One in-stance is the renewal of in.terest in land reformmeasures in a number of countries in the Far East,the Near East, and Latin America. A major fea-ture of most of the new land reform measures isthe strong emphasis they place on the developmentof co-operatives and c-redit facilities for those whoreceive land. Particular stress is being laid on co-operatives in India, where the substantial changesenvisaged include greater state intervention andcontrol over the wholesale trade in food grains andthe gradual organization of rural life on a co-opera-tive basis.

There are also signs of a change in the foodprice policies of certain Far Eastern countries, withthe object of increasing incentives to production.As mentioned above, these policies liad previouslytended to favor the consumer. In Latin America,where this same change in agricultural price policieswas made somewhat earlier in various countries,important price policy developments in 1958/59mainly concerned export products and includedthe in.troduction of a free and fluctuating exchangerate in Argentina, with the aim of facilitating ex-ports and allowing domestic prices to adjust inline with world market prices. In an effort tostem the fall of international coffee prices, is LatinAmerican coffee-producing countries agreed tovvithhold part of their export supplies.

Economic development plans have continuedto be pressed forward as rapidly as possible, thoughreduced export earnings, caused by falling worldprices for a number of the principal agricultural andmineral exports of the underdeveloped countries,hampered the execution of some programs. Manyof the new plans announced or begun in 1958/59gave significantly greater emphasis to agriculturalproduction. Changes in planning organizationwere again made in a number of countries, especial-ly in the Far East and Near East. In the latter regionmost of the semi-autonomous planning bodiesthat had been established earlier were abolishedduring the year under review, and developmentprojects were assigned to the different ministries forimplementation.

The U.S.S.R. and the Eastern European countriesare to some extent special cases, outside the two

broad groups discussed above, not only in thattheir economies are centrally planned but alsobecause, although some of them are relativelyhighly industrialized, the demand for agiculturalproducts has been unsatisfied and has risen fasterthan production in the past. In recent years newdevelopmrent plans have followed or replaced otherplans with rather bewildering speed in these coun-tries and sharp changes in production targets havefrequently been announced. All their more recentplans, however, have been characterized by astrong emphasis on the rapid expansion of agri-cultural production, which had earlier been some-what starved of resources in comparison with theindustrial sector. Again in 1958/59 there were anumber of new plans. That of the U.S.S.R.contains slightly less ambitious agricultural pro-duction targets than heretofore but this mayindicate greater realism rather than any slackeningin the pace of expansion. There were alsoconsiderable modifications in agricultural or-ganization, especially in the U.S.S.R., where furthermajor changes in the collective farms are now atan experimental stage and may be generally intro-duced in the near future.

A development which embraces both the more-and less-developed countries is the continuingtendency toward regional economic co-ordination.The European Economic Community began theoperation of a common market at the beginningof the year and negotiations have continued onfree trade arrangenients for the remaining countriesof Western Europe. Preparatory work towardthe establishment of a Latin American commonmarket has been intensified and further studieshave also been made of the proposed commonmarket for the Arab countries.

The developments summarized here are re-viewed in more detail below, region by region,and brief accounts also follow of the principalchanges in fisheries and forestry policies in 1958/59.

NORTH AMERICA

United States

From about 1956 efforts to bring United Statesproduction more in line with domestic consump-tion and normal export requirements have centeredmainly on the Soil Bank and on a system of flexibleprice supports, combined with earlier measures of

52

acreage restriction. Subsequent proposals havemostly proved highly controversial, principallybecause of the need to reconcile the desire of thefarmer to see no further reductions in his incomewith that of the nonfarm public for a less expensiveagricultural program. Recently, only relativelyminor modifications have been passed into law.

The Agricultural Act of 1958 implemented onlypart of the Administration's original proposals.5 TheAcreage Reserve Program, the more extensivepart of the Soil Bank legislation, was terminatedwith the 1958/59 crop. This costly program liaclbeen rendered virtually ineffective by more inten-sive cultivation of the remaining crop arca. Other-wise, the act chiefly affected cotton, maize, and rice.

For cotton a minimum national acreage allot-ment of 16 million acres was set for 1959 and sub-sequent years. For 1959 and 1960 each cottonfarmer was given the choice, either to adhere tohis acreage allotin.ent with price support at notless than 80 percent of parity in 1959, or to plantup to 40 percent more but at a support level atleast 15 parity points below the first alternative.In the event, an unexpectedly large numberof farmers chose to plant only their acreageallotments. From the 1961 crop, farmers will receiveonly their regular acreage allotment, and pricesupport, based on the average quality of the crop,will be at 70-90 percent of parity for 1961 and65-90 percent thereafter.

Under the referendum provided for in the act,maize producers decided for the abolition ofacreage allotments. Thus, the price support formaize will be at either 90 percent of the averagemarket price for the preceding' three years or 65percent of parity, whichever is the higher. Pricesupports for other feed grains will from 1959 be setby the Secretary of Agriculture at a level " reasona-ble in relation to the price support for maize. "

The Administration had proposed the generalabolition of the " escalator clause, " by whichsupports are automatically increased as soon assurpluses are reduced. The 1958 Act repealed thisclause only for rice,G replacing it by a flexibleprice support at the discretion of the Secretarywithin a range of 75-90 percent of parity for 1959and 1960, 70-90 percent in 1961, and 65-90 percentthereafter. The 1958 national acreage allotment for

5 These were outlined in The State of Food and Agriculture1958, pp. 54-55.

° In addition it is to be abolished for cotton from 1961.

rice was made permanent,. instead of being reducedas liad been envisaged under previous legislation.

Public Law 480, which since its inception in1954 has become the chiefinstrument for the disposalof United States stocks wider special terms, wasagain extended; 2,250 million dollars worth ofsales ao-ainst local currencies were authorized forthe period July 1958 to December 1959.

It was the intention of the United States Govern-ment dining 1959 to revise the legislation for thecommodities subject to mandatory supports whichliad not been covered by the 1958 Act, i.e., mainlywheat, gromidnuts, and tobacco. In the President'sFarm Message to Congress in January 1959 it wasproposed that the prices of these commodities shouldeither be supported at the disc-retion of the Secretaryat 75-90 percent of the average market price ofthe immediately preceding years or, if Congresspreferred the existing concept of parity, the Sec-retary should have the same discretionary powersas he now has for nonmandatory commodities tosupport their prices at any level below 90 percentof parity. A memorandum of the Secretary ofAgriculture accompanying this message containedsome additional proposals, including further ex-tensions of Public Law 480 and of the ConservationReserYe Program, the longer-term part of the SoilBank provisions.

There seeins to be little chance that either ofthe President's alternative recommendations will beaccepted. It is equally uncertain, however, whetherCongress will be able to produce alternative legis-lation that would be acceptable to the Adminis-tration. Special efforts have been made to arrive atsonie solution of the wheat problem that wouldreduce output without too great a decline in. farmincome, but no agreed measure has been foun.d.The only new measure to be passed recently is oneto limit Commodity Credit Corporation loansto an individual farmer or farm corporation to50,000 dollars.

While it therefore seems unlikely that any majorchanges will be enacted in United States farm.legislation in the near future, the mounting costof the present programs and the continuingaccumulation of surpluses make some solution ofthe problem more and more imperative.

Canada

There were no significant modifications inCanadian agricultural policy during the period

53

under review. The Agricultural Stabilization Actof March 1958 liad introduced a permanent systemof mandatory price supports for nine principalcommodities. In 1958/59 the prices of eleven non-mandatory commodities were also supported andthe prices of a number of commodities in this cate-gory will again be supported in 1959/60.

AUSTRALIA AND NEW ZEALAND

To some extent both Australia and New Zea-land adopted a " wait-ancl-see " attitude towardthe fall in their farm prices and export earnings in1958/59 and made no radical changes in their do-mestic farm policies. This was partly because somerecovery in export prices was expected before verylong, a view which has been justified by events inthe first half of 1959. In their trade policies the twocountries have again intensified their efforts toprotect existing export outlets and to developnew ones in the face of increasing difficulties intheir traditional markets in the United Kingdomand elsewhere in Western Europe.

Australia

Some groups of Australian wool growers pressedunsuccessfully for the establishment of a stabilila-tion scheme for wool. For butter, the other prod-uct chiefly affected by falling prices, the guaranteedreturn was raised. Farmers were also given a largerinitial payment for wheat. The stabilization schemesfor d.airy products and wheat were renewed for afurther five years, largely along the general linesof their predecessors.

Australian banking legislation, passed in early1959, included provision for the establishment of aCommonwealth Development Bank, which will belargely concerned with financing primary pro-d.uction.

New Zealand

The New Zealand. Wool Commission maintain-ed the previous season's floor price in 1958/59and bought wool at a number of sales. The dairystabilization scheme, whereby dairy farmers'incomes were augmented by about 36 millionpoimds (U.S.Sioo million) in the two seasons1956/57 and 1957/58, liad completely exhaustedits reserves by the end of the latter season. Pro-

vision was therefore made for a 5 million pound($14 million) government loan to help fmancethe expected. 1958/59 1055CS. For 1958/59, however,the legislation limiting to 5 percent in one yearthe maximum fall in the guaranteed producer pricefor butterfat was suspended and the price reducedby io percent. It was also decided to widertake aneconomic investigation of the dairy industry. Inorder to encourage production and so reduce theneed for imports, the 1958/59 producer price forwheat was raised by 17 percent.

New Zealand signed a trade agreement with theUnited Kingdom in November 1958 whereby,following the general lines of the Australia-UnitedKingdom agreement of the previous year, reducedpreferences could be offered for bargaining withthird countries. Under an agreement made with

Western Germany in April 1959 quotas were estab-lished for some commodities, the right to competefor a share of permitted imports of some others(mainly dairy products) conceded, and provisionmade for necrotiation if New Zealand should suf-fer damage in the German market as a resultof Common Market policies. The latter is apparent-ly the first such undertaking made by a CommonMarket country.

WESTERN EUROPE

During 1958/59 several countries in WesternEurope have made changes in their farm incomepolicies, as a result of the growing cost of supportschemes, the difficulty of marketing the surplusesthat have arisen in certain sectors, and the infla-tionary impetus of the linking of farm incomes toindicators extraneous to agricultural productivity.In the latest farm price and income support nego-tiations, farmers liad in some cases to accept cutsin their claims for direct price and income support,and there is a growing tendency to make themshare in the costs and market risks involved intheir production policies. In some countries therehas been a pronounced shift in government allo-cations from direct subsidies to measures to improvefarm structure and the marketing system. Therehave also been further small modifications in pricepolicies, designed to bring the pattern of productionmore in line with demand. In the less-developedparts of southern Europe agricultural policies llavecontinued to stress the need for investment in landimprovement projects. The European Economic

54

Community has taken the initial measures to im-plement a common market among the six countries.

Doniestic agricultural policies

In Finland a new law provides that, from the1958/59 crop year, farm incomes will be linkedto costs instead of industrial wages. In connectionwith the monetary reform. in France in December1958, the automatic link between agriculturalprices and the prices of certain cost-of-living itemsand of means of production was formally abolished.Prices for the 1959/60 harvest have, however,been fixed no lower than they would llave beenunder the former policy and, in compensationfor rising costs resulting from devaluation, theprix de direction (target prices) for 1961/62 havebeen raised by about 6 percent. Under the newsix-year agreement commencing in September1959, although farm incomes in Sweden continueto follow industrial wages, the income target willbe based on much larger farms than before andsupport to smaller farms will be to a much greaterextent through direct cost contributions. In-tensified efforts are also being made in Sweden torationalize the agricultural structure by the con-solidation of small farms and by the reafforesta-don of poor cultivated land.

Both the United Kingdom and Western Ger-many have put more emphasis on measures toimprove farm holdings rather than subsidies forparticular commodities or for production as awhole. In the United Kingdom, where the 1958Price Review liad made cuts in guaranteed pricesfor wheat, milk, and pig meat which particularlyaffected small farmers, gran.ts will be paid tofarmers with 20 to ioo acres who carry out anapproved improvement plan. There were no ma-jor changes in the 1959 Price Review, thoughcalf and hill cattle subsidies were increased as anadditional encouragement to the rearing of beefcattle. It was stated that any fw:ther expansionof production must be achieved by reducing unitcosts. In Western Germany the 1959 Green Planreduced subsidies on fertilizers and milk but in-creased grants for land consolidation and the en-larcrement of farms.

Among countries in which further adjustmentsto the pattern of production are being made,Belgium, which has already encouraged an ex-pansion of feed grain production as against wheat,intends to reduce its support of the wheat price.

In both. Belgium and the Netherlands budgetaryoutlays for the support or guarantee of milk pricesare to be reduced; although the guaranteed pricein the Netherlands is unchanged in 1959, it appliesto only about 90 percent of production. Up to1958 Denmark was one of the very few WesternEuropean countries that had not supported agri-cultural prices, but as a result of considerablepressure on prices in export markets, measureshave been introduced to protect producer pricesfor grain and to prevent a further shift to pigproduction by farmers who normally sell their

-ain. In Finland, Norway, and Sweden changesin price policies are under discussion which wouldorient production toward commodities not yetin over-supply.

In. southern Europe, price supports for softwheat have been reduced in Greece and Italy asproduction began to reach or exceed domesticneeds for the local varieties. Greek farmers willbe compensated by grants for irrigation and forthe development of the livestock industry. Italyhas reviewed and enlarged its agricultural devel-opment programs and has increased assistancefor buildings, mechanization, and stock breeding.Und.er POT tugal's second development plan (1959-64) there is a substantial increase in investment inagriculture. The Central Bank of Spain has draft-ed a 20-year development plan and in. this alsoparticular attention is paid to the agriculturalsector. In Yugoslavia co-operative farming re-mains the long-term goal and the bulk of fertilizersupplies and also most of the investment in irri-gation works llave recently been directed to theco-operative farms.

European Economic Community

From the beginning of 1959 import tariffsamong the six countries have been reduced by aninitial io percent. Import quotas have been in-creased by 20 percent, except for those representingless than 3 percent of domestic production, whichhave been raised to that level. Countries outsidethe Community benefited from the reduction ofsuch import tariffs as were above the future com-mon tariff of the Conuminity.

During the transitional period member coun-tries of the Community are permitted to concludelong-terrn contracts as a step toward an organizedmarket for agricultural products. The price underthese contracts is to approach that current in the

55

importing country untra Common Market pricehas been agreed. The first such contract wasnegotiated in February 1959, Western Germanyagreeing to buy 650-775,000 tons of cereals an-nually from France dming the next four years.The price will be the world market price plus aproportion of the tax raised by the German Im-port and. Storage Agency, starting at 2/12 and ris-ing by 1/12 every year.

The fixing of a common price for grains is oneof the major problems which the six countriesintend to solve in the near future as a step towarda common agricultural policy. A price muchbelow the present level of the German producerprice would have an adverse effect on agriculturalincomes in Western Germany, while low feedg,rain prices might lead to the overproduction oflivestock products. On the other hand, it is fearedthat a high grain price would cause an undesir-able expansion of wheat production in France andItaly.

While ami increase in the Community's agricul-tural production seems inevitable, mainly becauseof technical advances, at the same time manufac-turing industries are pressing for the maintenanceof present levels of imports so as to assure an ex-port market for their own products. WesternGermany, the largest agricultural importer of theSix, has already signed an agreement with Den-mark guarenteeing import permits for a three-year period for almost the present level. of Germanimports of Danish agricultural products, exceptbutter, which is to be the subject of separate ne-gotiations.

No agreement was reached in the negotiationswhich continued during 1958 for the establishmentof a wider free trade arca linked to the CommonMallet amid embracing all of the OEEC membercountries. Various alternative solutions are at pres-ent under discussion.

EASTERN EUROPE AND U. S . S . R.

Development plans

In the U.S.S.R.. a new seven-year plan. for1959-65 has been begun in place of the sixthfive-year plan (1956-60). Industrial production is tobe raised by 8o percent over the 1958 level andagricultural production by 70 percent. Althoughthe ag-ricultural objective is still very high, the

increases planned for the different products appearto be soinewhat more realistic than in the previousplan (Table H-15).

For grains, not only is the new planned rateof increase very much slower, but the plannedlevel of production per caput in 1965 is less thanthat formerly set for 1960. Furthermore, theincrease is to be mainly in feed grains, thoughit is also planned to expan.a the production of durumwheat, which was formerly exported in large quan-tities. An increased target has been fixed for po-tatoes, partl.y because of the important role intend-ed for this crop in livestock feeding. The targetsare also large for sugar beet and oilseeds. Forfiber crops, especially cotton, a slower increaseis envisaged than under the sixth five-year plan,presumably because of the new policy of devel-oping man-made fibers, the prod.uction of whichis to be expanded twelve-fold.

The planned inc-rease in. U.S.S.R. cattle num-bers amounts to an average of 5.4 million headper year, or much faster than occurred in theperiod 1952-58. However, the new livestock tar-gets published. in 1957 and designed " to exceedthe per caput production of the United. Statesfor milk, meat, and butter " had envisaged anannual increase of some 8 mill.ion head. It appearsthat this 1957 program is two or three years be-hinclhand for milk. Milk production in. 1958 was

'FABLE -- U.S.S.R.: COMPARISON OF NEW 1965 AGRICULTURA!, PRODUCTION TARGETS WITH FORMER 1960 TARGETS AND WITH

AVERAGE PRODUCTION 1949-53 AND 1954-58

56

57.8 million tons instead of the planned 70 million.For meat, in order to catch up with the UnitedStates, it was intended to produce 21 million tonsby 1960 OT 1962, but the new 1965 target is muchlo-wer.

Under the new U.S.S.R. plan, increased ag,ri-cultural production is to come very largely fiomhigher yields. Rather than a further expansionof the cultivated arca, crop yields are to be raisedby the continued development of mechanization,improved c-rop rotations, selected seeds, and atrebling of the supply of chemical fertilizers. Inthis connection it is of interest to examine theexpansion in investment in capital and labor, thehigher payments made for farm deliveries, and theincreased means of production, livestock numbers,and cultivated area which have led to the increasesin production achieved under earlier plans. Dataare not always available for comparable periods,but a rough comparison of changes in inputand output is shown in Annex Table 13.

New plans have also been started in a numberof the Eastern :European countries. Bulgariahas begun its third five-year plan (1958-62).Hungary has substituted a three-year plan for1958-6o for its previous five-year plan. In Czecho-slovakia, Poland, and. Romania, although earlierplans have not been sc-rapped, plans goin.g beyond1960 have already been prepared and in the former

' Unofficial U.S.S.R. figure. - n Average 1951-54. - Average 1955-58. -4 Average 1951-54 to average 1955-58.

Grains 80.9 112.9 180.0 164-180 7 11 2-4Potatoes 75.7 83.3 132.8 147.0 2 13Vegetables 10.0 13.9 30.7 '30.9 7 17 12Sugar beet 20.7 34.2 47.7 76-84 11 9 5-7Cotton 3.5 4.2 6.3 5.7-6.1 4 10 4-5Flax 0.23 0.40 0.51 0.58 12 6 4Wool . 0.22 ' 0.28 0.47 0.55 45 13 8Milk 2 36.6 51.1 83.8 100-105 47 14 8-9Meat .5.5 .7.0 12.7 16.0 5 15 11

Millioi units

Eggs .15.2 .20 9 47.0 37.0 47 21 7

Production Targets Average annual increase

Average1949-53

Average1954-58

1960(formertarget)

1965(new

target)

Actualincrease1949-53

to 1954-58

Planned increase

1955-60(forme,.target)

1958-65(new

target)

Million metric tons Percentage

two countries seven-year plans'for 1959-65 havebeen superimposed on the existing five-year plans.

In several respects the new agricultural programsclosely resemble that of the U.S.S.R. describedabove. They also are based mainly on higheryields through mechanization and greater use offertilizers. Improvements in wheat yields of theorder of 20 percent in five years are planned. Asin the U.S.S.R. there are to be sharp increasesin sugar-beet production, Bulgaria planning anincrease of 64 percent and Rontania hoping tobecome self-sufficient. The plans of the EasternEuropean countries lay considerable stress on pro-duction for export. Thus, Bulgaria plans to pro-duce 80,000 tons of oriental tobacco (about 40percent more than in 1953-57) and to increasegrape and wine production and the output of pre-served fruit and vegetables by some 6o-8o percent.

In Poland, an important exporter of livestockproducts, milk production is to be increased. from113 million hectoliters in 1958 to 154 million in1965 and meat production from 2.2 to 3 milliontons. Substantial increases in livestock numbersare planned in the other Eastern European countries.

Agricultural organization

In the U.S.S.R. the two important reformsannounced in early 1958, the sale to the collectivefarms (kolkhozes) of the ag-ricultural machinery ofthe state Machinery and Tractor Stations (MTS)and the tmification of the system of paymentsfor state procureincias,7 have no-w been put intopractice.

The sale of machinery was carried out rapidlyand by the end of 1958 was already completed for83 percent of the kolkhozes. Repair stations (RTS),selling ni2chinery, fuel, etc., have been establishedin place of the MTS, but some of the larger kolk-hozes are setting up their own repair shops.

For sales of agricultural products to the state, astandard average price has been set for each commod-ity, instead of the former system of di.fferent pricesfor the various types of sale or delivery. Thisaverage price is adjusted for the different regionsand accordina- to the size of the harvest. s Thus,

These reforms were described in The State of Food andAgriculture 1958, pp. 65-66.

8 For the very good harvests of 5958 the state paid an aver-age of 63 roubles per quintal for cereals, as against the standardprice of 74 roubles.

57

the mechanism. for fmancial assistance to agri-cultural production is now more flexible than thestraight price increases, practised since 1953, whichhave been condemned for the future in a speechof Mr. Khrushchev. Changes in the price systemwere also necessary, however, to enable the col-lective farms to pay for the purchase and mainte-nance of agricultural machinery.

These two reforms are the prelude to othersubstantial changes in the structure of the collec-tive farms in the U.S.S.R. Some significant or-ganizational changes have already been carried outon a number of kolkhozes, especially on thosecalled by Mr. Khrushchev " laboratories for thereorganization of agriculture, " and are to be pro-gressively introduced elsewhere. Generally speak-ing, these changes bring the organization of thecollective farms close to that of tire state farms(sovkhozes). In the division of the collective farm'sreturns among its members there is a tendencyto increase the part paid in cash and reduce oreven abolish that paid in kind. In further suc-cessive stages of this development, the paymentper trudoden (conventional work day) becomesfixed and then, finally, the concept of the trudo-den is itself given up and a cash wage paid by thehour or for a day of a fixed number of hours.It is also envisaged that the private plots and live-stock of tire kolkhoz inembers will eventuallydisappear completely.

Recently "inter-kolkhoz associations" have in-creasingly been forrned, several collective farmsjoining together and supplying the funds forsome common service, such as building construc-tion, electricity generation., s transport pools, cattlefattening, and reserve funds for seed and forage.Some associations also organize schools, hospitals,honres for the aged, and medical centers, and inthis they bear some resemblance to the Chineseagricultural communes, which are described below.

In almost all of the Eastern European countriesefforts to increase collectivization were strength-ened in 1958. In Bulgaria, at one extreme,collective and state farms occupied as much as96 percent of the agricultural area in 1958. Rapidcollectivization has brought the figure to 78 per-cent in Albania, 75 percent in Czechoslovakia,and. 54 percent in Romania. In Eastern Germany

° In the Ukraine there are already Goo such associationsfor building construction, to which 70 percent of the kollthozesbelong, and ioo for electricity.

the coverage of co-operatives and state farms wasraised from only 35 percent of the land at theend of 1957 to nearly 50 percent in March 1959.In Hungary, where the number of collective farmshad been reduced to 2,089 in 1956, they had risento 4,490 in March 1959 and, together with statefarms, covered 44 percent of the agricultural land.In Poland there has been no inc-rease in the num-ber of collectives since 1956 and., although theirfurther development is the officially declared policy,agricultural co-operatives cover only I percent ofthe agricultural arca; 14 percent of the area is

occupied by state farms and the remaining 85percent by 340,000 individual farmers.

Collectivization is d.eveloping in Eastern Eu-rope toward the so-called " superior " types ofagricultural co-operative, resembling the Sovietkolkhoz. In Bulgaria and Czechoslovakia almostall the co-operatives are of the Soviet type. Re-cent developments in Eastern Germany have fa-vored the " inferior -type, but the `` superiortype are still the more numerous. In Romaniamore than 50 percent of the co-operatives are ofthe looser type. Following the earlier develop-ment in the U.S.S.R., collective farms are beingamalgamated in Bulgaria and. in 1958 3,202 units,with an average area of 1,215 hectares, were com-bined into 1,470 units averaging 2,960 hectares.As in the U.S.S.R., agricultural machinery is tobe transferred to the collective farms in Bulgariaand Czechoslovakia. In Czechoslovakia the pro-portion of cash in the payments to collective farm-ers is to be increased and in Bulgaria the defini-tion of the work day is to be revised.. ThroughoutEastern Europe, including Poland, the proportionalimportance of compulsory deliveries has been re-duced and in several countries it has been announ-ced that, as in the U.S.S.R., the price system forsuch sales is to be unified.

FAR EAST

Policy developments elsewhere in the Far Easthave been rather overshadowed by the sweepingchanges in agricultural organization reported fromMainland China. Nevertheless, 1958/59 was alsoa significant year in the agricultural policy fieldin the rest of the region, especially in India, wherethe National Development Council set out princi-ples for the gradual organization of rural societyon a co-operative basis and for the eventual take-

58

over by producer and consumer co-operatives ofall trading in food grains. Land reform meas-ures were announced for West Pakistan and thespeedy finalization of land reform was urged inIndia. Several countries are showing greater interestin providing incentives for farmers through pricepolicies. The agricultural sector continues to begiven increasing emphasis in economic develop-ment plans, including the several new ones begunor announced during the year.

Mainland China

The organization of rural commwies, whichhad begun somewhat earlier in the year, was madelaw in August 1958. Already by the end of 1958it was reported that the more than 740,000 agri-cultural co-operatives existing in China liad beentransformed into 26,000 communes, embracing 120million peasant families or 99 percent of the total.

Some characteristics of the communes resem-ble the experimental changes now under way inthe organization of the collective farms in theU.S.S.R., but in many respects they are quitedifferent. 10 While the kolkhoz is a purely economicassociation, devoted almost entirely to agriculture,in the Chinese commimes " industry (the worker)agriculture (the peasant), exchange (the trader),culture and education (the student), and militaryaffairs (the militiaman) merge into one. n Theyare also closely involved with local governmentand have much greater disciplinary powers thanthe kolkhozes. Special emphasis is placed on theorganization of common services such as canteens," happy homes for the aged., and especially nurs-eries and other services made necessary by theextensive employment of married female labor.Members may not possess family plots as they didin the co-operatives and their right to a few cattleand fruit trees appears to be only temporary.It is envisaged that houses will eventually be rentedfrom the Chinese communes, but in the U.S.S.R.they are owned by the kolkhoz members. Acombination of a monthly wage with the provi-

1° In the U.S.S.R. there were about 8,0o0 " communesuntil 1933, when they were replaced by the conventional typeof kolkhoz. Although more limited in function than the newChinese communes, they were considered to be too advanceda stage of socialism for application at that time.

11 Resolution of the Central Committee of the ChineseCommunist Party on the Establishment of People's Communesin the Rural Arcas, 29 August 1958.

sion of basic foods or meals is aimed at, but pay-ment by work day is being retained at least tem-porarily. The communes are much larger unitsthan the kolkhozes. It was announced that eachcommune would in principle contain some 2,000families, though existing larger ones would notbe reduced. At the end of 1958 the average num-ber was in fact as high as 4,600, compared withthe average kolkhoz of 245 families in 1957.

In, December 1958 .the Central Committee ofthe Chinese Communist Party reviewed the de-velopment of the communes, and the regionalcommittees of the Party llave since been workingon the revision and consolidation of their structure.The importance of the developments in China,at a moment when the Soviet kolkhozes them-selves appear to be seeking new paths, i.s indisputa-ble. According to their success the Chinese com-munes will come to be considered in the otherCommunist countries either as " laboratories forthe reorganization of agriculture " or as a pre-mature development.

The production plans of the COMMUTICS for 1959are based on the development of a diversifiedeconomy and more stress is placed on cash crops,animal husbandry, and fisheries. The cultivatedarea is to be reduced this year and more intensivecultivation is planned. Following the reportedlyvery successful harvests of 1958, which are said tollave exceeded the targets under the twelve-yearplan (1956-67), new production objectives havebeen formulated. It was announced that it washoped to raise " grain" production (i.e., basicfoods) to 525 million tons in 1959, as against the375 million tons reported. in 1958. This 40 percentincrease seems highly problematical, in view ofthe intended reduction in. arca and the fact thatyield.s were apparently already very high in 1958.

Development plans

In the rest of the region, also, in spite of therecent good harvests, the problem of producingan adequate food supply for the rapidly growingpopulation is still a major preoccupation in eco-nomic development plans. The large crops of1958/59 eased certain pressures on developmentbudgets, particularly in the expenditure of foreignexchange on food imports, but resources for eco-nomic development continued to be insufficient.

Thus, in India further revisi.ons were necessaryin the production goals of the second. five-year

59

plan when it became evident that investment ex-pectations could not be achieved. A recent in-ventory of the resources that could be mobilizedinternally led the government to call for greaterausterity and increased consumer taxes. It is con-sidered essential, if full implementation of the five-year pl.ans is to be achieved, for agricultural pro-duction to be inc-reased substantially and food pricescontained. Special measures arising from this con-sideration are discussed below.

With the change of government in Pakistanin mid-1958, immediate measures were taken tocope with the deteriorating economic situation,especially in respect of food supplies. Strongmeasures to prevent hoarding and the smugglingof grain exports were introduced and prices con-trolled. Grow-more-food schemes were expand-ed and new plans announced for self-sufficiencyin food by 1960. A Special. Committee on Food.Problems was established. for West Pakistan tomake periodic reviews of the food situation, as-sess progTess in the implementation of produc-tion measures, and devise new long-term measures.An evaluation of the first four years of 'Pakistan'sfive-year plan (1955-6o) by the National PlanningCommission discl.oscd that probably only abouttwo thirds of the targets will, be achieved, and thatper caput incomes and living standards llave re-mained about the same. A draft of the scope andobjectives of a second five-year plan has beenprepared..

The Indonesian Parliament aciopted the 12,500million rupiah (U.S.$ 1,096 million) five-year de-velopment plan, retroactive to 1956. In addition125 million rupiahs ($11 were allocatedfor a five-year rice plan, beginning in 1959, withthe aim of self-sufficiency. South Korea, in thesecond year of its five-year development plan,announced a nine-point agricultural program. for1959 for the expanded production of rice, livestockproducts, silk, and. fertilizers. In the Philippinesa five-year prog,ram was begun to increase live-stock numbers and achieve self-sufficiency in meat.

In both North Viet-Nam and North Koreaproduction targets for 1959 llave been set substan-tially higher. Under North Viet-Nam's three-year state plan (1958-60) agricultural productionin 1960 is scheduled to be 74 percent higher thanin 1957, the year taken as the end of the economicrehabilitation period.

In addition to the above new plans and newobjectives, existing development plans were con-

tinued in the other countries of the region. Therewere also a number of changes in the administra-tive machinery for the formulation and executionof development plans. The Pakistan NationalPlanning Board was abolished and a new NationalPlanning Commission set up with wider respon-sibilities in both formulating and implementingdevelopment programs; in ad.dition, in ord.er toachieve greater co-ordination, the Economic Com-mittee of the Cabinet is to give final approvalto the various economic development programsand projects and to review their implementation.In Indonesia a National Plaiming Board was estab-lished to draw up projects within the frameworkof the five-year plan. In South Korea an Eco-nomic Development Council was set up in theMinistry of Reconstruction to administer the de-velopment plan. Burma decided to form co-ordi-nating committees at national and district level toassist in the implementation of the four-year riceexpansion plan begtm. in 1957/58.

Price policies

More interest was shown in a number of coun-tries in stimulating rice production by the use ofprice policies. Guaranteed minimum prices wereraised for the 1958/59 c-rop year in Pakistan, and. inBurma prices were increased for the better grades.In South Korea, where rice prices threatened tofall following the recent large crops, the govern-ment decid.ed to maintain 1959 purchase pricesat the previous year's level. Fwids were also pro-vided for increased purchases under the rice lienscheme, whereby farmers who do not wish to sellimmediately after the harvest may deposit theirsurplus in special warehouses and receive a loanuntil its sale at a later date. On the other hand,mininium purchase prices for rice and pad.dy werered.uced in the Philippines, following a good har-vest and a scarcity of fund.s to implement pricesupports at previous levels.

In India, although statutory authority has exist-ed to prevent food-grain prices from falling un-d.uly, it has not been implemented for several years.There has been a growing feeling, however, thatthe introduction of support prices for food grains,effective at the producer level, was essential as anadditional inducement to increase prod.uction andthat these prices should be announced before thesowing season. Minimum prices for rice andpaddy were in fact set late in 1958 in those states

60

where prices were falling as a result of bumpercrops, and sonie government procurement wasundertaken at support price levels. On the otherhand, rising food-grain prices in some areas havecontinued to cause concern and have led to the fix-ing or continuation of maximum price regulations.

Movements of grain continued to be restricted.Credit was limited for forward trading in grainsand this trading was subsequently banned in early1959. The National Development Council alsocalled for increased control over, and governmentintervention in, wholesale trading in food grainsin order to reduce marketing margins and bringdown living costs. It appears that initially this willconsist of increased government purchases of riceand wheat through licensed wholesale traders, whoare to buy and sell at the fixed minimum andmaximum prices. Furthermore, the distributionof these grains to consumers through " fair priceshops is to be intensified. Apparently the ulti-mate pattern envisages the sale of all marketablefood grains through a nation-wide network ofrural service co-operatives and marketing and con-sumers' co-operatives.

Early in 1959 the Indian government enteredthe market as a buyer of raw jute in areas whereprices liad slumped heavily, buying at slightlyabove the prevailing market rate. In Indonesia,with the dissolution of the monopoly buying or-ganization for copra, prod.ucer prices more thandoubled in 1958 and now reflect much moreclosely changes in world prices. In Japan specialefforts to increase livestock production in the lastfew years resulted in a supply of milk that exceed-ed market demand in 1958, and the policy willnow be to discourage any further increase untilconsumption catches up. In order gradually toeliminate marginal producers, Japan also plans toreduce from April 1960 the minimum prices forwheat and barley, which are at present supportedby a subsidy.

Other policy developments

Perhaps the most far-reaching policy develop-ment in the region outside Mainland China wasin India, where the National Development Councildecided that " the entire rural life should beorganized into service co-operatives by 1965, theend of the third five-year plan. As in China, thisindicates increasing reliance on the mobilizationof rural labor for the implementation of develop-

ment plans, but the changes are to be carried outmuch more gradually. As a first step, during theremaiiader of the second five-year plan. existingco-operatives are to be strengthened and crop loanfacilities expanded. The changes described abovein marketing and pri.ce systems are linked withthis policy. A working group has been appointedto formulate a scheme for completing the change-over to a co-operative form of society.

Also in India, those states which have not yetdone so have been urged to fix ceilings on landholdings before the end of 1959. The CongressParty's Working Committee recommended thatthe states should work out detailed programs toturn over the expropriated land to co-operativefarming. New land reform measures for WestPakistan, involving ceilings on individual holdings,were announced early in 1959. Ceylon's PaddyLand Act, passed early in 1958, was put into effectat the beginning of 1959 in some areas, with theelection of local Cultivation Conunittees empow-ered to select tenants and evict those who donot maintain satisfactory standards of cultivation.

In Pakistan conditions were eased for small loansfrom the Agricultural Development Finance Cor-poration and, in view of the expected need forcredit for the beneficiaries of the land reform, acommission was appointed to investigate the ade-quacy of existing cred.it facilities and recommendimprovements. Ceylon annouriced plans to estab-lish a co-operative development bank and alsobegan a crop insurance scheme in a few pilotareas early in 1959.

NEAR EAST

There was renewed interest in agrarian reformin some Near East countries in 1958/59 and theemphasis on other institutional questions, partic-ularly credit, has also inc-reased. Developmentactivities continued to expand and new programswere prepared in Jordan and the United ArabRepublic. Several countries made changes in theorganization of the bodies responsible for planning,in most cases aiming at the decentralization of theformulation and implementation of plans amongthe various ministries. A large number of bar-ter and other trade agreements were concluded,mainly with the U.S.S.R., Eastern European cowl-tries, and Mainland China. Regional economicco-ordination made further progress.

61

Land reform

Both Iraq and the Syrian Province of the Unit-ed Arab Republi.c introduced land reform meas-ures in September 1958. In addition some crownland was distributed in Iraq and, in jordan, a pro-()Tam has been undertaken to lease state land ata nominal rent to landless farmers for five years,after which they receive ownership provided atleast 75 percent iS Under cultivation.

The land reform laws in both Iraq and the Sy-rian Province of the United Arab Republic setceilings on the ownership of irrigated and non-irrigated land, give priority in land distributionto landless farmers, Bedouins, graduates of ag,ri-cultural schools and small landholders, and alsomake the organization of co-operatives compul-sory for the beneficiaries of the expropriated lands.Because of the limited data on land holding andownership, it is difficult to estimate the probableimpact on the pattern of land holding, but itappears that in both countries it will be felt moreheavily on irrigated land. For the Syrian Prov-ince it has been officially stated that aboutmillion hectares may be available for redistributionand that nearly 250,000 people could benefit from it.

It is not yet clear to what extent the manylocal differences in soil, rainfall, cost of irrigation,access to markets, etc. will be taken into consid-eration in determining the size of the units tobe distributed to new owners, but the uniforinicyin the maximum holding for existing owners in-dicates that some of these may be put at a disad-vantage. The lack, in both countries, of a well-established village structure may make it difficultto provide the credit, seeds, machinery, draft ani-mals, and marketing and other facilities that willbe need.ed by the new settlers. There is also alarge nomadic population and, particularly in Iraq,land titles are not clearly defined.

Development plans

In Jordan the Development Board adopted aten-year plan based on the recommendations ofthe Mission of the International Bank for Re-construction and Development which liad visitedthe country in 1956. The estimated expenditureis iio million dinars (U.S.$ 308 million), of whicha major part is to be covered by United. Statesaid. Agricultural projects pred.ominate and in-clude the construction of the East Ghor canal to

irrigate 12,000 hectares, various sinaller projectsfor water development, the planting of cloverfor fodder, and schemes for fruit and olive pro-duction. The production of potash fertilizers isalso to be developed.

A development plan, to be implemented infour stages, is in preparation in the Egyptian Prov-ince of the United Arab Republic with the aimof doubling the national income in 20 years. Aspart of this over-all plan, a ten-year agriculturalprog-ram, costing 59.8 million Egyptian pounds($172 million) has already been prepared. In ad-dition, work is to begin during 1959 on the firststage of the High Aswan Dam, which should takefour years to complete and will increase the sum-mer water capacity by about 8,500 million cubicmeters. The cost of the first stage is estimated at112 111i111011 Egyptian pounds ($322 million), ofwhich one third is provided by U.S.S.R. credits.Imports necessary for development purposes arelikely to be facilitated by the financial ag,reementsigned with the United Kingdom, for it has beendecided that the frozen balances now released willbe used only for the import of capital goods.

In the Syrian Province a ten-year plan wasbegun in September 1958. Total expenditure isset at 2,041.5 million Syrian pounds ($570 mil-lion), of which over 70 percent is for ag,riculture. 12Projects include the irrigation of a total of i nnl-lion hectares in the Euphrates basin, the Gliabarca and the Khabour basin, artesian wells, thedevelopment of agricultural research, and an ex-pansion of fruit production around Damascus.An interesting feature is that tobacco productionis to be increased over five years to 20,000 tO1lStO meet the requirements of the Egyptian Province.During 1959 the construction of a fertilizer fac-tory with an annual capacity of 100,000 tons isto be undertaken.

The Federal Council of the United. Arab Stateshas also proposed a development program forYemen, and an agricultural mission visited thecountry in early 1959 in this connection.

In addition to these new programs, develop-ment activities continued to expand in most coun-tries. Expenditure under Iran's second seven-yearplan (1955-61) was stepped up in 1958/59. InIraq the new government is reviewing the six-

12 In addition a separate five-year agricultural develop-ment program, costing 99.7 million Syrian pounds ($28 mil-lion), is under consideration.

62

year development prop-am (1955-60) in order toaccelerate industrialization, more intensive farmingin irrigated arcas, and agricultural diversification toprovide raw materials for new industries. Newgrain silos are rapidly being constructed to raisethe capacity from. 27,000 to 270,000 tons, suffi-cient for two months' Supply. In March 1959Iraq obtained a long-term loan of 550 millionroubles ($138 million) from the U.S.S.R. to beutilized for industrial expansion. The propor-tion of annual oil revenues appropriated for thedevelopment budget in 1959 has, however, beenlowered from 70 to 50 percent as a temporarymeasure.

Development expenditures continued to rise inTurkey, aided by loans of 159 million dollars fromthe United States and. Ioo million dollars fromthe OEEC countries and drawings of 25 milliondollars from the International Monetary Raid.Planned investment expenditure in 1959 is some30 percent more than in 1958. During 1958 themajor part of the Demir Köprii Dam, designedto protect 35,000 hectares from floods and irrigatea further 77,900 hectares, was completed.!, In the Sudan the first stage of the ManagilExtension adjoining the Gezira Scheme, whichwill irrigate 81,00o hectares out of an eventualtotal of 325,000, is expected to be completed during1959. The construction of two new dams, atRoseires on the Blue Nile and on the AtbaraRiver, which would irrigate 735,000 hectares, isunder consideration. The United States has pro-vided grants and loans of 30.6 million dollarsto assist in development.

Saudi Arabia, on the other hand, has decidednot to allocate large sums for development pur-poses until financial stability is restored, to whichend several new fiscal and monetary measuresllave been taken since April 1958.

In several countries there llave been impor-tant changes in planning organization. In the Egyp-tian Province of the United Arab Republic thesemiautonomous National Production Council andNational Council for Social Services llave beenreplaced by a National Planning Council in theMinistry of Planning. Each ministry will also havea Planning Division and the National PlanningCouncil will llave six subcommittees to study theprograms submitted by the various ministries.Similarly, in the Syrian Province the Develop-ment Board has been abolished and developmentprojects will be assigned to the different ministries

for implementation. The Plan Organization inIran has been abolished and here also develop-ment projects are being assigned to the ministriesfor implementation, co-ordination being carried outby the Prime Minister's office. Iraq has abolishedthe Development Board and the Ministry ofDevelopment, and has established an EconomicPlanning Council, with the Prime Ministeras chairman, and a Ministry of Planning. InLibya the three existing development programsare to be placed under a unified DevelopmentCouncil. A new committee was established inIsrael to bring together into an integrated de-velopment plan the programs already existing forthe various sectors.

Regional econotnic co-ordination

In January 1959 the Economic Council of theArab League took several measures to strengthenregional economic ties. Six countries T.-reed toestablish the long-discussed. Arab Financial Insti-tution for Economic Development, with an ini-tial capital of 20 million Egyptian pounds ($57million), to grant loans and undertake technicalstudies for governmental and nongovernmentalorganizations engaged in development. The Tem-porary Arab Economic Unity Council was alsoset up to make recommendations on the institutionof an Arab conunon market. The Arab TradeExchange Agreement was amended to extendtariff preference on Arab goods and a resolutionpassed to remove all restrictions on capital move-inent between member countries.

Other policy developments

During the period und.er review a furtherlarge number of barter and other trad.e agreementswere conclud.ed, mainly with countries of the Com-munist bloc. Iraq signed its first trade agreementswith Mainland China and. several Eastern Euro-pean countries. Sudan has concluded barter trans-actions with Mainland China and Hungary tofind outlets for its cotton, a trade agreement wassigned with the U.S.S.R., and agreements withCzechoslovakia and Poland are being completed.The United Arab Republic conclud.ed trade agree-ments with a number of countries, including Japan,Eastern Germany, and Mainland Cl-tina.

Some special export agencies have been set up,including an office to handle the export of fruit

63

in Lebanon, an organization to promote the ex-port of fruit, vegetables, and medical and aro-matic plants in the Egyptian Province of the Unit-ed Arab Republic and a company to promotecotton exports from the Syrian Province.

The principal price policy d.evelopment in theNear East has been the decision of tire SudanGezira Board to remove reserve prices at the be-ginning of 1959. It has continued to Sell COtt011by auction, but some private sales have also beenpermitted. In connection with the devaluation ofthe Turkish currency in earl.y 1959, premium ex-chancre rates were abolished in order to make ex-ports more competitive.

In view of the demand situation for long staplecotton, the United Arab Republic has announcedthat the 1959/60 area will be restricted to 28 per-cent 1CSS than in 1958/59. The Sudan i.s also Con-templating a partial shift to shorter staple cotton.

Several countries have taken steps to improvethe supply of agricultural credit. In Iran 3,500million rials (U.S.$46 million) were transferred totire Agricultural Bank. The capital of the IraqAgricultural Bank is to be increased from 4 toic) million dinars (Su million to $28 million) tosupply credit to the beneficiaries of the land re-form. In Jordan a central credit institution is tobe established to supervise the work of all tireexisting government agricultural credit agencies.The Syrian Province of the United Arab Republichas announced plans to establish a new Agricul-tural Bank with a capital of roo million Syrianpounds ($28 million) subscribed by tire govern-ment. In tire Egyptian Province a 11CW agricul-tural credit scheme is being tried in selected dis-tricts by tire establishment of farmers' co-opera-tives which will later be broadened to handle otheraspects of rural life in addition to agriculturalcredit.

AFRICA

In the African region policy events in 1958/59have been mainly concerned with developmentplanning. New plans have been begun in Ghanaand tire Portuguese territories and are in activepreparation in many other parts of tire region.Tire United Kingd.oin has announced furtherfinancial provisions for assistance in the develop-ment plans of its dependent territories, includinggovernment loans, which are a new d.eparture.

Development plans

In Ghana the second five-year developmentplan (1959-64) went into operation on i July.Requirements during the next five years are esti-mated at about 350 million pounds ($980 million),including roo million pounds ($280 million) for hy-dro-electric development. The government expectsto have about 90 million pounds ($250 million)available from reserves, current revenue and loansfrom the Cocoa Marketing Board, and willembark immediately on projects estimated tocost 132 million poimds ($370 million), 13 tO

WhiCh it is proposed to add as additional resourcescan be mobilized. Among the projects for im-mediate implementation, transport and commun-ications are the largest category (22 percent ofplanned expenditure); agriculture and natural re-sources are to receive 8 percent of total funds.Priorities in the agricultural program are to raisecocoa yields, to establish large areas of rubber andbananas in the southwest, to develop the cattleindustry in the north and the southern savannas,to raise cereal yields in the backward northern re-gion, to irrigate the Volta flood plain, and to studyand promote the use of fertilizers.

A second development plan, for the six-yearperiod. 1959-64, was started at the beginning ofthe year in Portugal and its overseas provinces.In the African territories a total expenditure of8.4 million contos ($292 million) 1S planned., ofwhich more than one third is to come from for-eign loans. Transport and communications areagain the major item in these tenitories, theirshare rising fi-om 35 percent under the first planto 45 percent of the greatl.y expanded total underthe second. The share of agriculture and irriga-tion (including settlement and colonization proj-ects in Angola and Mozambique) is also increasedfrom 31 to 35 percent.

The third development plan for the Frenchten-itories, some features of which were describedin last year's report, was begun in 1958. Therehas been considerable planning activity designedto secure a sharp inc-rease in the pace of develop-ment in Algeria. The development plan for Al.-

" ThC TOO million pounds for hydro-electric developmentis budgeted separately. It is hoped to begin work soon onthe purely hydro-electric aspects of the Volta River Project,independently of any eventual development of aluminumproduction.

64

geria is still in somewhat broad terms, but foragriculture priority is to be given to the produc-tion of intensive crops, especially in the irrigat-ed areas established under the first and secondplans. A number of special bodies llave been setup to carry out detailed planning and co-ordinatethe plan's implementation, including the Conseilsupj.rieur du plan and a new planning directorate.Financial resources will be centralized in the Fondsd'équipement de l'Algérie, to which the govern-ment will make each year in the period 1959-63a minimum contribution of roo,000 million francs($203 million) and a further contribution to bedecided annually.

Further development plans are being preparedfor the Belgian territories and also in Moroccoand Tunisia. The new state of Guinea is no long-er entitled to French grants under the Fonds d'in-vestissement pour le développement é.conomique et so-cial (FIDES) toward its development plan and ispreparing a new plan. Following its politicalunion with Ghana, Guinea received a ro millionpounds ($28 million.) loan from that country.

In most of the British territories current plansrun till the end of 1960. New Colonial Develop-ment and. Welfare legislation has been introducedin the United. Kingdom, making funds availablefor 1959-64 and thus allowing an overlap withthe previous planning period of 1955-60 " to elim-inate any sag in development expenditure.Additional grants of 95 million pounds ($266million) are provided, which, together with theunspent balance from the 1955 Act, makes a totalsurn of 139 million pounds ($389 1111111011) 14 avail-able for the coining five-year period.. HithertoUnited Kingdom financial assistance for the de-velopment plans of its overseas territories has beenentirely in the form of these grants, though co-lonial loans llave also been guaranteed. In view,however, of the recent shortage of loan funds onthe London market, provision has also been mudefor the first time for Exchequer loans of a total of upto Too million pounds ($280 million) over five years,to supplement the existing sources of loan finance.

The Commission of the European EconomicCommunity is studying development projects inthe overseas territories of the members of theCommunity proposed for financing from theEuropean Development Fund.

" These sums cover all the l3ritish territories, includingthose outside Africa.

Other policy developments

Not all of the economic implications of thepolitical changes in the French territories in 1958are yet clear. At the beginning of 1959 an agree-ment was signed with France under which Guineawill remain in the franc zone and will continueto enjoy its former preferential status in the Frenchmarket. The two countries would co-ordinatetheir trade policies and if Guinea wished to enterinto trade agreements with other countries it wouldinform France before beginning negotiations. Pro-vision was also made for technical and educationalassistance and the French Government indicatedthat it would propose the association of Guineawith the European Common Market. The fourrepublics of the former French Equatorial Africahave formed a customs union for the free circula-tion of goods and capital. A customs imion hasalso been concluded amona the countries com-bprising French Test Africa, excluding Guinea.

Morocco and Ttmisia have concluded furthertrade agreements, mainly with countries of theConununist bloc. Ethiopia has also increased itstrade relations with these countries. Ghana hastaken vigorous steps to expand its foreign tradeand has sent trade delegations to a number ofcountries. Guinea has concluded trade agreementswith Bulgaria, Czechoslovakia, Eastern Germany,and Poland.

In the Union of South Africa an interestingdevelopment has been the division of the Ministryof Agriculture into a Ministry for AgriculturalTechnical Services and a Ministry for AgriculturalEconomics and Marketing. Under its reserve pricescheme, intro dUCed in March 1958, the SouthAfrican Wool Board again bought heavily whenthe new season opened in September. Followingthe earlier abolition of fixed prices for mutton andbeef, a system of auctions with a floor price wasalso introduced for pig meat in 1958. A cominitteehas been appointed to investigate the working ofthe meat control scheme and to recommend howsupplies can be improved.

LATIN AMERICA

Difficulties in financing development projectswere again rather widespread in Latin Americain 1958/59. Export earnings were reduced, espe-cially for coffee, and a Coffee Agreement was

65

concluded in an effort to stem the fall in worldprices. Argentina introduced a currency reform,partly in order to facilitate exports, and there weresome further changes in price policies. Meas-ures for regional economic co-ordination receivedfurther attention and preparatory work toward aLatin American common market was intensified.In this region, also, there was some renewed in-terest in agrarian reform measures.

Development plans

With lower world prices forTmany of the majorLatin American agricultural and mineral exportscausing difficulty in financing the import ofcapital goods, the rate of investment appears tohave fallen off in most countries. Latin Americawas also particularly affected by the decline during1958 in the flow of private United States invest-ment abroad. Some development projects liad tobe postponed or curtailed, particularly those in-volving imported equipment, and import restric-tions were reinforced in a number of countries.

An important measure desig-ned to combat theseproblems and increase the supply of loan financefor economic development was the recommenda-tion of the Economic Council of the Organiza-tion of American States in May 1959 to establishan Inter-American Development Bank. It wouldhave a capital of 1,000 million dollars, of which 450million would be subscribed by the United States.

In spite of the financial and other difficultiesduring the year under review, progress was madewith existing agricultural programs and some newprojects were announced. In Argentina a Nation-al Institute of Tecluiology has been establishedfor the promotion of better farm practices, andapicultural development programs for the north-ern provinces are being studied. Bolivia hasobtained a loan of 2.5 million dollars from theUnited States to implement plans for the expan-sion of sugar production. The Subsidized WheatExpansion Program was continued in Brazil andprogress was made in programs for the improve-ment of storage and transport facilities. The Fed-eral Government has submitted a proposal toCongress for increased investment to accelerate eco-nomic development in northeast Brazil, includingthe irrigation of an additional 25-40,000 hectareseach year. Proceeds from the sale of United. Statessurplus foodstuffs in drought-afflicted areas willbe used to finance agricultural schemes.

Implementation of Chile's eight-year agricul-tural and transport development program wasslower than scheduled, mainly because of finan-cial difficulties and inflation. In Colombia thereorganization of the administrative machineryfor agriculture has been completed and changesmade in the structure of thc official planning bodiesto ensure more efficient formulation, co-ordina-tion, and implementation of projects.

In Mexico public investment in agriculture wasincreasingly directed to the improvement of mar-keting facilities in 1958, the large irrigation pro-gram and other projects receiving less funds thanin previous years.

Venezuela has begun a five-year program, cost-ing 660 million bolivares ($197 million), to in-crease meat production and overcome recurrentshortao-es. Funds will be available through theAo-ricultural Bank for the establishment of newcattl.c ranches, irrigation, fencing, the import ofbreeding animals, the purchase of machinery andequipment, and for pig breeding.

Price ,policies

In recent years producer prices in a numberof Latin American countries llave been raised andconsumer price controls removed in order to pro-vide greater incentives for agricultural production.This trend continued in 1958/59, especially in C011-lleCtiOn With the drive for self-sufficiency in sev-eral countries of the region, and there have alsobeen some other significant modifications in pricepolicies.

In Argentina the present policy tends to favorexports as against domestic consumption, whichhad been excessively encouraged before. In theprogressive removal of the controls of earlier years,the elimination of state monopolies has now beencompleted and free trading established for all majoragri.cultural products except wheat. As future meatsupply prospects deteriorated further during theyear, however, restrictions llave been placed oncattle slaughtering and meat consumption in orderto bring about a recovery in cattle numbers. Tomake exports more competitive a single fluctuat-ing exchange rate was adopted at the beginningof 1959, in place of the former system of con-trol.led rates combined with variable aforos andforeign currency retentions amounting in .practiceto different and variable rates for each product.For most agricultural products this involved a more

66

or less substantial devaluation. Agricultural ex-ports are now taxed by retentions of foreign cur-rency of 20 percent for crops and. I 0 percent forlivestock products to avoid inflationary pressurefrom a sudden rise in export earnings. The cur-rency reform represents an important step towardthe long-term goal of free multilateral trade, withdomestic prices free to reflect world market trendsin order to encourage corresponding adjustmentsin production. Minimum price guarantees are con-tinued, however, for all major crops.

Persistent inflation has limited the success ofBrazil's food price and supply control programunder which price ceilings have been establishedand the number of retail outlets increased in aneffort to keep down food prices. At the sametime, price supports for basic food products llavebeen maintained at incentive levels. In Chile thesupport price for wheat was sharply raised in1958/59, following the abolition of pri.ce controlon flour and bread. A rebate of so percent onrailway rates for wheat was maintained, as wellas a special bonus on purchases of fertilizers. Theremoval of price control for milk brought abouta substantial increase in production.

Price policies in the Central American COIT11-tries, especially Costa Rica, El Salvador, and Hon-duras, have continued to emphasize self-sufficiencyin food. supplies. Cuba i.s encouraging self-sufficiency in basic foodstuffs by means of supportprices for maize, rice, meat, etc., and taxes cm theconsumption of imported prod.ucts. In Colom-bia the Instituto Nacional de Abastecimientos (INA) iscarrying out a marketing program designed toreduce seasonal and geographical variations infood prices. In Venezuela changes in import reg-ulations for powdered milk are expected to pro-vide greater incentives for domestic milk produc-tion; assistance to rice producers is to be contin-ued in ord.er to reduce imports.

Falls in coffee prices, accompanied by increas-ing surplus stocks, have particularly affected. theLatin American countries as coffee is the principalexport item in no less than io of them. The LatinAmerican coffee producers have attempted to co-ordinate their policies in Order to avoid furtherdeclines in prices and in September 1958 15 COU11-tries agreed to withold a certain percentage oftheir exportable supplies. Brazil will with.hold 40percent of its crop, TO percent to be utili.zedfertilizer and the other 30 percent for domesticconsumption. The financing of the coffee stock.

has c-reated or aggravated inflationary pressures ina number of countries.

Regional economic co-ordination

Preparatory work for a Latin American com-mon market has continued, with studies anddiscussions at various levels, and most govern-ments 110W desire its prompt implementation. Atthe May 1959 session of the Economic Commissionfor Latin America it was decided to hold o govern-mental meeting in February 1960 at which spe-cific proposals for the common market would beprepared. The draft agreement is likely to be basedon a division of the 20 Latin American countriesinto three groups, according to their degree ofeconomic development. The elimination of cus-toms tariffs would be realized OVer a ten-year pe-riod, at the end of which there might still besome degree of protection in certain countries forparticular commodity groups.

The Central American countries, which arecarrying out a broad integration scheme, have con-cluded a Multilateral Treaty on Free Trade and.Economic Integration and an Agreement on CentralAmerican Integration industries. Other stepstoward an eventual common market embracingthe whole region includ.e discussions by Colombia,Ecuador, and Venezuela on the operation of anintegrated market, and an agreement by Argentina,Brazil, Chile, and Uruguay on initial measures toset up a system of multilateral payments. A furtherdevelopment in the field of regional economicco-operation was the decision to set up the Inter-American Development Bank, discussed above.

Land a:Pm

An agrarian reform was ad.opted. in' ,Cuba inJune 1959. Land ownership iS tO be limited to440 hectares per person or company, except forsuaar5 rice, and cattle Eirms which reach certainbstandards of productivity, for which the maximumis 1,500 hect2res. It is estimated that more than3 million hectares of land will be available forredistribution. The holdings to be distTibuted ormade available for assisted purchase will vary insize with the productivity of the land, with aminimum of about 30 hectares of nonirrigatedland per family of five persons. They will beused for the development of more diversified agri-cultural production, with emphasis OD intensive

67

rather than extensive cultivation. The NationalInstitute of Agrarian Reform created to imple-ment the law is to encourage the formation ofagricultural co-operatives.

Land redistribution is being accelerated in Co-lombia, together with other measures to fosterrural employment. During 1958 plots of govern-ment land were given to more than 3,000 landlessfarmers under Guatemala's farm settlement pro-gram. In Argentina new land reform measuresare being studied, particularly for the northernprovinces.

FISHERY POLICIES

By the end of 1958, 37 countries had ratifiedthe Convention OH Fishing and the Conservationof the Living Resources of the High Seas, whichhad been aareed at the United Nations Conferenceon the Law of the Sea held early in the year. TheConvention established machinery for the exam-ination of measures for the conservation andmanagement of fish stocks. The Conference liadfound no universally acceptable solution to theproblem of the breadth of the territorial sea, andseveral countries have subsequently declared ex-tensions of their territorial sea and taken actionto enforce the new limits. This problem againcame before the General Assembly of the UnitedNations, which has called for a third Conference,to be held in the spring of 1960.

Agreement was reached in early 1959 on a fish-eries convention for the Northeast Atlantic to re-place the International. Fisheries Convention of 1946.The new convention, if ratified by the signatorypowers, will extend the convention area and per-mit new types of measure for the managementof fishing operations.

The International Whaling Convention of 1946is in danger of being abandoned since Japan, theNetherlands, and. Norway have given notice oftheir intention to withdraw unless an ag,reementon catch allocations is reached by 30 June 1959.

At the national level, pressure for increasedgovernment assi.stance or protection for fisheryindustries has been mounting in several countriesin Western Europe and in North America, pri-marily because of the declining profitability ofoperations. Recent policy measures have there-fore been mainly concerned with the rationaliza-tion of prod.uction, processing and marketing opera-tions, the improvement of export prospects, the

stimulation of domestic consumption, and main-taining and improving the income of primaryproducers.

In the United States loan funds for the financ-ing of fishing craft have been inc-reased from roto zo million dollars. A quality inspection sys-tem has been initiated in fish processing establish-ments in Canada. Western Germany has givenhigh priority to the provision of economic assist-ance to the deep-sea trawler fleet, which is burden-ed by heavy debts, and considerable attentionhas also been devoted to marketing improvement.In Norway a government committee recentlymade recommendations for a radical overhaul offisheries policies and proposed the replacement ofS Mall vessels, restricted to seasonal fishing, by lap:,er vessels capable of year-round operations. In

order to promote exports, exchange equalizationpayments to producers of all varieties of fish ex-cept herring are being increased in Iceland. Thesubsidy schemes for white fish and herring pro-ducers in the United Kingdom were renewed,but the subsidy rates for steam trawlers werereduced and the interest rates on loans to thewhite fish fleet increased.

Among the smaller European producers, Bel-o-ium has authorized new measures of financialassistance, including subsidies for vessel operationsand marine research. Yugoslavia has embarked ona program for the development of a trawlfishery. Poland plans to give greater emphasis toexploratory fishing and factory-ship operations.Increased economic assistance to the deep-sea fishingindustry is contemplated in Greece. Ireland hasallocated a substantial sum to the developmentof marine fisheries over a period of five years.

The U.S.S.R.'s new seven-year plan envisagesan increase of two thirds in the volume of annuallandings of its fishing fleet by 1965. The increaseis to be effected by greater emphasis on research,exploratory operations, and the use of factoryships for fishing in distant waters. Mainland.China's targets for fisheries production are evenhigher and, if ful.filled, would probably make thecountry the world's largest fish producer by 1963.

The 1959 budget for fisheries in Japan is to beincreased and gr, eater attention given to measures forraising productivity, to marine research, and to thedevelopment of fisheries exploiting distant waters.

In the less-developed countries, where fisheriescan make a particularly important contributionto dietary improvement, fisheries policies generally

68

ami at streamlining production and distributionmethods in order to widen the market areaand raise per caput domestic consumption.Stress is laid on survey work for the appraisal ofdevelopment possibilities, the promotion of co-operatives, and the organization of regular marketsand supporting institutions and services. In Indiathe preparation of fisheries schemes for the thirdfive-year plan has already begun. Training coursesin administration and technology and the continuedpromotion of co-operatives are important aspectsof fisheries development work in this country.

FOREST POLICIES

Again in 1958/59 there were no substantialchanges in forest policies. There has, however,been an increasing tendency to introduce measuresto improve the productivity of small privateforests, including control measures, fiscal encourage-ment, technical assistance, and the development ofco-operatives.

In land utilization policies, tire better co-ordina-tion of agriculture and forestry is tending toreceive more attention, though only to a smallextent in the less-developed countries. Where ex-tensive afforestation programs are under way thisincreased attention has resulted fi-om tire need tofind suitable land for this purpose. In countrieswhere tire forest is still being cleared, as well asin arid areas where it has been destroyed, how-ever, it can be attri.buted to a fuller understandingof the role of the forest. The latter is also in evi-dence in tire widespread interest in the techniquesof watershed management.

It is chiefly in Western . Europe that tire im-provement of small forests has received attention.At the same time afforestation, once restricted bythe difficulty of fnicling available land., has contin-ued in this region, assisted by th.c developmentof research on the introduction of exotics, on quick-growing species such as the poplar and eucalyp-tus, on tire use of fertilizers and, above all, on ge-netic improvement. In Sweden, for example, aworking party of ag,riculturists and foresters hasarrived at a surprisingly high figure to be plantedin this already heavily forested country. Forest leg-islation continues to be improved and in certai.ncountries, as in Spain, recently renewed legisla-tion will quickly bring results.

hi some countries in Western Europe a consicl-

erable difficulty in implementing forest policies isthe insufficiency and the aging of the forest laborforce, in spite of the rapid development of mech-anization. Measures to increase training facilitiesand to improve living conditions for forest labortherefbre continue to be a major preoccupation.

In the extensive forests of the north and castof the U.S.S.R., where hitherto the forest hadbeen exploited purely on the basis of timber re-quirements and a general forest inventory, atten-tion is now being given to forest management.This is likely to bring about a stabilization of thelesproinkhozes and the development in. these arcasof forest industries supplied oia a permanent basisby tile managed forests. In Eastern. Europe, espe-cially in Bulgaria, Poland, and Romania, consid-erable attention is being given tO the place of theforest in soil and water conservation.

North America has always been the leader indeveloping policies for the multiple utilization offorests At present, more and more attention isbeing devoted in this region to forest develop-ment for tourism and other recreational purposesas a result of urban expansion and the improve-ment of communications. Considerable prog-resshas been made in methods of forest managementmore :adapted to these rising needs.

There has been a substantial increase in the FarEast in research on wood utilization, which is es-sential for the development of forest industries. Inthe Philippines, for instance, a new laboratory isgiving promising results. The most inaportant for-est policy development in this region, however,is the emphasis given to forestry inMainland China,especially to afforestation for erosion and floodcontrol and for productive purposes. It is plan-ned to expand the forested area to 19 percent ofthe total land area by 1965, in comparison withonly 8 percent in 1945.

A main feature of the world commodity situa-tion in 1958/59 was the unusually large increasein grain production. There was a further sharprise in the level of stocks of both coarse grains andwheat. Grain prices generally remained remarkablysteady, however. Other commodities for whichthe production increase was particularly heavy

Commodity survey and outlook

69

Progress in the development of forest policieshas been very small in the Near East, where thefew remaining forest resources are in grave dan-ger of destruction. Among the rare encouragingsigns, an energetic forest policy in Sudan is likelyto lead in the near future to a rational utilizationof forest resources. A school for forest rangersis to be opened in the Syrian Province of theUnited Arab Republic.

Increased exports of tropical hardwoods andthe d.evelopment of towns and of infrastructurehave helped to inc-rease interest in forest industriesin Central Africa. The rapid political changes inthis region, however, are not conducive to thecontinuity of forest pol.icies and it is to be fearedthat the designation of forest reserves may be heldup, with severe effects on industrialization and onthe competition between forestry and agriculturalland use.

In Latin America afforestation continues to bethe major interest in forest policies. Some at-tention is now being given also to the conserva-tion of existing forest resources, particularly inthe form of precautionary measures embodied inlegislation on the alienation of forested state landor taken in the course of settlement programs.Thus, Chile has taken steps to avoid th.e deforesta-tion of the south of the country, and. Venezuelahas established a forestry section in the servicedealino- with colonization and settlement.

Various commercial concerns are interested inthe development of the forests, particularly thetropical forests, of this region., but progress is stillslow, mainly because of the shortage of forest tech-nicians, of training facilities, and of adequate gov-ernment forestry servi.ces. There has recently beensome progress in Central America, while severalstates in Brazil have established or reinforced for-estry services.

included sugar, coffee, and cotton. Export pricesaveraged much lower during 1958 for these com-naodities and also for dairy products, wool, andrubber. The coffee problem became more acuteand unsold stocks rose very substantially. Buttermarketing also faced considerable problenis inWestern European countries during the earlier

part of 1958, the alleviation of which may proveto be only temporary. The increase in the outputof Ens and oils was checked for the first time since1953 and total exports were down by as much as7 percent. Cocoa production recovered, thoughit was still below the 1956/57 peak, and pricesfluctuated sharply, averaging much higher in 1958than the year before.

The commodity outlook for 1959/60 iS for stilllarger supplies of most products, especially grains,coffee, and. cotton. Some of the recent price declinesmay therefore not yet have reached a floor. Sup-plies of beef, wool, and natural rubber, however,are expected to be somewhat tighter in relationto demand.

In the field of international commodity policy,revised agreements on wheat and sugar were con-cluded during the period under review, coveringa larger share of international trade in these twocommodities. In addition an export retentionscheme was agreed to by Latin American coffeeproducing countries.

WHEAT

The iinbalance between supply and d.emand forwheat was accentuated. in 1958/59 by an exception-ally large increase in. prod.uction. Ever since 1952world supply has consistently exceeded effectivedemand, with the consequent accumulation ofheavy carry-over stocks. Trade has expanded, butthis has been mainly because of exports under specialprograms from the United States and., on a muchsmaller scal.e, Callada, France, and Italy. Interna-tional prices, although partially insulated from thesupply position, llave recently been at about thelowest levels since the war.

World production in 1958/59 (excluding theU.S.S.R., Eastern Europe, and China) rose bynearly 13 million tons to an all-time peak, havingpreviously changed very little since 1955. TheUnited States alone increased production by 14million tons, though in countries other than thefour major exporters there was a net decline (TableII-16). In the world as a whole the increase waseven g,reater. The U.S.S.R. reported a harvestof 75 million tons, which is as much as one thirdabove the estimated average of the preceding sixyears. In Mainland China a rise from 24 milliontons to the unprecedented level of 40 mii1ioi tonswas announced.

70

TABLE - WORLD WHEAT PRODUCTION, PREWAR AND1952/53 - 1958/59

Prewaraverage

Average1952-57

1957/58 1958/59(prelim.)

' Production for the years 5934-33 (the prewar average) was abnormallylow owing to droughts in 1934 and 1936. The 1937-41 averages for Canadaand the United States were 10.4 and 23.4 million tons, respectively. - 'Bra-zil, India, Japan, Pakistan. - Algeria, Iraq, Morocco, Tunisia, Turkey,United Arab Republic. - Excluding the U.S.S.R., Eastern Europe, andChina.

The increased output will be reflected in en-larged carry-overs. The 1958/59 season startedwith lower stocks in the four major exportingcountries (42 million tons as against 48 millionin the last three years), but at the end of the seasonthey will probably amount to about si million tons.

Trade was slightly larger in 1958/59. Argentina,Australia, and the United States increased theirexports, but those of Callada were about the sameas in 1957/58 (Table Tr-17). These four countriescontinue to account for 8o percent or more of

TABLE II-17. - WORLD EXPORTSTOF WHEAT ANL) WHEATFLOUR, PREWAR AND 1952/53 - 658/59, BY TRADE SEASON

(JULY-JUNE)

Prewar Average 19581591957/58average 1952-57 (prelim.)

' Including exports from t se U.S.S.R., Eastern Europe, an( China, tothe rest of the world but excluding (except for the prewar average) tradewithin tisis group.

Million metric ions

Argentina 6.6 6.6 5.8 6.5Australia 4.2 4.5 2.6 5.8Canada' 7.2 13.8 10.1 10.0United States 19.5 28.8 25.9 39.8

Total 37.5 53.7 44.3 61.6

Western Europe 31.1 35.6 40.5 39.0Four importing countries out-

side Europe3 11.6 12.5 13.3 12.3North Africa and Near East 3 7.6 13.0 15.0 12.8Others 7.2 10.7 12.9 12.5

WORLD 95.0 125.5 126.0 138.6

Millio t metric tons (wheat equi nient)

Argentina 3.3 2.6 2.1 2,5Australia 2.9 2.5 1.7 2.5Canada 4.8 8.3 8.6 8.5United States 1.5 9.6 10.9 12.2

Total 12.5 23.0 23.3 25.7

Others' 5.8 4.6 6 0 4.3

Worm) 18.3 27.6 29.3 30.0

world exports, though in recent years the exportsof France and Italy llave expanded rapidly. Othertraditional deficit countries, such as Mexico andSpain, have also become net exporters and the flourexports of Western Germany laave increased.

Europe's import requirements llave recentlyshown little increase and in the next few yearsthey are expected to decline steadily. In 1958/59,however, European imports llave increased. Im-ports into Asian countries llave been rising rapidly,but a large part has been provid.ed under specialterms. The wheat requirements of this area willprobably continue to grow as the per caput pro-duction of cereals in the Far East, which is belowthe prewar level, has declined further.

Preliminary indications suggest that the 1959/60crop will also be high. India has reaped a recordcrop and in North America the acreage has in-creased. Import demand will at best scarcelyexceed present levels. Thus, there is no sign ofany fundamental change in the immediate futurein the main wheat problem: the surpluses, whichare large and stili growing in North America, andwhich, more recently, llave developed also insome countries of Western Europe. Any long-termsolution must depend on changes in the level ofprice supports in both importing and exportingcountries and on new measures to cover the vastand rapidly increasing latent requirements of less-developed. countries.

A new International Wheat Agreement, to runfor four seasons from 1959/60, has been drafted.If fully ratified it will assure participating countriesan over-all 75 percent of the commercial wheatimports of importing members, provided pricesdo not exceed the agreed. maximum.

COARSE GRAINS

There was also a very large increase in the pro-duction of coarse grains in 1958/59. Productionand, to a smaller extent, consumption and tradehave been rising in recent years much more rapid-ly than for wheat. Maize production especiallyhas in.creased, mostly in the United. States, wherethe output of maize and grain. sorg-hum, for whichthere has also been an unusually large increase,rose by about 25 million tons between. 1952 and1958. In countries other than the U.S.S.R., East-ern Europe, and China, maize crops increased byabout ri million tons in this period. In the U.S.S.R.

71

the acreage has expanded to more than twice the1952 level.

World production of coarse grains (excludingthe U.S.S.R., Eastern Europe, and China) increasedby 15 million tons to reach a record level in 1958/59(Table II-i8). This was the largest increase since 1952

' Barley, oats, maize, sorghums, millets, mixed grains. - Productionfor the years 1934-38 (the prewar average) was abnormally low owing todroughts in 1934 and 1936. The 1937-41 averages for Canada and the UnitedStates were 9.7 and 89.9 million tons, respectively. - Brazil, India, Japan,Mexico, Pakistan. - Algeria, Iraq, Morocco, Tunisia, Turkey, UnitedArab Republic. - Excluding the U.S.S.R., Eastern Europe, and China.

and compares with an annual average increase of6.3 million tons in the five years IT 953-57. Themain increment in 1958/59 was again in maize,with nearly TO naillion tons more in. the UnitedStates, where the production of barley, oats, andsorghum also rose on a reduced acreage. Barleysupplies were sharply reduced in Iraq and the Sy-rian Province of the United Arab Republic, butrecovered. in Australia and. North Africa.

Trade in coarse grains has almost doubled inzhe past decade and there was a further increasein 1958/59. As in the last few years, the ex-pansion of maize exports was particularly note-worthy. United. States exports of maize re-mained large, mainly as a result of special pro-grams, exports under which averaged 46 percentof the country's total coarse grain exports in1954/55-1957/58. Argentina and. the Union OfSouth Africa increased their maize exports and.United. States exports of barley and sorghum werealso much larger in 1958/59.

At the opening of the 1958/59 season North

Million ietric tons

Argentina 9.2 6.0 7.0 6.5Australia 0.7 1.8 1.3 2.1Canada 7.7 13.5 12.5 13.4United States 72.8 115.7 129.7 143.0

Total 90.4 137.0 150.5 165.0

Western Europe 37.4 43.0 46.2 44.6Five importing countries out-

side Europe 28.4 37.0 38.2 36.6North Africa and Near East 8.7 11.9 12.0 12.1Others' 25.0 31.9 32.0 33.7

WORM 190.1 260.8 278.8 292.0

TABLE II-18. - WORLD PRODUCTION OF COARSE GRAINS, 1PREWAR AND 1952/53-1958/59

Prewaraverage

Average1952-57 1957/58 1958/59

(prelim.)

TABLE II-19. - WORLD EXPORTS OF COARSE GRAINS, PREWAR

AND 1952/53 - 1957/58, BY TRADE SEASON (JULY-JUNE)

Barley, oats, maize, sorghun s, millets. - Including exports from theU.S.S.R., Eastern Europe, and China to the rest of the world, but excluding(except for the prewar average) trade within this group.

American carry-over stocks of coarse grains werealready 7.6 million tons larger than a year before.United States stocks llave now been rising since1952/53 and are expected to increase by another romillion tons to a total of 63 million tons at the endof the crop year. To try to stem a further increase,Suppor t prices for the 19 5 9/60 CrOp have beenred.uced by an average of 17 percent, but thismeasure is linked with the abandonment of acreagerestrictions for maize.

Despite the heavier supplies, international priceshave shown an upward tendency in 1958/59, though

TABLE - ESTIMATED SUPPLIES OF RICE AVAILABLE FOR CONSUMPTION, AVERAGES 190-52 AND 1957-58

'72

by postwar standards they are still low. Pricerelationships have altered, reflecting supply changes,and import prices for barley have consistentlybeen higher than maize prices for the first timesince the war.

In the next few years population growth andrising levels of living should lead to the expansionof the livestock industry and increased utilizationof coarse grains. But production may continue torise faster than consumption and the problem ofsurpluses, at present confined to the United States,may therefore be accentuated.

RICE

Rice production resumed its rising trend in1958/59. With favorable weather, crops in bothimporting and exporting countries recovered fromthe 1957/5 8 setback. There were exceptionallylarge harvests in India and Mainland China.

Although production declined in 1957/58, worldrice supplies in the two years 1957-58 averagedSOMC 30 percent more than in 1948-52 (Table II-20).Per caput consumption increased by about 15

percent over the same period.. In the Far East,where nine tenths of the world.'s rice is consumed,a marked recovery in consumption has occurred inimporting countries, as a result of increases in both

NOTE: Paddy is converted lo milled basis at extraction rates applicable in individua countries or regions. No allowance has been made for changes in stocks,except in the United States. Differences between total export atad impor balances reflect imports into the U.S.S.R. and differences in quantities intransit at beginning atad end of period.

' Food and nonfood. - Mainly Ceylon, Federation of Malaya, India, Indonesia, Japan, South Korea, Pakistan, Philippines. - Burma, Cambodia, Tai-wan, Thailand, Viet-Natas. - 'Export balance in 1957-58 excludes shipments to the U.S.S.R. which totaled 180,000 total in 1957.

ProductionBalance of imports (+)

or exports (-) Estimated total supplies Estimatedper caput supplies

Average1918-52

Average1957-58

Average1948-52

Average1957-58

Average1948-52

Average1957-58

Average1948-52

Average1957-58

Ai Ilion metric tons (milled basis) Kilo. rams

Par East

Importing countries 50.8 62.8 4- 2.9 -I- 3.6 53.7 66.4 81 87

Exporting countries n (excludingChina) 11.3 13.1 - 3.0 - 3.4 8.3 9.7 116 117

Mainland China' 39.0 56.6 + 0.1 - 0.5 39.1 56.1 70 87

Total 101.1 132.5 - 0.3 101.1 132.2 78 89

Latin America 3.1 4.0 -I- 0.1 + 0.3 3.2 4.3 20 22

Africa and Near East 3.0 3.6 -- 0.1 -I- 0.2 2.9 3.8 10 12North America 1,3 1.5 -- 0.5 - 0.7 0.8 1.1 5 6

Europe 0.9 1.1 1- 0.2 -I- 0.4 1.1 1.5 3 3

WORLD (excluding U.S.S.R.) 109.4 142.7 - 0.3 - 0.1 109.1 142.6 47 54

Prewaraverage

Average1952-57 1957/58

Million metric tons

Argentina 7.2 2.0 2.3Australia 0.1 0.7 0.5Canada 0.5 2.5 2.0United States 1.1 5.6 7.9

Total 8.9 10.8 12.7

Others 5.5 4.3 5.4

Woimo 14.4 15,1 18.1

domestic production and imports. In. exportingcountries in this region (excluding China), per caputconsumption, which was already greater than be-fore the war, has remained stable and the increasein. th.eir output has thus permitted an expansion ofexports to deficit countries. In Mainland Chinaproduction and consumption are apparently muchhigher than in 1948-52 and substantial quantitieshave been exported. Most other regions haveshared in the general expansion., but the increasein per caput supplies has been modest.

World exports are more than i million tonshigher tha 11 _11 1948-52 and have thus kept pacewith the growth of production over the period asa whole. Preliminary returns for 1958 indicatethat exports were only about 5 percent less thanthe 5.7 million tons shipped in the previous year.International market prices were also generallysteady in. these years, partly because more thanone half of world trade is arranged through0-overnment-to-o-overnment contracts, some on along-term basis.

In spite of this over-all stability, individualcountries are still faced with disturbing fluctuationsin their trade owing to the effects of weather oncrops. After the drought-affected harvests of1957/58 there was a pronounced decline in exportsfrom Burma and Thailand, the two largest export-ing countries. The total volume of trade was sus-tained., however, by an equally marked expansionin exports from Mainland China, the United ArabRepublic, and some other countries. Importd.emand was stronger, because of the lower cropsand the steady increase in population and per caputconsumption. Some Unporters, notably India,were able to meet part of their additional require-ments by shifting to other cereals available onconcessional terms.

With the larger crops of 1958/59, there is

sufficient rice available to permit an increasein trade in 1959 and international prices fellmoderately at the beginning of the year. In theearly months of 1959, however, the volume oftrade was lower than a year earlier and it seeinslikely that part of the increased export' supplywill be added to stocks.

SUGAR

The postwar increase in sugar production con-tinued in 1958/59. Production of centrifugal sugar

73

outside the U.S.S.R., Eastern Europe, and Chinais likely to have exceeded 38 million. tons (rawvalue), as conipared with 35 million in the previousyear and 33 million tons in 1956/57. World pro-duction is estimated at 48.8 million tons, an in-crease of 4.2 million tons over 1957/58 and ofmore than 90 percent over the prewar years(Figure II-II).

Many factors contributed to the sharp rise inproduction in 1958/59. Weather conditions werefavorable in most of the principal producing areasand probably accounted for about one half ofthe increase. The balance must be attributed toeconomic and technological factors. With thesubstantial increase in world prices at the end of1956 and the first part of 1957 (from. 3.7 to 6.7U.S. cents per lb.), prices paid to beet and canefarmers, as well as factory prices, were raised inmany countries during 1957 and 1958, leading tolarger areas under sugar. Lower prices for somecompetitive crops also made sugar relatively moreprofitable. In Western Europe the beet area roseby io percent and sugar production by is percent.In many countries the expansion of sugar produc-tion for domestic consumption, and to some extentfor export, was the consequence of deliberate na-tional policies and programs, developed some yearsago, to promote ag-ricultural and industrial diversi-fication. Part of the production increase was alsodue to higher productivity through improvedvarieties, greater and more widespread use of ferti-lizers, irrigation, better agricultural practices, andimprovements in transport and milling efficiency.

Consumption, too, continued its steady andrather steep increase (Figure T_I-IT). In 1958 worldconsumption of centrifugal sugar (exludiug theU.S.S.R., Eastern Europe, and China) probablyrose by 1.4 million tons over the 1957 total of 33.8million. As in previous years, the greatest gainswere achieved in the less-developed countries ofSouth America and the Near East. In Asia, how-ever, the increases were not as high as had beenanticipated, partly' because of the difficulties expe-rienced in implementing programs to expand pro-duction.

The uncertain political situation in Cuba helpedfor a time to maintain world prices, but the improve-ment in the production outlook in that countrysuggested that 1959 supplies v,,rould be ample tomeet all foreseeable import demand and pricestherefore weakened. The decision of the Interna-tional Sugar Council in February 1959 to reduce

Million metric tons(raw value)

50

40

30

20

10

o

FIGURE PRODUCTION AND CONSUMPTION OF CENTRIFUGAL SUGAR, AVERAGE 1949-53 AND ANNUAL 1955-58

U.S.S.R., Eastern Europe, and China

Oceania

Africa

Asia (excl. China)

free market export quotas by 7.5 percent (and thatthe exporting countries should withhold from themarket, for the time being, io percent of theirquotas) had little effect on the market, and pricesremained 5 to 7 percent below the Agreementminimum of 3.25 cents per lb. However, itpossible that, in the absence of the stabilizing in-fluence of the newly-negotiated Agreement, pricesmight well have fallen further since supplies atpresent substantially exceed demand.

MEAT

Meat production (in the major producing areasonly and excluding the U.S.S.R., Eastern Europe,

74

South America

North and Central America

Western Europe

and China) is estimated to have been a little smallerin 1958. Production declined in Argentina, theUnited States, and Uruguay. In the world as awhole, however, production probably continuedto increase, as the U.S.S.R. reported a rise of 7percent and the Eastern European output alsoappears to have been higher.

The volume of trade increased slightly, stim-ulated by a marked growth in United Statesimport demand for beef (Tables II-21 and II-22).A large part of New Zealand's exportable beefsupplies was diverted to the United Statcs and,largely in consequence of this, imports of beefand veal into the United Kingdom were 13 percentless than in 1957. World prices for beef rose con-siderably during 1958 and the unit value of United

Production 1948/49-1952/53 1954/55 1955/56 1956/57 1957/58 1958/59

Consumption 1949-53 1955 1956 1957 1958

TABLE II-21. IMPORTS OF MEAT INTO MAJOR IMPORTING COUNTRIES, AVERAGE 1948-52 AND ANNUAL 1954-58

' See footnote I to Tal)lc'Estimate.

Average1948-1952

Kingdom beef imports was 20 percent above1957 levels.

In 1959 the United States output will be larger,with pork and poultry meat accounting for mostof thc increase. Expansion will continue at a m.od-crate rate in Western Europe. In Australia andNew Zealand, where production has grown veryrapidly since the beginning of the decade, the highlevels of 1958 will probably be exceeded. These

Average

1954

1954

75

606

1 977

1955

1955

1956

Thousand metric tons

15 22

48 45

91 191

7 13

66 90

23 32

5 21

16 16

18 20

1 352 1 407

29 30

133 119

415 265

78 44

64 53

151 153

81 97

21 31

45 40

104 146

393 577

7 14

9 46

295 236

409 431

2 3

1956

1957 1958(prelim.)

31 28

65 66

169 164

12 15

124 163

31 29

36 34

33 21

20 27

1 478 1 421

1957

32 38178 378

26 8

2 235 2 392

' Beef and veal, mutton and lamb, pork, poultry, offal, game, horse meat and other meat, fresh, chilled or frozen; prepared meat: bacon, ham, and salt-ed pork; other dried, salted or smoked meat; canned meat. Figures generally exclude unrcnciered pig fat, meat extracts, and sausage casings.

increascs should outweigh the expected fall inArgentina's output and the world total is likelyto exceed the record level ot 1957.

Although the decline in United States cattlenumbers was reversed. during 1958, United Statesbeef prices are expected to remain high throughout1959; a strong expansion of cattle numbers is underway, however, and it is likely that prices willdecline markedly in the early 1960's. Exportable

TABLE II-22. EXPORTS OF MEAT FROM MAJOR EXPORTING COUNTRIES, AVERAGE 1948-52 AND ANNUAL 1954-58

1958(preli m.)

Thousand netric tons

438 441

42 41

70 84

169 161

96 97

37 42

46 64

147 100

606 651

33 '5055 24

295 324

400 416

2 434 2 495

es for the years 5954-58 include the meat equivalent of exported live pigs b it do not include poultry meat, -

Belgium-Luxembourg 43France 25Germany, Western 73Greece 5

Italy 33Netherlands 22Spain 8

Sweden 14Switzerland 15United Kingdom 1 136 1

Canada 15United States

japan

132

Total 1 522 1

DenmarkFrance

IrelandNetherlandsPoland

Yugoslavia

Canada

United States

ArgentinaBrazilUruguay

AustraliaNew Zealand

Total

194 8-1 952

20733

42

7238

5

97

65

372

27

84

247

352

1 641

1 805 2 009

2 072 2 133

17

34

73

4

40

21

1

32

10

209

25

139

1

396

69

107

120

84

24

65

81

285

276

277

391

supplies of beef will be reduced by the fall inArgentine production and world market prices in1959 will therefore stay at high levels. In WesternEurope the situation ni.ay case by 1960, when therecent increased emphasis on beef in. a number ofcountries should cause an increase in production.

Sheep numbers have increased steadily in mostof the major producing countries and supplies ofmutton and lamb will remain plentiful.

Pigmeat production in Western Europe, theprincipal trading arca for pig products, will beonly slightly larger in 1959. Pig breeding wasreduced in some of the major producing countriesin the course of 1958. Western Germany's pro-duction will be about 5 percent less and in theUnited Kingdom there may be some decline fromthe 1958 record level, which was more than 70percent greater than before the war. Bacon andpork prices in Western European markets willtherefore probably average higher than in 1958.In North America, on the other hand, sharp increasesin output have already resulted in mach reducedprices.

The production of poultry meat has increasedrapidly in recent years. The biggest expansion hasbeen in North America, but large-scale productionmethods are also being increasingly applied in theUnited Kingdom and many other countries.Poultry meat will therefore continue to be in abun-dant supply.

EGGS

Egg production and trade continued to increasein 1958. Production was fairly stable in NorthAmerica and the main increase was in WesternEurope, especially in Denmark, the Netherlands,and. Western Germany. There was a new andmarked increase in Italy's imports, but the growthof imports into Western Germany, the world'slargest importer, slowed down. United Kingdomimports, although larger than in 1957, remainedsmall in comparison with the period prior to 1956.Among the exporters the largest gains were achieved.by Argentina, Eastern Europe, and Israel.

Supplies have increased further in 1959, withbigger exports from Denmark and the Netherlands.World prices at the beginning of the year weretherefore much below the corresponding monthsin 1958. As egg production reacts relatively quicklyto price changes, the recent expansion of production

76

in the major trading countries may be followed bysome contraction in 1960. The general trend ofworld production is upward, however, and ef-forts are being made almost everywhere to expandpoultry industries. Many importing countries areincreasing production and exporters may find itmore and more difficult to accomplish any majorexpansion in their sales abroad.

DAIRY PRODUCTS

FOY dairy prod.ucts 1958 was an eventful year.At the beginning of the year the United Kingdom,the United States, and certain other countrieslowered price supports with the specific aim ofdiscouraging milk production. Later there wasa severe butter crisis, with consequential remedialmeasures -whose results will have important lessonsfor the future. There was also increasing concernat the development of " filled milk.

Milk production in the main producing areaswas only slightly more than in 1957. Productionincreased: in Canada, the Netherlands, and. WesternGermany, but bad harvests and lower prices causeda reduction in the United Kingdom and there wasalso some decline in Denmark, Sweden, and theUnited States. On the whole, yields continued toincrease and cow numbers to fall. The UnitedStates Government purchased the equivalent of 5percent of total milk production under its pricesupport operations. Elsewhere, also, high supportsencouraged prod.uction and thus tended to reduceimports of dairy prod.ucts or to increase assistedexports from marginal exporters.

These factors were responsible for the buttercrisis of May 1958, when the import price of NewZealand butter on the London market dropped. to206 shillings per hundredweight, compared with293 shillings a year earlier. As a result the UnitedKingdoin took action, at the request of New Zea-land, to restrict butter imports from Finland., Ire-land, Poland, and. Sweden. Denmark, New Zea-land, and some other major exporters sharplyreduced prod.ucer prices. Certain exporting coun-tries, particularly Denmark, the Netherlands, andSweden, also took special measures to stimulatedomestic butter consumption. Substantial increaseswere achieved in these countries and also in theUnited Kingdom, mainly at the expense of mar-garine. But the other problem, the contractingmarket for butter in almost all areas except the..,

TABLE II-23. BUTTER: PRODUCTION AND COMMERCIAL TRADE, PREWAR TO 1958

Total twentydairying countries

Produc-tion Exports

United. Kingdom, is still not solved. For instance,Belgium, Switzerland, and Western Germanytogether imported 59,300 tons of butter in 1957but only 6,500 tons in 1958. Italy temporarilystopped butter imports in late 1958 and again inJanuary 1959.

Despite these difficult marketing problems, totalexports of butter actually increased in 1958, as a16 percent rise in United Kingdom imports morethan balanced the heavy reduction by other tradi-tional importers (Table II-23). By the end of 1958the London price of New Zealand butter had re-covered to 290 shillings per hundredweight. Therehad also been considerable reductions in the largestocks which had accumulated a year earlier andliad helped cause the ensuing crisis. As a result ofthe improved situation the United Kingdom with-drew the restrictions imposed earlier on importsfrom certain countries.

The expansion of cheese production in the mainproducing countries was checked in 1958 andthere was a marked improvement in prices on theLondon market. Production of condensed andevaporated milk increased slightly, mainly inWestern Germany. For dried milk the big ex-pansion of 1957 was not repeated and there wasonly a small increase in 1958. There was a sub-stantial rise in Canada and. the Netherlands, butproduction declined in Australia, New Zealand,and the United Kingdom, as well as in the UnitedStates, which contributes about three fifths ofworld supplies of dried milk.

The outlook is for a slight expansion in milkproduction in most countries during 1959. Asubstantial increase is forecast for Australia anda small increase expected in the United States.For butter the situation is still uncertain, althoughbetter than a year ago. Much depends on the

Four mainexporters

Produc-Exportstion

Produc-tion

Nine minorexporters'

Exports

Five mainimporters'

Produc-Importstion

Produc-tion

77

United States andCanada

Exports

' Australia, Denmark, Netherlands, New Zealand; for Australia and New Zealand, trade data refer to July-June season. 'Argentina, Austria, Finland,France, Ireland, Norway, Poland, Sweden, Union of South Africa. 'Belgium, Italy, Switzerland, United Kingdom, Western Germany.

reaction of United Kingdom consumption to thehigher prices now ruling and on the extent towhich exports to protected markets can be in-creased. A further uncertainty in the dairy productssituation arises from the growing importance of" filled milk and its implications for the marketfor condensed and evaporated. milk.

FISFIERY PRODUCTS

Fresh and frozen fish

Trade in fresh and frozen fish remained sub-stantially unchanged in 1958. The United States,the leading importer of fishery products, obtaineda larger proportion of the supplies for its fish pro-cessing ind.ustry from foreign sources. Total Unit-ed States imports, for the most part in fresh orfrozen form, probably exceeded. 300 million dollars,valued at the port of shipment. Imports of frozentuna and tuna loins from Japan by United Statespackers were the highest ever. Callada accountedfor about two thirds of United States imports of0-roundfish fillets and blocks, though this was asmaller proportion than in 1957.

Exports of fresh and frozen fish fi-om Icelandand Denmark increased, mainly because of improv-ed market opportunities in both the OEEC coun-tries and the dollar area. Norway's shipments, pri-marily to the United Kingdom, Western Germany,the U.S.S.R., and Eastern Europe, were smaller.

Toward the end of 1958 frozen fishery productsfrom Mainland China, notably squid, guppies,and other speciality items, made their first appear-ance in European markets, principally in Italy andSwitzerland.

Prices of fi-esh and frozen products generally

Thousand metric tons

Prewar averageAverage 1953-571956

1957

2 861

2 8412 8602 909

536

463

478

511

649

635

660

651

441

394

403

393

566

800

799

847

93

60

56

116

488

544

549

567

572

374

416

447

1 158863

853

846

2

7

19

21958 (preliminary) 2 957 517 649 388 870 113 605 451 834 11

remained firm. Reduced groundfish landings onthe Atlantic coast, combined with strong demand,caused a substantial increase in the prices of freshand frozen fillets in the United States.

The frozen, fish trade in Western Europe hasbenefited from an increase in cold storage facilitiesin wholesale and retail distribution outlets andin households, as well as from promotionalcampaigns. These developments promise to resultin significant improvements in the relative positionof the trade.

Dried, salted, and smoked fish

Norway's salted cod exports continued to de-cline in 1958, but its exports of dried unsalted cod,a high proportion of which goes to Nigeria, in-creased slightly. Its exports of salted herring,nearly two thirds of which were destined for theU.S.S.R., were approximately the same as in 1957,in spite of the reduced catch of winter herring.Among new trade agreements concluded by Nor-way was one with Czechoslovakia, under whichfish oil and other products will be delivered inaddition to salted herring.

Canada's exports of salted groundfish and pick-led and dry salted fish, mostly to Caribbean coun-tries, were smaller. Iceland and. the Netherlandsalso were confi-onted by shrinking markets forsalted and other cued fish, especially in the U.S.S.R.and Eastern Europe.

Indonesian imports of dried fish fi-om othercountries in Southeast Asia llave continued todecline and are clown to about one tenth of theprewar level.

Canned fish

Canadian exports of canned salmon were asmuch as three times the 1957 volume. The near-record sockeye salmon catch was the largest in50 years. The United Kingdom absorbed almostall of Canada's exports of this commodity, havingrelaxed restrictions on salmon imports from thedollar area for the first time in 20 years.

The consumption of canned tuna in the UnitedStates was the highest ever in 1958. Both cannedimports and domestic packs were at peak levelsand imports accounted for one seventh of totalconsumption. Among the United States' suppliers,Peru in particular made substantial progress inbuilding up its canning industry. The reappearance

78

in quantity of pilchards in the waters off Califor-nia was another factor responsible for improvedconditions in the Pacific coast calming industry.Market prospects for California canned pilchardswere less favorable than for canned tuna, however.In the long period of low abundance of the species,which liad lasted. from 1951, the industry lostsome of its customers in Southeast Asia to Japaneseand South African competition.

Improvements in the South African pilchardfishery and. the Norwegian herring fishery earlyin 1959 have brightened canning prospects. Mo-roccan sardine packers, however, have been con-fronted by declining demand. Portugal is an-other country seriously concerned about marketprospects for its canned sardine pack, partly be-cause increased competition in Common Marketcountries is expected. from French packers.

The fish canning industry has recently madegreat strides in the U.S.S.R., both through the im-provement of facilities and methods and the expan-sion of production, mainly for the domestic market.

Fish meal

The production of fish meal is still increasing.As a result of the failure of Norway's winter her-ring fishery and a consequent reduction of zopercent in its fish meal exports, the demand forthe exports of the Union of South Africa, Peru,Denmark, and other countries was considerablystrengthened. The Norwegian herring fishery haspartially recovered in 1959, however, and Norwayshould therefore be able to preserve its marketsfor fish meal.

There was a reduction in imports into WesternGermany and the Netherlands of menhaden oilfrom the United States, partly because of the con-tinued decline in United States catches. The de-mand situation for this product is affected by thecompetition of other animal and vegetable oils,particularly from nondollar sources, for use inmargarine production.

FATS AND OILS

The production of fats and oils declined slight-ly in 1958 for the first time since 1953. Totalsupplies (including the estimates now availablefor the U.S.S.R.) were somewhat above 29 mil-lion tons. There were further increases in ground-nuts,. soybeans, butter, and pig fat, but the pro-

duction of copra, linseed, sunflowerseed oil andtallow was lower. As a result of smaller 1957/58harvests, 1958 supplies were reduced in each ofthe largest producing countries - India, MainlandChina, the United States, and the U.S.S.R. -which together represent one half of the world total.

Trade sharply reflected these supply changesand total exports were probably as much as 7percent less than in 1957. Exports were sub-stantially lower for all major commodities exceptgroundnuts, palm products, rapeseed, soybeans,and butter. Copra and coconut oil exports fellfrom 1.3 million tons (copra equivalent) in 1957to less than a million tons in 1958.

Price developments in 1958 were closely re-lated to the international supply situation for in-dividual oils. Prices of " soft " oils, other thanolive oil, declined sharply throughout 1958. Forwhale oil, palm oil, tallow, lard, and olive oil,and also for linseed and other drying oils, priceswere stable or fell slightly. In marked contrast,

TABLE II-24. - ESTIMATED SUPPLY AND DISPOSITION OF FATS AND OILS USED PRINCIPALLY FOR FOOD, 1948-1958

79

prices for copra and palm kernels and their oilsregistered an unusually strong upward movementin 1958, especially during the second half of theyear. The general level of fats and oils pricesrecovered somewhat in the last quarter of 1958,which brought them back close to the level at thebeginning of the year. Average prices for 1958were about 6 percent below 1957 and a littleless than the 1952-54 average.

Most of the contraction in exports was reflectedin lower imports into Western Europe, the prin-cipal market, where net imports are estimated asat least TO percent kss than in 1957. There werelarge but somewhat lower requirements of liquidedible oils to supplement olive oil supplies in south-ern European countries. Raw material purchasesfor the manufacturing industries of northwesternEurope were greatly reduced.. Margarine output,which liad been expanding very rapidly until1956, fell by a further 2 percent because of the ainplesupplies of butter at low prices in the first half

' Includes edible vegetable oils, coconut, palm-kernel and palm oils, tallow, lard and other slaughter fats, marine oils. - 'A limited number of major pro-ducers only. - Constunption in producing countries only.

Average1948-52

Average1953-57 1957 1958

(preliminary)

Percentage distribution

Average1948-52 1957

MTiflioii netric tons Peal tirage

PRODUCTION

Butter and ghee (fat content) 3.3 3.8 4.1 4.2 16 15

Other commodities 18.1 22.0 23.8 23.5 84 85

Total 21.5 25.8 27.9 27.7 100 100

DISPOSITION (excluding butter)

Estimated use inMargarine 2.1 3.1 3.4 3.5 12 14

of which: Western Europe (1.2) (1.6) (1.7) (1.7) (6) (7)Soap 2.7 3.0 3.1 15 13

Shortening' 1.0 1.2 1.1 1.2 6 5

Total 5.9 7.3 7.7 32 32

Retention in ivalor producing regions for oilier usesAsia 4.9 5.6 6.0 27 25

Latin AmericaAfrica

1.10.9

1.60.9

1.71.0

6

5

7

4

Oceania 0.1

Total 7.0 8.1 8.6 39 36

Other uses inNorth AmericaU.S.S.R. and Eastern Europe

2.01.0

2.21.4

2.31.7

11

5

10

7

Western Europe 2.2 3.0 3.5 12 15

of which: olive oil' (0.8) (0.9) (0.9) (1.0) (4) (4)

Total 5.2 6.6 7.5 29 31

of 1958 and also, perhaps, because an upper limitin per caput food fat consumption may have beenreached in a few countries. The long-term declinein soap output also appears to have accelerated..Import demand for lard was lower and importsof drying and technical oils reflected lower ship-ments of linseed and oil. In other regions, retainedquantities of fats and oils principally for food wereagain larger in 1958 (Table II-24).

The outlook is for a renewed increase in pro-duction and export supplies. Late 1958 crops arereported as excellent in Mainland China and theU.S.S.R. United States supplies and exportablesurpluses are appreciably larger than in the mar-keting year that ended in September 1958. WestAfrican groundnut crops are lower but, includingcarry-overs, exportable supplies are Still well abovethe recent average. Copra supplies should in-crease following more favorable weather.

Larger import demand, particularly in WesternEurope, is likely, also some improvement in worldprices. Price ad.vances were held in the earlymonths Of 1959 and imports into SOMC north-western European countries were at a higher rate.European dernand for soap manufacture is expectedto decline further, but margarine manufactureshould increase and use of industrial and dryingoils should return to more normal levels. Althoughthe Mediterranean countries llave harvested good" off year olive crops, their needs for other oilswill again increase. In the United. States domesticuse is expected to reach a new peak.

FRESH FRUIT

Apples and pears

In recent years the main influence on the levelof world production of apples and pears has beenthe .pronounced fluctuations that llave occurredin the European crop. In 1958/59 there was abumper crop in Western Europe which was morethan double the low output of the previous year.Changes in other regions were small, with someincrease in apple crops in Australia and the Unit-ed States and a sharp reduction, because of latefrosts, in Argentina.

As a result of the heavy supplies some countriesapplied import restrictions and prices generally fellsteeply. European imports of winter fruit appearto llave been considerably less than the year before

80

and the large quantities of apples in storage arealso limiting export possibil.ities from tile SouthernHemisphere in the spring and summer of 1959.

Citrus fruit

Citrus production was also at record levels in1958/59, when it is estimated to have increasedby as much as 6 percent. The United Statesaccounted for most of the increase, though itsoutput of oranges and grapefruit did not quiteTCCOVer frOlT1 the effects of the 1958 frost. Therewere substantial increases in th.e Mediterraneancountries also.

In spite of the increased production, worldtrade in oranges and tangerines was prObably lessin. 1958/59 than in the previous season. Exportsof summer oranges from the Union of South Africafell steeply, as drought damage caused an unusuallyhigh percentage to fail to reach export standards.Import demand for winter citrus was weakenedby the exceptionally large fruit crops in Europe.Bad weather delayed harvesting and shipmentsin a number of Mediterranean countries. Al-though the 1958/59 season for winter orangesstarted in October with higher prices in Londonand Hamburg, quotations declined later.

Exports of lemons appear to llave increasedwith the rise in production. United States exportsare less than the high volume of last year, butItaly has gained a greater share of the market.

Bananas

Exports of bananas expand.ed further in 1958.Shipments from Ecuador, the leading exporter,rose fi-orn 26 to almost 29 million bunches. Thebiggest increases in imports were in France, theUnited States, and. Western Germany. The lat-ter'S imports rose from 120,000 tons in 1953 to300,000 tons in 1956 and. 420,000 tons n 1958,causing a sharp fall in prices, particularly fromSeptember 1958.

DRIED FRUIT AND WINE

Raisins and currants

Although production increased by 2 percentto about 625,000 tons in 1958/59, this was stillrather less than the levels reached in previous years.

The United States crop was again below average.In Greece the production of currants increasedslightly, and sultana production fell by one thirdfrom the record of the preceding season. The de-cline in raisin exports from Northern Hemispherecountries was more than counterbalanced by afurther substantial rise in exports from Australia,which in 1958/59 was the world's largest exporterof raisins. With exports of currants approximate-ly the same as in 1957/58, total exports of driedvine fruit are estimated to h.avc increased by about11,000 t011S 111 1958/59 (Table II-25).

Stocks were unusually low at the beginningof the 1958/59 season. With the small increasein output, total supplies will probably prove small-er than requirements and there will be no unsoldstocks of dried vine fruit by the end of the season.Prices have risen, reflecting the tight supply sit-uation, and price prospects depend mainly onthe size of the new crop.

TABLE 11-25. - WORLD PRODUCTION AND EXPORTS OF RAISINS AND CURRANTS, 1955/56 - 1958/59

RABINSUnited States'TurkeyIran

GreeceSpain

Others

Total Northern Hemisphere

AustraliaUnion of South AfricaOthers

Total Southern Hemisphere

WORLD TOTAL

CUERANTS

GreeceAustraliaUnion of South Africa

WORLD TOTAL

TOTAL, RAISINS AND CURRANTS

al

Dates

Production is estimated to llave been rathergreater in 1958 than the 1.4 million tons recordedin the two preceding years. Date crops in Iranand Iraq increased by about 20 percent. Provi-sional data indicate no substantial change in thelevel of exports. Japan has not coutinued its im-ports of dates from Iraq, but there were largermarkets in the Near East itself, notably in theUnited Arab Republic, Saudi Arabia, Bahrein,and Aden.

Wine

The production of wine recovered from thesharp decline in 1957. In Italy production rose by23 million hectoliters to reach a new record and.Western Germany and Austria also had recordcrops. The vintage in France, though 14. million

' Crop year starting with Southern Hemisphere harvest in first part of period indicated. - 2 Trade season for Northern Hemisphere, September-August;Australia, March-February; other Southern Hemisphere countries, calendar year. - 'Production includes a small quantity of currants. - Production datacover sultanas (seedless raisfns) only, but exports include all raisins. - Exports include a small quantity of currants, - 6 Es,cluding the U,S,S,R,

1955/56 l 1956/57 1957/581958/59(prelim.) 1955/56

I

1956/57 1957/58 1958/59(prelim.)

___....

Tiltotimml metric. torts

204 181 148 156 72 46 25 25

141 186 131 147 27 65 48 58

60 62 63 64 39 39 41 42

42 11 63 43 44 42 58 40

9 9 8 10 5 6 5 6

22 22 22 24 5 3 13 10

478 501 435 444 192 201 190 181

71 46 70 78 55 33 53 69

8 5 s 7 4 5 2 4

8 11 4 3 1 ...

87 62 79 88 60 38 55 73

565 563 514 532 252 239 245 254

65 92 86 81 58 59 65 65

11 14 11 11 7 9 6 8

1 1 1 1 -

77 107 98 93 65 68 71 73

642 670 612 625 317 307 316 327

Production Exports

hectoliters above the low 1957 level, was muchbelow the average and there were also significantreductions in Algeria and Portugal. It is esti-mated that there was a slight further rise in wineexports. France continued to import large quan-tities and, with reduced exports from Algeria,4.1 million hectoliters or one fifth of French im-ports were siipplied by Spain, Portugal, and Greece,which normally export less than 100,000 hectolitersto this destination. In contrast to a decline ofone quarter in Algerian exports, Spain's total. wineexports doubled and those of Greece were almostseven times the 1957 levels.

As a result of the low 1957 output, wine priceshad risen sharply in producing countries fromthe end of 1957. When the expectations of a

good crop materialized in the autumn of 1958,there was a rapid fall in prices.

PRICES

TABLE II-26. WORLD PRODUCTION, PRICES AND GRINDINGS OF COCOA BEANS, AVERAGE 1949-53 AND ANNUAL 1955-59

Average 1948/49-1952/53 1954/55

82

COCOA

It is still difficult to discern a marked longer-term upward trend in cocoa production, althoughthere was a renewed increase in 1958/59 (TableII-26). Production rose in 1956/57 to 895,000 tonsfrom 8oi,000 and 836,000 tons in the two precedingyears, but in 1957/58 it fell as low as 775,000 tons.Estimates of the 1958/59 crop, promising at thebeginning of the season, were reduced afterwardsbecause of unfavorable weather and pest and dis-ease damage in West Africa. Later on, however,it turned out that the crop, while late, would notbe smaller than average. According to presentestimates production is likely to be between855,000 and 870,000 tons, an increase of more than80,000 tons over the previous year, but still belowthe 1956/57 peak level.

1955/56

' Estimate of Statistical Committee of FAO Cocoa Study Group, 12 May 1959. - To April 1959.

1956/57 1957/58 1958/59(prelim.)

PRODUCTION

Thousand metric tons

Africa 499 492 521 584 458 539Ghana and Nigeria (362) (329) (349) (405) (300) (385)French Territories (109) (130) (138) (140) (119) (116)

Latin America 253 298 304 298 304 305Brazil (130) (151) (171) (161) (162) (165)

Asia and Oceanic 8 11 11 13 13 15

WORLD TOTAL 760 801 836 895 775 855

Spot Accra, New York (U.S. cents/lb) 31.4 43.0 29.4 26.9 43.1 39.5Spot Accra, London (sh.d./cwt) 254 /10 338/4 233/4 220/4 348/S 2 311 /4

Average1949-53 1955 1956 1957 1958 1959 (forecast)

Thousand metric tons

GRINDINGS'

Europe 358 382 420 480 425 417United Kingdom (117) (103) (94) (110) (96) (96)Western Germany (51 ) (76) (95) (100) (95) (85 )

North and Central America 290 227 262 273 247 245United States (258) (191) (227) (235) (210) (208)

South America 63 72 71 90 92 92Asia, Africa, Oceania, and U.S.S.R. 45 47 55 54 59 70

WORLD TOTAL 756 728 808 897 823 824

As a result of the low 1957/58 crop, pricesrose fi-om 18o shillings per hundredweight inMarch 1957 to 360 shillings a year later, with theaverage for the 1957/58 crop year at about 350shillings. lhen production had fallen to thcsame level in 1953/54, however, prices had risenas high as about 55o shillings, with an averageof 467 shillings for the year 1954. The differentbehavior of prices in the second period was proba-bly because manufacturers' stocks were higher andan adjustment in consumption was achieved morequickly. Better statistical information also en-abled manufacturers to follow more careful buy-ing policies. The course of consumption since1954 demonstrates that it is quite considerablyaffected by price changes.

During 1958/59 prices have fluctuated between270 and 360 shillings per himdreclweight. Therelatively depressed production outlook at the end.of 1958 strengthened prices, but concern aboutthe effects on consumption exercised a moderat-ing influence and prices quickly reacted to theimprovement in crop prospects early in 1959.Even the comparatively mild inc-reasc in pricestoward the end of 1958 may llave had some ad-verse effects on consumption. World grindingsare estimated at 823,000 tons in 1958, almost iopercent below the 1957 level, and 1959 consumptionappears likely to be no higher and possibly evenlower. Any substantial Mc-I-case in production in1959/60 could therefore llave a marked effect onprices.

COFFEE

In 1958, for the second C011SCCIII1VC year, themajor features of the world.'s coffee economy wererising prod.uction, stationary volume and fallingvalue of trad.e, heavy stock accumulations in pro-ducing countries, and gradually declining prices(Table II-27). International co-operation was on abroad.er basis than before and led to the establishmentof the International Coffee Study Group in June1958 and to the conclusion ot the Coffee Agree-ment in Septernber. Under the latter, 15 LatinAmerican countries, supported. by Fran.ce and Por-tugal on behalf of their African territories, agreedto withhold a percentage of their exportable pro-duction..

World production, estimated at 55 million bags(3.4 million tons) was io percent higher in 1958/

83

TABLE II-27. - WORLD PRODUCTION, IMPORTS, STOCKS, ANDPRICES OE COFFEE, 1956/57 - 1958/59

WORLD PRODUCTIONof which:BrazilTotal Latin AmericaAfricaAsia-Oceania

WORLD IMPORTS 'of which:United StatesWestern Europe

OPENING STOCKSBrazil-Colombia2

PRICES'Santos No. 4Colombia MamsIvory Coast Courant

Thousand metric tons

1958/59(prelim.)

' Calendar year, first year ndicated. - On s July of the first yearindicated.

59, mainly because of an increase of 19 percent inBrazil. Total African output rose by about 6percent, with the largest increases in the Belgianterritories, the Ivory Coast, and. Uganda.

This increase in production was not reflectedin the volume of imports, which, at 2.3 milliontons, were very little more than, in 1957. Antic-ipating a further weakening of prices, buyers havebeen reluctant to purchase beyond immediateconsumption requirements. The United Statesimported 1.2 million tons in 1958, 3 percent leSSin quantity and 15 percent less in value than in1957. Western Europe's imports, however, roseby 7 percent to 0.8 million tons. Exports of mildand robusta coffees were maintained., but Brazilianexports declined by IT percent in. volume and. 19percent in val.ue. Total Latin American coffeeexports Were worth U.S.$1,952 million in 1956and $1,788 million in 1957, blit they earned onlyabout $1,400 million in 1958.

The downward trend in prices continuedthroughout 1958 and. early 1959, particularly forBrazilian coffee, for which prices declined by 33percent between early 1958 and. March 1959. Retailprices in the United States fell by about i i percentduring 1958 anci there were gradual downwardadjustments in some European countries. Con-

U.S. cents per lb.

58.1 56.9 48.474.0 63.9 52.331.0 34.2 36.5

1956/57 1957/58

2 264

1 274748

670

2 510

979

1 870517118

2 259

1 252755

565

3 090

1 4092 420

530

133

2 270

1 212800

935

3 410

1 7302 710

560

133

sumption responded well to the lower prices. Inthe United States roastings increased by 3 percent,to reach the highest figure since 1949, and consump-tion was well maintained. in France, the United.Kingd.om, and Western Germany.

Imports are likely to rise substantially during1959 because of the lower prices and the need inimporting countries to replenish stocks, which atpresent cover only a few weeks' requirements.So far in 1959 Brazilian exports have been rela-tively high. Domestic consumption in producingcountries is also likely to improve as more andcheaper coffee is being made available fi-oni theretained quotas. Stocks, however, will be higherat the beginning of the 1959/60 season than ayear earlier and will probably be around 28 'millionbags (1.7 million tons), which is 70 percent of annualworld requirements. Brazilian stocks were 13.9million bags (o.8 million tons) on i July 1958 andare likely to reach 21-22 million bags (1.3 milliontons) at the beginning of the new crop year.

Growing conditions for Brazil's 1959/60 crophave so far been good and, if the crop is as largeas forecast (30-31 million bags or 1.8-1.9 milliontons), the world output may reach a new recordlevel of 57-58 million bags (3.4-3.5 million tons).In these circumstances, no large-scale buying forstocks is likely and the possible increase in consump-tion alone will not suffice to dispose of the hugeexportable supplies. On the whole, therefore, itwould seem that prices have not yet found theirlong-term equilibrium level.

TEA

Tea production ni 1958 (excluding the U.S.S.R.and. China) was about 750,000 tons, 5 percent morethan in 1957. Production increased in all FarEastern and Afi-ican growing countries exceptIndonesia. India reached the production targetunder the second five-year plan three years inadvance. Ceylon's crop of 187,000 tons was arecord and production in. Pakistan recovered.

Exports exceeded the 1957 level by 30-40,000tons. Among the major consuming countries,the net imports of Callada, Ireland, New Zealand.,the United Kingdom, and the United States wereslightly lower, however, and the larger volumeof world trade was accounted for by higher im-ports in Near Eastern and. North African countries.This is in line with the postwar tendency for rel-

84

atively stable tea imports in western countries andrapidly rising levels in the Moslem countries ofAsia and. Africa.

The large export supplies, consisting mainlyof low and medium quality teas, liad some adverseeffect on buying policies and prices. Althoughthere were no disproportionate fluctuations in.

1958, prices were generally lower and the diffe-rential between quality and plain tea remained. wide.In ord.er to meet the sharper competition in worldmarkets and to encourage sales, Ceylon and Indiareduced taxes and export duties on plain tea.Renewed interest in regulated marketing was ,

evident in the discussions in late 1958 betweenIndian and Ceylonese growers' organizations.

The outlook for 1959 is for still higher supplies.Production is expanding not only in the traditionalFar Eastern producing countries but also in Africa,Latin America, and Mainland China. Productionin China, the third largest producer, is likely toincrease substantially once the areas reported tohave been planted since 1953 are in full bearing.The major part of the expected increase in worldproduction will come from areas producing mainlylow quality tea, however, and high qualities willtherefore remain in strong demand. Excess sup-plies of low quality tea are likely to continue toinfluence prices.

TOBACCO

Tobacco production fell slightly in 1958, main-ly because of lower prod.uction of oriental leaf inGreece, Turkey, and Yugoslavia. United Statesoutput of cigarette tobaccos increased appreciablyand the rising trend in flue-cured, Burley, andMaryland crops is likely to continue in 1959,with the termination of the Acreage Reserve Pro-gram. Callada harvested a record crop in 1958but in the Federation of Rhodesia and Nyasalandthe increase was small, bad weather damagingcrops and lowering quality.

Exports were a little lower than in 1957. Greekand Turkish exports tell and, mainly because ofreduced import demand for American flue-curedleaf, United States exports of unmanufacturedtobacco were 4 percent lower. Exports from Indiato the United Kingdom, its major mark.et, increas-ed by nearly 25 percent.

Prices of flue-cured leaf rose sharply in theUnited States in 1958, owing to the interplay of

reduced supplies and increased domestic demand,and this will cause further difficulties in findingexport markets. Fhie-cured prices declined inRhodesia and Nyasaland and the average price ofdark fire-cured in Nyasaland dropped by almost zopercent because of the lower quality. In Calladabidding at auctions tended to be belOw theminimum grade prices for flue,cured set by theGrowers' Marketing Board. The reduced supplyot oriental-type tobacco resulted in higher pricesfor Turkish tobaccos, but prices in Greece fellbecause of lower quality.

United States stocks declined significantly forthe first time in the postwar period. United King-dom stocks were slightly lower, but in Greecethey liad inc-reased by about one third by the endof 1958. Stocks also rose in Callada.

Cigarette consumption continued to grow in1958, with a mod.erate in.crease in the United Statesand a substantial one in the United Kingdom.There was also some increase in the consumptionof other smoking tobaccos, reversing the trendof recent years. United States cigar consumptionincreased substantially, chiefly because of the grow-ing popularity of smaller cigars and cigarillos.

TABLE H-28. - WORLD SUPPLY AND DISTRIBUTION OF COTTON 1953/54 - 1958/59

1953/54

SOURCE: International Cotton Advisory Committee.

1954/55 1955/56

85

COTTON

Supplies of cotton were slightly heavier in1958/59, in spite of a further reduction in openingstocks from 4.9 to 4.7 million tons, reflecting aconsiderable drop in the United States surplus(Table II-28). World production rose from 9.1to about io million tons. Mainland China reportedan increase of almost so percent and U.S.S.R.production recovered to the 1956/57 peak. Rec-ord yields raised. United. States production, not-withstanding a further reduction in acreage allot-ments, and there were larger crops of long staplesin the Egyptian Province of the United ArabRepublic and in the Sudan.

Consumption is likely to llave been somewhathigher in 1958/59. Expansion is reported in theU.S.S.R., Eastern Europe, and China, as wellas in producing countries in the Near East and LatinAmerica. In the United States and Callada con-sumption rose slightly, but in Western Europe andalso in Japan it was more than io percent lower.Trade may llave contracted from 3.1 to some 2.7million tons. United States exports fell sharply,but most other countries increased their exports.

1956/57 1957/58 1958/59(prelim.)

19 59/ 60(prelim.)

OPENING STOCKS

Million metric !OHS

United States 1.2 2.1 2.5 3.2 2.5 1.9 2.0U.S.S.R., Eastern Europe, and

China 0.5 0.4 03 0.4 0.5 0.7 1.0Ocher: Net exporters 1.1 0.8 0.8 0.6 0.6 0.8 0.9

Net importers 1.2 1.3 1.3 1.1 1.3 1.3 1.1

WORLD TOTAL 4.0 4.6 4.9 5.3 4.9 4.7 5.0

PRODUCTION

United States 36 3.0 3.2 2.8 2.4 2.5 2.9

U.S.S.R. and China 2.4 3.0 3.2 2.8 2.4 2.5

Others 3.0 3.4 3.5 3.4 3.6 3.8

WORLD TOTAL 9.0 8.9 9.5 9.1 9.1 10.0

WORLD SUPPLY 13.0 13.5 14.4 14.4 14.0 14.7

CONSUMPTION

United States 1.9 1.9 2.0 1.9 1.8 1.8

U.S.S.R., Eastern Europe, andChina . 2.6 2.6 2.7 2.8 3.1 3.6

Others 3.9 4.1 4.2 4.6 4.4 4.3

WORLD TOTAL 8.4 8.6 8.9 9.3 9.3 9.7

FIGURE CONSUMPTION OF VIRGIN WOOL IN PRINCIPAL

MANUFACTURING COUNTRIES, 1953-58, BY QUARTERS

(Semi-logarithmic scale)

Thousand metric tons(clean basis)

300 -

200 -

B60 \

_NV°50 D-

10-

30 -

20 -

15 -

10

\

A

. E

1903 1954 1955 1956 1957 1958 1959

A - World (annual data)- Common Market countries

C - United KingdomD - United StatesE - yapan

World prices declined almost continuouslythroughout the first part of the season, the fallfor long staples being particularly steep. OnlyUnited States prices remained relatively stable.By the end. of April 1959 United. States cottonwas 8 percent cheaper, but prices of other types

TABLE II-29. WORLD PRODUCTION, CONSUMPTION, AND STOCKS OF WOOL, 1953/54 - 1958/59

OPENING STOCKS

In supplying countriesIn consuming countries and afloat:VolumeConsumption months 4.0

SOURCE: International Wool Study Group and Commonwealth Economic Committee.' Calendar year, second year indicated. Esthnated.

86

were from io to 23 percent lower than at theopening of the season.

Opening stocks for 1959/60 may show someincrease. An unexpectedly large number of United.States farmers chose to plant only their basicallotments for a support price of 80 percent ofparity, but, with the termination of the AcreageReserve provision of the Soil Bank, the crop istentatively forecast as 2.9 million tons, a rise of16 percent. Chinese and U.S.S.R. plans provide forfurther expansion, but some decline seems likelyelsewhere, especially in the Egyptian Province ofthe United Arab Republic, Mexico, and the Sudan.

The United States 1959/60 cotton export pro-gram continues the subsidy, but it is increased from6% to 8 cents per lb. and subject to revision with-out notice. At the same time the domestic price,based on the new differential support levels, willbe materially reduced. The lower price levelsin relation to man-made fibers will, it is hoped,stimulate demand. Assuming a renewed expan-sion in economic activity, especially in importingcountries, where stocks are now relatively low,an inc-rease in trade seems to be in prospect.

WooL

Wool supplies are estimated to have been about5 percent higher in 1958/59. Producer stocks hadincreased considerably in South America and alsoin New Zealand and the Union of South Afi-ica,where price reserve schemes liad resulted in someaccumulation. The world clip rose to some 1.6million tons (clean basis), reflecting recovery fromdrought conditions in Australia and. the Unionof South Africa and continued expansion in theflocks of Argentina and New Zealand (Table 11-29).

1955/56 1956/57J

1957/58

Thousand metric tons (clean basis)

1958/59(prelim.)

3.8 3.3 3.2 3.5 3.4

1 170 1 191 1 261 1 330 1 305 1 357

1 165 1 198 1 297 1 340 1 266 1 300

97 112 130 92 79 122

386 382 356 358 368 364

1953/54 1954/55

PRODUCTION

CONSUMPTION

The decline in wool consumption th.at had begunearly in 1957 was halted in the third quarter of1958 (Figure II-12). World consumption for thewhole year was only 6 percent below the recordlevel of 1957 The trend toward increasing useof man-made fibers was also reversed at the end.of 1958, when wool became cheaper than mostsynthetic staples. Wool stocks in consuming coun-tries, already relatively light, decreased furtherwith the revival in consumption. Trade expandedby almost 20 percent in the second half of 1958,with increased shipments from South Americafollowing currency reforms.

Prices fell in the first half of the season, thoughless sharply than in 1957/58. Recovery beganin November 1958 for crossbreds and in January1959 for merinos, and April prices ranged from95-105 percent of the level ruling a year earlier.

With increasing economic activity, particularlyin the United States, the revival in the demandfor wool is likely to gather momentum. Newtechniques to give wool some of the characteristicsof the synthetics can be expected to check tosome extent the competition of man-made fibers.

JUTE

Jute crops were considerably larger in 1958/59,although the better qualities were not veryplentiful. Pakistan produced over 1.2 milliontons and India almost achieved self-sufficiency bygrowing 940,000 tons of jute and 290,000 tonsof mesta (kenaf). Minor producers registered

1500

1300

1100

FIGURE I I-I 3. - MONTHLY PRICES OF JUTE AND JUTE

GOODS, CALCUTTA

(Semi-logaritlimic scale)Rupees/m. ton

1953/54 1954/55 1955/56 1956/57 1957/50 1958;59

A - Hessian 40" 10 oz.B - Raw jute (Mill Firsts)

only moderate gains, but further considerableexpansion was reported. in Mainland. China.

The larger crops, combined with somewhatincreased opening stocks, caused a sharp reductionin prices early in the season. By mid-season,however, the fixing of minimum export pricesin Pakistan and the decision of Indian mills topurchase five mouths' requirements stabilized theprice level. Lower prices stimulated demand inWestern Europe. Pakistani mill consumption isrunning 20 percent above last season's level.In India consumption laas not changed much,but improved margins between prices of raw juteand jute products, reflecting the ample supplies ofjute, may encourage a higher rate of consumptionin the near future (Table II-30 and Figure II-13).

For the first time since I950 India has lifted theban on raw jute exports. The relatively low qual-ity of the fiber available for export and the heavyexport duty have, however, discouraged large-

TABLE 11-30. - PRODUCTION AND COMMERCIAL DISAPPEARANCE OF Jurn (AND MESTA iN PAI ISTAN AND INDIA, 1953/54- 1958/59

PRODUCTION

1953/54 1954/55 1955/56

Million metric

1956/57

tons

1957/58 1958/59(prelim.)

Pakistan jute 0.76 0 91 1.27 1.18 1.13 1.24Indian jute 0 56 0.53 0.76 0.78 0.74 0.94Indian mesta 0.12 0.20 0.21 0 27 0.23 0.29

Total 1 .44 1.64 2.24 2 23 2.10 2.47

COMMERCIA DISAPPEARANCE

Indian mill consumption 0.95 1.10 1.21 1.15 1.18 1 18

Pakistan mill consumption 0.05 0.06 0.13 0.16 0.17 0 20Pakistan exports overseas 0.68 0.71 0 79 0.74 0.71 0.77

Total 1 69 1.87 2 13 2 05 206 215

SOURCE: Indian Jute M lls Association and Pakistan Jute Association.

87

SOURCE: ECOn0MiSt Intelligence Unit.

TABLE II-31 WORLD PRODUCTION OF HARD FIBERS, 1953-58

scale shipments. Although Pakistan's exports over-seas are almost io percent greater, the decline inshipments to the Indian market may not beoffset by this increase or by expanded domesticconsumption, and some inc-rease in stocks is

probable by .the end of the season.The Pakistan Government proposed to license a

slightly larger area for jute cultivation in 1959/60,but growers have been reluctant to plant more jute.

HARD FIBERS

At around 760,000 tons, hard fiber proc-luctionwas 3 percent lower in 1958. Abaca production

dropped to 93,000 tons, balings falling by a further25 percent in the Philippines and contracting some-what in Central America and Indonesia. Sisalproduction reached a new record of 517,000 tons.Output in British East Africa rose by 8 percentand there were similar increases in other Africanterritories, though production was considerablyreduced in Brazil and Indonesia. Henequen pro-duction was slightly higher (Table II-31).

Demand in 1958 was sufficient to clearstocks in the principal growing countries. Abacarequirements, although smaller than in 1957,exceeded current production. The use of sisal andhenequen increased with the large grain harvestsin North America. United States imports of hard

TAI3LE II-32. - IMPORTS OF HARD FLBERS INTO PRINCIPAL CONSUMING COUNTRIES, 1953-58

1953 1954 1955 1956 1957 1958(prelim.)

Thousand tt etric tons

ABACA 127 111 117 130 128 93

Philippines 109 100 107 124 119 89

SISAL 401 418 465 490 508 517

British East Africa 207 217 219 227 230 247

Portuguese Africa 54 55 68 66 77 82

Brazil 66 66 90 102 117 102

HENEQUEN 99 120 100 118 119 122

Mexico 87 104 91 106 108 111

OD U2 HARD FIBERS 26 28 24 28 26 ' 26

SOURCE: Economist Intelligence Unir.

1953 1954 1955 1956 1957 1958(prelim.)

Thousand metric tons

United States 219 181 187 174 172 166of which abaca 54 33 35 39 44 42

United Kingdom 76 78 94 81 87 85of which abaca 15 15 18 17 16 14

P fiCommon Market countries 102 130 156 176 183 188

of which abaca 17 16 19 18 17 14

Japan 36 35 44 49 53 47of which abaca 30 26 32 32 34 27

Canada 26 31 36 36 41 34of which abaca 3 3 3 3 3 2

fibers were about 5 percent less than in 1957,however, because pf increasing imports of Mexicantwines. In Western Europe the level of importswas unchanged, but sisal partly displaced thescarcer abaca. Japanese imports fell by 25 percent(Table II-32).

The downward trend in abaca prices, begunin mid-1957, had been halted in May 1958 and byMarch 1959 prices were higher than at any timesince the Korean crisis. Sisal prices became firmerafter mid-1958, following a decline in Braziliansupplies.

Demand for ropes and twines may well show anexpansion in 1959, espcially ,in the United States,and total consumption of cordage fibers should begreater than in 1958, provided harvests are normal.Abaca production SUMS unlikely to make a fullrecovery in 1959 and sisal and henequen may in-crease less than in 1958. Continued scarcity ofabaca and reduced pressure fiom Brazilian sisal maykeep prices higher than in recent years.

RUBBER

Natural rubber production was slightly higherin 1958 (Table II-33). The main increase was inthe Fed.cration of Malaya, both on estates and small-holdings, and production also increased in Ceylon,India, Thailand, anci Viet-Nam. Indonesian produc-tion is estimated to be about the same as in 1957.

World consumption reached a record of ahnost2 million tons, chiefly because of an unprecedent-edly large offiake in the U.S.S.R., Eastern. Eu-rope, and China. However, consumption in theUnited States fell by a further io percent to thelowest level since the Korean crisis and UnitedKingdom consumption continued to decline as

TABLE 11-33. WORLD PRODUCTION, CONSUMPTION,

AND STOCKS OF NATURAL RUBBER, 1953-58

Production

Consumption

Stocks at end of year

1953

1 755 1 839

1 631 1 803

716 732

1954 1955

SOURCE: International Rubber Study Group.

1956 1957 1958(prelim.)

77,ousand netrie tons

1 948 1 918 1 933 1 990

1 910 1 933 1 915 2 017

765 739 765 749

89

usage of synthetic rubber increased. In WesternEurope and in Japan consumption was stationary.Toward the end. of 1958 consumption generallyshowed signs of expanding (Table II-34).

World stocks dropped slightly between Decem-ber 1957 and December 1958. After an initial fallwhich brought them into lisie with prices of syn-thetic rubber, prices of natural rubber began torecover in May 1958, rising rapidly until Novem-ber and continuing firm with only a slight setbackat the end of the year. At the same time, marginsbetween prices of different grades narrowed.

In 1959 consumption is expected to increasefurther. The industrial expansion programs of theU.S.S.R. and China entail substantial growth inrubber requirements, which may, however, bepartly met by synthetic rubber. Recovery in UnitedStates consumption may gain momentum duringthe year, but the synthetic rubber capacity is notfully employed. Increases in Western Europe,where new synthetic rubber plants llave been con-structed, may be less pronounced. At the presentrate, supplies of natural rubber may fail to keep upwith demand in the short run. The upward pres-sure on prices may stimulate the expansion ofsynthetic rubber utilization.

FOREST PRODUCTS

Roundwood

World roundwood production again declinedslightly in 1958 (Table II-35). In 1957 the decreasein production liad been due to a reduction ofabout 8 percent in fellings in North America as aconsequence of the recession, while in other partsof the world production had continued to rise. In1958, however, the slowing down Or cessation ofindustrial expansion red.uced consumer demandfor most categories of forest prod.ucts in other partsof the world as well. This led to lower raw ma-terial requirements in most forest industries, partic-ularly in Europe. As in 1957, the decline in outputwas almost entirely in industrial roundwood, fuel-wood production remaining more or less un-changed.

In North America the drop in output of indus-trial round.wood was smaller than in 1957. Therecession leveled off during 1958 and, toward theend of the year, industrial production and especiallyd.welling construction was again on the uptdrn.

United StatesNaturalSynthetic

Total

United KingdomNaturalSynthetic

Total

Western EuropeNaturalSynthetic

Total

Japan

NaturalSynthetic

Total

Eastern Europe and U.S.S.R.Natural

Mainland ChinaNatural '

Rest of WorldNaturalSynthetic

Total

Souace: International Rubber Study Group.' Imports.

As demand continues to rise in 1959, productionis likel.y to increase and may regain the 1956 level.

Sawlog production remained at the 1957 levelin Europe. As the demand for sawnwood declinedduring the latter part of 1958, however, fell-ings are on a reduced scale in the current season. Inthe northern countries, output was as much as 20percent less than in the 1957/58 felling season.With reduced coal output, the demand for pitpropsdeclined and their production fell from 16.8 mil-lion cubic meters in 1957 to 15.7 million in 1958.Pulpwood production also declined because of ared.uced demand for pulp prociucts. The improv-ed economic situation may increase demand forforest products in this region in 1959. Large stocksin exporting countries, however, together withsome reduction in prod.uction in certain forestindustries are expected to keep raw material re-

TABLE II-34. RUBBER CONSUMPTION IN PRINCIPAL INDUSTRIAL AREAS, 1953-53

1953 1954 1955 1956

Thousand metric tons

562 606 645 571 547 493

797 647 909 888 943 886

1957 1958(prelim.)

1 359 1 253 1 554 1 459 1 490 1 379

233 243 250 196 184 178

5 9 21 40 58 64

228 252 271 236 242 242

392 452 475 461 470 46840 52 80 115 156 167

432 504 555 576 626 635

90 90 89 111 132 129

2 2 4 9 13 16

92 92 93 120 145 145

106 50 86 212 169 284

61 63 51 96 117 150

247 299 314 286 296 31542 42 66 99 107 114

289 341 380 385 403 429

90

quirernents at about the same level as in 1958.North American exports of sawlogs, both conif-

erous and broadleaved, remained at the 1957 level.In Europe trade in coniferous sawlogs increased..European exports of broadleaved logs fell,though there was a rise in imports because of in-creased demand for tropical logs. While the U.S.S.R.was able to increase its exports of pulpwood andpitprops, exports from North America and Eu-rope, especially of pitprops, declined. Exports ofbroadleaved logs from Africa were at about thesame level as in 1957.

Sawnwood

After a decline of about ro million cubic metersin 1957, world production of sawnwood was main-tained at about 285 million cubic meters.

TABLE 11-3 5. - WORLD PRODUCTION AND TRADE IN FOREST PRODUCTS, 1953-58

North American output increased slightly, hav-ing fallen by about 12 percent in 1957. Renewedactivity in residential construction in the UnitedStates revived demand for both United States andCanadian sawnwood in 1958. The output of sawnsoftwood and hardwood took an upward turnin the second half of the year and the improvementhas continued in the first months of 1959.

in Western Europe the output of sawnwoodchanged little from the 1957 level, despite lowerrequirements. This led to a certain degree of over-production and to increased stocks in exportingcountries. The incipient recovery evident in theEuropean economy and increased activity in housebuilding at the beginning of 1959 have been favor-ing dernand anew. As shippers have large stocksstill to be absorbed, however, somewhat red.ucedproduction in the main exporting countries is ex-pected to lead to a lower over-all output of sawn-wood in 1959.

Following an increase of about 5 percent in 1957,there was a slight reduction in the production ofsawnwood in Asia (excluding China). In otherregions changes were generally srnall, except inthe U.S.S.R., where the steady rise in output con-tinued during 1958.

91

The pattern of world trade in. sawnwood show-ed some changes in 1958. Favored by the recov-ery in the United States, Canadian exports to thatcountry rose. Exports from Canacia to Europed.eclined, however, lower prices for sawn soft-woods on the European markets making Canadiansawn goods less competitive, despite the exception-ally low level of freight rates. In Europe, tradein sawn softwood was reduced, with lower vol-umes recorded by all the major exporters exceptFinland and the U.S.S.R. During the early monthsof 1959, the market has shown signs of recoveryand forward sales as well as exports are wellabove 1958 levels.

Woodpulp

The steady 7 to 8 percent annual increase in out-put achieved by the pulp industries since the warslowed to a rise of I percent in 1957 and came toa halt in 1958. In. 1957 the fall in production oc-curred in North America, owing to the recession,and was offset by increased output elsewhere. In1958, however, production ceased to expand inEurope and Asia also.

In the United. States the decline in production

1953 1954 1955 1956 1957 1958(prelim.)

Million ct bic meters

RoundwoodProduction' 1 470 1 552 1 601 1 625 1 597 1 580Exports 18.4 21.3 27.0 26.6 27.3 24.9

SawnwoodProducdon 266.3 273.9 295.5 293.9 283.2 285.0Exports 28.7 32.1 35.7 31.8 33.8 32.9

MywoodProducdon 8.3 9.0 10.7 11.3 11.7 12.1Exports 0.5 0.8 1.0 0.9 1.1 1.0

Million metric tons

VVood pulpProduction 39.1 42.4 46.6 49.8 50.1 50.0Exports 6.0 6.9 7.6 7.8 7.8 7.5

NewsprintProduction 9.8 10.4 11.2 12.0 12.3 12.0Exporn 6.0 6.2 6.6 7.0 6.9 6.7

Other paper and paper boardProduction 38.5 40.8 46.4 48.0 48.9 49.7Exports 2.3 2.8 3.2 3.2 3.6 3.5

' Including fuelwood. - 'Logs, plywood, pitprops, fuel ood, poles, pilings and posts.

in the chemical pulp sector was only slight and amoderate increase in Canada brought total NorthAmerican production to about the same level asin 1957. Mechanical pulp production, however,declined by about 4 percent. In Europe, wherea slackening in demand led to reduced production,principally in the exporting countries, chemicalpulp decreased by about i percent and mechanicalpulp by about 3 percent. The expansion of pulpproduction was also interrupted in Japan, outputfalling by about 5 percent. The volume of bothinter-regional and intra-regional trade in pulp wasalso affected.

As pulp production capacity continued to ex-pand in 1958 and demand to flag, the margin of sur-plus capacity again increased and operating ratiosfell further. In the United States the pulp indus-try operated in 1958 at only 83 percent of its prac-tical capacity. The producers of mechanical pulpin northern Europe decided to reduce their outputto 65 percent of normal capacity in order to achievea better balance between supply and demand..

In 1959 the upturn in e CO nomic activity inNorth America as well as in Europe will probablybring about a rise in demand for pulp and anincrease in prod.uction. As new capacity is stillbeing added., however, output will probablycontinue to be much below capacity.

Newsprint

World production of newsprint, which hadrisen without interruption until 1957, declined bymore than 2 percent in 1958. European outputwas at about the 1957 level and that of Asia increased

92

slightly, but production in North America drop-ped by about 4 percent.

The decrease in North America was largelydue to a decline in domestic demand, the fall ineconomic activity resulting in less advertising andsmaller newspapers. Newsprint production inthe United States was reduced by about 3.5 per-cent, and Canadian production, mainly dependenton exports to the United States, by 4.5 percent.,Reduced exports to the United States and the lowerlevel of economic activity also influenced the out-put in Europe. While the downward trend inproduction continued into 1959, a rundown innewsprint stocks suggests that it may be reversedlater in the year. Since capacity was further in-creased in 1958, bringing the operating ratio clownto about 83 percent, manufacturers are well ableto meet new increases in demand.

Other paper and board

The production of paper (other than newsprint)and board showed a general upturn during the lat-ter half of 1958, raising the year's over-all outputby about i million tons. In the United States the1958 paper production was about the same as inthe previous year and paperboard production,which increased sharply during the last quarter,rose slightly. In Europe and Asia the productionof paper and paperboard rose by about 3 percent,a much smaller increase than in previous years.

In view of the recent mercase in. the rate ofgrowth of production, which liad been checked bythe recession, the outlook for 1959 can be regardedas favorable.

Chapter ¡TI - AGRICULTURAL INCOMES AND LEVELS OF LIVING IN

CO RUS AT DIFFERENT STAGES OF ECONOMIC DEVELOPMENT

For many reasons there has been a growinginterest of late in the levels of living of farm andrural people. Present clay concern with economicdevelopment and social welfare makes it naturalto inquire whether there has been any recentimprovement in their condition and how it com-pares with that of people living in towns, for inmany countries those engaged in agriculture areamong the poorest and least privileged membersof the community.

There are also economic motives which haveled to increased interest in measuring levels ofliving in agriculture. Many of the more industrializ-ed countries now pay, directly or indirectly, largesubventions to apiculture in the form of pricesupports, subsidies to improve farming efficiency,and so forth. This may be done for social, defense,economic, or other reasons. In these countriesthere is much interest in how rural and urbanincomes and living conditions compare, largelyas a guide to policy.

In economically less-developed countries, in-terest has arisen not only from social motives, butalso from the gTowing realization that the verylow incomes of their farm people are an obstacleto the expansion of agricultural production whichthey badly need to provide for the rapidly grow-ing population, especially in towns, to raise nutri-tional levels, and often for economic motives ofexport expansion or import saving. Low agricul-tural incomes reduce the funds available for invest-ment to improve agriculture and also the incentivesfor investment. In extreme cases they seriouslyimpair the cultivators' capacity for work.

The purpose of the present chapter is to assemblethe rather scattered and incomplete informationon farm or rural incomes and levels of living incountries at different stages of economic develop-ment, and to reach some conclusions on howthese levels compare between countries, with in-comes and levels of living in towns, and whetherany measurable improvement has been made in

93

recent years. A final section analyzes some of thefactors which determine rural levels of living. itthus acts as a bridge to Chapter IV, which dealswith some of the main problems of agriculturaldevelopment in comtries at an early stage ofeconomic progress.

Because of the limitations of the data availableinost attention had perforce to be given to incomes,expenditures, wage rates, consumption levels, andother economic indicators. But these are not ofcourse the only things which determine the welfareof a population. it is indeed in. many of the non-economic amenities of life that rural people areoften most lacking. To the extent that informationis available, comparisons are mad.e of such bord.er-line or noneconomic factors as literacy and educa-tion, medical services, housing, and other amenities,but much more information on these aspects isnecessary before any final assessments can be made.

The broad conclusions which emerge from cheinquiry are that except in a very few countries(nearly always agricultural exporting countries)farm incomes are appreciably lower on averagethan incomes in towns. The disparities appearsomewhat greater if based on per caput productionin agriculture and in other sectors of the economythan if based on household surveys of expenditure,largely because many farm families have non-agTicultural som-ces of income. In many countries,however, the gap is of the order of 25 to so percentand sometimes more. There are some factorswhich tend to narrow the gap in the more indus-trialized countries and to widen it in the less-developed countries. Nevertheless, income dis-parities are not always greatest in the less-developedcountries and there are some striking examples tothe contrary.

Differences in farm incomes between countriesat different stages of economic development aresubstantially greater than those between averagefarm and urban incomes in the sa.me country.It is shown that these differences between countries

bear relatively little relation to the size of firms.They owe something to the price mechanism andto agr, icultural support measures. But they arecorrelated primarily with productivity per man.For example, the labor time need.ed to produce aton of wheat can be as much as 30 to so timesgreater in countries where farm incomes are lowas in those where farm incomes are high. Similarthough less striking differences occur for otheragricultural products.

While higher incomes in agriculture in theeconomically less-d.eveloped countries must stemultimately from higher productivity, it would bean oversimplification to suppose that it is onlynecessary to provide the farmers in these countrieswith the technical knowledge and equipment, theinvestment funds, the marketing services and soforth to enable them to match the per caput out-put of farmers in more advanced agriculture.

In nearly all countries agriculture was the firstand basic occupation and absorbed by far the larg-est part of the labor force. To a large extent eco-nomic progress consists of the gradual transfer ofpopulation from agriculture to other occupations,made possible by gradually rising productivityin agriculture. The growth of other industries inturn stimulates agricultural development, and so amore and more rapidly rising spiral of economicprogress is developed. Thus, in. the course of ceo-

As levels of living depend ultimately uponlevels of income, it is appropriate to begin bysetting out some of the basic facts on incomelevels in relation to the pattern of production andemployment in different countries. Three approach-es to the estimation of incomes are attempted.The first is on the basis of national income data.This is later compared with data on wage rates inagriculture and manufacturing industries, andin particular with the results of householdexpenditure and consumption surveys.

NATIONAL INCOME DATA

In Annex Table 14 some 40 countries are groupedaccording to their average per caput national in-come, and for each are shown the percentage of

94

nomic progress the proportion of the populationengaged in agriculture becomes smaller and smaller,though it is not yet possible to foresee where theoptimum leve) will be established.

Agricultural progress must go hand in handwith over-all economic progress, and to a largeextent farm productivity and farm inconie canexpand only at the pace that growing urban marketsand higher urban incomes provide the necessarypre-conditions for higher farm productivity andproduction. But there is of course no assurance thatagricultural productivity and production will infact grow at this rate. In many less-developedcountries at the present time production does notkeep pace with the growth of demand, and exportshave had to be scaled down or increasing resortliad to imported food. Some of the main fiictorswhich lead to this result are discussed fully inChapter IV.

Filially, although it seems clear that majorincreases in levels of farm incomes must go handin hand with general economic development, thisin no way implies that nothing can be done in themeantime. On the contrary, measures are nowbeing developed in several of the economicallyless-developed countries which give promise thatat least the worst disabilities of rural poverty canbe overcome without waiting on urban develop-Ment

the national income originating in agriculture, thepercentage of the population dependent on agricul-ture, and the percentage living in rural areas.

The table brings out the well-known fact thatthe role of agriculture in the national economytends to be greatest in economically less-developedcountries with low levels of income, and to declineprogressively in countries with relatively highlevels of income. The same broad relationship isshown in Figure Ill-r. Evidently, however, thecorrelation is far from perfect. For example, withabout the same level of per caput national income,the percentage originating in agriculture is aboutfour times as large in Denmark as in the UnitedKingdom. Similarly, although the percentage ofthe national income arising from agriculture isabout the same in Japan as in New Zealand, theper caput national income in the latter country is

Levels of income in agriculture

FIGURE III-1. PER CAPUT NATIONAL INCOME OF SELECTEDCOUNTRIES AND SHARE ORIGINATING FROM AGRICULTURE

(Semi-logarithmic scale)

Percentage of incomefrom agriculture

70 -

50 -

30

20

10 20 30

K

40 60 80 100 200

Per caput national income (U.S.$)

Ar - Argentina Gr - GreeceAu - Austria In - IndiaBe - Belgium Ir - IrelandBr - Brazil It - ItalyBu - Burma J - JapanCa - Canada K - KenyaCe - Ceylon N - NetherlandsCo - Colombia NZ - New ZealandD - Denmark Pa - PakistanE - Ecuador PR - Puerto RicoFi - Finland T - ThailandFr - France UK - United KingdomGe - Germany, Western US - United States

some five times higher than in japan. As would beexpected, the share of the national product originat-ing in agriculture tends to be higher at any givenincome level in agricultural exporting countriesand lower in agricultural importing countries,though again there are some exceptions to this rule.

The same broad relationship holds between theper caput national income and the percentage of thepopulation engaged in agriculture, the latter tend-ing to fall as incomes rise. It is apparent fromAnnex Table 14, however, and from the same datashown graphically in Figure that in all butfew countries the percentage of the national productoriginating in agriculture is appreciably smaller thanthe percentage of population engaged in agriculture.It follows that per caput incomes generated inao-riculture are smaller than in other activities.Of the countries listed, the reverse is true onlyin Australia, New Zealand, and Ceylon, all coun-tries with important agricultural export industries.

If there were no other circumstances affectingthe relative incomes of people engaged in agricul-ture and in other occupations, this income rea-

300 400 600 8001000 2000

95

tionship could be conveniently shown by the" disparity factor in the final column of AnnexTable 14, and also in Figure III- 2. This factorrepresents the ratio of the per caput income originat-ing in the agricultural sector to that originating M.all other sectors of the economy and is calculatedfrom the earlier columns of the Annex table. Inpractice, actual incomes available in agriculture andin other walks of life are affected by many otherthings, e.g., land rent, taxation, government sub-sidies and payments, etc. Nonetheless, the disparityfactor can be usefully discussed as a first approachto this income relationship, though it is importantthat these reservations should be borne in mind.

In Figure III-3, therefore, per caput nationalincome originating in agriculture and in other occu-pations are plotted against each other for as manyas possible of the countries included in AnnexTable 14. A series of diagonal lines show the level.sat which there would be parity of income betweenapiculture and other occupations, and the levelscorresponding to different percentages below par-ity. For about two thirds of the countries listedper caput income originating in agriculture liesbetween 40 and Go percent of per caput incomesoriginating outside agriculture. For about onequarter of the countries the ratio is less than 40percent.

On the whole, the data suggests that incomedisparities to the disadvantage of agriculture tendto be greatest in the economically less-developedcountries, notably in some countries of LatinAmerica and Africa where mining is important orwhere industrialization is beginning to get underway. The disparities tend to be smaller in thecountries of northern and western Europe. Butthere are important exceptions to the general ruleas is evident froni the rather wide disparity in theUnited States.

WAGE RATES

Further indications of the income disparitiesbetween agriculture and other industries are to behad from wage statistics. While there is no meansof comparing them directly with yearl.y incomes asindicated by national income data or consumptionsurveys, the ratio between average wages in agri-culture and in manufacturing (using national datawhether these are given as per hour, per day, perweek, per month or per year) gives some indication

FIGURE. 111-2. PERCENTAGE OF POPULATION OF SELECTED COUNTRIES DEPENDENT ON AGRICULTURE AND PERCENTAGE OF

DOMESTIC PRODUCT ORIGINATING FROM AGRICULTURE

Honduras

Pakistan

Philippines

India

Turkey

Belgian Congo

U.A.R. (Egypt)

Brazil

Ecuador

Yugoslavia

Panama

Paraguay

Colombia

Portugal

Ceylon

Greece

U. of S. Africa

Ireland

Italy

Chile

Japan

Argentina

France

Den mark

New Zealand

Austria

Netherlands

Canada

Germany, Western

U. S. A.

Belgium

U. K.

-

0306

08

0605

06\ 0 8

t.1

0 7

\\\\,,\\o707

07

6-1

of levels of living in agriculture and in towns.The comparison is again inexact since it does nottake account of the degree of underemploymentand of the length of the work clay. Nevertheless,it confirms in a general way the comparisonsbased on national income data (Table Ift-i).

First it is seen that the disparity of wages ison the whole similar to the income disparitiesderived from national income data. Of the threecountries which in Annex Table 14 showed a plus-disparity, Australia alone shows a higher wagelevel in agriculture than in manufacturing, but inthe two other instances, New Zealand and Ceylon,

03

4

Percentage

Percentage of population in agriculture

Percentage of domestic product from agriculture

70 80

NOTE: Figures in each bar represent disparities between per caput incomes originating in agriculture and in other occupations (Annex Table 14).

96

the wage disparities are rather moderate. Similarly,in countries where national income data suggest aconsiderable disparity so, as a rule, do the wagecomparisons.

The wage disparities are wider in most casesthan those derived from national income data.This may be due in part to the rather high pro-portion of independent operators in farming, andin part to the fact that in most countries a largeproportion of the labor in agriculture is classed asunskilled. The main cases to the contrary (Belgium,Sweden, Norway, Finland., and. the United States)are countries in. which there are considerable groups

60o 10 30

FIGURE III-3. PER CAPUT INCOME ORIGINATING IN AGRICUL-TURE IN RELATION TO PER CAPUT INCOME ORIGINATING IN

OTHER OCCUPATIONS

(Logarithmic scale)

Per caput income inagriculture (U.S.5)

2000

'00 150 200 250 300 400 000 030 1000 1500 2000 1,01

Per caput income in other occupations (U.S.5)

Ar - Argentina Is - IsraelA - Australia It - ItalyAu - Austria Ja - JamaicaBC - Belgian Congo J - JapanBe - Belgium Lu - LuxembourgBr - Brazil N - NetherlandsCa - Canada NZ - New ZealandCe - Ceylon No - NorwayCh - Chile Pa - PakistanCo - Colombia P - Panama

- Denmark Py - ParaguayEcuador Ph - Philippines

Eg - Egypt Po - PortugalFi - Finland PR - Puerto RicoFr - France T - ThailandGe - Germany, Western Tu - TurkeyGr Greece UnS - Union of S. AfricaHo - Honduras UK - United KingdomIn - India US - United StatesIr - Ireland Yu - Yugoslavia

NOTE: Diagonal lines indicate levels of income parity (100 %), and of 60%and 40 % of parity, respectively.

of small, marginally economic holdings, whichreturn very low incomes to their operators. Insome of these countries a good deal of attention isbeing given to the consolidation of such holdings.

Some of the wage disparity also applied todifferent kinds of work done by the same workers.In the United States, for example, farm workersare paid higher wages for nonfarm wage workthan for farm wage work, even though the formerwage was still much lower than the wages paid

97

TABLE III-I. - AVERAGE PER CAPUT DISPARITIES I3ETWEEN

FARM AND NONFARM INCOMES AS EmmATED FROM NATIONAL

INCOME DATA ANO) FROM AVERAGE WAGE RATES IN AGRICULTURE

AND MANUFAC'EURING

Dispari ty factorestimated from

Nacional Wageincome

data rates

Disparity factorEstimated from

Nationalincome

data

Wage

rates

in the manufacturing industries. In India, on thecontrary, there appears to be no noteworthy dif-ference in the wages paid to agricultural laborersfor agricultural and nonagricultural work. 2

CONSUMER EXPENDITURES

While data on national income and on wagerates are available for a rather wide range of coun-tries, these over-all statistics are too imprecise toreveal anything more than broad. trends. For amore limited number of countries, closer compari-sons of income levels (or rather of expenditures)in agriculture and other occupations (or in ruraland urban areas) can be made on the basis of house-hold surveys. Household survey data -for iz select-ed countries, including as many as possible of theeconomically less-developed countries, are given inAnnex Table is. The basic figures for total livingexpenditures, taken as an indicator of incomes, arepresented. in Table III-2 and in Figure III-4. Inboth instances comparisons are given with theincome disparities derived from national incomestatistics.

It is noteworthy that the household survey datasuggest considerably smaller disparities betweenfarm and nonfarm incomes than those derived fromthe data on national income and wage rates for

1 "The hired farm working force of 0954," U.S.D.A.,A/vIS 003, p. 16.

B. Ramamurti, Agricultura! labour: .Flon, they work andlive, All-India Agricultural Labour .Enquiry, Delhi, 1954, p. 19.

Australia 1.4 1.1 Belgium 0.6 0.8New Zealand ... 1.1 0.7 Colombia 0.6 0.5Ceylon 1.1 0.6 Japan 0.6 0.4Denmark 0.8 0.7 Sweden 0.5 0.7United K ngdom 0.8 0.6 Norway 0.5 0.7Germany, VVes- Finland 0.4 0.6

tern 0.7 0.6Austria 0.7 0.6 India 0.4 0.3Canada 0.7 0.5 United States ... 0.3 0.4Ireland 0.6 0.6 Philippines 0.3 0.4

FIGURE III-4. PER CAPUT INCOME IN AGRICULTURE IN COM-PARISON WITH INCOME IN OTHER OCCUPATIONS AS INDICATED

BY a) HOUSEHOLD SURVEYS OF EXPENDITURE, AND b) NA-TIONAL INCOME DATA

(Logarithmic scale)

Per caput agricultural incomeor expenditure (U.S.$)

100 150 200 250 300 600 500 600 000 1000 1500 2000

Per caput income or expenditure in other occupations (U.S.$)

Co - Colombia J - JapanIn - India UK - United KingdomIt - Italy US - United StatesNit - Italy, Northern Yu - YugoslaviaSlt - Italy, Southern

NOTE: Diagonal lines indicate levels of income parity (100 %), and of 60 %and 40 % of parity, respectively.

o Expenditure according coconsumer surveys

e National income data

all countries for which comparisons are available,with the exception of Colombia. In the United.Kingdom and japan there is very little disparity,while in the United States, Italy, Yugoslavia, andIndia the disparity has been reduced to values rang-ing from o.6 to 0.8.

There appear to be a number of reasons for thedifferences in the estimates of the disparities betweenfarm and nonfarm incomes derived from nationalincome and from household survey data. In somecountries the household survey data are not repre-sentative of the farm population as a whole. Thus,in the United States the figures relate to faun opera-tors only, who are l.ikely to llave somewhat higherincomes on average than their employees. InIndia, Jamaica, and the United Kingdom the house-hold surveys cover all those living in rural arcas,whether engaged in agriculture or not. In theUnited Kingdom, for example, about 20 percent

TABLE - ESTIMATED PER CAPUT EXPENDITURE

NOTE: Ratio figures were calculated before expenditure figures wererounded.

' Basic data in Annex Table Is. - 'Farm households. - Rural house-holds, including rural nonfarm families.

of the population lives in areas classified as rural,though only 7 percent is engaged in agriculture,i.e., considerably less than half the rural population(Annex Table 14). In India the difference is lessstriking and about five sixths of the rural populationis engaged in agriculture. In these four countries,however, the group covered by the householdsurvey is likely, to a greater or lesser extent, to haveincomes higher than the average for the farm popu-lation as such.

On the other hand, there appear to be at leastthree major statistical sources of discrepancy whichwould be likely to lead to some underestimationof farm incomes from the national income data :

defects in the statistics on which the nationalincome data are built are likely to lead to anunderestimation of the contribution of theagricultural sector;overlap in source of income between the farmand nonfarm sectors (nonagricultural incomeaccruing to the agricultural population andvice versa);

differences in the valuation of home-producedfood.

These three points are considered somewhatmore fully below:

(a) Statistics of agricultural output are not onlyoften less accurate than statistics on industrial out-put, trade, etc., but are probably more often biassed

U.s. Ratio

United States 990 0.6 0.3United Kingdom 590 620 1.0 0.8

S North 320 455 0.7Italy

South 235 310 0.70.5

Japan 'I35 160 0.9 0.6Jamaica 135 0.4Yugoslavia 120 140 0.8 0.3Colombia 110 320 0.4 0.6United Arab Rep.

(Egyptian Province) 70-95 0.3Ghana 65 75-125Ivory Coast ' 100Thailand 65 0.5India ' 60 90 0.7 0.4

IN AGRICULTURA!. AND URBAN AREAS FROM HOUSEHOLD SURVEYS 1

Per caput expenditureDisparity

Disparityratios esti-

Agriculturalor rural

households

Urbanhouseholds

ratiorural/urban

mated fromincome

statistics

downward owing to incomplete coverage and insome cases to understatement of production. Forthis reason, the contribution of agriculture to na-tional income is often somewhat tmderestimated,and the income of the average farmer somewhathigher than would be expected from nationalincome data. Some other assets of rural life areoften incompletely covered by statistics. For in-stance, rural housing is in some countries not im-puted any value at all, while in some others theimputed rental value of rural houses is low. To avarying degree, some other goods which are pro-duced and consumed in rural arcas, such as clothes,tools, and ornamental objects, tend to be under-estimated or altogether omitted. Moreover, manyservices are omitted from national income calcula-tion when rendered locally, e.g., tutpaid mutualaid or work performed within the individual house-hold.; in the latter cases it often inerges with themarketing margin for home-produced food. (seebelow). The accrual of invisible services occurs alsoin urban arcas, but normally to a much smallerextent than in rural areas.

(b) Nonfarm income of the agricultural populationappears quite important in countries from whichdata are at hand. In the United States, in 1955,income of farm-operator fannlies from nonfarmsources amounted to more than half of their netincome from farming, or to over one third oftheir total income. The biggest item was wagesfor nonfarm work. Among farm workers in thesame country, defined as those who worked 25days or more on farms during the year, is percentof the work time and about zo percent of the wageswere in nonfarm work; of the nearly 2 millionworkers concerned, only just over half returnedfarm work for wages as their chief activity duringthe year. In Japan, during the years 1949-56, farmhouseholds derived about 30 percent of their netincomes from nonagricultural sources. In India,the agricultural labor inquiry of 1950-51 showedthat agricultural laborers derived about one fifth oftheir (extremely low) incomes from nonagriculturalwork. These examples make it clear that incomegenerated in agriculture cannot always be directlyequated with income of the agricultural population.Examples of urban workers earning part of theirincomes in agriculture are likely to be less common.

(e) In most household surveys, home-producedfood is valued at retail prices for comparabilitywith data from urban areas as well as for compara-

99

bility between the data on home-produced and pur-chased food. National income estimates, on theother hand, base their value of agricultural pro-duction on the prices paid to the farmer. Themarketing margin, including some processing ser-vices, e.g., the plucking of poultry, thus invisiblyaccrues to the income of the agricultural popula-tion in the household survey, though not in thenational income data. The importance of thisdifference in methods of estimating farmers' in-comes can to some extent be gauged from the datain Table bearing in mind that, on the average,processing and distribution costs commonly ac-count for about half the retail value of foodstuffs.The share is soinewhat smaller for unprocessedlivestock products, and greater for most plantprod.ucts and for highly-processed foods.

TABLE 111-3. - ROLE OF HOME-PRODUCED FOOD

Value of home-produced foodas percentage of total value

of food consumed

Homo pro-duced food inrural areas aspercentage of

total livingexpenditure

The national income data thus seem likely toexaggerate somewhat the disparity between farmand nonfarm incomes, though not necessarily tothe full extent of the difference between these andthe household survey estimates. The householdsurvey data on the other hand may tend to under-state the disparity, especially where they relate torural rather than farm households. It should beadded also that points (a) and (c) above are likelyto be of more importance in the economicallyless-developed countries, where the statistical ser-vices are less complete, and where home-producedfood accounts for a large share of the total farmincome. These two points may partly explain theapparently greater disparities between farm andnonfarm incomes in less-d.eveloped. countries.

SIZE OF FAMILY

Before turning to a more detailed considerationof the main items of expenditure, mention may be

Percentage

United States 40 2.5 17

Yugoslavia 77 52

Japan 68 8.5 33

India 56 17 37

Farm or rural Urban

made of a factor which often contributes to thelower per caput incomes in agricultural and. ruralflsinilics : that, as a rule, fertility rates are higher andfamilies larger in rural areas than in towns. Thismay be seen from Table based on populationcensus data, which shows a considerable differencein the average size of the family in all the countrieslisted, except India. It may be added that whilethe 1947 census of Egypt gives data on familysize only for provinces, the average size of house-holds, in the largely urban provinces of Cairo andAlexandria, are not very different from the restof the country, the average being about 4% ineach case. The situation in Egypt thus appears tobe similar to that in India.

TABLE III-4. SIZEor HOUSEHOLD

' 165o. - a The corresponding ligo e for 1650 is 5.3.

The average size of families in the samples cover-ed by the household data are in fairly close agree-ment with the census figures in Table III-4. Thusin northern and southern Italy, respectively, theaverage family size was 5.0 and 4.9 persons in farmfamilies and 4.1 and 4.6 in urban families. In theUnited. Kingdom (not included in Table IH-4)the difference in the size of the families surveyedwas relatively small, averaging 3.3 persons in therural and 3.1 to 3.2 in the urban groups..

The difference in fainily size largely reflectsthe higher fertility of the agricultural and ruralfamilies, as is evident from the data in Table III-5showing the average number of children per mar-ried woman. Detailed figures for married women inparticular age g-roups show the same result. The1951 census of India does not give comprehensivedata for specific fertility for the whole union; datafrom the former state of Travancore-Cochinshow, however, that there were there only smalldifferences in fertility between rural and urban areas,and between agricultural and other families; this isin accordance with tlae family size data shown in the

100

previous table. In Egypt, too, as in the case of sizeof Households, there is no very marked differencein fertility between the mainly urban provinces ofCairo and Alexandria and the rest of the country.

TABLE - NUMBER OF CHILDREN PER MARRIED WOMAN

The data in Tables III-4 and 111-5 are generallyconsistent with each other and together with thedata from India and Egypt confirm tlac conclusionthat where rural or agricultural families are largerthan urban families this results in large measurefrom higher fertility. As a consequence, eachearner has more persons in his charge in the agri-cultural populations than in other sectors of thecommunity and the income available per head iscorrespondingly smaller.

REGIONAL VARIATIONS

National averages of income disparities oftenconceal rather wide regional variations within acountry. In the United. States, for instance, nationalincome data indicate that in the western parts ofthe country the disparities between farm incomesand nonfarm incomes are smaller than for thecountry as a whole. The larger disparities elsewheremay of course be partly offset by differences inincome from nonfarm. sources. There are alsoconsiderable differences in the level of incomes(farm and nonfarm) and also of wage rates in dif-ferent regions of the United States: as is well known,they tend to be lower in the southern states. Simi-lar differences between northern and southern Italywere shown in Table II1-2, while in Yugoslavia thereare considerable differences between the constituentrepublics in income disparities calculated fromnational income data, though these are much smallerif the estimates are based on household surveys.However, in Japan, where regional data are alsoavailable, the differences between different partsof the country are much smaller.

Year ofdata

Agricul-tural

occupa-tions

Otherocupe-tions

Rural

areas

Urbanareas

Wholecountry

United States 1957 3.5 2.4 2.9 2.3 2.5Great Britain 1951 2.0 1.7 1.8 1.5 1.7Norway 1950 ... 2.7 1.8 2.4Yugoslavia 1948 2.9 1.9 ... ... 2.6Japan 1952 4.0 2 9 ... ... 3.5

Average lumber of members

Norway 1950 4.1 3.3 3.5 2.8 3.3Italy 1951 4.8 3.9 4.2

North 1951 (4.9) (3.6) (4.1)South 1951 (4.6) (4.6) (4.6)

Yugoslavia 194E3 5.1 3.3 4.8 3.1 4.4Japan 1955 ' 6.1 ' 4.9 5.4 4.8 5.1India 1951 4.9 4.7 4.9

Agri-cultural Other Rural Urban Whole

Year occupa-tions

occupa-tions

areas areas country

The consumer survey data given in AnnexTable is have been broken down to show sepa-rately the share of the total expenditure on food,clothing, housing, and other items. In all countriesfood is the largest single item, accounting for aboutone third of the total expenditure in the wealthiestcountries, about one half to two thirds in econom-ically less-developed countries, and occasionallyrising to over three quarters. Clothing usuallyaccounts for between io an.d 20 percent of totalexpenditure, but its share is smaller in some coun-tries with low levels of income. Expenditureson housing and " other items tend in generalto amoimt to an increasingly large share of thetotal as incomes rise, and in the countries at thehead of the list accoluit for about one quarter andone third respectively of the family budget.

EXPENDITURE ON FOOD

It has long been recognized that while expen-diture on food increases with rising incomes itd.oes so at a lower rate, so that the share of theincome spent on food tends to become progress-ively smaller in the higher income groups (Engelslaw). The percentage of the income spent onfood. (the Engels coefficient) is thus in itself someindication of the kvel of living, as is clearly evidentin Annex Table is. 3 An even better indicatoris the type of food consumed. At low incomelevels the largest expenditure must necessarilybe on inexpensive cereals and starchy roots to satisfyhunger, but as incomes rise an increasing shareof the money spent on food goes for sugar, fats,livestock products, and fresh fruit and vegetables.At the highest income levels highly-processedfoods and meals in restaurants become a large itemin the total expenditure: here the additional ex-penditure in effect goes on services rather than onmore food or more expensive foods.

More detailed examination of the consumersurvey data suggests that rural and firm familiesdo not react in a significantly different maimerfrom those living in towns so far as their totalexpenditure on food is concerned, if home-pro-

The pattern of expenditure

" Income elasticity for ,f9od derived from household surveys, United Nations Economic Commission for Europe,

by L. Gorcux. FAO, Rome, 1959. Economic survey of Europe in 1958. Geneva, 1959.

101

duced food consumed in the household is valuedat retail prices and coun.ted as part of their income.The data for some representative countries is an-alyzed further by income groups in Figurewhich shows the percentage spent on food atdifferent levels of total expenditure taken as anin.dicator of income. At any given income levelthe percentage spent on food is usually somewhatlower in towns than on farms in India and southernItaly, and usually somewhat higher in Japan andthe United States. In the United. Kingdom thecorrespondence is remarkably close. It is inicer-tain what significance should be attached to thedifferences where they exist: they may arise inpart fi-om small differences in statistical treatment,e.g., the method of valuing home-producedfood.

Some differences between countries seem toemerge from the chart. Thus, the share of theincome spent on food seems to fall particularlyrapidly in the United States, Italy, and (after acertain income level) in India. By contrast thedecline is somewhat slower in Japan and especiallyin the United Kingdom. It has recently beennoted that, in a number of European countries,the rise in national income since the war has notbeen accompanied by a significant change in theshare of the income spent on food, a fact attributedto the larger expenditures on prepared and pro-cessed foods or restaurant meals now that moremarried women work outside the home. 4 Thismay also be the explanation of the very slowdecline in the curve for the United Kingdom. inFigure III-5.

The pattern of food expenditure as betweencommodities (Figure 111-6) on the whole bearsout the conclusion that level of income has morebearing on the type of diet than agricultural orurban occupation. The share spent on cerealsdeclines sharply in the wealthier countries and isusually somewhat higher in farm than in urbanhouseholds, which probably reflects income dis-parities. Conversely, in the higher income coun-tries ami increasing share of the total food expen-diture is for more expensive foods, includinglivestock products, fruit and. vegetables. Again,

FIGURE III-5. PERCENTAGE OF TOTAL EXPENDITURE ON FOOD

(INCLUDING HOME-PRODUCED Fool)) AT DIFFERENT INCOMELEVELS, RURAL AND URI3AN

(Semi-logarithmic scale)

Percentage of totalexpenditure on food

70 -

60

50

00

30

2020

r r ,30 50 70 100 200 300 500 700 1000 2000 30

Per caput annual expenditure in U.S. $ equivalent

- India UK - United Kingdom- Italy (Southern) US - United States- Japan

Farm or ruralUrban

the difference between rural and urban householdsis consistent with the previously established in-co Inc . ispa ri ties.

Coefficients of income elasticity of expenditureas a whole have been worked out separately forrural and urban households in five countries onthe basis of consumer data, for foodstuffs as a wholeand for some main conunodities (Annex Table 16).They indicate the change in expenditure, at con-stant prices, which would be expected from achange in real income of i percent, and are ofinterest in the light they throw on probable futuredevelopments. To eliminate complications dueto differences in the size, sex, and age compositionof the households the coefficients llave been cal-culated on a per caput basis.

It is noteworthy that for foodstuffs as a wholeincome elasticities tend to be larger in urban thanin farm households in the wealthier countrieswhere elasticities are generally l.ow, as in the UnitedStates, but that the reverse is the case where in-comes are low and elasticities high, as in India.It is likely that, except at the lowest income levels,elasticities for farm-produced foods are very low,but that for purchased foods income elasticitiesin farm households may be as high or higher than

102

in town households. The data for individualcommodities give support to this view, thoughwith some exceptions. Thus, income elasticitiesin farm households would be lower than in urbanfamilies to the extent that the former can providefood for themselves.

Income elasticities for home-produced foodsas a whole in farm households have been workedout for three countries for which sufficiently de-tailed data were available:

In the United. States the negative figure sug-gests that at the higher levels farm householdsconsume less of their own produce and turn in-creasingly to purchased foods, including processedfoods. The relatively high elasticities for home-produced foods in Japan and India, on the contrary,probably reflect the normal response at the lowerincome levels of those countries. With risingincomes farm households consume more food ormore expensive types of food, whether home-produced or purchased.

' Excludes fish and seaweeds.3 Includes condiments.

The types of home-produced food most typ-ically consumed in farm households in these threecountries are shown in Table In the three

TABLE III-6. PERCENTAGE OF HOME-PRODUCED FOODS

CONSUMED IN FARM HOUSEHOLDS

UnitedStates

JapanIndia (1951)

(1955) (1955/56)Aug.-Nov. April-june

Pere wage

AU. FOOD 40 68 56 50

Cereals 6 83-94 65 62Pulses 91 61 58Potatoes 28 96Other fresh vege-tables 63 92 39 25

Fresh fruit 37 35

Meat, poultry, fish SiEggs 80 ' 65

31 6

Milk and products 65 70 64

Edible oils 31 43 15 14

United. States 0.17

Japan + 0-44India H- 0.99

FIGURE 111-6. PATTERN OF FOOD EXPENDITURE (INCLUDING HOMEPRODUCED FOOD) BY COMMODITIES, RURAL AND URBAN

ITALY, SOUTHERN Rural

Urban

ITALY, NORTHERN Rural

Urban

UNITED KLNGDOM Rural

Urban

UNITED STATES Rural

Urban

10 20 30 40 50 60 70 80 90 100Percentage of total food expenditure

103

CerealsMilk, meat and fish products

Other foodFats and oils

Milk products

Meals outside home

Meat and fish products

INDIA

JAPAN

Rural

Urban

Rural

Urban

FIGURE 111-7. SHARE OF HOMEPRODUCED FOOD IN TOTAL FOOD EXPENDITURE OF FARM FAMILIES, UNITED STATES AND JAPAN

Percentage of home-produced foodin total food expenditure

Ca am Ca M2

.0.....600*.o.*CO.'*""....0oemogreeM1680 eo geoo..e All foodMeat, eggs, and milk

.00 C300 00

104

G0 -0CIPS0M0 10001

WagearemMaroa Avg <011100010 WO 0

Rice

Vegetables

" Mughi

Fats, oils, etc.

093 CM CM CO Ca PM CM CM 0 Tea, cakes, fruit, and soft drinks

Eggs

Meat, poultry, fish

Fresh vegetables

All foodFresh fruit

Butter, fats and oils

UNITED STATES 1955

Flour and cereal products

JAPAN 1955/56

400 500200 300

1 000 yen per year

500and over

Under 2 000 2 000 4 000 6 000

U.S.$ per year

8 000 10 000 Over 10 000

countries a large share of the milk products andsome other animal products, e.g., eggs, are home-produced.. Mainly home-grown vegetables areconsumed in the United States and Japan, but notin India. Farm households in Japan also producemost of the cereals th.ey consume; in India thepercentage is considerably lower, while in theUnited States it is very small as the main cerealfoods are bakery products bought from outsidethe farm. The relatively low percentage of home-produced cereals in India compared with Japanmay reflect the very low level of incomes whichmay make it impossible for many farmers to pro-duce their full needs or to retain enough grain atthe time of harvest to carry them through the year.

The extent to which home-produced food formspart of the diet of farm households, however, isin no sense an indicator of the level of living.It may reflect consumer preference. In Japan,for example, in contrast to the United States theshare tends, if anything, to rise rather than to fallin the better-off households (Figure III-7). Irmust also depend largely on the type of farming,tending to be higher where mixed farming ispracticed and lower where only one or two com-modities are produced for sale.

The contrasting tendencies between the twocountries are also evident if a comparison is madein time. Thus, in the United States comparisonbetween the farm household surveys of 1942 and1955 shows a marked decline in the proportionof home-produced food in all food groups exceptfresh fruit. The same is true of rural nonfarmhouseholds (Table II1-7).

In Japan the annual farm household economysurvey also shows a slight tendency for home-produced food to represent a smaller share of the

105

TABLE 111-7. - PERCENTAGE OF HOME-PRODUCED FOOD

CONSUMED IN RURAL HOUSEHOLDS IN TI1E UNITED STATES,

1942 AND 195

total family expenditure. But this is not so muchdue, as in the United States, to a switch to outsidesources for food produced on the farm.. On thecontrary the home-produced share of staple foods,including cereals, tends if anything to rise. Itresults rather from increasing expenditure on thethings not produced on the farm: such items as" drinks and tobacco, " and especially manufitc-tured goods and other nonfood items. Agricul-ture remains on a largely subsistence basis even inthe higher income classes.

FUTURE TRENDS OF FOOD EXPENDITURE

The general similarity of income elasticitiesin farm asid utban households in most cotintriessuo-crbbests that in general further increases in farmincomes will tend to lead to a gradual approxi-

TABLE - SHARE OF HOME-PRODUCED FOOD IN FARM HOUSEHOLD EXPENDITURES, JAPAN, 1949 TO 1936

1949 1950 1951 1952 1953 1954 1955 1956

Perrentag,

Total expenditure 45.9 46.9 46.6 43.8 41.9 42.7 42.9 42.1

Total food expenditure (incl. tobacco) 66.3 69.8 71.2 69.9 68.0 67.3 67,9 67.2Staple food 88.5 90.4 92.8 92.1 91.1 90.5 91,4 91.6Subsidiary foods - I 86.8 89.9 90.1 88.4 87.4 87.1 86,6 86.3Subsidiary foods - II 20.9 25.4 26.1 28.4 27.6 28.5 28,9 28.4Condiments, fats, and oils 53.7 51.1 51.2 52.2 49.0 47.3 47,1 46.1

Drinks and tobacco 9.6 13.2 14.0 26.8 15.1 15.4 15.8 15.5

' Includes rice, wheat, barley, naked barley, other cereals, and potatoes. - Include such foods as pulses, vegetables, pickles, seaweeds, and grocery. - Include suchfoods as fish, shellfish, meat, eggs, milk-, and processed foods.

Rural farmhouseholds

Rural nonfarmhouseholds

1992 1955 1942 1955

Perce itage

Milk products 89.7 67.9 37.5 7.7Fats and oils (including butter) 57.6 28.3 14.7 3.6Flour and cereal productsBakery products *19.1

8.8- 1.3j 1.1

--Meat, poultry, and fish 60.8 50.3 14.9 7.0Eggs 96.2 80.4 50.2 18.4Sugar and sweets 27.2 9.6 15.0 6.4Potatoes and sweet potatoes 63.4 30.6 18.8 8.5Fresh vegett.bles 61.9 59.3 30.9 25.4Fresh fruit 20.1 28.0 8.3 12.4Fruit and vegetable juices -- 18.5 6.1Dried fruit and vegetables 18.5 4.8 4.2 1.3

mation of farm food consumption patterns to thosein towns. This does not necessarily imply thatin. all countries farm households will graduallyfollow the trend in. the United States and consumeless and less of their own production. In thisrespect the determining factors may be tradition,and perhaps especially the abundance or otherwiseof farm labor. The United States trend, however,seems likely to apply increasingly in the farm sectorof many European countries and probably stillmore in Australia and New Zealand.

In poor communities and countries, wherefood consumption has a high elasticity again.stincome, the small farm households that producea single product like, say, rice, wheat, millet, etc.,usually keep most of their production for theirhousehold use, being obliged to sell some partin order to pay taxes, debts, and other necessities.So-called " sales for hunger may occur here.Such farm households seldom have enough foodand thcir members may want to increase their ownconsumption. The income elasticity coefficientof horn.e-produced foods in India, which is as highas 1.0, represents this situation. If then commer-cial conditions improve in favor of farm house-holds, these may decrease the sale of their products,increasing their own consumption. A sharp in-crease in income from rising prices may thussometimes lead to shortages in Lu-ban markets whichare dependent upon the producers' sales.

The effect of a rise in prices and farm incomeson market sales is likely, however, to be influenc-ed not only by the income elasticity of the particularproduct, but also by the tendency, when incomesrise, to switch to more preferred foods: in eco-nomically less-developed countries, for example,from millet, barley, and maize to rice or wheat.Thus a rise in income might lead to a reducedsupply of rice on the market and an increasedsupply of " inferior grains. On the other hand,a relative rise in the price of, e.g., rice in compari-son with other cereals is likely to lead to somereversion to the farm consumption of cheapercereals in ordcr to benefit from the higher returnsfrom rice. Instances of both effects have beenreported from Japan.

NUTRITIONAL ASPECTS

Expenditure on food does not tell the wholestory. A nutritionally adequate diet may be made

106

up in many ways and with varying proportionsof cheaper or more expensive foodstuffs. More-ver, the cost of food varies considerably fromcountry to country. A relatively low level ofexpenditure on food does not therefore neces-sarily imply a diet nutritionally inadequate, andvice versa. Data from a number of consumptionsurveys, showing nutrients per caput per day, areset out in Annex Table 17. The figures are notalways strictly comparable and in several casesare not representative of the entire country.Nevertheless, some broad conclusions may bedrawn from them.

The quantitative aspect or the energy valueof food is usually expressed in terms of calories.Moreover, ami acceptable basis for estimating thespecific calorie requirements of different popula-tion groups is now available, thus making it pos-sible to assess the quantitative adequacy of variousnational diets on ami international basis. In thelight of such an analysis, it seems that in mostcountries of the world average per caput foodsupplies are not far short of the estimated calorierequirements of their respective populations. In-deed in some regions, especially in North America,Australasia, and Europe, the problem is often oneof overconsumption rather than shortage of cal-ories. In many economically less-developed coun-tries, however, especially in Asia and Africa, cal-orie intakes are still marginally adequate, whichmeans, in plain words, that man.y inillions still gohungry, at least part of the time. For even incountries where the national average calorie supplyseems higher than the requirement level, somesections of the population get less than their needsand others more, since food supplies are rarelydistributed evenly over the population.

If requirements were fully met, the total cal-orie intake would be expected to be on ami aver-age higher among farm or rural populations thanin urban or nonfarm populations, because of theusually higher incidence of heavy physical workin. agriculture. When rural people get less calo-ries than urban people it is likely that their calorierequirements are not fully met. Of the countriesincluded in Annex Table 17 the rural calorie in-take appears to be higher than the urban intakein the United. States, the United Kingdom, Poland,and Japan (Figure III-8). There is a small diffe-rence in the opposite sense in Yugoslavia and CostaRica, and a larger one in India. (The Indian dataare by " consumption unit, which makes the

Per raput per day

U. S. A. RuralUrban

U. K. RuralUrban

Poland RuralUrban

Yugoslavia RuralUrban

Japan RuralUrban

Costa Rica RuralUrban

Ecuador Rural (Quininclé)Rural (Otavalo)Urban

Cameroons (Fr. Adm.) Rural

Ivory Coast "Campements"Village

Per consumption unit per day

U. S. A. RuralUrban

India RuralUrban

FIGURE 111-8. INTAICE OP CALORIES PER CAPUT PER DAY AND NUMBER OF CALORIES DERIVEDFROM PROTEIN AND FAT, RURAL AND URBAN

XXV

absolute level not comparable with the per caputfigures from other countries, though the UnitedStates' figures are expressed in both manners.)The data for Ecuador also show sonic indications ofa lower calorie intake in rural districts than in towns.

The food from which the calories are derivedcan be analyzed separately for a few countries,

rroONESESERSEFo::;;;;;;;;;.7.:

girMirr... 04. e 4k, v. 7Ar

" ' " ' '

ran

107

Number of calories

Calories derived from protein

Calories derived from fat

Total number of calories consumed per day

and show a broadly similar distribution, to thatindicated by the household expenditure surveys,though the proportions are naturally different asthey do not take into account the relative pricesof the different foods (Table 111-9). The similarityof the consumption pattern of rural and urbanpeople in both the United States and the United

1 000 2 000 3 000 4 090 S 000

' Including ghee.

Kingdom is very striking. The figures for Indiawain brills, out the low income level and theheavy dependence on cereals. In. the Africancountries listed, tubers largely take the place ofcereals, but the figures suggest somewhat morevariety in the diet than in rural India.

The calorie value of the diet indicates onlyits quantitative value. Its nutritional quality can-not be expressed in terms of a single nutrient, asproteins, vitamins, and minerals must all be takeninto account. Moreover, no objective standardscan yet be established of tlae basic requirementsof many nutrients. On the present rather subjec-tive basis, average diets appear to be defective inmost economically less-developed countries, andagain it must be borne in mind that inequalitiesof distribution may mean that some sections ofthe population have defective diets even in coun-tries where the national average appears satisfactory.

But while a single nutrient cannot properlyreflect the nutritional quality of the diet, the pro-tein content deserves special attention not onlybecause protein is one of the most important nu-trients, but also because most foods rich in proteinare also usually good sources of many other essen-tial nutrients. Since this is particularly true offoods of animal origin, animal protein content isprobably even more significant although recentadvances in nutritional science tend to " de-em-phasize " the traditional superiority ascribed sofar to animal protein,. Estimates of protein in-

TABLE - PERCENTAGE OF TOTAL CALORIES DERIVED FROM EACH MAIN FOOD GROUP

108

takes suggest th.at large numbers of persons, espe-cially children, in. Asia, Africa, and in parts ofCentral asid South America, have too little proteinin their diets. Indeed, a number of surveys inthose regions indicate that protein malnutrition,known as kwashiorkor in some parts of Africa,is probably the most serious nutrition problemat the present time.

The data in. Annex Table 17 and Figure III-8bring out clearly the much lower level ofproteinintake in the economically less-developed andpoorer countries, and in most of these countriesindicate a lower protein intake in. rural than inurban families. So far as they go, therefore, thefigures suggest that protein deficiency is likelyto be a more serious problem in rural than in urbanareas in economically less-developed countries.This is likely to be true of other nutritional defi-ciencies as well, even though (if they had theknowledge) rural people could grow many ofthe foods they lack with little or no cash outlay.

Figure III-8 shows the approximate proportionof the calorie intake derived from fat as well asfrom protein. Fat is the most concentrated sourceof calories, providing more energy for a givenweight consumed than any other food. It is

striking how closely a high calorie intake is as-sociated with a high proportion of fat in the diet.Again, the higher average energy requirementsof the rural population, compared with towndwellers, is reflected in their larger fat consump-

Percentage

Cereals 24.0 27.6 31.5 38.2 72.8 82.4 0.5 3.5

Pulses and nuts 0.8 13 8.7 7.3 13.1 0.5

Tubers 29 20 68 6.4 47.4 81.5

Vegetables 3.2 24 2.5 2.1 3.5 0.6Fruit 4.6 32 26 1.7 15.6 0.4Sugar and sweets 9.7 11.9 12.6 12.3 2.4 1.0 0.2

Milk and milk products 15.1 14.8 13 3 11.7 1.6 1.6Meat, eggs, and fish 26.5 21.1 18 3 14.9 2.1 0.9 3.3 7.7Fats and oils 13.0 14.7 14.1 14.0 ' 7.6 3.5 15.4 3.4

Miscellaneous 0.2 0.2 08 0.6 2.2 1.3 1.2 2.2

Total 100.0 100.0 100.0 99.8 99.9 100.1 100.0 100.0

United States United Kingdom India Cameroons(French

Adm.)(main-ly cocoafarmers)

Ivory Coast(ruralvillage

sample)Urban FarmUrban Rural(London)

Industrial Agricultur-workers ists

tion in the wealthier countries, though the reverseis the case in economically less-developed countries,probably because of the great poverty of theirrural populations.

Existing differences in nutritional levels, how-ever, do not depend entirely on differences ofincome, though this is probably the most significantfactor. Some nutritional deficiencies may arisefrom the absence of certain foods which are neitherproduced locally nor available in local markets.This situation occurs more often in rural than inurban areas. In some cases such foods are actuallyproduced but not consumed, owing either to theneed to buy other goods and services, or to prej-udice or ignorance.

Very little information is available on thechanges that take place in the dietary pattern asa consequence of urbanization, be it because ruralpopulations move to urban arcas, or because theyare influenced by urban ways of life. However,it is known that significant rises in per caput in-come, associated with urbanization in economicallyless-developed countries, normally lead to anincreased consumption of livestock products, fi-uitand vegetables, and other foods of high nutritionalvalue. But there are many exceptions, and higherincomes in towns are not infrequently spent onmore " sophisticated " diets, including highly mill-ed rice, sugar, and beverages of little or no nutri-tional value. During the early period of indus-trialization in Western Europe there was muchmalnutrition among urban populations becausethey consumed diets deficient in many essentialnutrients. From what is known, it seems that thesituation is similar in many of the newly urbanizedpopulations in other regions. For instance, thesurveys carried out among the Bantu of the Unionof South Africa show that with urbanization thenormal rural diet of whole-grain cereals and milkis often replaced by one based on maize laical,white bread, and mineral water. Another exam-ple is the increasing incidence of beriberi as aconsequence of the replacement of nutritious home-pounded rice by highly milled or polished, butvitamin deficient, white rice, even in the ruralareas of Asia.

EXPENDITURES OTHER THAN ON FOOD

The natural converse of the falling percentageof the income spent on food with rising incomes

109

is of course an increased expenditure on otheritems. Some indications of the nature of the non-food expenditure is given in Annex Table as,but si.nce these, for purposes of comparability, areclassified in somewhat broad divisions, a rathermore detailed analysis is given below for a morelimited number of countries. After food, the mostessential household expenditures are for housing,clothing, and fuel (including light), and these arefirst considered in the paragraphs that follow.

Houshig

As already indicated, the statistical data arenot always comparable between rural and urbanarcas. Thus, in the United States and the UnitedKingdom house rent (or its equivalent in the caseof house ownership) accounts for a somewhathigher share of the total expenditure in urbanthan in rural arcas (Table Apart fromany income differential, this might be expectedin view of the higher site value of urban dwellings.For other countries included in the table, however,the difference between urban and rural expendi-tures is so marked that it seems probable that ruralhousing (except where it involves direct cashoutlay) has been valued at a more or less nominalfigure, or not valued at all, as in the survey in Thai-land. The implications are twofold. For onething the low rental value imputed to rural hous-ing owned by its inhabitants lowers the total esti-mate of rural family incomes. Secondly, as a

result the share of the income spent on food andotlacr items tends to be overstated.

At the same time it is probable that expendi-tures on housing are highly responsive to increasesin income. This seems to follow from the lowexpenditures on housing even in urban areas inthe countries (other than time United States andthe United Kingdom) which are included in Table111-io. Again, most of these countries have rath-er warm climates where less elaborate housingis needed.

Moreover, the lower expenditures on rent inrural areas are due not only to defects in the sta-tistics; in many instances they also reflect feweramenities. Rural houses are less frequently equip-ped with numing water, main sanitation, and elec-tricity than houses in towns, and this in itself cango far to explain lower rental values (Table

In most countries, poorer housing may becounted as one of the definite disabilities of the

TABLE III-I0. - PERCENTAGE OF TOTAL EXPENDITURES IN RURAL AND URBAN HOUSEHOLDS DEVOTED TO HOUSING, FUEL, CLOTHING,

AND OTHER NONFOOD ITEMS

House rent

Perce stage

Fuel, light

HO

Clothing Total shelter,heating, clothing

TABLE I. - PERCENTAGE OF DWELLINGS WITH RUNNING WATER AND ELECTRICITY IN RURAL AND URBAN AREAS

Other nonfood

NOTE: Figures in parentheses relate to piped water supply within dwellings; other figures to piped water supply inside or outside dwellings.' On farms, 45 (42), rural nonfarm 70 (60. - On farms 76, rural nonfarm 88. - ' Excluding Maoris.

agricultural population compared with town countries, or between rural an.c1 urban populations.dwellers. Indeed., in a number of countries the share of the

income spent on clothing is somewhat higher inClothing rural households, and in cold.er climates at least

this may not be unexpected in view of the greaterThe share of the income spent on clothing shows need of the farm worker than inost townsmen for

smaller differences than housing, either between protective clothing against rain and. cold.

United States 11 10 9 8 12 11 32 29 37 36

United Kingdom 11 8 4 10 13 25 26 42 42

J North 4 2 5 4 19 16 28 22 30 23Italy

South 4 2 4 4 19 18 27 24 28 24Japan 2 5 5 11 11 18 37Jamaica 10 1 3 2 6 11 19 1 4 25 .17Ghana

Capital and rural areas 5 1 5 6 12 17 22 24 14 10Small towns 2 5 17 24 12

Thailand 7 9 16India 6 7 7 7 16 15 31 19

Year

Rural Urban Rural Urban

Percentage

United States 1950 '60 (57) 97 (95) 83 97Canada 1951 (40) (94) 66 99

Great Britain 1951 (80) (98)France 1954 35 (34) 80 (75) 89 95Finland 1950 8 53 65 98Germany, Western 1955 67 97 98 99Netherlands 1947 (27) (87) 72 95Ireland 1946 9 (8) 92 (67)Austria 1951 35 (21) 87 (45) 83 97Portugal 1950 (3) (43) 9 47

New Zealand 1945 39 95 79 98

Puerto Rico 1950 83 (16) 64 (59) 24 81Chile 1952 (18) (76) 15 77Colombia 1951 7 (S) 66 (62) 4 64Panama 1950 9 93Brazil 1950 (1) (40) 4 60Honduras 1949 (2) (29) 23Cuba 1953 15 (7) 79 (58) 9 83Dominican Republic 1950 3 (1) 57 (18) 2 46

SOURCE: United Nations, Statistical Yearbook, 1958.

Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural

Running water Electricity

If countries are compared there appear to beno clear trends. Expenditure on clothing is low-er in the United States and the United Kingdomin relation to total expenditure than in sonic coun-tries with lower levels of per caput income. Thehighest figures indeed tend to fall toward the middleof the income range, though the relatively highfigures for Ghana are an exception. Ghana is anexception also to the trend, which would seemreasonable, toward smaller proportionate expen-ditures on clothing in tropical climates. Thecustoms and traditions of the particular coun-try are probably an important factor. Evenso the spread both between countries and bet-ween rural and urban workers is comparativelysmall.

Fuel and h:ght

Expenditures on fuel and light vary even lessin relation to total expenditures than those on cloth-ing and in all countries range between 2 and 9percent of the family budget. They are indeedproportionately high in some of the lower in-come and hotter countries (e.g., Thailand, India)where the reverse might have been expected. Theexplanation may lie in the cost of fuel andthat a certain ininimum amount is needed forcooking.

Other nonfood expenditures

The largest variation in expenditures from coun-try to country comes in the miscellaneous groupclassed in Table as " Other nonfoodexpenditures. If shelter, heating, and clothingare grouped together the share of the incomespent on these three items is roughly twice asgreat in the highest as in the lowest income coun-tries, both in rural and urban areas. For " othernonfood " expenditures, however, the correspond-ing disparity is from three to four times. Exceptin the United Kingdom, where it is equal, theshare of the income spent on these miscellaneousitems (often luxury and serniluxury goods andservices) is always lower in rural than in urbanhouseholds. Expenditures on these items in factappear to show the greatest increases with risingincomes, and it is in the smaller amounts of moneyavailable for their purchase after essential livingexpenses llave been met that the income disparities

between urban a id rural households are mostclearly seen.

The high share of expenditure in India on theseitems stands out from the general d.ownwardtrend. It may be partly explained by rather highexpenditure on ceremonials (about 6 percent)and also on personal services, which in urbanhouseholds accolmt for some 8 percent of thefamily budget.

Differences of itemization between countriesmake it impossible to make more than a few moredetailed comparisons. Transport accounts for soine13 percent of total expenditure in urban and. 10percent in rural households in the United States.In the United Kingdoin the corresponding figuresare 6 and 7 percent, respectively, so that in thiscountry a higher share of the income is spent inrural households. In none of the other countriesincluded in the table does transport exceed 2 per-cent of the total family expenditure (except inthe Jamaican urban sample where it is 3 percent).In all cases the share of the income spent on trans-port was higher in urban than in rural household.s,in spite of the greater isolation of the latter. Agood deal of the urban expenditure was presumablyaccounted for by travel to and from work, atleast in the larger towns. Rural workers, how-ever, also often live at a considerable distancefrom their work, or cover long distances in thecourse of their employment.

Another item which can be identified in mosthousehold surveys, household furniture and equip-ment, accounts for as little as 2 percent of expen-diture in the rural households in, e.g., Ghana andJamaica, and about 4 percent in Japan, ranging upto 6 and 8 percent in the United. States, the UnitedKingdom, and Italy. As a rule the share of theincome devoted to those goods was little higherin rural than in urban households.

AMENITIES NOT INVOLVING DIRECT EXPENDITURES

In the foregoing sections attention has beengiven mainly to income and expenditure, for itis on these matters that the most exact informationis available, and that rural levels of living betweencountries, particularly in relation to urban levels,can be measured. But obviously these are onlysome of the things to be consid.ered when an attemptis made to appraise rural levels of living. Andsome of the more intangible things are precisely

FIGURE 111-9. PERCENTAGE OF ILLITERACY IN RURAL AND URBAN POPULATIONS OF SELECTED COUNTRIES

Argentina (1947)

Brazil (1950)

Ceylon (1946)

Chile (1952)

Costa Rica (1950)

Cuba (1953)

Cyprus (1946)

Dominican Rep.(1950)

El Salvador (1950)

Greece (1951)

Honduras (1950)

Japan (1948)

Panama (1950)

Puerto Rico (1950)

U. of S. Africa (1946)(native population)

United States (1952)

Venezuela (1950)

those where rural people are most at a disad-vantage. In nearly all countries they have lesscomplete medical, educational, and cultural ser-vices, more restricted amusements, less oppor-tunities for social contacts. They usually have long-

I I I i

10 20 30 40 50 60

Percentage of illiteracy

Urban districts

MOM Rural districts

112

70 80

cr hours of work, and fewer or no holidays.Their occupation is precarious in that it is especiallysubject to the unpredictable hazards of weather,as well as to the economic hazards by which towns-people are also affected. There are sometimes

À,/%12ir

i

,

Zi.../.41". ,i6fifY di. ' .., ' .456fifor 44

1

t.

, x4.,,..- ...5 ,_ / M

compensating advantages in the greater peaceful-ness and seclusion of the country, but these ad-vantages are by no means always there, especiallyat the lower income levels. Nor do they appealto everyone.

There are few statistics which enable any meas-ure to be made of the disabilities of the rural peoplein relation to town dwellers, especially in econom-ically less-developed countries. Figures may behad of the degree of illiteracy in rural and urbanareas, which reflect the less complete educationalservices in country districts in many areas and thegreater distances of country children from schools(Annex Table 18 and Figure III-9).5 As with allsuch figures, comparisons between the rural andurban groups are more valid than comparisonsbetween countries, as the definition of illiteracyis not the same in all countries. The data present-ed, however, suggest that illiteracy is often twiceas frequent and exceptionally up to four times asfrequent, in rural districts as in towns.

Attempts have been made to throw light ondifferences in medical services by comparisons ofthe numbers of doctors and hospitals, or of theincidence of disease or mortality between rural andurban areas. Few countries, however, compilestatistics of this kind in a way which facilitatescomparisons between town and country, or be-tween agricultural and urban occupations. A briefsurvey of the problem, together with a bibli-ography, is given in a recent WHO publicationfrom which the following may be quoted:

...within a given country there is frequently too high a dis-proportion between the medical density in the town and in thecountry. In France, there is approximately one physician per1,000 inhabitants in the towns and one per 2,000 in the country.In the USA, in 1942 there were 120 physicians per ioo,000 ofthe population for the country as a whole; this figure variedfrom 153 per 100,000 in " metropolitan " cities to 59 per ioo,000in areas classed as rural (less than 2,5oo of a population) ...This inequality in distribution would have been still greater insome countries, however, if special measures had not beentaken ... In some countries, no special measures are taken tokeep doctors in country districts. In Turkey, they gravitateto Istanbul, Ankara, and the west-coast towns; in the east,the ratio up to a short time ago was as low as one doctor perioo,000 of the population. In Bengal, where there are 4,586

5 Facilities for education in rural areas. (International Bureauof Education, Publication No. 192). UNESCO, Paris, 1958.

R. F. Bridgman. The rural hospital. World Health Or-ganization, Geneva, 1955, pp. 23-24.

113

qualified plays c ails and 7,690 licenciates (assistant physicians),i.e., an average of one practitioner per 4,913 inhabitants, themedical density is probably three-and-a-half times higher inthe towns than in the country. In Sind, there are reckoned to be155 fully qualified practitioners and 323 licenciates, i.e., oneper 9,487 of the population, but the ratio of density as betweentown and country is 4.9 : 1. It is estimated that three-quartersof the physicians practise in the towns, whereas the ruralpopulation is eight to nine times as great as the urban pop-ulation.

The impact of health conditions on the lifeexpectancy and death rate in rural and urban areascannot always be compared directly, owing todifferences in the age structure in itself, which maysometimes be a direct consequence of rapid urbani-zation. More conclusive are differences in infantmortality (deaths under t year of age per i,000live births) for which a few countries have separaterural and urban statistics. Infant mortality is more orless the same at about 26-30 per L000 in rural andurban areas in countries like the United States andthe United Kingdom. In Japan, however, it is higherin rural areas at 47 per i,000 than in urban areaswhere it has been red.uced to 35 per i,000 (bothfigures relate to 1956). In some other countries,among them. Yugoslavia, Italy, and. Colombia, itcan be shown that at least certain large cities haveappreciably lower infant mortality than the countryaverage, which indicates that it is correspondinglyhigher in rural areas. Thus, comparing in each casethe capital city with the country as a whole thefigures were respectively: Italy (1958) 36 and. 49per 1,000; Yugoslavia (1957) 53 and 102 per i,000;Colombia (1956) 81 and 104 per 1,000. On theother hand, the rural/urban contrast tends to be lessimportant in countries where the infant mortalityrate is particularly high, as in the United ArabRepublic (Egypt) and India, and in some cities,e.g., Calcutta and Bombay, it is currently higher thanfor the countries as a whole. In this respect, too,the contrasts between countries at different levelsof economic development are larger than thosebetween rural and urban areas within the sameCountry.

Although statistics on social and other noneco-nomic factors are scanty, the general thesis is not indoubt, that in addition to often considerable incomedisparities, agricultural and other rural workersdo lack many of the amenities, services, and otherfacilities available in towns. These disabilities areno less real because they cannot be measured andmust be taken into account in any assessment ofrural levels of living.

Recent trends in agricultural incomes and levels of living

The first sections of this chapter give some ac-count of the levels ofliving of farm and rural peoplein countries at different stages of economic develop-ment and some indications of how their conditioncompares with that of people in towns. The some-what limited data available refer in the main to theearly and mid-1950's. They constitute as it were across section of the situation at that particularmoment of time.

For an inquiry of this kind, however, it is

equally irnportant to consider trends in time; tosee, for example, whether there is evidence of anygeneral improvement in the well-being of farmpeople in the last few decades, and whether dispari-ties between levels of living in the countryside andin towns seem to be widening or contracting.Such comparisons, especially when information isavailable over a fairly long period, may shed usefullight on the trends and changes which may beexpected in the future.

So far as is known, only one country (theUnited States) publishes an index aimed directlyat measuring changes in the level of farm living.This index is based on a combination of the averagevalue of farm sales and the percentage of farmshaving certain amenities, including electricity, tele-pilones, and automobiles. This index and the relat-ed data indicate an appreciable improvement in thegeneral level of rural well-being in recent years,not only in comparison with the period of depres-sion in the 1930's but also in comparison with theprosperous postwar years.

Between 1940 and 1956, for instance, the num-ber of farms having electricity rose from 33 to94 percent, those having running water from 22

SOURCE: Farm operator level of living indexes for counties of the United States,1945, 1950, 1954, U.S.D.A., Agricultural Marketing Service, Stat.Bull. 204, March 1957.

114

to 64 percent, those having telephones from 25to 52 percent, and so on. Rural standards werethus in many respects approaching urban standards,despite the remaining disparity between rural andurban areas generally. This disparity is, however,smaller in each area than in the United States asa whole. There are also indications that differencesin farm levels of living in different areas are tend-ing to level out. Thus the level-of-living index islowest in the South, but this is also the area wherethe relative improvement has been greatest, sothat the disparity of farm incomes between areasis smaller in 1956 than in 1940. The pattern ofspending also appears to llave become more similarto that of urban areas and of the North.

Direct evidence of a distinct improvement inlevels of rural living comes also from Japan, wherean index of farm household consumption expendi-ture (in real terms) is available, not only for recentyears but also in comparison with the immediateprewar years. The index of real wages in manufac-turing industries, also included in Table 111-13, whilenot strictly comparable, affords some evidence thatin Japan rural levels of living have improved con-siderably more than that of industrial workers incomparison with the 1930's though since 1954some of the relative gain appears to llave been lost.

TABLE IIII3. JAPAN: INDICES OF FARM HOUSEHOLD

EXPENDITURES (IN REAL TERMS) WITH, FOR COMPARISON, INDICES

OF REAL WAGES IN MANUFACTURING INDUSTRY

Indices 1934-36 100 Indices 1951 = 100

The index of Japanese farm household expendi-ture includ.es a breakdown of expenditure d.uringthe postwar period, which also indicates ami up-ward trend in the level of living. For example,from 1951 to 1956, in comparison with an increasein over-all expenditure of 22 percent, food ex-penditure increased by only io percent, while

1930 75 102 104 44 931940 79 115 104 49 1021945 100 138 128 65 1271950 122 152 147 92 1451954 140 167 161 113 1631956 145 169 165 119 167

1951 109 92 100 1001952 122 102 112 111

TABLE IIII2. INDICES OF LEVELS OF LIVING OF UNITED STATES 1953 128 107 117 117FARM OPERATORS (U.S.A. AS A WHOLE, 1945 = 100) 1954 129 108 118 117

1955 131 115 120 1241956 134 126 122 136

United NortheastStates

NorthCentral

South West

SouRcEs: Statistical Abstracts, Ministry of Agriculture and Forcstry, Japan,Indices

1957. Japan Statistical Yearbook 1955-56.

Farm Wages inhousehold manufactur-

expenditure ing industry

Farm Wages inhousehold manufactur-

expenditure ing industry

TABLE 111-14. - RELATIVE GROWTH OF THE AGRICULTURAL AND NONAGRICULTURAL DOMESTIC PRODUCT IN SELECTED COUNTRIES

Period

Average annual growthindex of agricultural

product

At currentprices

SOURCE: United Nations, Yearbook of s ational accounts statistics, 1958.NOTE: Figures in parentheses are FAO estimates.

' Average percentage change from one year to the next.

expenditure on cereals and roots fell by 7 percent.By contrast, expenditure on clothing and " extra-ordinary expenses " rose by 61 percent and 5 7percent, respectively. There was some fall in expen-diture on lighting and heating, but expenditure onhousing and miscellaneous items each rose more thanthe over-all average.

For some other countries conclusions may be

At fixedprices

115

Average annual growthindex of nonagricultural

product

At currentprices

At fixedprices

Ratio of averageannual rate of growth

of agricultural and non-agricultural product

At currentprices

At fixedprices

inferred, although less precisely. In Italy, forexainple, comparison between an investigation offarm household expenditures in the 1930's withthe recent farm family budget inquiry shows thatthe share of income spent on food has declined,though it is not clear by exactly how much, whichin itself is indicative of a higher level of living.This conclusion is borne out by the lessening of the

Percentage Ratio

United States 1951-57 - 3.9 (- 0.6) 5.0 (4.0) 92 96Canada 1951-57 - 5.0 (- 1.3) 8.3 (8.8) 88 91Luxembourg 1950-57 3.6 0.6 10.2 4.5 94 96Belgium 1951-57 1.5 1.6 4.6 3.1 97 99United Kingdom 1950-57 3.3 (2.5) 8.2 (2.2) 95 100

Denmark 1950-57 3.7 2.6 6.6 2.3 97 100Norway 1951-57 5.5 1.5 7.9 4.2 98 97Finland 1951-57 2.1 0.2 9.1 4.6 94 96Germany, Western 1950-57 8.0 3.2 12.0 8.6 96 95Netherlands 1951-57 6.3 (6.0) 9.5 (9.6) 97 97

Israel 1952-57 23.9 23.6 100Argentina 1951-57 20.6 2.8 17.2 1.8 103 101

Puerto Rico 1950-57 .5 8.9 92

Ireland 1950-57 5.1 (1.9) 5.2 (0) 100 102Austria 1950-57 10.2 3.1 14.8 7.2 96 96

Chile 1951-57 47.6 1.0 51.5 3.4 97 98Italy 1950-57 3.3 2.8 10.5 7.0 93 96

Union of South Africa 1950-56 5.3 8.4 97

Lebanon 1950-56 5.6 6.2 99

Yugoslavia 1952-55 27.6 (14.1) 14.9 (17.0) 111 98

Colombia 1950-57 10.0 11.7 98

Brazil 1951-57 22.9 4.6 30.6 11.1 94 94

Greece 1950-57 16.7 9.1 15.7 6.1 101 103

Turkey 1950-57 16.2 5.3 19.3 7.8 97 98

Portugal 1952-57 3.1 3.2 4.6 4.4 99 99

Japan 1950-57 8.6 (- 0.9) 15.4 (8.5) 94 91

Philippines 1950-57 4.2 7.1 97 -Ecuador 1950-56 7.1 4.9 8.7 6.4 99 99

Honduras 1950-57 5.5 2.4 7.6 4.1 98 98

United Arab Republic. (Egypt) 1950-54 - 2.3 6.6 92

Peru 1951-56 1.9 14.9 89

Ceylon 1950-57 2.8 7.2 96

Thailand 1951-54 - 2.5 .4 12.3 6.2 87 95

Belgian Congo 1950-57 7.0 5.3 9.9 7.8 97 98

Korea, South 1953-57 44.8 4.6 41.4 6.4 102 98

Pakistan 1950-57 1.5 4.4 97

Kenya 1950-57 9.2 13.1 97

India 1950-56 3.4 3.3 3.5 4.0 100 99

Burma 1950-57 6.6 5.9 9.6 7.9 97 98

disparity between urban and farm incomes (seebelow) at the same time that the over-all per caputincome has inc-reased. Improvement in comparisonwith the period of depression during the 1930's,however, would be expected and is likely to haveoccurred in most countries.

In most countries, direct evidence of changes andtrends in levels of farm living during the postwarperiod is lacking and resort must be had to nationalincome statistics and other indirect data, which aresubject of course to the qualifications noted in thepreceding sections.

DEVELOPMENT OF NATIONAL INCOME

A comparison of the rate of growth of the na-tional product in the agricultural 7 and nonagricul-tural sectors suggests that in a considerable majorityof countries economic development has been fasteroutside agriculture (Table This would beexpected and is even necessary for sustained eco-nomic growth. The growth differential is seldomlarge, however, the difference in the annual rateof growth exceeding 5 percent only in about onefourth of the countries listed if the comparison ismade at current prices. In real terms, i.e., at fixedprices, the growth differentials are still srnaller inmost countries, indicating that price movementsduring the period were generally unfavorable toacrriculture.

If there were no change in the distribution ofthe labor force and population between the agri-cultural and nonagricultural sectors, the slowerpace of agricultural expansion would be reflectedin a continuously widening gap between averagefarm incomes and incomes in other occupations.But in practice the percentage of the populationdepending on agriculture is falling in most countries.The faster this happens the fewer people there willbe to divide the shrinking agricultural portion ofthe national income, and consequently the largerthe share falling to each.

The rates of growth in agriculture in Table 111-14 arcderived from national income statistics and correspond to theconcept of " value added." They should not be confused withthe indices of agricultural production in Chapter II of this re-port, which represent the increase in the net farm output ofagricultural products, without any deduction for the cost offarm machinery, fertilizers, or any other input costs of non-agricultural origin.

116

FIGURE IIII0. RECENT TRENDS IN SHARE OF AGRICULTURE INPOPULATION AND NATIONAL PRODUCT OE SELECTED COUNTRIES

(Semi-logarithmic scolc)

Share ofagriculture

JAPAN -,...--.............

......................

UNITED STATES

......'*"°°°"'".....

...UNITED KINGDOM

... .... ,,,,,,........................".,

........ARGENTINA

6............... ..... ...........

ITALY

66

, ,

,...,..,..-........,....,..............6i,6,...,6.,.,

CHILE

1946 1940 1950 1952 1954 1950 1950

Population

National product

SOURCES: Data in Figures 111-so and 111-ii:

Argentina: El desarrollo económico de la Argentina, Anexo, "Algunosestudios especiales y estadistica macroeconómicas' UnitedNations Economic Commission for Latin America, [E/CN.12/429/Add.4, 30.6.1958.]

Chile: Cuentas nacionales de Chile 1940-1954, Santiago deChile, 1957.

Colombia: United Nations, Analyses and Projections of EconomicDevelopment III, The economic deve/opment of Colombia,Geneva, 1957 [E/CN. 12/365/Rev.1], pp. 16-17.

Italy: Sommario de statistiche storiche italiane 1861-1955, Rome,1958, and current statistics.

Japan: S. Tohobata and S. Kawano, Economy and agriculture inJapan, (in Japanese), Tokyo, 1956, and current statistics.

United Kingdom: J. R. Bellerby, Nacional income and agriculture TheEconomic Journal, March 1959; Ch. Booth, Occupationsof the people of che United Kingdom, 1801-81, J.R.S.S.,1886, and current statistics.

United States; Historical statistics of the United States 1789-1945, 1949,and current statistics.

The interval between census dates is too longfor the change in the percentage of the populationengaged in agriculture during so short a periodas 1950-56 to be accurately known. Estimates fora few countries, however, are shown in Figure

90 -

30 -

20

10

5

20

is

40

30

20

40

30 -

20 -

Is-

111-io. In most cases the curves showing the shareof agriculture in the population and in. the nationalincome run fairly parallel, which suggests that inthese countries agricultural incomes neither gainednor lost very much ground in relation to incomes ofother occupations during the period covered.There appears to be some tendency for the disparityof incomes to wid.en in the United. States and theUnited Kingdom, but this may well reflect somereadjustment following the greater emphasis laidon agriculture during the war. A more markedpostwar adjustment is evident in the curves forJapan and Italy, while those for Argentina suggestsome recent narrowing of the gap.

These short-term trends can do no more thanto throw light on recent developments in the coun-tries concerned. For a few countries similar rela-tionships llave been worked out over a relativelylong period, and these are of considerable interestin the light they throw on the mechanism ofeconomic development and industrialization (Fig-ure 1).

The charts suggest that the rather wide disparitiesbetween farm and nonfarm incomes in the UnitedStates and Sweden date back well into the nine-teenth century. In the other countries for whichestimates are available (United Kingdom, Italy,Japan, Argentina, and Colombia) there appears tohave been smaller income differences for most ofthe period covered. Some other points seem to beof interest. For example, the temporary narrowingof the income gap in the United States at theturn of the century may llave been connected withthe rapid colonization of the western parts of thecountry and the opening up of large export out-lets in Europe. In the United Kingdom, Italy,and Japan the disparity seems to llave been small inthe mid or late nineteenth century when agriculturewas still the leading ind.ustry, while in all threecountries the disparity appears to llave increasedduring the period of rapid industrialization. Asimilar tendency is visible in Sweden after 1920.In the United Kingdom at least, the greatly in-creased disparity in the late nineteenth century mayalso have reflected the same growth of internationaltrade in agricultural products which reduced theincome gap in. the United States.

In the United Kingdom the gap has again be-come much narrower in the last decade or more,and the same trend is evident recently in the curvesfor Japan, Sweden, and Italy. To a large extent thesemore recent reductions in income disparities prob-

117

FIGURE LONG- AND MEDIUM-TERM TRENDS IN SHAREOP AGRICULTURE IN POPULATION AND NATIONAL PRODUCT

OF SELECTED COUNTRIES

(Semi-logarithmic scale)

Share ofagriculture

50 -40 -

30 -

20 -

10

20 -

60 -50 -40 -

20 -

10 -

30 -

20 -

UNITED STATES

COLOMBIA

UNITED KINGDOM

ARGENTINA

.0 COSS =NB I XrDS

02=1MHZIMIS.111

SOURCES: SCC under Figure 111-to.

ably reflect price supports and other intentionaleconomic and social measures to improve the rela-tive situation of the farni population, includingland reform in Japan. In Argentina, too, wherethere was a widening of the gap during the 1940's,largely as the outcome of policies to speed up indus-trialization, the gap has recently again tended tonarrow.

*oz.. aroma

1

SOSO 1870 1890 1910 1930

Population

National product

1950

50 -40 ITALY

30

70

50 -40 - SWEDEN

30 -

70

50 - JAPAN40 -

30

20

These observations seem to justify the earlierconclusion that there is no particular correlationbetween the degree of disparity and the actuallevel of faun income. If the data allow of anyinterpretation, it may be that when industriesexpand very fast and urban incomes rise, agricul-tural incomes usually fail fully to keep pace, eventhough such boom periods stimulate the demandfor farm products. The income disparity thuswidens. This situation arises partly because theagricultural population is less mobile than thenonagricultural strata. Income disparities maytherefore tend to be greatest at times of particularlyrapid industrial expansion, and perhaps especiallywhen this occurs at an early stage of industrializa-tion, though the charts also suggest that an excep-tion must be made in time of war. However, itis difficult to reach any final conclusions on rural/urban income. For example, like all national in-come data, the data reproduced in Figure donot take into accowit nonagricultural earnings. Ithas proved almost impossible to obtain time seriesdata on ao-ricultural incomes from nonagriculturalsources. If, however, agricultural workers wereable to get part-time jobs outside agricultureat times of rapid industrialization, the realincome disparities may have been narrower andless fluctuating than would be indicated bythe charts.

AGRICULTURAL INCOMES

Apart from the regular national income statis-tics, some countries publish distinct estimates ofagricultural incomes year by year. For some Euro-pean countries estimates of net receipts by the farmsector are made periodically. 8 By adjusting suchestimates for changes in the cost of living, an ind.e-pendent indication ma.y be obtained of changesin the income in real terms (Figure ITT-42), thoughthe estimates as they stand do not of course allowfor the gradually declining share of agriculture inthe witional labor force. This would result insomewhat larger increases in per caput income inagriculture than the rise in the income of the" national farm " as a whole.

FAO/ECE Agriculture Division, Output and expenses ofagriculture in some European countries, 1948-51, 1950-53, 1952-55.Geneva, 1953, 1955, and 1958.

118

FIGURE R_ECENT TRENDS IN TOTAL AGRICULTURAL

INCOME OF SELECTED COUNTRIES

Indices: 1949 = 100

180

170

160-

150

740

730

120

110

100 -

90

80 -

70

Ge

1949 1950 1951 1952 1953 5954 1955 1956 1957

us

Index of agricultural wages deflated by cost-of-living index (Source:International Labour Office, Year book of labour statistics).

Indices: Fi st year of pe iod = too

Ireland 1950-56 127 108 122Netherlands 1950-56 122 98 104Canada 1950-56 116 92 106Norway 1952-56 113 100 119

United States 1950-56 111 86 81

Japan 1950-56 111 76 86United Kingdom 1950-56 102 93 87

Italy 1950-56 98 92 78

Growth of IncreasedIndex of

agricultu-agricultu ral

wages inper caputoutput in

Period ral wages relation to agriculturein real industrial comparedterms wages with

industry

A - Australia N - NetherlandsD - Denmark UK - United KingdomFr - France US - United StatesGe - Germany, Western

AGRICULTURAL WAGES

Just as comparisons between current levels ofwages in agriculture and in industry throw a side-light on existing income disparities between the twosectors, so trends of agricultural wages give indi-cations of a rising or falling level of living in agri-culture. It is also of interest to compare these withthe trends of wages in manufacturing industry and,more ftmdamentally, with changes in per caputproductivity in manufacture.

The indices of wage rates in the first columnof Table 111-15 suggest that in most of the eightcountries included there has been a considerableimprovement in the real earnings of wage workers

TABLE III-I5. - TRENDS OF WAGES IN AGRICULTURE AND

THEIR RELATION TO THE TRENDS OF WAGES AND PRODUCTIVITY

IN INDUSTRY

in agriculture in recent years. The second colunmcompares the rise of wages in agriculture and inindustry. Agricultural wages appear to have in-creased more rapidly than industrial wages inIreland, to have kept pace in Norway and theNetherlands, and to have fallen behind somewhatin the five other countries.

The final column compares changes in percaput prod.uctivity in agriculture and industry, asestimated from national income data at currentprice levels. The estim.ates allow for the relativedecline in the agricultural labor force, but are ofcourse no more than approximate. Similar esti-mates at fixed prices would give results rather morefavorable to ag-riculture as in most countries pricerelationships moved against agriculture during theyears under review.

The data presented earlier have shown, amongother things, that in most countries there are con-siderable disparities between incomes and levels ofliving in agriculture and in other sectors. Thesedisparities, however, are mucli smaller than thedifferences between agricultural incomes in eco-nomically developed and less-developed countries.It may be seen from Figure for example,that the differences between per caput incomes orig-inating in agriculture in the highest income coun-tries are some ten times those in the lowest incomecountries. They are thus much larger than thedisparities between farm and nonfarm incomes,which in few countries exceed three times and areusually m.uch less. For reasons already discussed,the national income estimates may appreciablyoverstate the income differences, both betweencountries and between the agricultural and non-agricultural sectors. Conversions from nationalcurrencies to dollar equivalents also tend to exag-gerate income differences between countries be-cause of price differences. Nevertheless, there isno doubt that the country differences in farm in-comes are much greater than the occupationaldifferences. In other words, the level of farm in-comes depends in the first instance on the generalincome level of the country.

In this final section of the chapter an attemptis made to see how far income disparities betweencountries and between the farm and nonfarm

119

There is perhaps some very rough correlationbetween the first two columns and the last colurrmof the table. In the United States, the UnitedKingdom, and Italy agricultural wages seem tohave risen to a rather greater extent in relation toindustrial wages than would have been justifiedby the relative growth of per caput output atcurrent prices. Had the growth of productivitybeen measured at constant prices, however, therewould probably have been little or no wage dis-parity, at least in the two former countries. In theother five countries, on the other hand, agriculturalwages appear not to llave reflected fully the growthof per caput output in relation to the industrialsector. This lag would llave been still greater ifthe growth of productivity liad been measured inreal terms, i.e., at constant prices.

Main factors influencing farm incomes and levels of living

sectors are influenced by such factors as price levelsand price relationships, by productivity per hectareanci per man, by differences in size of farms, volumeof output, etc., and to find also how far they arekeyed to the economic and social structure of thecountries concerned. It is hoped that such ananalysis may give some insight into the causes ofrural poverty and indicate what action may ormay not be feasible in the circumstances of aparticular country.

AGRICULTURAL PRICES AND PRICE RELATIONSHIPS

Farm prices are subject to wide fluctuations underfree market conditions; agricultural production ishighly seasonal and influenced unpredictably bythe weather. These factors, together with thecharacteristically sin.all scale of operations by largenumbers of independent producers, make it exceed-ingly difficult to adjust the supply of farm prod.uctsto demand. As many agricultural products haverather low price el.asticities, a small over-supplyis likely to lead to a disproportionate fall in priceand vice versa. This applies especially to the moreperishable products.

Farm incomes are also influenced by cyclicaland longer-term price movements. In the pastfew decades there have been two periods of general-ly high agricultural prices, corresponding to the

two world wars, but these have been rather quicklyfollowed by a fall in agricultural prices relative toother prices. In ad.dition, the depression of the1930's led to a price movement very unfavorableto agriculture, while the Korean war led to a mark-ed, but short-lived, rise in agricultural prices duringthe postwar period. In general, however, the risein agricultural prices during the Second World Warand the subsequent decline were much less sharpthan in the case of the First World War, largelybecause of the widespread adoption of measures ofagricultural price control and price support.

Both the inherent variability of agriculturalprices and the measures adopted to reduce suchfluctuations and to stabilize firm prices and incomesoperate tmevenly between countries at differentstages of economic development. They appearto increase the differences in income levels betweenthe agriculture of different countries and to in-fluence also (though not always in the same sense)the disparities between incomes in the agriculturaland other sectors. But, although important, theyare not, as is shown later, the most importantfactors.

The very poverty of most farmers in economi-cally less-developed countries makes them moreseriously affected by price fluctuations. Lack ofcash, and often indebtedness (together with lackof storage facilities at their disposal) usually forcesthem to sell on a glutted market immediately afterthe harvest when prices are lowest. Farmers ineconomically more developed countries, on theother hand, more often have the financial resourcesto hold all or part of their output until the periodof lowest prices is past. Indeed, the fact that theycan do so reduces the magnitude of such fluctua-tions, and not infrequendy further market stabiliza-tion results from co-operative marketing or theoperation of producers' marketing boards. Thefmancial weakness of farmers in economicallyless-developed countries thus tends to depress theirincome still further and to widen the gap betweentheir income and farm income in more developedcountries.

The general adoption of price control and pricesupports in the last two decades has probably doneeven more to increase price and income differencesbetween economically less and more developedcountries. In economically less-developed countriesthe main fluids for investment in industry andother nonagricultural activities must come fromagriculture, which in such countries is nearly al-

120

ways die largest sector of the economy. Landtaxes and taxes on agricultural exports for generalo-overnment revenue tend to reduce firm incomes.Moreover, consumers in towns are poor, eventhough not on average as poor as the agriculturalpopulation, and it is important to keep food priceswithin their reach. In economically less-developedcountries, therefore, agricultural price policies haveusually been aimed primarily at containing con-sumer prices and avoiding inflation, and onlysecondarily at stabilizing farm prices and incomes.In some cases the emphasis on the consumer sidehas gone so far that it appears to have hamperedthe badly-needed agricultural expansion and thusto have aggravated the inflationary pressures it wasdesigned to combat. Such policies clearly tend toincrease disparities between farm and nonfarmincomes.

The situation is quite different in the economi-cally more developed countries. Since the postwarshortages were overcome, a main objective of poli-cies in. many of these countries has been to minimizetime disparities between incomes in agriculture andin other occupations, sometimes for motives ofsocial justice, sometimes to slow down the drift ofmanpower from agriculture for political, defense,social, or economic reasons, e.g., import savings.Domestic agricultural prices have therefore beenstabilized by various measures at relatively highlevels, often substantially above those ruling inworld markets. In 'addition farm incomes haveoften been maintained or raised by various sub-sidies (often designed also to raise efficiency), bythe provision of credit on favorable terms, or bythe remission of taxation.

Such policies, which in effect constitute large-scale transfer payments to agriculture from othersectors of the economy, could be pursued only toa very limited degree in economically less-developedcountries. In a country like India, for example,where some 70 percent of the population is engagedin farming and half the national income is generatedin the agricultural sector, there is evidently notmuch financial capacity in the rest of the communityfor supporting the farmers. Nor can these measuresbe extensively applied in countries, even highincome countries, which are heavily depend.ent onagricultural exports, since these must be sold atcompetitive prices on world. markets.

Differences in average returns to farmers indifferent countries, largely the result of nationalpolicies, were shown for a few key commodities

in a number of' charts in The State of Food and Agri-culture 1958 (Figures II-It and. 12). The estimatesinclud.ed returns from subsidies, in so far as thesewere tied to particular conunodities, as well asmarket returns. In general, the highest returns perton were received in economically more developedcountries, particularly importing countries, andthese often exceeded by so to ioo percent, andoccasionally more, average returns to farmers inexporting countries. Few underdeveloped countrieswere included in the charts for lack of precise data,but for basic agricultural products their price levelsare generally relatively low, sometimes so low thatimported foods must be subsidized if they are to besold at current domestic prices.

National price and support policies thus appearto be a factor tending to increase income differencesbetween farmers in economically more and less-developed countries. They are also likely to increasethe disparities between farm and nonfarm_ incomesin economically less-d.eveloped countries, and toreduce such disparities in economically more de-veloped countries.

The magnitude of these effects is difficult toestimate with any certainty, though in some coun-tries they must be considerable. In. the United States,for example, the total cost of all programs for thestabilization of farm prices and farm incomes in1958 was $ 2,666 million, to which must be addedthe subsidy on commodities sold abroad by theCommodity Credit Corporation at less than thedomestic price. These figures do not, of course,take into account price support measures whichoperate by limiting imports or (except where sub-sidies are paid) by limiting production. They may becompared with total household living expenses ofaoTicultural families in 1955 of $ 15,749 million.It has been estimated recently that, during the pastquarter of a century, government programs haveincreased farmers' net income by 20 to so percentin years when price fluctuations would otherwisehave hit hardest; and during the last six years,government action is believed to llave kept netfarm incomes one-third higher than they wouldotherwise have been. 9

In the United Kingdom the cost to the Treasury

The place of government in agriculture. Address by Rep-resentative Harold D. Cooley, Committee on Agriculture,U.S. House of Representatives, before the National FarmInstitute, Des Moines, Iowa, 21 February 1959; sec Congres-sional Record, Appendix, 9 March 1959 - A 1848.

121

of price anct incomè sUpport policies for the year1957/58 are estim.ated at L 290 million and atL 240 million for 1956/57. Because of the systemof price guarantees through deficiency paymentsthis represents virtually the whole cost of agricul-tural supports. It may be compared with a net farmincome, exclusive of wages to farm workers, ofk 36o million in 1957/58 and 314 million in1956/57. io

In Italy, the main objective of agricultural pricepolicy is to stabilize the market for the main farmproducts. Total disbursements by the Ministry ofAgriculture have been of the order of 100,000million lire annually, or some 4 percent of the con-tribution of agriculture to tb.c country's nationalincome, though by far the largest part goes intoland reform projects and is in large measure inthe nature of investment. In Italy, as in most othercountries, however, government disbursements inno way measure the total aid received by farmers.Prices of important foods are maintained at adetermined level by regulating the volume ofimports, and by official intervention in markets.Thus, farm incomes are to some extent supportedby means of higher prices to consumers.

At the other extreme may be mentioned someeconomically less-developed countries where do-mestic p1-ices are kept relatively low and consider-able sums are raised for general revenue throughdirect and indirect taxes on agricultural exports.In Burma, for example, a large share of the costof government was for some years nact fi-om theprofits of the State Agricultural Marketing Board.In Argentina a similar policy was formerly operat-ed through TAPI (Instituto Argentino para la

Promoción del Intercambio). Similarly, many othercountries in Asia, Africa, and Latin Americatax agricultural exports directly, or by variousindirect means, including multiple and variableexchaiwe rates.

OUTPUT PER MAN

Price levels and price relationships thus consti-tute one main factor determining the level of farmincomes. A second, and even more importantfactor, is the volume of output per man. It has

Total agricultural income, including wages paid to hiredworkers, amounted to L 6ii million in 1956/57 and L 669million in 1957/58.

become axiomatic that the incomes of industriesand nations depend largely on their productivity.The data in Figure Iff-13 make plain, shouldany evidence be needed, that the level of income inagriculture, no less than in other occupations, de-pends more than anything else on the level of pro-duction per person. Some qualifications and dif-ferences of concept should be noted about the datacorrelated on this chart, '1 but they do not impairthe general correlation.

The chart shows not only the close relationbetween per caput production and income; italso brings out that the lower the " gross produc-tion " per caput the more closely it approximatesto " net production and income, because sol.ittle in the way of production requisites is purchas-ed from other sectors of the economy. At the higherlevels of per caput output, on the other hand, thecost of production requisites is high in relation tooutput. In other words, much more gross produc-tion is needed for each dollar of farm income.In the United States, nonagricultural inputs costnearly half the value of the output (net of feed,seed, and interfarm sales) and nearly twice as muchmust be produced to provide one dollar of net farmincomes than in India, where such costs representonly a small fraction of the value of the agricul-tural output. Between these extremes there are alldegrees of variation: in European countries, forexample, nonagricultural production costs varyfrom about ro to 30 percent of the value of theagricultural. output. It seems evident that, wherethey occur, the additional production costs are, onaverage, profitabl.e to producers. But evidently,too, additional production requisites cannot beused unless funds are available to buy them, andwill not be profitable to use unless a market canbe found for the additional quantities produced.

" The per caput incomes charted in Figure III-53 correspondto the per caput incomes estimated from national income datain Annex Table 14: they are no more than the dollar equiva-lent of a calculation in national prices. In the estimates of percaput production, on the other hand, the same price weightingshave been used for all countries. Allowance has been made forany quantities used as raw material for further agriculturalproduction (e. g., grain for seed or livestock feeding), but theyare gross production estimates in the sense that no dedlictionhas been made for the cost of nonagricultural inputs, such asmachinery and fertilizers. This is in contrast to the income data,which in effect represent added value. Both income and out-put data relate to the average for the period 1952-54. They havebeen calculated on a per caput basis in relation to the estimatedtotal agricultural population in 5953.

122

FIGURE 111-13. PER CAPUT NATIONAL INCOME ORIGINATING

IN AGRICULTURE IN SELECTED COUNTRIES IN RELATION TOPER CAPUT AGRICULTURAL OTJTPUT

(Logarithmic scalc)

Per caput agriculturalincome (U.S.$)

I SOO

600

400

o Ph

/014

e

40 50 60 70 00 90100 ISO 100 050 000 400 500 600 000 0000 1 500 0000

Per caput gross agricultural production (standard units)

Ar - Argentina Ir - IrelandAu - Austria It - ItalyBL - Belgium-Luxembourg j - japanCa - Canada Ne - NetherlandsCe - Ceylon NZ - New ZealandCh - Chile No - NorwayCo - Colombia Pa - Pakistan

- Denmark Ph - PhilippinesE - Egypt Po - PortugalFr - France Th - ThailandFi - Finland Tu - TurkeyGe - Germany, Western UK - United KingdomGr - Greece US - United StatesIn - India Y - Yugoslavia

As shown later, both these conditions are frequentlynot met in countries in the early stages of economicdevelopment.

There appears to be rather little correlationbetween the level of agricultural incomes and theaverage size of the farm in the cowl:- ies includedin Figure ITT-13. It is true that some of the highincome countries are sparsely settled, with a largearea of agricultural land per man, and that thecountries where farm incomes are lowest havecongested agricultural populations and very smallfarms. But the contrasts between countries whichhave more or less the same area of agriculturalland per nian are so striking that not too muchimportance can be attached to the physical area.Average farm incomes in Japan, for example, areabout twice as high as in Thailand, though Japanesefarms tend to be smaller and the natural fertilityof the soil is probably lower. Again, agriculturalincomes in densely populated Belgium appear toaverage appreciably higher than in Argentina with

Co

.NZ

TABLE 111-16. - AVERAGE LABOR TIME REQUIRED IN SELECTED COUNTRIES (A) PER AREA OF CROP OR PER MILK Cow, AND (B)PER 100 KILOGRAMS OF P RODUCTION

SOURCES: United StatesUnited Kingdom:

BelgiumGreeceChileColombiaJapan

U.S.S.R.

its large arcas of fertile land in relation to population.It is of course obvious that in countries where

farms are very small there is a limit to the extentto which farm incomes can be raised., and th.atwhere a rising farm population leads to an increas-ing subdivision of holdings the ciifficulties of rais-ing farm incomes will be correspondingly increased.However, since production in most countries in-creases faster than the area of cultivated land, and,in some of the more industrialized countries, evenin spite of a contraction of the agricultural arca,there is certainly in all countries a considerablepotentiality of increased agricultural productionon the existing farm area, and one which constantlytends to become greater with the developmentof agricultural science, with better farm manage-ment, or with a more appropriate layout and struc-ture of holdings. In most countries, too, additionalland coudd be brought under cultivation or culti-vated more intensively, e.g., by irrigation, and

123

toso, U.S.D.A., Agricultural Research ServiceS'tatistical I3tilleti,t, 144, 161. ugo, U. S. D. A., Technical Bulletin rozo (1950).H. T. Williams, Changes in the productivity of labour in British agriculture, .fournal of Proceedings of the Agricultural EconomicsSociety, Vol. To, No. 4, March 1954.A. G. Baptist and H. Waterschooi, Eludes sur la petite exploitation agricole, 2. Le travail (t95o, processed).Chr. Evelpides, E georgia tes tillados (1944).The economic development of Colombia, United Nations, p. 200 sq.Same as for Chile.Statistical Abstracts. of Ministry of Agriculture and Forestry, Japan, 1957; Statistical Yearbook of Ministry of Agriculture and Forestry,Japan, 1954.Pravda, 16 Dec. 1958 (article by N. S. Khrushchev).

' In the United States, United Kingdom, Belgium, Colombia, and Japan, data are given in hours; they have been here converted to days on the basis ofro hours to a day. - 1956 for wheat and rice, 1954 for oilier products.

drainage, though how much cannot be estimatedwithout detailed surveys of natural resources.

In view of the great differences of natural condi-tions of soil and climate between and within coun-tries, international statistical comparisons of percaput income and the density of the rural populationwould be largely meaningless. Even within acountry, a close subdivision by natural regions maybe necessary to show any relationship betweenincome and size of farm if there are great varia-tions in the fertility of the soil or of rainfall, or ifsome arcas are irrigated and others not.

More significant comparisons may be made ofthe efficiency of labor in different countries andthe average output which results from each houror day of work, though they present many intri-cate problems. Even though the input of worktime per hectare under each crop and per head ofeach kind of domestic animal varies enormouslywithin any country, on account of topography,

B. AVERAGE HOURS OF WORK PER 100 KILOGRAMS Hours per loo ktlograms of out p aOF OUTpUT

United States 1950 1.0 1.3 1.0 0.5 81 5.31910 4.1 5.8 2.8 1.3 96 8.4

United Kingdom 1948-49 2.8 2.3 5.9Belgium 1950 4.2 1.7 6.1

U.S.S.R.State farms 1958 1.8 4.2 2.1 9.9Collective farms 7.3 5.1 3.1 14.7

Chile 1952 17 14 6Greece 1939 25 43 18 50Colombia 1953 35 34 16 279Japan 1954-56" 54 49 7 600

Period Wheat Rice Potatoes Cotton Tobacco Milk

A. AVERAGE NUMBER OF DAYS SPENT PER HECTARE Labor days per hectare or per animalOF CROP OR PER MILK COW

United States 1950 1.1 3.6 17.0 17.5 115.4 12.51910 3.8 13.6 18.8 28.7 88.0 14.6

United Kingdom 1948-49 7.1 43.2 15.2Belgium 1950 13.6 50.4 220 20.8

Chile 1952 20 47 59GreeceColombia

19391953

2634

11365

13286

11855

328-318

30.

Japan 1954-5V 122 185 95 960

Wheat I Rice Potatoes Sugar beet Tobacco Mills

soil, and other factors, and -the techniques aregradually improving in many countries, yet thecontrast between countries are so huge that notall of the comparison is lost in the margins of error.Table III-16 shows the average labor time expendedfor selected branches of production, expressed asdays' work per year per hectare wider crop andper head of stock; data from countries in whichthey are expressed in hours have been convertedinto days, assuming io hours to a full day of farmwork. As unit yields are different, output per man-hour, shown in the second half of the table, is evenmore important, and these data are also presentedgraphically in Figure III-14.

The figures are of course weighted averages ofvarious practices which occur side by side in thecountries. Thus, the hours of labor per hectare ofcotton in the United States vary from 87 to 187,depending 011 whether mechanical or manual har-vesting is used. The average of 175 for 1950 is nowlikely to have been considerably reduced. Similarly,the hours oflabor per milk cow in the same countryvaried between III to 140 hours, according towhether inilking was done mechanically or manual-ly. The data from Europe are subject to similarqualifications. Those from the United Kingdomrefer to 1948/49 and are likely to have been reducedwith further mechanization. Those from Belgiummay be taken as indicative of the level on partly-mechanized small farms in continental Europe.The estimates for Greece, although derived fromstudies rnade in the 1930's, are still largely usedin the country where, however, mechanization hasmade some prog,ress in cereal cultivation. The levelin Greece and Colombia is also, in a general way,indicative of the efficiency of nonmechanizedfarming in several countries in the Mediterraneanareas and in South America. From the U.S.S.R.,several indications suggest that the " target " ef-ficiency is less than the average in the United States,in some cases even below the United States levelof 1910, while the efficiency actually achievedis far lower and in many cases even below what i.sachieved on small farms in Europe. "

By and large, the first part of the table wider-scores the fact that efficiency of work actually doneis partly a response to the availability of land perman. The large area per man in the United Stateshas been a challenge to increase efficiency, and the

"Puri snizbeniia zatrat truda y serskom khoziaistye, Moscow,1956.

124

small area per man in. Japan has been a challengein the opposite direction: to find useful employ-ment for as much labor as possible. A few moredata can be quoted to support this point. Forexample, cotton cultivation in Egypt absorbs aboutGoo d.ays per hectare under crop. 13 In India andPakistan, between Ioo and 200 days per year arespent per hectare wider rice, and proportionatelylarge numbers on other crops.14

The data from the United States for 1910 havea particular interest in that they show that tractorsand mechanization are not the only way to reachhigh productivity in Eirming. There were aboutL000 tractors in the United States at that time, butmechanical harvesters and multiple hook-ups ofplows were drawn by horses. Animal draft power,when sufficiently plentiful, can evidently provide ahigh level of productivity, as still evidenced onmany Australian farms. Conversely, the slowimpact of large-scale mechanization on laborefficiency on collective farms in the U.S.S.R. sug-gests that technical and manacrerial skill is as im-portant for high productivity as the level of me-chanical equipment.

The data in the second part of the table bring outthe scope for gains in efficiency and productivity thatmust exist in most countries. Yet, the productivitylevels shown are not only or always the cause for lowproduction per man. When farm labor is plentifuland land scarce, there is likely to be more concernabout maxiinizing pro duction than productivity.

The enormous differences of productivity forcertain crops, notably wheat, do not apply to thesame degree to all enterprises on the farms. Asseen from the data on milk cows, there may bemuch smaller differences between countries, eventhough New Zealand, for instance, has even lowerwork time requirements for livestock than theUnited States (about one half in respect of milkcows and sheep).15 At the opposite extreme from

la R. P. Dunn, COli011 in Egypt, Memphis, Term., 1949.11 Report on the investigation into the economics of jute growilq

[with comparable data on rice], season 195455, by K. C. Basakand S.M. Ganguli, Indian Central Jute Committee. Calcutta,1956. V. G. Pause, Estimation on the cost of production of crops,Indian Central Cotton Committee. New Delhi, 1954. Report onthe Survey of rural credit and unemployment in East Pakistan, 1956.Dacca University Socio-Economic Survey Board. Dacca, 1958.

" Estimated from data supplied by the New Zealand Depart-ment of Agriculture and based on Government Statistician'ssample survey of 1,500 farms. The result is in accordance withglobal estimates that can be made on the basis of current sta-tistics on crops, livestock, and agricultural labor force.

WHEAT

FIGURE 111-14. AVERAGE LABOR TIME EXPENDED PER I00 KILOGRAMS OF OUTPUT IN SELECTED COUNTRIES

Japan (1956)

Colombia (1953)

Greece (1939)

Chile (1952)

U.S.S.R. (1958)

Collective farms

State farms

Belgium (1950)

U.K. (1948)

U.S.A. (1910)

U.S.A. (1950)

POTATOES

Greece (1939)

Colombia (1953)

japan (1956)

Chile (1952)

U.S.S.R. (1958)

Collective farms

State farms

U.K. (1948)

Belgium (1950)

U.S.A. (1910)

U.S.A. (1950)

MILK

U.S.S.R. (1958)Collective farms

State farms

Belgium (1950)

U.K. (1948)

U.S.A. (1910)

U.S.A. (1950)

New Zealand (1957)

10 20

Hours per 100 kilograms of output

125

30 40 50 60

RICE

Japan (1956)

Greece (1939)

Colombia (1953)

Chile (1952)

U.S.A. (1910)

U.S.A. (1950)

wheat is tobacco, where American producers haveincreased rather than decreased the input of worktime per acre. Despite some increase in yields,the productivity of a man-hour has remainedalmost constant. A nonsubstitutable crop in whichquality is important, however, can rely on the pricemechanism to raise returns to fitriners.

Productivity per man for the agriculture of thecountry as a whole thus depends not only on theefficiency of operation for particular crops, butalso on the share of different commodities in thecountry's national production. Moreover, therelative shares are subject to change in responseto demand and pri.ce movements, and other fac-tors. Such changes modify the scope for reducinglabor input and enhancing the productivity ofeach work hour.

Some other factors which influence agriculturalproductivity may be noted. Employment in agri-culture is seldom complete all round the year.To achieve full employment takes skillful man-agement of the farm as an enterprise, and may notbe possible at all in regions where the climate im-poses long seasons of inactivity. Apart from seasonaltmemployment, the work to be done is in manycountries less than the agricultural labor forcecould cope with; this often leads to the adoptionof work practices which are less efficient than wouldbe possible given the degree of technical develop-ment of the country. If uniform work standardsare applied to calculate the global sum of work tobe done in agriculture in various countries, theresult suo-,ests that in most countries the same out-put could be achieved with more efficient practiceswith from three quarters to one third of the exist-ing agricultural labor force. There are thus widedifferences in the level and intensity of employment,and only a few of the most developed cownriesapproach full or nearly full employment for theiramicultural workers.

This does not mean that all of the redundantfraction could be removed fiom agr, icultural pro-duction as soon as employment became availableto them elsewhere, unless this took the form ofpart-time employment without change of domicile.A rapid transfer of inanpower on a large scalewould often result in a fall in agricultural pro-duction, tmless structural adjustments and tech-nical improvements were made at the same time.For example, the small size and fragmentation ofholdings may tic up more labor on farms thanwould be needed for the same production mader a

126

more rational layout. Again in many less-developedcountries the whole labor force is fully stretchedat the time of harvest, and in some instances ap-pears to place a ceiling on the area of land whichcan be cultivated.

PRE-CONDITIONS FOR INCREASED AGRICULTURAL

PRODUCTIVITY

Enough has been said in the few preceding para-g,raphs to make it clear that the problem of ruralpoverty could not be solved simply by improvingthe teclutical knowledge and equipment of farmersin the less-developed countries to a point whichwould enable them to match the levels of pro duc-tivity of farmers in advanced countries, even thoughthis were combined with improvements in thesystems of marketing and credit which wouldenable them to reap the full benefits of their labor.A high level of farm productivity, and with itfarm incomes comparable with those in developedcountries, can be reached only as part of ageneral economic advance in the less-developedcountries.

Put in its simplest ternts, the crux of the problemis this: in a country with a highly productive agri-culture each farm family produces enough to feeditself and some io to 20 nonfarin families as well.But for this to be possible there must be io to zononfarm finnilies to feed. In a country in whichhalf the population is engaged in agriculture thereis clearly only one nonfarm family to provide amarket for the farm family's output. Moreover,this nonfarm family, as has been shown earlier, islikely to have a much lower level of consumptionthan a nonfarm family in an industrialized country,so that the market for farm prod.ucts is still furtherrestricted.

These considerations indicate that the industrialstructure of a country, by limiting d.emand, placesan upper limit on output, but it by no meansfollows that this level of output is always reached.It is shown in Chapter IV that in a number of coun-tries at the present time institutional factors or priceregulations diminish incentive to farmers so thatproduction does not reach the existing level ofdemand and increasing reliance has to be placedon imports. This in turn is likely to react backon the rate of industrial and other noneconomicdevelopment.

An exception to the limit placed by the level of

demand. on the growth of productivity and pro-duction arises, of course, in the somewhat limitednumber of cases where a large and expanding ex-port market can be found for the agricultural prod-ucts of the less-developed country. It has beenshown that in agricultural exporting countrieshigher levels of income are often enjoyed by farmprod.ucers than in nonexporting countries at acomparable level of economic development. But,for some decades, the volume of internationaltrade in agricultural products has been expandingslowly, largely because of the increasing use ofsubstitute raw materials, and because greater farm-ing productivity enables industrialized countries toproduce a bigger share of their own requirements ofmany commodities. Consequently, there are rela-tively few cases where an expanding export marketmakes possible a breakthrough from the restric-tions of the limited domestic market in economical-ly less-developed countries. Until their own urbanmarkets become larger the agriculture of economi-cally less-developed countries must perforce belargely subsistence agriculture.

There is yet another complication which emer-ges from a study of the relative rates of growthof farm and nonfarm population in the processof industrialization. For a considerable time tocome it seems clear that most economically less-developed countries must look forward to anincrease in the absolute numbers of persons dependenton agriculture, even though the percentage of thepopulation depend.ent on agriculture continues todecline. The basis for this conclusion is consider-ed. below. The practical implications for mosteconomical.ly less-developed countries, and especiallyfor those in Asia and in some parts of CentralAmerica where the density of the rural populationis already high, are serious and disturbing. Itmeans that for many years to come, in countrieswhere the scope for an enlarged agricultural areais limited, the area of farm land available to eachfarm family will continue to contract. Much ofthe benefit resulting from higher yields will thusgo to offset the shrinking area of land per farrnfamily, and the opportunities for increasing farmincomes and levels of living will be to someextent reduced.

There appears, however, to be one way ofbreaking through this economic strait jacket, atleast in some degree, and that lies through educa-tion. The point has been made earlier that inmany cases the dietary levels of farm families are

127

unnecessarily low because of ignorance, as withlittle or no cash expenditure they could producemany of the foods in which their diet is defic.ient.This applies especially to fresh fruit and vegetables,and to a scarcely less extent to livestock products.It often applies also to fuel which might be produc-ed on small woodlots on waste hand unsuitablefor cropping.

Education, using the term in its broadest sense,can also be used to show farm people in economi-cally less-developed countries how, by individualand co-operative effort, they can utilize much oftheir time at present unoccupied in farming toobtain many of the nonag,ricultural amenitieswhich they lack, especially in the direction ofhousing, drainage and sanitation, roads, schools,and the like. This concept of self-help lies behindthe efforts toward. " community developmentnow being worked out in India and other econom-ically less-d.eveloped countries. The possibilitiesare discussed more fully in Chapter IV. Com-munity development and education in living con-stitute a new and promising approach to the prob-lem of rural poverty which was never tried onany extensive scale in the earlier industrializecicountries. It seems to offer a means of overcom-ing at least the worst disabilities of rural povertyat a more rapid rate than would be possible und.erthe free-enterprise type of economic developmentof the past.

With this introduction, attention may now begiven to a more detailed consideration of theprocess of the migration of labor from agricultureto other occupations, which is at the core ofeconomic development in nearly all societies 16.

THE TRANSFER OF LABOR FROM AGRICULTURE

To put the matter in perspective, it may beuseful to start with the examples of some countrieswhich have industrialized earlier. Figureshows long-term movements for the total, agricul-tural and nonagricultural, population (or laborforce) in Denmark, the United States, the U.S.S.R.,Japan, and in two less industrialized countries,Argentina and the United Arab Republic (EgyptianProvince).

" Furtlicr detail and discussion in: Agriculture in a growingpopulation, by F. Doyring, Monthly Bulletin Qf AgriculturalEconomics and Statistics, FAO, Aug.-Sept. 1959.

FIGURE 111-15. LONG- AND MEDIUM-TERM MOVEMENTS OP TOTAL, AGRICULTURAL, AND

POPULATION IN SELECTED COUNTRIES

(Semi-logarithmic scale)

70 -SO

/r

1000 '20 '40 '60 '90 1900 '20 '40 '60

For Denrnark data are available since 1800 forthe total population d.cpendent on agriculture andon other industries, and the curves may be takenas representative of a rather fully-settled countrywith a moderate growth of population. Untilabout 188o the farm population continued to rise,but at that date it was overtaken by the nonfarmpopulation which had grown considerably morequickly. Since 1880 the nonfarm population hascontinued to rise at an undiminished pace, but thefarm population showed practically no furthergrowth and since 1920 has started to fall. This isnow the general situation in Western Europe. TheOrganization for European Economic Co-operation(OEEC) recently published estimates which showedthat in nearly Idl countries of that region the volumeof agricultural employment had fallen, on average,by about 20 percent between 1947/48 and 1956.During the same period the output of the samecountries had increased by about 30 percent.

128

Agricultural populationTotal populationNonagricultural population

r r

1P00 '1,1 '60 '60 'BO 1900 '20 '40 '60

NONAGRICULTURAL1

Productivity per man had thus risen by someGo percent as a result of increased mechanizationand improved agricultural methods.

For the remaining countries shown in FigureITI-I5, except the U.S.S.R., the data relate not tothe total population, but to the labor force. Thecurves for the U.S.S.R. closely resemble those forDenmark, except that the nonagicultural popula-tion appears to llave caught up with the numbersin agricultural employment, and the latter to llavebegun to decline only since the Second World War.In the United States, where population growth aidedby immigration was much faster, the curves aresteeper, but as in Denmark nonagricultural laborovertook time numbers engaged in agriculture about1880. For another 20 to 30 years, the numbersengaged in agriculture continued to rise (thoughmore slowly than nonagricultural employment) asthe western part of the country was still beingopened up. Since 1920, however, there has been a

r

zoo

- 100

80

- 60

- 40

30

20

10

8

6

4

3

2

U.S.S.R.

z'7 7 ,- T 7 1 1

JAPAN

6

4 --

1 _0.8

06

5 _4 _

3 _

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UNITED STATESDENMARK 2

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Millions Millions

continuous fall in the agricultural sector. Finally, inJapan, the only example to date of the industrializa-tion of a densely-populated Asian country, thecharacteristic steep rise in nonagricultural employ-ment was interrupted temporarily by postwardifficulties, but has since been resumed. The farmpopulation, however, has declined very slowly. Inspite of industrialization the pressure on the landappears to be little less intense than in 1880,when these esti mates begin.

The data for the two less-industrialized countriestake on a greater significance against this back-ground. Thus, the curves for Argentina since 1900closely resemble those for the United States ofsome 20 to 30 years earlier. Nonfarm labor wasah-eady more numerous than the farm labor forcein 1900, but it is only recently that the employmentin agriculture shows signs of falling. The curvesfor Egypt show a still earlier stage of economicdevelopment. The numbers engaged both in agri-culture and nonagricultural employment rose upto 1947, the latest available figures, but althoughagriculture was still predominant the rate of growthof the farm population was perceptibly slowingdon.

Since the war the situation in most of theeconomically less-developed countries has beenconsiderably affected by the general speeding upof population growth as a result of improvedhealth services. In most countries, this seemslikely to delay the time when nonagriculturalemployment overtakes agricultural employmentand when the farm population begins to decline.In general, statistics for these countries are availableonly for relatively short periods; but the data forrepresentative less-developed countries in TableIII-15 and Figure III-16 suggest that in all instances(except Yugoslavia) the farm labor force continuesto increase. The increase, however, is always ata considerably slower rate than nonfarm. employ-ment (except in Greece and in Pakistan, where thereverse is the case, perhaps partly as a result of.partition). Thus, the d.ensity of the rural popula-tion and the pressure on the land continue toincrease, even though the percentage of the popu-lation engaged in agriculture is declining. Theproblem of raising farm incomes is correspondinglygreater.

Differences between the growth of the totalpopulation and the niale labor force (columnsand 2 of Table III-17) reflect mainly changes inthe age composition of the populations as the

129

FIGURE 111I6. RECENT AVERAGE ANNUAL PERCENTAGE CHANGE

IN AGRICULTURAL AND NONAGRICULTURAL LABOR FORCE INSELECTED COUNTRIES

o

Percentage increase

Agricultural

Nonagricultural

result of changing birth and death rates. Of moresignificance for the present inquiry are the differ-ences between the annual growth of the nonfarmlabor force aild the total labor force (column 5)or the total population (column 6). These differ-ences reflect the rate of change from agriculturalto nonagricultural employment. Large differencesof 2 percent or more, as in, e.g., Yugoslavia, andin the short-term in Mexico, Brazil, and Venezuela,indicate a rapid rate of industrialization. Differ-ences of under i percent represent a relativelyslow rate of industrialization. Short-term trendsare naturally more subject to incidental influences.For instance, the censuses in Egypt show a ratherspeedy shift between 1917 and. 1927, while thetrend between 1927 and 1937 appears slightlynegative (slightly increasing percentage in agricul-ture). Medium-term trends may therefore be moreindicative of what can be anticipated for the future.

Further information on economic crrowthunderdeveloped countries may be liad fiom dataon urban and rural population; sonic long-termand medium-term trends in urbanization are shownin Figure III-17. Urban populations tend to growmore consisten.tly with general population increasethan do nonagricultural populations. Both inIndia and Iraq, as in many other countries in Asiaand Africa (and to a less extent in Latin Americaand even southern Europe), cities tend to growfaster than urban occupations, because with a rapid

si.1,--:`,72:',,,..,14%.,;;,,,i

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,. ..,..,',11,7-. .......,:v.:"'...,'

%.,.., k. q

Yugoslavia

Greece

Turkey

U.A.R.(Egypt)

Japan

Pakistan

Mexico

Chile

TABLE III-17. - DIFFERENTIAL RATES OF GROWTH IN AGRICULTURE AND OTHER INDUSTRIES

fn employment. - 'Manpower figures relating to both sexes.

population increase in the rural areas, people aresqueezed out of farming. They cannot find enoughseasonal occupation in agriculture to sustain them-selves, and even odd jobs in the cities may bemore favorable despite their irregular character.The data for `` nonagricultural employmentdiscussed above should be read with this pointin mind; an inc-rease in city slums is clearly nota basis for higher income in general.

The urbanization trend. in the United. Statesand Argentina has been very similar, based partly,in both cases, on immigration of urban peoplefi-om Europe. The trend in Colombia (1925-53)also shows a remarkable resemblance to that ofthe United States between, say, 1870 and 1900.The remaining charts are not influenced by immi-gration, although that for Iraq reflects the rapidresettling (through high natural increase) ofa oncedensely-settled country which thereafter for cen-turies was in a state of devastation. Un.stableconditions in. a countryside, crowded in relationto its far from developed resources, have forcedlarge numbers to the cities, where, however, manyof them cannot be put to productive work. Al-though the period covered in Figure III-17 was nota very prosperous one for India, it is interesting

130

to note that the urbanization trend resembles thatof Russia between 188o and 1920. If this urbani-zation (or equivalent rural industrialization) can bebacked up by useful employment, as seems to beindicated by recent data on industrial employment,the country may be 031 the verge of a major shiftin the occupational structure of its population.

INCOME DISPARITIES AND ECONOMIC GROWTH

The long- and medium-term perspectives dis-cussed in the preceding paragraphs suggest that,looked at in the round, income disparities betweenthe ag,ricultural and nonagricultural sectors may bean essential motivating force in economic develop-ment and industrialization. In a country in thecourse of economic d.evelopment, nonagriculturalindustries with higher levels of productivity willattract at least part of the surplus farm populationby offering higher incomes as well as a morevaried kind of life. Although the rural exoduswill case the pressure on the land., the gap betweenrural and urban incomes may continue to widen.In extreme cases, the movement away from theland will be laro-er than the capacity for employment

Period

Percent annual rate of growth Differences Percent ofpopulation inagriculture

at endof period

Totalpopulation

Total malemanpower

Agriculturalmale

manpower

Nonagri-cultural malemanpower

Column (4)minus

column (2)

Column (4)ininus

column (1)

(1) (2) (3) (4) (5) (6) (7)

Perce !rage

MEDIUM-TERM TRENDS

Yugoslavia 1931-53 0.9 0.7 - 0.1 2.7 2.0 1.8 60

Greece 1928-51 0.9 0.7 0.7 0.7 0.0 - 0 2 49

Turkey 1935-55 2.0 2.0 1.3 2.3 0.3 0.3 64

United Arab Republic (Egypt) 1917-47 1.3 '1.6 1.4 2.3 0.7 1.0 63

Morocco 1936-52 1.6 1.2 0.2 3.7 2.5 2.1 65

Union of South Africa 1936-51 1.9 1.0 0.0 1.95 0.95 0 05 47Japan 1930-55 1.3 1.0 0.1 1.45 0.45 0.15 35

Pakistan 1931-51 1.2 2.0 2.6 0.7 1.3 0.5 76Mexico 1930-50 2.2 2.2 1.5 3.7 1.5 1.5 58

Chile 1930-52 1.5 2.0 1.1 2.8 0.8 1.3 37Colombia' 1925-53 2.2 1.8 1.0 3.2 1.4 1.0 54

SHORT-TERM TRENDS

United Arab Republic (Egypt) 1937-47 1.7 ' 2.2 0.1 3.7 1.5 2.0 63

Philippines 1939-50 1.9 2.0 1.4 3.7 1.7 1.8 69

Thailand 1937-47 1.9 2.6 2.4 3.8 1.2 1.9 82Mexico 1940-50 2.7 3,6 2.4 5.5 1.9 2.8 58

Brazil 1940-50 2.4 22 1.2 4.2 2.0 1.8 63

Venezuela 1941-50 3.0 4 3 1.5 7.5 3.2 4.5 48

FIGURE 111-17 LONG AND MEDIUMTERM MOVEMENTS OF TOTAL, URBAN, AND PURAL POPULATION IN SELECTED COUNTRIES

(Scnii-logarithmic scalc)Millions Millions

100

70

50

lo

30

20

400

300

100

40

20

in other industries, and the towns will be congestedwith unemployed or wideremploycd unskilledlabor. As shown above, experience in countriesalready industrialized indicates that there is seldomany rapid fall in the farm population un.til non-agricultural employment represents consicierablymore than half the total.

Within the agricultural population of most coun-tries, differences in income are often wide, on thewhole wider than between various groups offactory workers. The general income disparitydoes not therefore mean that all farmers or farmworkers have less incoine than urban people. Manyalready have more or less parity of income, andfor these the urban " pull " is not felt at all, atleast not for economic reasons. On the otherhand, those who cul.tivate holdings very muchbelow average, and even more the landless farrn-hands, are likely increasingly to feel that " pull

131

f I

IRAQ

ARGENTINA

(I 3- I -33- I

1 T

rt

102

BO

30

40

30

10

0 a

-00

0

the farther down they are on the income scale.This is probably why there can be a considerablemigration from farms into urban industries evenin a country like Japan, where the general incomedisparity is small when measured by the yardstickof consumption surveys. In any circumstances,however, there is likely to be some time lag inthe movement of labor out of agriculture relativeto income incentives, especially in the older gener-ations; for this reason income disparities unfavor-able to the agricultural population are likely topersist in most countries.

THE EFFECT OF AN EXPANDING MARKET

FOR AGRICULTURAL PRODUCTS

Emphasis has been placed in the foregoingdiscussion on the importance of a gracivally declin-

UNITED STATES

.../"../../.e."--/ /

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INDIA --..--....--->-...----'.....

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1100 -20 40 .60 001900 -13, 40 1803 10 -00 60 TO 1000 .10 '40 '40

Rural populationTotal populationUrban population

Mg proportion of the population in the agriculturalsector as a means of raising agricultural productivitycloser to that in other occupations and thus reduc-ing income disparities with the rest of the economy.Historically, this appears to be the more importantfactor, but there is another which may also con-tribute powerfully to the same end. The growthof outlets for agricultural commodities, whichmakes economically feasible the major increasesin productivity, depends not only on the size ofthe nonagricultural sector, but also on its incomelevel. Higher incomes lead to an increased demand,especially for livestock products, fruit and vegeta-bles. These products are not only more expensive,but also more labor intensive, than cereals andother traditional products of arable farming, theircultivation being on the whole less easily mechaniz-ed. The milking machine has not yet had theimpact of the tractor and the combine-harvester.

Mechanization of the harvesting of leafy and rootvegetables came late and so far has had relativelylittle effect on labor requirements. Fruit c-rops ofall kinds are rather resistant to radical reductionsin the labor requirements.

The more " mechanization resistant an itemreinains, the more it is likely to continue to com-mand a high unit price, and one tending to risewith the income level of the community as a

whole. The case of tobacco in the United States,where the volume of output per man-hour hasnot increased, was noted earlier. In most countries,there is still a long way to go before the popula-tion has satisfied its desire for the products oflabor-intensive farm enterprises. Even in WesternEurope the price trend for animal products, otherthan milk products on export markets, has remain-ed reasonably steady in recent years, and there hasbeen little threat to this part of farm employment.

The growing demand for more labor-intensiveand. relatively " mechanization-resistant branchesof production in agriculture is likely to be ofincreasing importance for n-i.any less-developedcountries, first for their export products, and laterfor their own expanding domestic demand for the

132

same products, when urban industries expand andincome levels become higher. In. the Mediterraneanregion, economic development is likely to favorfirst an expansion of fruit and vegetable productionfor export to markets in Western Europe, andlater, when the Mediterranean comtries themselveshave become more industrialized, a growing do-mestic demand within each country, both for fruitand vegetables and for livestock products. In trop-ical countries, similar trends may develop towardmore emphasis on, e.g., tropical tree crops. Suchfactors are likely to become a powerful counter-balance to the opposite trend of cutting downlabor requirements through more mechanical andrational means of production. Even the overseascountries of recent settlement, which have so farspecialized in labor-extensive forms of production,may have to shift to a more intensive pattern inthe future as their populations increase. Whetherthis will mean more or less manpower in agriculturethan at present cannot be forecast, but it willcertainly mean more than if there were no changein the pattern of demand.

There is thus no means of telling beforehandjust how large an agricultural population willultimately prove rational in each country, when itbecomes developed to the point of spending lessthan half the household budget on food. Thatthe agricultural population will decrease in relativeterms is clear enough, but whether this meanslar,er or smaller absolute numbers than beforewill depend largely on the circumstances of theparticular country. Countries where natural con-ditions favor, e.g., cereal production or extensivegrazing, are likely to end with a smaller farmpopulation, and those largely specializing in horti-cultural or other intensive forms of productionwith a larger farm popula.tion in relation to thetotal. But in the long run the price mechanismis likely to bring some rough equality of earningsbetween those engaged in extensive and intensiveforms of production, and (looking still furtherahead) perhaps ultimately with earnings of peoplein nonagricultural employment.

Enough has already been said in Chapter IIIto bring out the tuiderlying inter-relationship be-tween general economic and agricultural develop-ment. It was stressed that to a large extent eco-nomic development consists in the gradual trans-fer of labor resources from agriculture to otheroccupations. But for this to be possible theremust be a gradual increase in agricultural produc-tivity per Juan so that the growing urban popula-tion can be fed. Conversely, the growth of agri-cultural productivity and production is largelyconditioned by the growth of the market out-side agriculture. Unless it can be absorbed bythe market at a reasonable price, additional pro-duction may be more harmful than beneficial tofarm incomes. At the present time, however, itis more common in economically less-developedcountries for agricultural production to lag be-hind than to exceed the growth of consumerd.emand, especially on domestic markets, for yea-sons which are analyzed below.

In this chapter the underlying relationship be-tween agricultural and general economic develop-ment is taken for granted, and against this back-ground are considered the practical policies andmeasures which make possible agricultural expan-sion in harmony with the growth of the economyas a whole, neither falling too far behind norrunning too far ahead. No attempt has beenmade to go into detail. Books could be and havebeen written on some topics which are here con-sidered in a few paragraphs. The aim has beenrather to try to bring out the inter-relationshipbetween the different approaches to this problem -economic, social, and technical - and to showagricultural development in perspective as part ofa campaign for economic and social progress.Such a broad over-all appraisal can be of helpin bringing out the main lines of strategy, even

133

Chapter IV - SOME GENERAL PROBLEMS OF AGRICUL ' AL

DEVELOPMENT IN LESS-DEVELOPED COUNTRIES IN THE LIGHTOF ' OSTWAR EXPERIEN

Introduction

though the tactical details are necessarily lightlysketched in.

Three main factors have led to the greatlyincreased interest in agricultural development inrecent years. The first, of a somewhat temporarynature, was the general scarcity of food and otheragricultural products during and after the SecondWorld War. The second., and one which eachyear seems to be of greater significance, has beenthe upsurge in the rate of growth of the world'spopulation, chiefly as a result of improved medicalservices and falling death rates. The third, andin some ways the most important of all, has beenthe emphasis on economic development and onimproving the living conditions of the peoplesof the economically less-developed countries whichhas been so characteristic a feature of the post-war world.

There is no need here to discuss how postwarfood shortages were overcome, or to consider indetail the implications of population growth whichhas received much attention. in United Nations'and other publications. Its importance is nowwidely recognized. So far as the economically less-developed countries of the world are concerned,it is perhaps enough to note that fi-om 1936 to1958 the combined population of Asia, Africa,and Latin America is estimated to llave increasedby so° to 600 millions, or nearly 40 percent, andthat recent United Nations estimates foreshadowa further increase of the order of 1,000 millions(medium estimate), or some 50 percent, between1958 and 1980 (Table IV-I). Evidently, the rateof growth is accelerating. From 1936 to 1958 ithas been estimated at some 1.5 percent annually.From 1958 to 1980 it may well reach 2.1 percentannually. There must be at least a parallel growth inthe food supplies of these regions if their generallyunsatisfactory diets are not to deteri.orate further.

TABLE IVI POPULATION OROIN TH IN tCONOMICALLY LESSDEVELOPED aEGION5

The new emphasis on economic developmentand higher incomes, however, makes it necessaryin. practice for a considerably more rapid growthof agricultural production than of population tobe achieved in ord.er to reduce the gap betweenthe consumption levels in more- and less-developedcountries. At first, the main emphasis in mostcountries embarking on schemes of economic de-velopment was placed on industrialization. It wasseen that the economic strength of the more ad-vanced countries lay in their industrial base. Itwas recognized that, broadly speaking, a nation'swealth was inversely proportional to the percent-age of its population engaged in agriculture. Itwas natural, therefore, that in inost of the less-developed countries the way to a better life seemedto lie in devoting all available resources to therapid building up of industry.

But with experience has come the gradual re-alization that economic development necessitates amore or less balanced growth of the nonagricul-tural and agricultural sectors. If industry developsand agriculture faiN to keep pace, the result is

likely to be urban food shortages and inflationarypressures. Alternatively, there will be a scalingdown of food exports at the cost of badly neededearnings of foreign exchange, or the diversion ofscarce resources for food imports. If, though re-cently this has been infrequent in most of theless-developed countries, agricultural productionseriously outruns the g,rowth of demand in urbanmarkets, farm prices and incomes will fall precipi-tously. The resultant decline in farm purchases ofindustrial goods will in turn hamper industrialgowth and may even bring about a recession.Because of the greater awareness of these relation-

134

Percentage increase

1936 to1958

37

38

63

39

1958 to1980

56

47

77

57

Percentage

Annual rate of growth

1936 to1958

1.45

1.48

2.25

1.50

SOURCE: 1958 and 1980, Population Branch, Bureau of Social Affairs, U aited Nations. 5936, FAO, based on United Nations Demographir yearbooks.

1958 to1980

2.00

1.80

2.60

2.10

ships, there has been a renewed interest amongplanners in the less-developed countries in thefactors governing the growth of agricultural pro-duction.

CHARACTERISTICS OF AGRICULTURE IN ECONOMI-CALLY LESSDEVELOPED COUNTRIES

The diversity of natural, economic, and socialconditions to be found in the agricultures of eco-nomically less-developed countries is so g,reat thatat first sight it may be questioned whether anygeneral discussion can be meaningful. Natural con-ditions range from the hot, wet lands of the trop-ical zone, with a poverty and fragility of humusand a large area under forests, to the arid zonesof, e.g., the Near East and Central Asia, withhard, dry soils, vast deserts, steppes and mountainareas, and strong contrasts of winter and summertemperatures. Soil types, topog-raphy, and naturalvegetation extend over an equally wide range.

Problems of agricultural development are alsogreatly influenced by the great differences in thedensity of the rural population, ranging from thecrowded river basins of India, Pakistan, and Viet-Nam and some of the densely populated Carib-bean islands, to the sparsely inhabited areas ofCentral Africa and Brazil. Great disparities mayeven occur within a single country, as in Indo-nesia, where about two thirds of the population isconcentrated on the islands of Java and Madura,which contain only 9 percent of the total area ofthe country. Many economically less-developedcountries suffer from rural overpopulation in thesense that " with given techniques and natural

Esti mated population

1936 1958 1980

Millions

Asia 1 155 1 580 2 470

Africa 165 227 333

Latin America 121 197 349

Three regions 1 441 2 004 3 152

resources, real income per head_ would be sub-stantially higher if the population were smaller."'

Social and institutional conditions as well varywidely among less-developed countries. There areg,reat differences in educational levels and degreesof literacy, in political institutions, consumptionhabits, systems of religious belief, land tenuresystems, etc., which have a considerable bearingon agricultural development.

All these differences are reflected in the varyingforms of agricul.ture. Ahnost purely subsistencefarming is still to be found in some isolated areas,e.g., in parts of Laos and. Nepal, in some areasof the Andes and the Amazon basin, and in. manyparts of Africa. The most common type of agri-culture, however, is a smallholding worked pri-marily to feed the farmer's family, but producingalso a small surplus to be sold or traded in orderto pay taxes and other cash expenses and to ob-tain a few things which the farmer himself can-not produce. In some countries, such as Thai-land, most of the holdings are 0-wiled by theircultivators, but more often they are held on atenancy basis, e.g., fixed rents or sharecropping.Such peasant-cultivated smallholdings using prim-itive methods of cultivation are sometimesfourid sid.e by side with large and efficiently ma-naged plantations with advanced techniques andhigh levels of productivity. These plantations,however, usually produce specialized c-rops forexport and as a rule exercise relatively little in-fluence on the methods of farming practiced onsmallholdings in their immediate neighborhood.Some other variants may be mentioned. Largefarms or estates cultivated by hired labor, usuallyof low productivity, occasionally occur in someareas, especially in Latin America, though moreoften such estates are divided among small tenantfarmers. Non-ladle herdsmen are still predomi-nant in some arid areas of Asia and Africa.

In spite of these diversities there are many com-mon factors which make possible some generalizeddiscussion of the problem. By definition, less-developed countries are those where per caputproductivity and hence incomes are low. Agri-culture is the main occupation and, as shownin the previous chapter, average farm incomes arenearly always even lower than those in otheroccupations. Transportation, communications, and

1 P.T. Bauer and B.S. Yamcy, The economics of under-developed countries, London, 1957.

135

marketing systems are usually poor. The primi-tive methods of farming result not only in lowproductivity, but frequently also in the deteriora-tion of soils and other natural resources. Limitedagricultural resources and knowledo-e to,etherwith concentration on a few basic commodities,often result in lack of prod.uctive employment forfairly long periods between the seasons whenwork on crops is required. There is thereforechronic underemployment or (for the landlessagricultural worker) unemployment in rural areas.Credit at reasonable rates of interest, if availableat all, usually meets only a small fraction of theneeds for funds to finance improvement of agri-cultural holdings or agricultural practices, or toprovid.e essential consumption loans in times ofadversity.

These conditions give rise to the " circle ofpoverty " characteristic of such agricultures. Lowproductivity and low incomes result in small sav-ings and consequently small possibilities of invest-ment to improve the productivity of the holdings.The incentive to invest is diminished by the insta-bility of agricultural prices and by land tenureand. marketing systems which return to the farm-er only a part of the ntarket value of any increasedproduction that extra efforts and ami investmenton his part might bring about. In any case, mostfarmers know little about the methods whichwould improve productivity. Even when knownthere is often much resistance to adopting them,partly because of a liking for traditional ways,partly because of ami understandable reluctanceto risk new and (to them) unproved methods,which if unsuccessful would reduce further theiralready inadequate incomes and perhaps increasefurther ami intolerable burden of debt. This dis-trust is not entirely unfounded since, e.g., improp-er application of chemical fertilizers or use ofseed ill-adapted to local conditions can lead todisastrous results. Finally, in the very poorestcommunities the poverty and inadequate diets ofmany farm families reduces their capacity to workand gives rise to ami apathy which in itself is a for-midable obstacle to progress.

This circular process of poverty engenderingpoverty is common to nearly all less-developedcountries, if not to the whole ag,riculture then tolarge backward areas. It represents the hard coreof the simation around which a general discussionmay be oriented. While there is general recogni-tion of the problem posed by this " circle of pov-

erty, " no consensus exists as to the decisivefactors which enabled the so-called " developed "countries to break through that same vicious cir-cle. The end phase of urbanization in WesternEurope and North America, with the creation ofmarkets for farm products outside agriculture, theabsorption of surplus rural manpower by industri-alization, and the increase of productivity in ag,ri-culture, stretched over centuries, though thetempo became dramatically faster from the mid-eighteenth century onward. This leisurely develop-ment, however, is no longer acceptable. Improv-ed commimications have made the people ofthe less-developed countries much more aware ofthe gap that separates their levels of living fromthose in more industrialized countries, and theyare increasingly impatient to share in the well-being made possible by technical development.

However, less-developed countries now havesome advantages that the countries which indus-trialized earlier .did not have. The science ofagriculture has developed immensely, and pro-grams of international, technical, and financialassistance give some help, even if not always enough,in applying this knowledge to the agricultures ofless-developed countries. Finally, governments1101V take a more active part than ever before inefforts toward economic and social progress.

BASIC CONDITIONS POR AGRICULTURAL DEVELOPMENT

The preceding paragraphs already point tosome of the basic conditions for agricultural de-velopment. It is axiomatic today that increasedproduction must come primarily from improvedmethods zmd a better use of existing resources.The methods of farming in general use in themore developed countries, if properly applied inthe natural conditions of the economically less-developed countries, could lead to immense in-creases in output. Nor do the resources of agricul-tural research show any sign of comin,,,,, to an end.

But improved technology is only part of theanswer. It is evid.ent that in the last analysis abetter use of resources will occur only when theproducers themselves make the extra effort required,e.g., to improve the land they work and under-take the risks involved. (including as a rule somecash outlay) in trying new and more intensivemethods of farming. Clearly, they will do soonly if they expect to benefit thereby. While

136

adequate incentives at the farm level will not guar-antee that all or even a substantial majority offarmers will make the additional efforts neededto increase prod.uction, their absence will certainlymean that such efforts are unlikely to be made.Until the economic climate is favorable, the teach-ings of extension workers are likely to fall onstony groun.d, while the leadership provided, e.g.,under community development, will be unlikelyto break through the prevailing apathy.

Among the basic economic conditions neededfor the growing market demand to exercise itsfull effect on production, three appear to be ofspecial importance:

Reasonably stable prices for agricultural products atreinunerative level. Unless they have some

confidence that prices will bear a minimumrelationship to costs, farmers will be hesitant toincur additional work or expense to increasetheir output.

Adequate marketing facilities. Marketing condi-tions should ensure that the incentive effectsof growing urban demand and of stabilizedprices reach the producer and are not absorbedby distributors or speculators.

A satisfactory system of land tenure. Market in-centives to increased prod.uction will be greatlyreduced if the system of land tenure results ina large share of the value of any increased pro-duction accruing to landlords. Moreover, farm-ers will not incur the expense and effortneeded to improve their holdings unless theyhave reasonable security of tenure.

In the absence of these basic conditions, otherefforts to inc-rease production may prove fruitless,or at best yield only a fraction of their potentialbenefits. A first step by governments anxious toencourage agricultural expansion may thus lie inproviding by such measures a reasonably stableand favorable economic cli.mate, in order to givefarmers confidence that they will reap some tan-gible benefit from any additional effort or invest-ment. If economic and social conditions are gen-erally favorable, however, there are a numberof more positive measures which governments maytake to stimulate production further, e.g.:

The provision of credit on reasonable terms,especially to small farmers, for improvedmethods of pro duction.

The provision of production requisites (fertilizers,pesticides, improved seeds, etc.) at reasonableprices.

The provision of education, research, and ex-tension services to spread the knowledge ofimproved methods of farming and to encouragelocal co-operative action to improve production,marketing, and other facilities.

The development of resources which are be-yond the powers of individual farmers or groupsof farmers, such as large-scale irrigation, landreclamation, or resettlement projects.

The remaining sections of this chapter are con-cerned primarily with the ways that have beenfollowed and the problems which have arisen ineconomically less-developed countries in their at-tempts to provide an economic and social environ-ment favorable to agricultural development, and

The reasons for the inherent tendency to priceinstability of agricultural products were discussedbriefly in Chapter III, e.g., the seasonal natureof production, the impossibility of adjustingproduction at all closely to demand in. view ofthe uncertainties of weather and yields, and therelatively low price elasticities of many farm prod-ucts. It was pointed out that price fluctuationsare particularly severe in economically less-de-veloped countries, where they have a damagingeffect on the incomes of farmers. In these coun-tries the weak economic position of most pro-ducers forces them to sell immediately after theharvest to meet essential living expenses or torepay debts, so that the post-harvest glut is moremarked than in " d.eveloped " countries. When,as is frequently the case, sales are made to a mer-chant or landlord to whom he is indebted, thefarmer is in a poor bargaining position and mustaccept the price offered. Later in the seasonwhen prices recover few farmers have much oftheir output left to sell. Their average returnsare therefore very little above the price levelduring the post-harvest glut, and they hardly profitfrom the substantially higher prices that consumersmust pay l.ater in the season. In some countriesspeculative activities tend to magnify these price

The role of price stabilization

137

tire means used directly or indirectly to improvemethods of cultivation by investment and educa-tion. A final section deals specifically with therole of governrn.ents in fostering and guiding thedevelopment of agriculture.

Attention is given not only to ways of increas-ing production, but (no less important in develop-ing economies) also to ensuring an increasing andregular flow of supplies to urban markets. How-ever, it is clear that for a long time to comemuch of the agriculture of economically less-developed countries will remain on a largely sub-sistence basis, especially in remote areas. Someways of improving the level of living of subsis-tence farmers were mentioned briefly in Chap-ter III, and are discussed somewhat more fullyin some of the sections which follow, particularlyin conn.exion with extension services, includinghome economics, and with comnmnity develop-ment.

fluctuations, which moreover do not only affectfarmers. They also lead to considerable hardshipfor tire poorer groups of consumers, who usuallydo not have the means to stock up basic non-perishable foods during the period of low pricesat harvest time for use later in the year.

Price instability seems to be inc-reased by thelargely subsistence character of agricultural pro-duction in kss-developed countries. When theneeds of their families for food are inadequatelymet, farmers are likely to consume rather moreof their output when prices are high and to sellless, thus inc-reasing the shortage on urban marketsand forcing prices still higher. On tire otherhand, when prices are low they may have tosell more in order to satisfy their minimum needsfor cash, and so intensify the downward pressureon prices. Reliable data are scarce on tire propor-tion of the total output which enters the marketin economically less-developed countries theso-called " marketable surplus. It has been esti-mated that in India it constitutes about one thirdof tire total production of rice and wheat 2; inCeylon and Taiwan only about one half tire rice

a Ford Foundation Agricultural Production Team, Reporton India's food crisis and steps to meet it, New Delhi, 1959

produced. is estimated to be sold off farms; whilein Southern Korea the proportion is reckoned atonly about 30 percent of the crop.3

The dependence of many less-developed coun-tries on agricultural exports is yet another factormaking for instability, both to individual farmreceipts and to government revenues, since priceson export markets are notoriously liable to widefluctuations. Moreover, when prices of an importantexport product are high, inflation.ary pressuresmay be exerted throughout the whole economy,and vice versa.

While most of the underdeveloped countrieshave taken at least some steps to stabilize agri-cultural prices, price fluctuations in many are stillconsiderable. Such measures caimot always befully iinplemented for lack of the necessary ad-ministrative machinery, operating funds, and mar-keting and storage facilities. The large areas andinadequate systems of marketing and transportin many of the less-developed countries add tothe difficulty. It is not easy to measure the extentof the price fluctuations because of the scarcityof reliable farm price data in most of the less-developed countries. Nor is it easy to disentanglethe effects of general price movements within acountry, or of price fluctuations in internationalmarkets, from those due to seasonal and year-to-year variations in supplies. It has been reported,however, that in Cambodia prices of paddy inJanuary and February are in general barely halfthose prevailing in July and August, while in Co-lombia the immediate post-harvest price of po-tatoes is often no more than one third of the pricesrealized later in the season. A few illustrativeexamples of wholesale prices in India are shownin Figure IV-I and give some indication of thewide variations in market prices which farmersexperience. Thus, the price index for rice fellfrom the high level of 112 in July 1953 to 72 inApril 1955, rising again to II in August 1958.The fluctuations in the price indices for wheat,jowar, and groundnuts are even more sti-ikingthan for rice. Similarly, the average annualwholesale price for rice in Dacca, Pakistan, fellfrom 25.75 rupees per maund in 1952/53 to 14.4rupees in 1954/55 and recovered to 21.37 rupeesin 1956/57. The annual average price of wheatin Lyallpur, Pakistan, rose from 8.12 rupees per

' United Nations/FAO, Food and agricultural price policiesin Asia and the Far East, Bangkok, 1958.

138

maund in 1950/51 to 14.01 rupees in 1952/53, butfell to 9.56 rupees in 1955/56.1

Such price fluctuations are clearly the resultof much more than seasonal and year-to-yearvariations in supply, although these are of primaryimportance. But while they persist, producerscan hardly feel encouraged to risk additionalexpenditures or to make additional efforts to in-crease their prod.uction. So long as most of therisks associated with programs to increase foodproduction are borne by cultivators, it is notreasonable to expect them to ad.opt improved,but usually more costly, production methodsunless they have some protection against undulylow prices, which may not even be sufficient tocover their out-of-pocket expenses. Price sta-bilization measures, reasonably effective at thefarm level, thus seem to be a necessary prerequi-site if the potential from other programs toincrease agricultural production is to be realized.

Most underdeveloped countries have madeefforts in a variety of ways to reduce price fluctua-tions of basic foodstuffs, but rather few have con-sistently used prices at incentive levels to inducecultivators to increase production or to supportfarm incomes, except sometimes for a few keycrops of special significance. As emphasized inChapter III, large sustained transfer paymentsfrom the other sectors of the economy to agri-culture, of the kind common in industrialized coun-tries, are ruled out by the small size of the non-ag,ricultural sectors, as well as by the general lowlevels of incomes. On the contrary, the financ-ing of economic development in most countriesdepends to a considerable extent upon capitalaccumulation from the agricultural sector. Con-sequently, government funds available for agri-cultural price stabilization operations and othermeasures to assist agriculture are severely limited.

Current government price measures for basicfood crops in less-developed countries can in mostcases be traced back to the period of food shortagesduring and after the Second World War. Pri-mary emphasis was placed not so much on providingincentives for greater production, as on the con-trol of prices for the protection of consumers.This emphasis has continued in many countriesin order to counteract inflationary tendencies,stemming in some cases from increasing expen-ditures and incomes under general economic de-

United Nations/FAO, op. cit.

FIGURE IV-I. INDIA: INDICES OP WHOLESALE PRICES OF CERTAIN GRAINS AND OF GROUNDNUTS, 1953 TO 1958

Indices 1952/53 100

velopment prog,rams. These price policies havebeen implemented in a number of ways, e.g., bycontrol of foreign trade, government procurementand distribution, buffer stock schemes, price con-trol, rationing, selective credit control, etc. 5 Some

Fuller details can be found in Report of the FAOIECAFECentre on policies to support and stabilize agricultural prices and

SOURCE: Reserve Bank of India Bulletin, Bombay.

Rice

WheatJowarGroundnut

139

of these schemes have made for some greater de-gree of price stability for cultivators but frequentlyat such low levels as to offer little incentive to

incomes in Asia and the Far East, FAO/ETAP Report No. 887,Rome, 1958; FAO, Report of the Latin American Centre on,foodand agricultural price stabilization asid snpport policies, Rome,1959 (mimeo.); and LJnited Nations/FAO op. cit,

1953 1954 1955 1956 1957 1958 1959

producers to increase their output. In many cases,as is shown later, inadequacies of marketing, landtenure, and credit systems often resulted in thecultivator receiving less than the procurementor guaranteed price that governments may haveanno mice d..

In the last few years this orientation of govern-ment price measures toward the consumer hascome in for increased criticism, largely on thegrounds that such policies have retarded a neededexpansion of agricultural production and havethus tended to perpetuate the inflationary pres-sures which they were meant to combat. Theyhave also been criticized on social grounds aslaying a disproportionate burden on agriculturalproducers for the benefit primarily of urban in-dustry and of urban consumers, who on the aver-a<Te are often better off than the general runfarmers.

Increasing attention is therefore being given ina number of less-developed countries, especially inLatin America, to government measures designedto minimize price fluctuations (though not neces-sarily to obviate them entirely), at price levelswhich do not involve large and sustained incometransfers in either direction between the agricul-tural sector and the rest of the economy. Suchprice stabilization policies nevertheless seem like-ly to give substantial incentives to agriculturalexpansion. For price stability in itself, and inparticular stability relative to prices of the thingsfarmers buy, i.s a powerful incentive. The povertyof consumers, no less than the lack of governmentfunds for price supports, rules out the generaladoption of relatively high incentive prices, as -wellas of high prices aimed at raising farm incomescharacteristic of some industrialized countries. Buteven if farm prices were effectively stabilized at nohigher level than would correspond to the averageprice currently paid by consumers (including allow-ance for reasonable distribution costs), farmers inmost less-developed countries would gain consid-erably and would have much more confidenceto expand production than, at present. Such pricestabilization measures which, if efficiently adminis-tered, need involve neither substantial expense togovernments nor transfer payments frorn the restof the economy to agriculture, were endorsed byrecent FAO meetings on the subject in LatinAmerica and in Asia and the Far East. They offersome protection both .to agricultural producersand to consumers, and relieve the economy as a

140

whole from the stresses arising from periodicshortages and inflationary pressures.

Several countries have been working towardthis end by moans of government procurementand buffer stock operations, designed to removesupplies fi-oni the market in periods of low pricesand release supplies later when prices rise, coupledwith regulation of imports and exports. In, forexample, Colombia, Ven ezuela, Panama, Burmaand Ceylon, this is accomplished by setting up anetwork of government-sponsored. buying sta-tions to which producers may bring their prod-uce for sale at a guaranteed minimum price ifprivate traders offer less. In Southern Korea, thesame result is sought by granting farmers low in-terest loans on the security of grain stored at har-vest time in approved warehouses located through-out the country. A variant of such schemes hasbeen successfully operated for certain cash cropswhich normally move to processing plants, e.g.,for sugar cane in India and Taiwan, whereby theplants pay a guaranteed price for the producedelivered to them. If effectively managed, suchschemes can be financially self-supporting, althoughseveral countries have suffered substantial losses inthe initial sta.ges until sufficient experience in man-agement and administration has been 0-ained andadequate warehouse facilities established. Evident-ly, they impinge on, and are closely related to,some of the improvements in the marketing sys-tem discussed in. the next section.

Price stabilization for agricultural commoditiesproduced primarily for export is an altogethermore difficult problem than price stabilization ondomestic markets, and in general is possible onlythrough in tern a ti o nal commodity agreements ; butthese are difficult to negotiate and have not beenuniformly successful. In a few instances, less-de-veloped countries with a major share of the worldmarket for a particular commodity have attempt-ed unilaterally to stabilize international pricelevels by regulating supplies, e.g., Brazil for coffee,Pakistan for jute. However, the opportunities forsuch unilateral action are few, and such schemesare in any case risky. As a rule, therefore, na-tional efforts have been directed not so muchtoward stabilizing international price levels as tocushioning the effects of world price fluctuationson the domestic market.

A few of the less-developed countries, partic-ularly in Ah ica, have sought to reduce fluctua-60115 in prices to their producers by equalization

(or stabilization) funds, setting aside part of theexport proceeds in times of high prices in orderto augment returns to growers when prices arelow. Such schemes have been undertaken withsuccess, for example, for cocoa in Ghana and Ni-geria. A larger number of countries, especially in.Latin America, have sought to stabilize returnsto producers of export products, and also thepact on the domestic economy generally of pricefluctuations on international markets, by means ofvariable export taxes, such as variable export duties,variable and multiple exchange rates, with variantssuch as the aforo system, or by the centralizedmarketing of exports through a state agency. Thus,it has been possible to insulate producers to ag-reater or lesser extent from price fluctuations onworld markets by having government revenuespartially absorb these fluctuations. Variable andmultiple exchange rate systems and state exportagencies may also be used to subsidize exports,though, for obvious reasons, less-developed coun-tries cannot as a rule afford any sustained andsubstantial subsidization of agricultural exports. 6

It is difficult to evaluate the success of agricul-tural price stabilization and support measures, inless-developed countries as elsewhere, because of thenumerous other factors at work. However, theNew Delhi Center on Policies to Support andStabilize Agricultural Prices and Incomes in Asiaand the Far East concluded that:

In most countries (of the Far East) price policies for foodgrains have been aimed primarily at protecting the consumer

The role of

Economic development and urbanization callfor greater movements of agricultural productsfrom rural areas to towns. In addition, rising in-

Sometimes, however, export subsidies are granted toassist exports of marginal quantities of a commodity primarilyproduced for domestic consumption, e.g., for some staplecrops in Costa Rica, or to farmers depending on one productfor their entire money income (sugar in Brazil and Argentina,rice in Guatemala). In exceptional cases a country may sub-sidize some traditional major export product with a view toincreasing foreign exchange earnings, for example, wheat inUruguay. In such cases, however, the subsidies are financedby taxes on the exports of some other major agriculturalexport commodity (wool in the case of Uruguay).

141

and limiting the effects of inflation, sometimes at the expenseof the producer. They cannot be expected to have acted asan incentive to production and may sometimes have had theopposite effect. In the few countries where incentive pricepolicies have been tried, there are indications of a positive re-sponse, though other complicating factors obscure the result.For cash crops there was general agreement that productionresponded markedly to price assurances asid to changes in pricelevels.

The Latin American Centre on Food and Agri-cultural Price Stabilization and. Support Policiesexpressed the view that:

The recent tendency in many countries to stabilize farmprices at a somewhat higher level than before was necessaryin order to encourage increased investment in agriculture andto correct imbalances of supply asid demand which liad de-veloped during the years when Emi prices were held at arelatively low level. As a rule these policies have not beenlong enough in operation for their results to be appraised.In a fcw countries, however, they have already led to a steadyexpansion of production and occasionally to the emergence ofsmall surpluses in formerly importing countries.

While price stabilization and support measureshave helped to damp fluctuations in retail and whole-sale market prices in many less-developed coun-tries, there is more doubt, for reasons discussedbelow, as to the extent to which they have beeneffective in assuring producers a minimum pricefor their produce. Rather clearly, price guaran-tees can exercise their effects on production onlyto the extent that the producer actually receivesthem, a condition which is not yet always fulfilled.

marketing

comes usually imply soine diversification and in-crease in the demand for foodstuffs, of which many,e.g., meat, fish, milk, fruit and vegetables, areperishable commodities. The production of thesemore valuable foods is indeed one of the waysin which farmers can raise their incomes and alsospread their farm work over the year. Amongthe problems that economic development raisesare therefore those of ad.apting and improvingmarketing structures and organization to allowan increased flow of agricultural products to mar-kets, including an increased proportion of perisha-ble commodities. Unless these problems are sol-ved economic development as a whole may be

hampered., sin cc nonagricultural development willbe hindered by food shortages and inflationarypressures in towns. Equally, the agricultural sectorwill not expand at the rate made possible by growingnonfarm demand and the impact of any economicincentives to greater production will be weakened.

Again, in less-developed countries weaknessesin marketing methods and organization often con-stitute a serious im.pediment to better farm returnsand increased output, not only of higher qualityproduce but also of staple commodities. Therelatively small proportion of the retail price forfood that may be received by producers is a com-mon grievance and may blunt the edge of anincentive policy to stimulate production. In-deed, if the price stabilization measures outlinedabove are to be successful, modification of exist-ing marketing systems is usually essential in orderto ensure that small farmers actually receive theminimum prices guaranteed.

Though calculations of marketing margins arenotoriously deceptive, some examples from less-d.eveloped regions may be quoted to give a roughidea of the impact of marketing costs on farmers'shares of the prices paid by consumers. In Pakis-tan, according to recent government marketingreports, the grower obtains 32 tO 37 percent ofthe price paid by the consumer for tobacco and25 to so percent of that paid for dates. Ill thecase of Malta oranges, the producer's receipts havebeen only 16 or 17 percent of the consumer'sprice. An investigation of rice marketing in Indo-nesia indicated that out of a consumer price of390 rupiahs for the rice equivalent of ioo kilo-grams of paddy, 199 rupiahs (a little over 50 per-cent) went in marketing costs. Servi.ces of valueto both producers and consumers make up partof the difference, but wasteful and inefficienthandling and distribution methods, very high in-terest payments, etc., may widen the gap consider-ably. Greater efficiency of marketing thus offerspossibilities both of lowering prices to consumers,thereby increasing the volmne of sales, and ofincreasing returns to producers.

In the broader view, good marketing facilitiescan help cultivators to specialize in the commodi-ties they can produce most advantageously. Inthis way they can contribute to raising the farmers'level of living and add to the economic wealth ofthe community. The sections that follow examinesome of the more common problems whicharise in improving the efficiency of marketing.

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MARKETING AND RURAL CREDIT

Faun credit is discussed more fully in a latersection, but it is convenient to note here someaspects which impinge on marketing problems.Because of the lack of alternative sources of credit,many srnall producers are forced to seek loansfrom dealers and merchants in times of scarcityand need, especially prior to the harvest, and maybecome heavily in. debt to them. The farmersare then often obliged to sell their prod.ucts yearafier year to the same merchant, at prices sub-stantially below those ruling in the free market,as a condition of maintaining the loan. Theycannot, because of their indebtedness, switch toother sales agents and in many cases receive netreturns well below the average farm prices report-ed by statistical agencies. As a result, improvedwholesale prices and quality differentials do notbring forth the production response that wouldotherwise be expected, while the adoption ofdishonest and wasteful practices by borrower andlender alike may be encouraged.

The actual rate of interest, when calculated onami annual basis, is often prohibitive by commercialstandards. Often, the effective rate is concealedwhen loans are made to the farmer in kind at ahigh price period and repaid in produce assessedat a low price when delivered to his creditor. Insome instances part of the crop may be committedto creditors for delivery after harvest under aloan agreement concluded earlier in.the year, theextension of which would involve still higherinterest payments. But even when farmers re-tain control over their produce they must often sellimmediately after the harvest to meet currentexpenses. Even if they have storage facilities attheir disposal, credit against goods retained in thefarmers' hands is frequently difficult to obtain andexpensive because of the risk that the goods maybe disposed of independently.

These difficulties might be eased by a widerextension of the warehouse receipt system, as hasbeen applied, e.g., for grains in Southern Korea,in the sugar trade in the Philippines, and is nowbeing applied more generally in India as the newNational Warehousing Corporation proceeds withits development program. To be fully effective,however, a sufficiently large network of ware-houses is needed. to CIASUTC that there is one with-in reach of each farm. Otherwise, the mainusers are likely to be merchants and large farmers.

Usually such programs can be carried out onlywith government assistance because of the heavycapital costs involved.

The need on the lender's part to obtain a lienon some marketable security when the loan is

made and to see that it does not leave the posses-sion of the borrower except in repayment of theloan makes a close link between the source ofcredit and the sale of the product essential. Thisneed probably lies behind the development ofthe merchant-moneylender system. Where theamounts 1.ent are small and the borrowers nu-merous and scattered, it is difficult to see howtrading and lending activities can be separatedwithout some considerable increase in cost, andthe integiated credit and trading agency seems themost practical.

The replacement of the merchant-moneylenderby an equally efficient, but less costly and moresympathetic, alternative bas been the subject ofmany investigations and proposals. A recent studyby the Rice Coinmittee of the Federation of Ma-laya (1956) reported that co-operative c-redit so-cieties coul.d not be expected to compete success-fully with village shops, which supply farmerswith their daily necessities as well as buying theirproduce and offering credit. Co-operatives usual-ly face certain inherent handicaps - dependence onsal.aried labor and management, 1.ack of adequatecapital and trained personnel, a high rate of illit-eracy and ignorance among the farmers withwhich they in.ust deal, and a low standard ofgeneral integrity in the conduct of financial mat-ters that lie outside established social codes. Fromthe farmers' point of view, however, such anagency is preferable since it would be operatedby a sympathetic management rather than oneseeking primarily to obtain the maximum profit.

Co-operatives combining both credit and Mar-keting have long been established in. Ceylon. InSierra Leone, just over 25 percent of all cocoaproduced is marketed by co-operative societies,which are also active in providing members withshort-term credit to be recovered from the pro-ceeds of the current crop after sale by the society.'Cyprus, too, has many examples of successful

Longer-term loans (8 years) are also issued to cover halfthe cost of bringing new land into production under supervi-sion by the Department of Agriculture. In the first year thelimit was 2 acres, thus giving real encouragement to the smallfarmer, and over 400 acres were brought into production.

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blending of marketing and credit in co-operativesocieties. Thus the marketing of carobs developedwhen credit societies pooled members' carobs forcollective sale to local merchants. Then co-opera-tive unions were formed, which eventually con-tracted loans to members, built processing plants,and became sufficiently important to operate onthe export market.

STORAGE

Inadequate storage facilities are the cause c;heavy losses in many parts of the world. At anFAO meeting on rice, held in. the Philippines in1948, it was estimated that more than To milliontons of rice would be 1.ost in the world in 1947/48because of inadequate storage. Although the sit-uation has since improved, much remains to bedone to reduce the losses incurred when agri-cultural commodities are stored in unfavorableclimates, especially by wider application of knowl-edge already available. Some progress has beenmade in economically less-developed countries,notably in Latin America, where national de-velopment institutes and banks have often beenrnade responsible for constructing strategically lo-cated storage and drying and fumigating facilities.Plans for large-scale construction of scientificallydesigned storage plants are now under way inIraq, the United Arab Republic, and India, toquote only a few examples from other parts ofthe world.

Owing to their scarcity, the ownership of stor-acre facilities is sometimes an issue in less-developedcountries. M.erchants able to store essential com-modities are said to llave profited unduly fromspeculative operations and many countries areturning increasingly to public ownership.

MARKET INFORMATION

Inad.equate information On current market con-ditions is another characteristic weakness in de-veloping countries. It arises mainly from thelarge number of small enterprises involved, weakcominunication systems, and frequent il.literacy.It is an important safeguard if a farmer can com-pare the prices offered by one trader with thosepaid by others. More complete market infor-mation also reduces the business risks of whole-

salers, with potential benefits to producers and. con-sumers. Wh.en up-to-date accurate information islacking, local buyers seek wider margins as a

hedge against price changes in distant marketswhich they may not know about. Again, inade-quate market information is a frequent cause ofphysical waste, e.g., when perishable fruit andvegetables from distant points are unloaded on analready satiated market. The wide price dis-crepancies characteristic of economically less-clevel-oped countries often reflect inaccurate price re-porting and comparison of different varieties orgrades as well as ta-ansport and other difficulties.

TRANSPORTATION

Inadequate transport is often responsible bothfor high marketing margins, and for the contin-uance of subsistence farming in many areas.Many producers in the less-developed countriesmust continue to be restricted to local villagemarkets until low cost transport facilities makeother outlets accessible. 8 Many important agri-cultural arcas are linked with the outside worldonly during the dry season of the year. Throughlack of farm-to-market roads or because of highfi-eight charges resulting from inadequate roads,producers in many countries have to concentrateon crops which are not necessarily the most neededor the most economic. In parts of the Philippines,for example, subsistence c-rops like rice and maizeare often grown in place of more suitable c-rops,such as Manila hemp, because of the difficulty ofbringing the product to the market. The grow-ing of perishable crops, in particular, is subjectto these difficulties.

Large arcas of cultivable land may lie practi-cally idle because of the lack of access roads. Forexample, 3,000 miles of Erin-to-market roadsbuilt in Mexico since 1950, out of a planned totalof 8o,000, have already brought about a strikingincrease in grain and fruit production in some

In Bolivia, for instance, transportation costs of orangesto La Paz have been estimated as some 75 percent of prices-received by farmers. In 1957 it was estimated in the SyrianProvince of the United Arab Republic that transport costsamounted to about 40 percent of the export price for wheatand 5o percent for barley. In Thailand, the average distancefrom a farm holding to a railway station is 70 km., to a navi-gable waterway 30 kin., ro a road usable during most of theyear, 50 km.

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areas. Another important aspect is the hemradaptation of existing transport facilities to thespecial demands of agricultural products, particu-larly perishable products such Os meat, fresh fruitand vegetables, and milk.

GRADING AND HANDLING

Frequently quality improvement is hamperedby the system of pricing employed at the faunlevel. A grading system which secures to theprod.ucer appropriate price differentials is a potentmeans of guiding production into the qualitieswanted OR the market and of raising farm in-comes. Conversely, when no price differential isallowed for improved quality there is no incentivefor better handling and grading. Deductions forimpurities and shrinkage are applied indiscrimi-nately on rice moved through certain markets inIndia, hence discouraging the proper cleaning anddrying of the product at the farm.

Serious losses often result from careless treat-ment in picking, transport, and market handlingof fruit and vegetables. This applies especiallywhen fruit is sold on the tree and the picking isundertaken by a contractor, who may let it outto a third party, with no direct interest in theprice obtained for the c-rop. Much damage couldbe avoided by more careful packing and loading.A typically unsatisfactory handling method is thepack carrier commonly used in the Near East. Itis deep, with a wide top narrowing toward thebottom, and in consequence the lower levels ofsuch produce as grapes and tomatoes are badlybruised and cTushed.

Livestock and meat of different types and quali-ties are often sold at uniform prices regardless ofconsumer preferences. in some areas of CentralAmerica cattle are sold on the basis of height,an attribute valuable in traveling long distanceson foot but often inversely related to meat quality.Sales practices of this type frequently continue inuse after the conditions which first led to theiradoption no longer apply. Poor market prep-aration and handling of livestock in transit is

another source of low quality and prices, as wellas much unnecessary suffering. Shrinkage in weightand losses fiom death and crippling in some coun-tries of Latin America are far in excess of thosecustomary in some other areas where animals areshipped over comparable distances. Many of these

losses could be avoided by better equipment andmore care.

EXPORT MARKETING

Better marketing can greatl.y strengthen thecompetitive position of countries where exportsof agricultural products are a main source of for-eign exchange. Many sales may hinge uponefficient marketing organization, improved grad-ing and handling practices, speedy adaptation tochanges in demand, and the use of transport,packing, and presentation methods -which mini-mize waste and bring produce to the consumer inan attractive form. Where a buyer and seller areseparated by long distances, as in much exportmarketing, standardized grade specifications en-able experienced traders to buy by grade descrip-tion alone. Measures taken by governments, suchas that of India for the compulsory grading ofexports of, e.g., wool,- Virginia tobacco, sunnhemp, and essential oils, have resulted in develop-

Perhaps the most important way in which landtenure systems influence agricultural production isthrough their effect OIL the farmer's incentives and.motivations. Security of occupancy, an equitabledivision of farm income between landlords andcultivators, the expectation of reasonable rewardfor the farmer's labor, the pride of ownership -these are powerful stimulants for land improvementand for other investment to increase output, andfor a wi.se use and conservation of resources. Theyalso affect the " receptivity" of the farmer to tech-nical advice and other farm services designed toaid him and his willingness to apply them.

The significance of many tenure changes liesmainly in such catalytic effects, permitting greaterresults to be obtained from other agriculturald.evelopment programs, e.g., price stabilizationmeasures, marketing improvements, extension pro-grams, proVision of subsidies for agricultural req7uisites, etc. While defective land tenure systemsmay hamper or even nullify the effectiveness ofother measures and stultify the farmer's initiative,it is equally tTue that land tenure changes by them-selves can selcioru achieve spectacular increases in

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ing, foreign markets. Other examples could bequoted. In the Egyptian Province of the UnitedArab Republic, improved marketing techniquesfor fruit and vegetables have been adopted andmodern packing stations established. The recentlyestablished Organization for the Development ofExports is in charge of promoting and co-ordinat-ing export activities for horticultural products andother foods and ag,ricultural products. In theSyrian Province, a projected network of grain stor-age and cleaning facilities and a wheat gradingsystem will open the way to more advantageoussale of Syrian wheat on international markets.Libya, too, has given much attention to improv-ed marketing facilities as a means of expandingagricultural exports, notably of olive oil andcitrus. Terminal port facilities for handling, pro-cessing, and storing products for export are nowbeing constructed. The introduction of standardgrades for barley in Iraq and the establishment ofa marketing information service have helpedto maintain existing markets and secure newoutlets.

productive efficiency. Rather, they contribute toestablishing the economic and social climate inwhich other development measures can becomeffective.

Land tenure systems may also have importanteffects on capital investment in agriculture. If thetenure system is such that a large proportion ofag-,riculture's earnings are diverted into unprod.uc-tive expenditure (as in the case of some feudaltypes of land holding), a change in land tenuremay bring about increased productive investment.Furthermore, the agricultural credit system is oftenso tightly interwoven with the tenure system thatthe operation of one may either limit or facilitatethe functioning and development of the other.Similarly, taxation policies are strongly influencedby land tenure arrangeinents and, conversely,many of the maladjustments in tenure are hardto resolve without a revision in tax policy.

Filially, land tenure has an important implica-tion for agricultural production through its effectson farm size and layout. While farm size is af-fected by many factors in addition to the landtenure system, it has been noted that any tenure

system usually operates in an agricultural regionthrough a characteristic pattern of farm sizes. Of-ten these tenure-connected farm sizes are either toolarge or too small for greatest efficiency. Similarly,poor layout and fragmentation of the productionunit are frequently caused by the prevailing tenuresystem, particularly inheritance customs. To the ex-tent that tenure reforms can bring farm sizes andfarm layout closer to the requirements for optimumefficiency, they can have a significant effect onproductivity.

The following paragraphs give some examplesof land tenure improvement measures which havebeen initiated in less-developed countries, and theways in which they may facilitate agriculturaldevelopment.

TENANCY REFORM

Although under certain conditions systems ofleasing and sharecropping are associated with highagricultural productivity, in most underdevelopedcountries their results are usually inefficient eco-nomically and unsatisfactory from a social view-point. Their principal defects include excessiverents, insecurity of occupancy, subletting with thesubsequent development of multiple tenancies, theextraction of personal services by landlords andother abridgements of the freed.om of the cultiva-tors, including a denial of access to markets and.credit. The result has frequently been a situationwhich left very little incentive for cultivators toimprove the land, since without security of ten-ure the benefits stemming from any land improve-ments they make might well accrue to others,while high rents and lack of credit on reasonableterms offer poor prospects for tenants to secureany sizable share of increases in output that theirefforts and investment might bring forth. Unsatis-factory tenancy conditions are being tackled inseveral ways, of which two of the more impor-tant may be mentioned: the improvement of thecontractual relationship between landlord andtenant, and the transformation of tenants intoowners.

Several countries have introduced regulations tolimit rents that tenants may be charged (Iraq,Taiwan, the United Arab Republic), to restrictsubletting (India), to require compensation forimprovements made by tenants if they subsequentlyleave the land holding, to set a minimum period

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of contracts for leasing land, and similar measures.In a number of countries, land reform measureshave been introduced to convert tenants into own-ers and thus do away with tenancy altogether.In Japan land reform has been recognized as the" release mechanism for the great agriculturalprogress made in postwar years; it has helpedcreate the conditions for the diffusion of demo-cratic concepts and for a change in the status ofthe farmer's wife. Another approach, as in theSudan, involves replacement of private tenancyarrano.ements by state regulated leases, which insome cases have such a long-term and even hered-itary character that they approach fi-eehold tenuresin security and permanence.

The greatest problem raised by measures toimprove unsatisfactory leasing and sharecroppingsystems is usually that of effective enforcement ofthe reform without which legislation in favor oftenants is obviously largely futile. Even whereimplementation machinery exists, local interests areoften able to prevent even the best conceivedmeasures fi-om being carried out. For example,an investigation of the implementation of the 1948Bombay (India) Tenancy Act concluded that regu-lation of rents liad been largely ineffective.9

The exainple of some of the more developedcountries in working out satisfactory tenancy sys-tems, in which landlords and tenants share pro-portionally in the contributions to production aswell as in the rearms, has often proved to havelittle relevance to the situation in less-developedcountries. This seems to indicate that tenancyreform legislation can succeed only if it is comple-mented by appropriate measures to strengthen thetenants' economic position, e.g., by provision ofadequate agricultural c-redit on reasonable terms, byimprovement of marketing and storage facilities,and by effective extension and educational ser-vices. The establishment of voluntary tenants' asso-ciations has also been suggested as an aid to im-proving the operation of tenancy systems. Finally,efficient ad.ministrative machinery at the locallevel may prove to be the d.ecisive factor inensuring successful implementation of tenancylecrislation.

V.M. Dancickar and G.J. Kliudanpur, Working of Bom-bay Tenancy Act 1948: Report oi investigation. Gokhalc Insti-tute of Politics and Economics, Poona, 1957.

PROMOTING EFFICIENT CULTIVATION OF LARGE

HOLDINGS

In some of the less-developed countries, largeland holdings in estates or plantations are notedfor their high productivity in comparison withnearby peasant agriculture, e.g., rubber plantationsin Ceylon and the Federation of Malaya, tea plan-tations in Ceylon and India. On the other hand,in many areas, particularly in Latin America, largeunderutilized farms often leave great scope forimprovements in productivity. Such farms arepredominantly extensively cultivated estates heldby absentee landlords. Land is still the principalsource of wealth in many underdeveloped coun-tries and landownership remains associated withprestige and social status. Furthermore, the pur-chase of land is often considered the best invest-ment for private funds, inter alía as a safeguardagainst inflation. As a result, landownership maynot be accompanied by the intention to make themost efficient use of its resources. This attitudemay be facilitated by nonexistent or negligibleland taxes and by other institutional advantagesin favor of the landowners. The worst featuresof this system are exemplified by the latifundiafound in some Latin American countries, wherevery large holdings on level fertile land are oftencultivated superficially or used for livestock graz-Mg, while side by side subsistence farmers raisebasic food crops on small, steep, and erodableplots.

There are, however, indications that as indus-tries expand in these countries land is losing someof its attractiveness as an investment. Some gov-erinnents, too, are making efforts to reduce theproportion of large, extensively farmed estates.Reform measures of the more drastic type includeexpropriation of large estates and subdivision imitosmaller and more intensively farmed holdings, as,e.g., in Iraq and the United Arab Republic. Thiswas done also in Mexico before the Second WorldWar. In Italy, to take an example from a moredeveloped country, distribution of land of relativelyunproductive estates is being accompanied by anintensive development effort involving irrigation,reclamation, road building, and a whole networkof services for the new farmers. The provisionof adequate c-redit, marketing, and extension ser-vices to the new owners are usually regardedas essential to the success of such land reformmeasures.

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Other countries are attempting to deal withthis problem through differential taxation, in whichtax rates vary directly with the size of the propertyand with its degree of underdevelopment. In soniccases opportunities are given at the same timefor state assistance to owners desiring to developtheir large properties. For example, an " indirecttype of land reform was introduced in Colombia in1957 by establishing a system of tax incentives andpenalties to promote intensified use of good agri-cultural lands. Owners of so or more hectaresare required to devote between is and. 25 percentof their lands to agricultural crops (including forestplantations, cultivated pastures, and improved pas-ture lands). Those who do not comply with thisrequirement are liable to additional annual taxesranging fi-oin 2 tO io percent of the value of thelands. In arcas where the government has spon-sored irrigation or drainage projects, the compul-sory cultivation margins inay be doubled. Asdirect incentives, various tax exemptions are of-fered, e.g., for the amounts spent for agriculturalmachinery and for animal shelters, fences, and otherbuildings useful in improving the operation andmanagement of the holding.

PUBLIC LAND POLICY

A relatively neglected aspect of land tenureimprovement has been the field of public landpolicy. Publicly-held lands are notoriously under-utilized in many less-developed countries, althoughby no means all of such lands could be used eco-nomically for agriculture. Furthermore, so une pub-lic lands may be used best in connection withwatershed land protection or flood control measures,or for rec-reation purposes. However, land spec-ulation and g,reat destruction of natural resourcesalong the so-called " agricultural frontier " area frequent occurrence in countries with defectiveor nonexistent public land policies.

A great deal of this " public domain couldbe made to yield increasing benefits in less-develop-ed countries by systematic land development andsettlement. One of the important prerequisitesfor a successful public land policy is a cadastralsurvey, and various countries interested in carry-ing out ag,rarian reform and settlement programshave been active in this field in recent years, e.g.,India and Thailand.

A comprehensive public land policy has been

adopted in Costa Rica, involving the establish-ment of a National Land Institute to take chargeof public lands. This Institute will advise the gov-ernment On unused lands suitable for coloniza-tion purposes and on those best utilized for theconservation of -forest and water resources. Pub-lic lands will be tr-ansferred to the Institute foradministration and management, and the Institutewill have the power to transfer suitable parcelsto settlers. The Institute will also have the pow-er to buy, and even to expropriate, private landswhich are considered useful for colonization pro-grams. In Indonesia a bill is wider considerationwhich would provide that all land belongs to the,overnment and is to be utilized in accordancewith the economic and social interests of the na-tion. This formulation would replace traditionalcommunal land tenure systems by establishing apriority for the nation as a whole, at the expenseif necessary of local customs. There is also a longestablished program in this country of resettlingcultivators from Java to the less-densely popu-lated islands.

In Iraq, some public lands are being improvedand divided into units of 12 to 40 hectares for freedistribution to farmers, who can obtain title tothe land in ro years if they fulfil certain conditions.In Tanganyika the Agricultural Corporation hastaken control of some tenant lands originally alien-ated for the Groundnut Scheme, which under-took bush clearance, contour ridging, and provi-sion of water in the area. The system und.erwhich tenants are being settled on these landsprovides inter alia tha.t the Corporation will, furnishtenants with machinery and technical guidance,while the tenants contract to follow prescribedagricultural practices, including suitable crop rota-tions, and to deliver their produce for sale throughthe Corporation.10

Experience indicates that settlement schemes arenot likely to be successful unless the new colonistsare provided with adequate services, includingcredit, marketing, agricultural prod.uction requisites,and advice on cultivation practices. Thus, the GalOya Scheme in Ceylon requires that settlers joina general service co-operative society, one of whichhas been established in each village, as a condition

A. Cairsk di, Report on land tenure and land use problemsin the Trust Territories (!I' Tanganyika am/ Ruanda-licumli, FAO,lt nulo, 19 5 9 (mimen).

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to receiving allotments of land. '1 Credit, selectedseed and planting material, tools and. implements,working animals, and general consumer suppliesare made available through these societies, -whichalso market their members' paddy crops. In addi-tion, an agricultural extension service includingdemonstration plots operates as part of the scheme.

MODIFYING TRIBAL TENURES

Another group of tenure problems is associatedwith a tribal ag,rarian structure. In large parts ofAfrica and the arid. Near East there are types ofmigratory agriculture based on shifting livestockgrazing, which have their origin in the naturalarid conditions, but are also tied to cultural factors.Increasing conflicts are developing, however, be-tween the nomadic and the more settled sectors ofagriculture, especially in the Near East, wherethere is a great pressure from the surroundingpermanent cultivators to restrict the movements oftaibal herdsmen who, on their sid.e, feel they havetraditional grazing rights. Moreover, the scarcity ofwater in the areas still available for nomadic grazingoften leads to overgrazing of the available pastures.

Prior to the invasion of the tribal areas by set-tled cultivation, the migratory agriculture of thenomadic regions had usually established a roughbalance with the natural environment, which pro-vided a reasonable living at a subsistence level anda considerable degree of security, as long as sufficientland was available. In many areas this precariousbalance has been upset in recent years by a ,reatincrease in population and a corresponding in-crease in livestock numbers. Some tribesmen llavenow abandoned livestock grazing and shiftingcultivation in favor of settled cultivation, and thishas resulted in individualization of land rights as abreak with the communal ownership of tribal lands.

When this process has led to the establishmentof freehold tenures in tribal areas, it has causedm.arty social and cultural problems. Attempts arenow being made to devise a type of tenure thatwould preserve the values and advantages of theessentially communal economy, while accelerat-ing the inevitable transformation toward a settledand market-oriented agriculture. One interestingrecent example may be found in certain aspects

" FA O, Report qt. the Centre on principios and policies of landsettlement .for Asia and the Fill" EaSt, Rome, 1959 (ninIc0).

of th.e scheme in Tanganyika mentioned above,which aim toward developing the capacities of thefarmers by a series of simple steps which are tolead to a full-fledged commercial co--operative. Anovel feature of this experiment is the judiciousmixture of individual and joint features in agri-cultural practices, the latter providing the linkwith the old tribal social pattern.

Another example of recent progress in the trans-formation of tribal tenures is reported from South-ern Rhodesia. Regulations concerning rotation-al grazing llave been introduced, including strictobservance of grazing boundaries and generalprotection for communal pastures. Such measurestend to transform the formerly haphazard livestockproduction methods into better systematic mmage-ment practices within the framework of a com-munal system of tenure.

STABILIZING SHIFTING CULTIVATION

Shifting cultivation is prevalent over large areasof Latin America, Africa, and. the Far East, espe-cially in the tropical regions. Normally this in-volves indisc-riminate burning of forest and grasscover to clear land, which is cultivated for a fewseasons and then abandoned when the soil loses itsfertility. It may be practiced by squatters whollave no title to the land and whose only interestis to cultivate rapidly as much land as they cancl.ear. The system is destructive of natural re-sources and seriously impoverishes the soil. Insome cases shifting cultivation is carried out ongovernment lands and is consequently a problemof public land policy; in other cases it is practicedon large private tracts held by absentee owners forspeculative purposes. Some governinents are mak-ing efforts to regularize the situation either bygiving permanent tenure status to the squatters orby relocating them in other suitable arcas.

Shifting cultivation may also be practiced byaboriginal tribes who llave been pushed away fromlands where stabilized agriculture is practicable. Asuccessful attempt is under way in the BelgianCongo to regulate such shifting cultivation andimprove the condition of the tribes. Under the" corridor settlement scheme the principle offorest fallow is preserved in a regular pattern whichallows for a return to cultivation of the same areasafter a number of years. In general, the croplands are laid out in strips, or corridors, each culti-

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vated corridor alternating with one of forest. Thissystem allows a modified form of shifting cultiva-tion while maintaining a forest cover. There arealso more intricate and flexible patterns, in whicha cash crop may be introduced into the cultivationcycle. In other countries, the so-called " taungyasystem provides not only for regulation of shiftingcultivation, but also for raising valuable forest speciesof relatively rapid growth during the fallow period.

CONSOLIDATION OF HOLDINGS

Another problem of agrarian structure is theexcessive fragmentation of holdings into smalluneconomic parcels, which hinders the introduc-tion of many rational methods of cultivation.Such fragmentation is a feature of a good dealof European ag,riculture, but is also found in manyless-developed countries with a considerable pop-ulation pressure on land resources. While manyof the basic causes of excessive fragmentation arenot amenable to direct remedies, progress has beenmade in some countries in consolidating frag-mented holdings. The most successful programsllave been those which link land consolidation withother development measures, such as the construc-tion of roads, changes in land utilization, soilimprovement, regulation of the water supply, etc.When land consolidation is thus combined withother activities, it can successfully solve many ofthe fundamental problems of the agrarian structure.As with other types of land tenure improvement,land consolidation operations appear to be mostsuccessful when combined with the provision ofadequate extension services and other measures todevelop the initiative of farmers. Land consolida-tion programs llave been carried out in Pakistan(Punjab), Japan, and Kenya. Similar approachesappear to be needed in other regions, particularlyin some Islamic countries where the strict obser-vation of inheritance rules has led to extensiveland fragmentation. Land consolidation prog-ramsmay, however, provide no more than temporaryrelief unless inheritance customs and laws arechanged to prevent the renewed frag-mentation ofholdings in the course of years.

* * *

The aspects of agricultural development dis-cussed. above - price stabilization and the improve-ment of marketing facilities and conditions of land

tenure - are concerned principally with creatinga favorable economic and social climate whichwill give the farmer a direct interest in improvinghis methods of cultivation and increasing his out-put. We may turn now to some of the morepositive and direct measures for furthering agri-cultural development, in particular the provision

Ad.ditional investment is usually necessary toexpand substantially the output of any indusn-y,agricultural or nonagricultural, irrespective of theform of social or economic organization. Thefigures in Annex Table 13, for example, showhow large a financial investment was needed forthe recent expansion of agricultural production inthe U.S.S.R. Agricultural investment is unique,however, in that it nearly always includes, besidesa financial investment, a substantial component ofnonfinancial investment for which there is nodirect cash outlay. Quite frequently in small proj-ects almost the whole " investment is of thischaracter, e.g., the work carried out by individualfarmers in leveling their fields or improving thebuildings on their holdings. Sometimes a groupof farmers may work together on a voluntarybasis, for example to improve an access road.Even a large government irrigation project, imply-ing a substantial financial investment, however, willprobably involve the digging of field channels bythe cultivators themselves to bring the water fromdistributory canals to their own holdings, so thathere too there is also a nonfinancial componentin unpaid labor. While financial and nonfinancialinvestments are considered below separately, inpractice agricultural investment in less-developedcountries nearly always involves both types invarying proportions.

FINANCIAL INVESTMENT

Some types of investment for agricultural de-velopment fit closely the usual definition of " in-vestment - e.g., the construction of large irriga-tion projects, of farm buildings, or of warehousesfor storing agricultural products. In other cases,governmental expenditures on, e.g., subsidies onagricultural requisites or the provision of the funds

The role of investment

150

of additional funds for investment, including cur-rent production expenses, and the method.s of nu-proving the technical level of cultivation througheducation, research, and extension services. Itmay be re-emphasized, however, that neither groupof measures can be fully elf( ctive in the absenceof the other.

for farm credit, do not fit so closely the usualdefinition of " investment. Many monetary ex-penditures that cultivators may make to increasetheir own production, e.g., for fertilizers or im-proved seeds, are more of the character of produc-tion costs. However, all such expenditures are like-ly to be an important part of any over-all effortto improve productivity and all require some mo-bilization of monetary resources. In the para-graphs that follow they are therefore all consid-ered as forms of " investment " for agriculturalexpansion.

As is well known, capital for investment isone of the least plentiful of resources in less-develop-ed countries since incomes are so low that only asmall margin can be spared for capital formation. 12The shortage of capital in these countries bearsparticularly heavily on the agricultural sector as itis usually the largest and is called upon, in oneway or another, to provide much of the capitalneeded to develop other sectors.

The transfer of funds from agriculture takesplace in many ways. In Japan, for instance, in-dustrialization was quite largely financed from landtaxes, which in the early years of industrializationyielded about 8o percent of the central govern-

" The ratio of gross domestic capital formation to grossdomestic product in many of the underdeveloped countriesseldom exceeds io percent. Net investments are still smaller,because a large proportion of the total gross investment isoffset by depreciation and replacement charges. Thus, inBurma (1953-56) these were estimated at about 30 percentof total gross fixed capital formation. In Japan (1953-57)the proportion was 35 percent; in India (1950-53) 40 percent;in the Philippines (1953-57) nearly 65 percent. For the LatinAmerican region as a whole, estimates for the period 1946-55reach an average depreciation figure of around 37 percent.Sources: United Nations, Economic survey of Asia and the ParEast, 1958. Special tables O and P, pages 175-179. UnitedNations, Economic survey for Latin America, 1955, Tables 8 and9, page 9.

ment's revenue, although a substantial share wasalso reinvested in apiculture for irrigation, floodcontrol, and land improvement and reclamation.More recently, Mainland China appears to havedeveloped a similar transfer of funds from agricul-ture by fiscal measures. 13 Another common meth-od is by export taxes on agricultural commo-dities and occasionally by the profits of state agen-cies engaged in agricultural exports, as in Argen-tina and Burrna. In Argentina, for example, theexport agency accumulated large funds during theperiod 1946-55, made up of the differences betweenthe prices paid to the farmers and those in worldmarkets. Only a small part of these funds wasreinvested in agriculture and the major share wasused to finance industrialization or to subsidizefood to urban consumers, which however con-tributed directly to the same end. Agriculturalprice policies devised to protect consumers byholding farin prices below their " natural levelsimilarly tend to operate as a means of transferringfunds from agriculture to the nonagriculturalsector.

Some institutional factors also contribute to thechanneling of funds from agriculture to other sec-tors of the economy. Relatively high rents onagricultural land, high rates of interest to money-lenders, and large distribution margins all tendto divert funds from agriculture, and sometimesdepress cultivators' incomes to levels which leavelittle margin for saving or investment. A roughestimate for India for 1950-51 places rent on landand interest on cultivators' debts at from onefourth to one third of the income originatingin agriculture, 14 most of which is probably notreinvested in apiculture. In the Egyptian Provinceof the United Arab Republic it has been estimatedthat the rent of agricultural land (before landreform) amounted to no less than so percent ofthe total value of the agricultural output, andnearly a fifth of total national income.15

Again, as pointed out earlier, instability of farmp1-ices and insecurity of land tenure in less-develop-ed countries combine to make agriculture a relatively

" United Nations/FAO, Economic Development andPlanning in Asia and the Far East: The Agricultural Sector,Economic Bulletin for Asia and the Far East. Bangkok, No-vember 1957.

United Nations/FAO, op. cit." M.A. Anis, A study of the national income of Egypt,

quoted by Alfred Bonné in Studies on economic development.London, 1957.

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unattractive field ofprivate investmen.t, usually withsmaller returns, a slower turnover, and greaterrisks than investment in industry or trade. Fur-ther, the inflationary conditions characteristic ofmany less-developed countries attract funds to theconstruction of urban buildings and to nonpro-ductive investment, such as the bidding up of theprices of land rather than land improvement.

While some net flow of funds out of agricultureis inevitable in less-developed countries in the pro-cess of economic g,rowth, it is equally importantthat sufficient investment fluids should be retain-ed in (or returned to) agriculture for a balanceddevelopment of the economy as a whole. Therelatively slow growth of agriculture in manyless-developed countries and the stresses which thisimbalance has set up in their economies suggeststrongly that this condition has not always been

Where an imbalance has developed., policies ofthe kind discussed earlier to create a more favor-able economic and social environment may domuch to correct the situation. Measures whichmay be taken for the inc-reased mobilization ofprivate funds for agricultural investment, for bet-ter facilities for agricultural credit, and for theoptinnun use of government resources are con-sidered below. For some schemes involving sub-stantial financial investment, especially where thisimplies expenditures of foreig,ii exchange, assist-ance fi-oin international financing institutions maysometimes be called upon. Much attention hasalso been given recently to ways in which agri-cultural surpluses in some of the developed coun-tries could be used for inc-reasing apicultural andother investment in less-d.eveloped countries.

'Private foreign capital has seld.orn been a majorsource of investment funds in the ag-riculture ofless-developed countries, though it has contribu-ted more largely to time infrastructure whichhas made agricultural development possible. Therole of private foreign capital was briefly reviewedin The State of Food and Agriculture 1953, and thesituation does not appear to have changed mate-rially since that time. It was pointed out thenthat its contribution was rather modest, ex-cept in a few sectors. Thus, at the end of 1951total United. States investment in foreign capitalwas $694 million. More than 8o percent was

16 FAO, Uses of agricultural suyluses to finance economic

development in under-developed countries. Rome, 1955.

invested in Latin America, mainly in sugar andfruit undertakings; about 45 percent was in Cu-ban sugar alone. This compared with a net in-vestment in domestic United States agriculture ofthe order of $1,5o0 million armually. The share ofagriculture in United Kingdom overseas privateinvestments cannot be separated precisely, but in1950 (the latest year for which data were thenavailable) share and loan capital of companiesregistered in the United Kingdom and Britishcompanies registered abroad included L77.8 mil-lion for rubber and 40.9 million for tea andcoffee as the only recognizably agricultural un-dertakings, though these figures are certairdy notComplete. The conclusion seems to be, however,that in general the less-developed countries, as inthe past, are likely to have to rely primarily ontheir own resources for agricultural investment.

MOBILIZATION OF PRIVATE FUNDS FOR INVESTMENT

IN AGRICULTURE

Despite the rather discouraging picture pre-sented above, private investment in agriculture inat least some of the less-d.eveloped countries is atpresent substantial. For example, it was tentativelyestimated that private investment in agriculture andvillage and small-scale industries in the secondfive-year plan for India would amount to Rs.3,000 million, compared with a planned publicinvestment of Rs. 10,540 million for agriculture,community development, irrigation and flood con-trol, and wi.th a total estimated private investmentof some Rs. 24,000 million. In the Philippines'five-year development program (1957-61) the totalestimate of private investment in ag-riculture was611 million pesos, as compared with 307 millionpesos for public investment in agriculture."

There seems little doubt, moreover, that in-creased private investment in agriculture would beforthcoming if measures for greater price stabilityand to improve marketing and land tenure systemsincreased the returns and reduced some of therisks. In such circumstances producers would belikely to increase their expenditures on, e.g., ferti-lizers, better seeds and livestock, insect and dis-ease control, though part also of any inc-rease infarm incomes would certainly be spent on badlyneeded foods and consumer goods or hoarded.

" United Nations/FAO, op. cit.

152

The tendency in less-developed countries tohoard gold, jewelry, or cash reflects in part thelack of banks or co-operative credit societies wheresavings can be safely deposited while remainingreadily accessible. If small savings could be mo-bilized by such means they could be used to aug-ment the supplies of institutional credit to smallfarmers or for other forms of investment. Theestablishment of savings banks in rural areas ap-pears to be one of the best ways to attract smallsavings, giving the depositor a sense both of se-curity and liquidity, while the payment of inter-est on deposits gives an additional incentive forsaving.

AGRICULTURAL CREDIT 18

In the majority of less-developed countries smallfarmers have little or no access to institutionalcredit, and can obtain private credit only fromrelatives or from merchants and moneylenders,often at usurious rates of interest. The sources offarm credit in a number of countries, as disclosedby recent surveys, are analyzed in Table IV-2,where the minor role of institutional credit inCeylon, India, Pakistan, and Thailand is in sharpcontrast to the situation in Turkey and Morocco.In Morocco, in particular, government institutionsand commercial banks appear to provide morethan four fifths of the total supply of farm credit.Lebanon, where the study covers only one district,appears to be in an intermediate position. Thesmall share of credit contributed in many coun-tries by public and co-operative institutions reflectspartly their lack of loan funds, partly the inabilityof many small farmers to provide land or othersecurity for loans, and partly the reluctance ofinstitutions to grant loans for current consump-tion needs.

In most less-developed countries, the interestrates charged by private moneylenders are ex-tremely high. In Cambodia, for instance, theinterest rates may range between 7 and. Do percentper month (80-120 percent per annum). In Indo-nesia the usual rates appear to be between So and1.00 percent per year. In India, as much as 70percent of the money borrowed froin private

18 Much of the material in this section has been obtainc:c1from United Nations/FAO, Credit problems qf small farmershi Asia and the Far East. Bangkok, 1957.

TABLE IV-2 - SOURCES OF AGRICULTURAL CREDIT (PERCENTAGES OF TOTAL BORROWINGS)

sources was in some arcas at annual rates of in-terest of 25 percent or more, while interest ratesexceeding 50 percent or more are not uncommonin many areas. 19 In the Philippines rates of in-terest paid by small tenant farmers may rangefiom 25 to 400 percent per annum. These ratesof interest reflect in part the lack of alternativesources of credit; they reflect also, however, theheavy risks and high cost of providing agriculturalcredit. The small size of the holdings, the greatdepend.ence of agriculture on weather, and theabsence in many less-developed countries of own-ership or occupancy rights in land all contributeto these difficulties. Thus, absence of legai proofof land ownership means that in many countriesthe majority of small producers can borrow onlyon their personal security. Recent investigationsin India showed that in some areas small cultivatorshad obtained over 70 percent of .their loans onthis basis. Even in areas where small farmers owntheir land, however, short-term loans are fre-quently obtained on personal security. Such loansoften carry an explicit or implied understandingthat the cultivator will sell his surplus produce tothe lender, who is often a merchant as well. Thisaspect was discussed in the section on marketing.

The difficulties of supplying credit on reason-able terms to large numbers of srnall farmers hasfrequently led, both in more and in less-developed

" All-India Rural Credit Survey, Vol. II, p. 173.

15 3

SOURCES: Ceylon: Department of Census and Statistics, Survey of rural indebtedness-Ceylon 1557. Colombo, 1959.India: Reserve Bank of lndia411-India rural credit survey, vol. II, p. 167. 'Bombay, 1954.Pakistan: The Board of Economic Inquiry, Punjab, Report on the need and supply of credit in the rural areas of the Punjab. Lahore, 1951.Thailand: Ministry of Agriculture, Thailand farm economic survey, 1953.Lebanon: Agenda, Working materials and proceedings of the Agricultural Credit Conference, held in Beirut, Lebanon, October 1953, sponsored by

the Ford Foundation and the Economic Research Institute. (South Baka'a district only, not representative of the whole country).Turkey: V. Webster Johnson and Edwin C. Johnson, Farm credit activities in selected countries with reference to credit programs for underdeveloped areas.Harvard, 1954.iV1orocco: Bulletin de staristiques et de documentation financière, No.nr, 1958.

' Includes fishing societies. - Included under " Government." - Unreported. - 'Included under " Others."

countries, to the establishment of special institutionsfor this purpose, rather than to reli.ance on com-mercial banks. At the present time action of thiskind is being taken in many countries to createor to augment the supply of agricultural c-reditat reasonable rates of interest, sometimes through

agencies, and sometimes through co-b013 era institutions. An interesting developmentin some countries is the provision of loans in kind.Thus, in Taiwan fertilizers are supplied on creditto cultivators by the " Food Bureau, while re-payment can be made in the form of rice. InChile the Agricultural Department of the StateBank- supplies fertilizers, seeds, pesticides, and otherrequisites on loan to farmers at low rates of inter-est. Under the 1956-60 development plan in theFederation of Malaya, government assistance forthe replanting of rubber 011 smallholdings is givenpartly in kind, i.e., by the supply of selected plant-ing materials, fertilizers, fencing, etc., and partlyin cash.

Hitherto, in spite of official encouragment, theco-operative movement has seldom liad any signifi-cant impact on the provision of agricultural creditin less-developed. countries. Thus, the All-IndiaRural Credit Survey noted that " the weakest linkof all, in a chain which is weak at almost all points,is the primary co-operative credit society. It sat-isfies none of the requisites of either good co-operation or sound. credit. Its failure to promotethrift and savings is followed at not too great

Ceylon 1957 India,1951/52

Pakistan(Punjab)

1951Thailand 1953

Lebanon(South Baka's)

1953Turkey 1952 Morocco 1957

Percentage

Government and government-own-ed institutions

2.6 3.3 3 0,2 11.5 50 47.5

Commercial banksCo-operatives

1.14.1

0.93.1 13 14.0 40.0

2.5 37.4

Landlords 8.0 1.5 17 2.0 3.7Agricultural moneylenders 24.9Professional moneylenders 15.5 44.8 1 27.3 43.1

47.5Traders and commission agents 11.5 5.5 3 6.3Relatives and friends 44.2 14.2 63 55.4 1.7Others (incl. unspecified sources). 13.0 1.8 1.1 8.8

a distance by its failure to provide in the villagea system of credit which is at once adequate,prompt and productive.

Some of the weakness of co-operatives in thisfield has been d.ue to the shortage of trained staffhaving the high standards of integrity necessary.Some has come from a certain rigidity in theirloan conditions: e.g., insistence on land ownershipas a criterion for credit worthiness. Recently,however, there has been a good deal of new think-ing in this direction. One reason has been therealization that, while the co-operative frameworkprovides the best means of placing agriculturalcredit on a sowid footing, in the early stages atleast govern.ments must take primary responsibilityfor the provision of funds, organization, and gen-eral supervision. A second is a greater realiza-tion of the close relationship between agriculturalc-redit and the marketing of agricultural produce,and of the need for an integrated approach tothese questions if the co-operative movement isto compete successfully with private moneylendersand traders. A third point is a greater appreciationthat judiciously supervised agricuttural credit canbe granted against the personal integrity and pro-ductive capa.cuy of the borrower as well as on thesecurity of iand, and indeed must be if institutionalc-redit is to be provided to the majority of smallcultivators, particularly tenants and sharecroppers.

In Japan, the well-established co-operative move-ment has, in the COLITSC of its evoiution, acquiredmost of the features referred to above. It hasadopted an integrated approach to credit and mar-keting, and its system of granting crop productionloans on the security of crops (rice, wheat, andbarley) meets in a substantial measure the short-term credit needs of farmers. However, the sit-uation is =pia in Japan, where most farmersnow own then land. In the Philippines, however,a new approach along these lines is being develop-ed by the Agricultural Credit and Co-operativeFinancing Administration. Similar trends are appa-rent in, e.g., India and Ceylon, in the sense thatfarm crecut is being provided inc-reasingiy byco-operatives, winch aiso market their members'proauce. Recent rtgutations in Iraq and the Uni-ted Arab Republic make it computsory for thebeneficiaries of iand reform to join co-operativesthrough winch they may receive the necessarycredit facilities.

The provision of credit does not of course initself ensure that the funds will be used for improv-

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ed production. Systems of supervised c-redit havetherefore been established in many countries, espe-cially in Latin America, and are operating withconsiderable success. Under these systems theprovision of loans is coupled with the planningof improved farm operations in co-operation withthe extension services and with marketing andother ancillary services. Emphasis in granting loansis placed on the prospective repayment capacityof the borrower as it results from the combina-tion of credit, extension, and other operations.Supervised credit, by its very nature, however, isa costly service financially and also in its require-ments of skilled and trained personnel. Its educa-tional aspects, however, are important. It mayindeed be questioned whether the educational costsshould be charged against the loan or whetherthey should be covered by special governmentallocations, as are other public ed.ucation and ex-tension services.

The technical and social supervision may beprovided more economically if supervised credit isorganized through the co-operative movement, orif there is already an adequate and efficient exten-sion service with which it can be linked. Becauseof its cost, supervised credit cannot entirely re-place normal credit operations. It is, however,well adapted to improving methods of cultivationin selected areas, and may be transferred to otherc-ritical areas when this has been achieved, leavingthe suppl.y of credit in the first area to be main-tained through less expensive channels.

PUBLIC INVESTMENT IN AGRICULTURE

The much more prominent part taken by publicinvestment in postwar economic development thanformerly is less of an innovation in agriculturethan in some other sectors of the economy. Be-cause it offered little attraction for private invest-ment, institutional farm c-redit has long been pro-vid.ed largely from public funds in many coun-tries. For the same reason, and because of theneed to deal comprehensively with large areas,big irrigation, drainage, and land reclamation proj-ects have traditionally fallen into the field of stateinvestment.

Some new developments may, however, benoted. One is the emphasis on " multipurposeprojects, " especially in combining the construc-tion of dams for irrigation with power projects,

transportation services, flood control, an.d the wholegamut of activities now included in " river basindevelopment. " Another is the use of public fundsto assist in small-scale projects which formerly wouldhave been left entirely to private enterprise, such asminor irrigation works, the construction of ware-houses, silos, etc. A third is the use of govern.-ment funds to provide production requisites andimproved planting material to farmers at low cost.The results of the inc-reased government expendi-tures since the war on agricultural education, ex-tension, and research are discussed in a later section.

In some countries the tendency, especially inthe initial stages of economic development, hasbeen to concentrate a large part of the publicinvestment in all sectors, in.clucling, agriculture, ona few large-scale projects. More than half of thepubli.c investment proposed in Pakistan's five-yearplan, for instance, is in power, irrigation, railways,and large-scale industry. Similarly, in the firstfive-year plan of India, roughly two thirds of newpublic investment was for multipurpose schemes. 20However, in the second Indian five-year plan theirrigation program underwent a change. While inthe first plan there were about nine schemes (includ-ing power projects), each costing Rs. 30 croresand over, in the second plan there is not a singlenew scheme in this category. The emphasishas shifted from multipurpose to single-purposeschemes and from major to medium-scale projects.This is expected to result in achievements approach-ing more closely the targets laid down. 21 A trendfrom major to minor irrigation projects has alsooccurred in Mexico, a country where provisionof additional irrigation facilities in the last twodecades h.as been remarkably rapid. Forty percentof the area brought under irrigation in the decade1946-55 reSulted from minor projects, whereasprior to 1946 around 95 percent of all irrigatedland had been served by large-scale projects.

Although large projects often offer scope forintroducing more advanced farming methods, theirconstruction alone will not ensure their efficientuse. For example, a peasant accustomed to dryfarming has to learn the techniques of wet farm-ing. Reductions in the cost of irrigation water,

" D.K. Rangnekar, Poverty and capital development in

India. Oxford, 1958.21 Studies in Indian agricultural economics, Chapter IV,

p. 067. Presented to the Tenth International Conference ofAgricultural Economists, Mysore, India, 1958.

155

or even its free supply, are sometimes necessaryin the initial stages to induce farmers to take fulladvantage of it, e.g., by raising a second crop.Moreover, additional costs to farmers are involvedfor, e.g., fertilizers, soil preparation, implements,and farm buildings if the full potential of theproject is to be realized. Improved transportationand marketing facilities will often be requiredto handle the increased production. The initialinvestment for construction is thus seldom thetotal cost of a large-scale irrigation project.

This is not the place to di.scuss the relativemerits of large- and smaller-scale development proj-ects. Both certainly have a part to play, and insome circumstances large-scale reclamation orirrigation projects may represent the best, or in-deed the only, solution. Nonetheless, large-scaledevelopment projects involving substantial capitalinvestment are obviously a serious commitmentfor the resources of less-developed countries. Theysometimes have to be abandoned temporarily attimes of financial string-ency, while the inevita-ble delay, even in favorable circumstances, beforethere is any return in increased production meansthat for a long time they tend to increase inflation-ary pressures. It appears also that the attractive-ness of spectacular large-scale projects sometimesleads to ami inadequate allocation of funds for lessdramatic tasks, such as the construction, main-tenance, or replacement of smaller works.

Public investinent funds are often used fruit-fully as a method of stimulating private invest-ment which might not otherwise be made, e.g.,by assisting farmers financially in minor irrigationworks such as tanks and wells. Several Asiancountries have adopted this practice. In India, forexample, minor irrigation works are eligible fora subsidy of 25 to 50 percent of the total cost.In Pakistan subsidies on the installation of wellsare given in the form of 50 percent grant andso percent loan. In South Korea, too, a subsidyamounting to one half of the cost of irrigationworks is given. The same method is used insome Asian countries to encourage land develop-ment. In Burma, acreage expansion subsidies weregiven for increases of area under paddy up to1953/54, and such subsidies are still in effect forgroundnuts and jute. Similar subsidies are givenin Ceylon for bringing new land under paddy andsome minor crops.

The subsidized distribution of agricultural req-uisites, such as fertilizers, improved plantino. ma-t,

terial, etc., found in many less-developed coun-tries is also in essence a means of using publicflulds to encourage additional private investmentor expenditure to improve the level of cultivationand to increase output. To cite only a few exam-ples, in both the Federation of Malaya and Pak-istan there is a so percent subsidy on the priceof fertilizers; in Ceylon fertilizers for paddy aredistributed at two thirds of their cost price; inIndia, ammonium sulphate, made in governmentfactories, i.s supplied on a " no profit no lossbasis, while a subsidy of 25 percent is given forsuperphosphate. The response of farmers to thesubsidization of fertilizers has been considerable, asalso in Norway, the United Kingdom, and othermore developed countries, where the same systemis followed. The present demand for fertilizersappears indeed to exceed the supply in a numberof countries, including India and. South Korea.

Improved planting material is also subsidizedin many countries. For example, in India thepurchase and distribution of improved seeds areeligible for a subsidy of 2 rupees per maund (about37 kg.). In Ceylon improved coconut seedlingsare subsidized to the extent of nearly half the totalcost. As planting material generally accounts foronly a small proportion of the total cost of produc-tion, the main benefit from such subsidies accruesprimarily from increased productivity. The great-er use of improved varieties of seed is one of theeffective ways of increasing crop yields, and large-scale seed farms to multiply suitable varieties arebeing established in India and Pakistan. Experiencewith, e.g., hybrid maize in Pakistan and manyLatin American countries, and with improved typesof sugar cane in Cuba, Puerto Rico, Indonesia,and other countries indicates that farmers in less-developed countries are quick to adopt new plant-ing material once they are convinced that it leadsto substantially higher yields.

Similar methods are being used to encourageafforestation. Many governments, for example,provide forest seeds or seedlings, free or on nomi-nal payment, and technical advice to private ownerswho are willing to plant new forests, windbreaks,or shelter-belts.

NONFINANCIAL INVESTMENT

While fmancial resources for agricultural andother development are almost always scarce in

156

less-developed countries, manpower is often abun-dant. This applies particularly to the denselypopulated countries of Asia. Much attention hastherefore been given in recent years to findingways of utilizing these reserves of labor for morerapid economic progress.

It is not easy to estimate the reserve of manpowerlatent in the permanent or seasonal unemploymentand underemployment in .the rural areas of theless-developed countries, though it is certainlyvery large. One of the few authoritative estimatesis to be found in the Indian second five-year plan:

... with present techniques of agriculture being continued,if cultivating units were to approach what might be describedas family holdings affording possibility of fairly full-time workin agriculture for a family of average size, agricultural produc-tion could be maintained with about 65 to 75 percent of thenumber of workers now engaged in it.

Similar assumptions of the possibilities of makingbetter use of existing agricultural manpower,though as a rule without any quantitative estimate,are made in the plans or basic reports on economicdevelopment of Pakistan, Burma, South Korea,South Viet-Nam, and the Philippines. In MainlandChina, where the most spectacular efforts to datehave been made for the fuller utilization of ruralmanpower through the communes," first estab-lished on a large scale in 1958, it has been claimedthat the average number of days per year spentworking in the fields as recently as 1955 was 125,but that in many communes it liad now risen toover 300 days.22 The development of these com-munes, which engage in rural industries as well asagriculture, is discussed briefly in Chapter II, butit is manifestly too early to form any valid judgmentof their success.

Some of the qualifications which apply to theconcept of surplus manpower were noted in Chap-ter M. By no means all manpower in the agricul-ture of less-developed countries is surplus in thesense that there would be no fall in production in.the short run if labor could be moved to otheroccupations. At some times of the year, especiallyat harvest, the entire labor resources of a ruralcommunity may be fully stretched. In these cir-cumstances a condition for reducing the labor forcein agriculture (assuming that it could be productivelyabsorbed elsewhere) might be the provision of im-

" Rene Dumont, L'extraordinaire développementchinoise, Le Monde, 12 octobre 5955.

proved cultivating or harvesting equipment, notnecessarily mechanized. Alternatively, the onlyway of turning to more productive use many daysnow idle or underutilized may be the organiza-tion of part-time occupations in rural areas.

The simplest way in which underemployedrural labor could be used profitably would be ofcourse in agriculture itself. In most less-developedcountries there is much scope for work by thefarmer and his family, with little cash outlay, inthe improvement of his holding, e.g., by the level-ing of fields, terracing against erosion, the construc-tion of builds, fences, animal shelters, barns, andso forth. Measures taken by governments to createa favorable economic climate for agriculturalexpansion of the kind discussed earlier, e.g., bymeasures to reduce price fluctuations, to improvemarketing facilities, and to provide suitable condi-tions of land tenure, might well act as a triggermechanism to encourage much work of this kindby putting the farmer into a position to profitfi-om them. Work to improve the cultivator's ownholding could be further stimulated by appropriateadvice fi-om extension workers and farmers' clubs,who could often suggest better methods of carryingthem out than those in common use in the locality.In some countries efforts are being made to stimu-late such activities further, e.g., by some govern-ment contribution in the form of grants, credits,or materials. In Taiwan, for example, the govern-ment provides the cement to cultivators who under-take to construct drying grounds for their ownfarms and furnishes pumps on a part-credit part-,rant basis to those who dig wells on their ownproperty according to approved specifications.

A second way of utilizing rural underemployedlabor in agricultural and ancillary development, towhich inc-reasing attention is being devoted, lies inthe undertaking on a voluntary, communal, orcollective basis of small projects such as the contruc-tion or improvement of feeder roads, small waterreservoirs, small irrigation canals to link with themain canals, wells, etc." As is well known, thismethod of capital formation is an important fea-ture of the community development programs

" The creation of community forests where there are none,or even the abandoimaent of parts of existing state forestsunder sufficient control, to nearby communities, is also ofgreat interest. It provides employment for plantation, mainten-ance, and exploitation, a possible source of raw material forrural industries, and a source of capital which can be drawnupon, when necessary, for community investments.

157

which have been established in many of the less-developed countries, especially in Asia and. theFar East where there are the largest reserves ofmanpower. Ceylon, India, Pakistan, and the Phil-ippines all have ministries or departments in chargeof extensive community development programs,and. other Asian countries are considering theirintroduction.

The essence of community development is thatself-help village groups mobilize their natural andhuman resources " in efforts to improve their levelof living, with as much reliance as possible ontheir own initiative," and that governments willprovide financial aid and technical services "inways which encourage self-help and mutual help."24The rapid evolution of this movement can be il-lustrated from the progress that has been made inIndia, where special emphasis has been placed onthis approach. The Indian Community Develop-ment Program was inaugurated in 1952 with 55community projects, each project area comprisingabout 300 villages. By the end of the first five-year plan, 553 Community Development blockshad been created, bringing 157,000 villages, ornearly one out of every three villages, imito theorbit of the program. The second five-year planproposed to bring every village in India und.er thisscheme, though this target has since had to besomewhat modified.

Activities undertaken by Community Develop-ment projects in India have been classified into thefollowing major categories:

Constructional programs, such as the buildingof roads, culverts, drains, schools, communitycenters, dispensaries, and drinking water sources.

Irrigation programs, including wells, pumpingsets, tube wells and tanks.

Other agricultural programs, such as landreclamation, soil conservation, consolidation ofholdings, use of improved seed.s, manures andfertilizers, and pesticides, improved methods ofcultivation and improved tools.

Institutional and other programs, including theestablishment of youth clubs, women's organi-zations, community centers, co-operative so-

" United Nations Twentieth Report of the AdministrativeCommittee to the Economic and Social Council, El2931, AnnexIII, p. 2, October 1956.

cieties, distribution stores, adult literacy centers,primary schools, cottage industries, etc.

It is difficult to evaluate how much more effec-tively than in the past the agricultural labor forcehas been utilized so far through the Indian Commu-nity Development Program. Over-all data on theProgram's achievements appear not to have beenpublished. In any case it -would not be easy to sepa-rate the achievements of Community Developmentfrom those brought about by other agencies. Thefrankly voiced conclusions of the two latest Com-munity Development Evaluation Reports of theIndian Go-vernment, based on sample surveys, are,however, of great interest. It was stated. that" the objective of inducing public participation andpositive support has been comparatively success-ful in the case of constructional programs, but notin the case of institutional programs," designed tobring different social g-roups closer together."It was further considered that " the objectiveof stimulating continuing and positive effortsbased on self-help for promoting economic andsocial development has been comparatively unsuc-cessful. Too niuch dependence on governmentinitiative and assistance is still being exhibited bythe vast majority of the rural population affectedby the prog,rram." 26 The interest in participationshown by different occupational and social groupsof villagers appears to have varied according to thetype of project. The lower income groups partic-ipated most willingly in projects which theyregarded as being of immediate benefit to them,such as well-digging, but less in projects such asdrainage and in road-building, the benefit of whichis more obvious to owners of land or of bullocksand car ts.27

A good many observers have felt that a majordifficulty hampering the program has been theinadequacy of the workers at the village level,both in numbers and in quality and training.28This would not be unexpected in the early stages

" Government of India, Planning Commission, The fourthevaluation report on the working qf Community Projects and NESblocks, New Delhi, 1957, p. 19; The fifth evaluation report onthe svorking gf Community Development Prnjects..., Summary.Ncw Delhi, 1958, p. 30.

" Fourth evaluation report, p. 19." Government of India, Committee on Plan Projects.

Report of the lean; for the study of community projects and nation-al extension service. New Delhi, 1957, Vol. IL

" Albert Mayer and Associates, Pilot Project India. Berke-ley and Los Angeles, 1958, p. 320.

158

of so vast a scheme. The Indian Government is inany case making strenuous efforts to provide muchlarger numbers of fully trained personnel to provideleadership to the village communities.

Rather full consideration has been given toCommunity Development in India, partly becauseof the great attention given to such programs inthat country, and partly because of the unusualobjectivity with which the Indian Government hasendeavored to assess their results. But it would beunfortunate if the impression were given thatconununity development was not being pressedin the other countries of Asia or (though sometimesunder other names) in countries in other continents.Similar programs are under way in Mexico, PuertoRico, British Guiana, Ghana, and Tanganyika,to cite only a few countries outside Asia.

In Ghana, for example, the Department ofSocial Welfare and Community Developmentattached to the Ministry of Labor and Co-opera-tives, has been carrying out for some years intensivework in village projects, mass literacy, the im-provement of WOMCII'S working conditions, andagricultural extension campaigns. For villageprojects the Department provides technical adviceand plans, tools and machines. Assistance hasalso been provided by institutions with fundsavailable for rural development, such as theCocoa Marketing Board. The village peopleprovide unskilled labor and sometimes fundsfrom voluntary contributions of the villagersthemselves. In the five-year period 1953-57 nearly5,000 separate village projects were completed,including latrines, street drains, water supplies,feeder roads, schools, clinics, the planting of treesto provide shade and avoid erosion, and so forth.29

Again, in Puerto Rico, the Social ProgramsAdministration of the Ministry of Agriculture ad-ministers most of the programs of the Land. ReformPolicy, instituted more than 25 years ago, alongthe general lines of community d.evelopment.About 200 communities have been established inwhich are located nearly 25,000 smallholders.The government provides the land free of cost;lays out the roads and streets, but does not gradethem; sets aside a definite area for a communitycenter, but leaves it to the settlers to provide theirown homes, to develop th-j.r own plots of land and,as a community, to develop streets, roads, schools,

" P. du Sautoy, Community development in Ghana. Ox-ford, 1958.

churches, co-operatives, etc. The Social ProgramsAdministration, however, gives technical assist-ance to help and guide these activities, some materialassistance such as machinery for road-building andwell-drilling, and some financial assistance in theform of credit. Technically-aided self-help groupswere constructing latrines at a cost of U.S.$ iseach, which had previously cost the government$ Go, and building cement-block houses at acost of $ 300 as against $ 1,000 paid by the gov-ernment when built under contract. Of projectsvalued at approximately U.S.$ 250,000, nearlyGo percent was provided by the settlers themselves,about one third of it in money and two thirds inwork. The remainder was provided by the govern-ment of the Island and units of local govern-ment.a°

RURAL INDUSTRIES AND HANDICRAFTS

Apart from the fuller use of underemployedrural labor in agriculture itself, or in related com-munity projects, the development of rural indus-tries also offers scope for more productive workwithout migration to towns. Such work is oftenundertaken on a part-time basis to augment earningsin agriculture, so that the farm labor force is notreduced at harvest time or oth.er seasonal laborpeaks. Many rural industries imply fairly substan-tial financial investment and appear sometimes tobe more highly capitalized than lasge-scale indus-tries in relation to their output and to the employ-ment they provide.n

Several types of industry tend to grow up inrural areas in a wid.e range of countries. Some areconcerned with the first processing of farm andforest products, e.g., the drying or canning offruit and vegetables, the crushing of oilseeds andsugar cane, dairies, tanneries, saw mills, etc. Some-what more complex are the traditional forms ofhome spinning and weaving of yarn and textiles,utilizing locally-produced fibers. The developmentof the carpet industry in Iran and Baluchistan is a

" United Nations, Report of the Mission on Rural CommunityOrganization and Development in the Caribbean arca and Mexico,iVlarch 1953.

" For a fuller discussion, see International Labour Office,Labour and social problems of small-scale and handicraft industriesin ASiail countries. Geneva, 1957 and V.V. Bhatt, Capitaloutput ratios of certain industries: A comparative study ofcertain countries, The Review of Economics and Statistics.

159

good example of the fuller utilization of localfibers, in this case wool. Another type is the manu-facture and maintenance of simple tools and agri-cultural equipment, and (closely related) the pro-duction of farm requisites, e.g., bricks, tiles, andpottery from local materials. All these types ofindustry tend in the course of economic develop-ment to enlarge in scale, and often to develop imitotypical urban manufactures. Yet another type,often related from the outset with larger-scaleoperations, is the out-contracting of work to bedone in the home for subsequent assembly infactories. This list is by no means exhaustive. Theproximity of mineral deposits or of hydro-electricpow'er, for example, gives rise to various forms oflarge - and small-scale rural industry. Low laborcosts in themselves are an attraction to the establish-ment of industries in some densely populated ruralarcas.

Industries based on the processing of agricul-tural products have a dual significance in. that,in addition to the employment which they provide,they often lead also to an increased demand forcertain farm products and so act as a stimulus tofarm prod.uction. In many Latin American coun-tries, for example, milk prod.uction has inc-reasedremarkably after the establishment of milk pro-cessing plants because of the regular market theseoffer to milk producers. In other cases such pro-cessing industries are established for export cropsto make possible the export in a more finishedform. This has been the case notably for oilseedsancl rubber. Again in many tropical countriesof Africa and. Latin America the d.evelopment ofcotton growing has been followed by the estab-lishment of ginneries in rural areas to supply boththe export trade and the new mills being- establish-ed in urban areas.

It is a short step from local ginneries and tan-neries to the establishment of textile plants andfactories prod.ucing footwear and other leathergoods. However, at this stage the problemii

arises of whether it is economic to establish suchsmall-scale industries, or whether it is better toencourage larger-scale units cen.trally situated intowns. The answer may hinge on the attitudetoward employment and the generai developmentobjectives of the country concerned.

For example, the Indian second five-year planaccepts the absorption of labor as ami objectivein itself and considers that attention should beconcentrated. " on the mobilization of effort rath-

er than on the gains and returns arising there-from. Consequently, quite substantial finan-cial resources llave been devoted to the promotionof rural small-scale industries, especially textiles,channeled in part through the Community De-velopment Program; to aid them certain marketingrestrictions and taxes have been imposed on com-peting large-scale urban industries. A Small In-dustries Corporation was set up in 1955 to establishpilot projects, secure orders and provide creditfacilities and instruction in production techniques.In the case of khadi (homespun and woven tex-tiles), large government orders llave been placedwith small industry, e.g., for uniforms, and subsi-dies on production and rebates on sales are givenfrom the proceeds of special excise taxes levied onthe production of cotton mills. At the same time,orcranized efforts are being made to reduce the costdisparity between the khadi industry and thecotton mills by helping the rural families to obtainimproved spinning wheels and, wherever possible,power looms.

A similar approach is followed in some otherAsian countries, e.g., Cambodia, Ceylon, and Pak-istan. In order to assist any enterprise which ei-ther employs less than 20 persons or uses no pow-er, the Pakistan Government has set up theSrnall Industries Corporation, which began pro-viding financial and administrative aid in 1956.Training and development centers for the hand-

The greatly increased agricultural productionwhich could be achieved in economically less-developed countries through improved methodsof farming are likely to be realized only as a resultof research, often of a simple type, to establishthe most suitable methods for each type of en-vironment; of educational, including extension,services to disseminate this knowledge to farmers;and finally of its effective application by millionsof small producers. This last condition impliesnot only the creation of an economic and socialenvironment which will provide farmers withthe incentives and means to improve production;it implies also a rural population willing to absorband put into practice new ideas, skills, and tech-niques, and to adjust itself to a way of life whichin time may depart widely from the accustomed

160

loom industry and for sericulture, as well as a num-ber of marketing schemes for rural industrialproducts, llave been set up in both parts of thecountry.

The type of small undertakings manufactur-ing accessories or acting as subcontractors to largefirms may und.er certain circumstances flourish inrural areas. The highly-d.eveloped watch and pre-cision instrument ind.ustry in Switzerland startedin this way, with certain parts being manufacturedin small family or cottage industries by ruralworkers in their off-season, for assembly in largerurban plants. Similarly in Japan the productionof special types of paper, toys, specialized weav-ing, cutlery, and even engineering products is

undertaken in small establishments in the Japanesecoimtryside, in the vicinity of the larger " pa-rent " firms located in towns. In India's plans,particular stages in the manufacture of bicycle andsewing machine parts, electrical goods, cutlery,pottery, and agricultural implements have beenallocated to small-scale production. Its location,however, is at present mainly urban or semi-urban. With increasing electrification of villagesin India as a long-term aim., a pattern of industrialunits would converge on their natural industrialand urban center and form a unit, or, in the wordsof the Karve Committee Report, " a pyramidof industry broad-based on a progTessive ruraleconomy. " 32

pattern. Many of the presen.tly accepted conceptsof production, distribution, and consumption of(roods and services llave arisen from the slowaccumulation of experience and. tradition. Theyhave become part of a cultural heritage, embody-ing many values, attitudes, sentiments, and evensuperstitions which are so deeply rooted that theycan be changed only slowly and with difficulty.

To be effective, therefore, agricultural educationmust take full account of the social and culturalbackground. Improvements of a kind which canbe incorporated into the existing patterns of liv-

" India, Planning Commission. Report of the village andsmall scale industry committee (Karve Committee). New Delhi,1955. The first five year plan, 1952, Ch. XXV, para. IS.The second five year plan, 1956.

The role of education, extension, and research

ing are of particular value in that they are moreeasily accepted. This approach is especially rel-evant for subsistence farmers whose very existencehas been based on strict adherence to traditionalpractices and who are, therefore, reluctant to takechances by experimenting with new approaches.Radical changes are certainly necessary, however,i.f farmers in less-developed countries are to par-ticipate in and benefit from agricultural develop-ment, but with care these may be carried throughwithout upsetting the rhythm and balance oflife in ways which -would hinder the adoption ofbetter methods of farming and, ways of living.

Agricultural education., including extension,will be the more effective to the extent that it isbacked by general education tending to widenthe Eirmer's horizon arici make him more recep-tive to new ideas. Unfortunately, as shown inChapter Ill, il.literacy is usually high in the ruralareas of less-developed countries, where educa-tional facilities are even less adequate than in towns.Although it is much easier to deal with a literatepopulation, illiteracy does not preclude the teach-ing of better farming methods. In such circum-stances, however, educational and extension ser-vices will be most meaningful if they are directedtoward the immedia.te needs of cultivators, andtoward such wider issues as are of direct concernto them, their families, and their communities,e cr.b5 the conservation of soil or woodland., thecombatting of floods and droughts, the controlof pests and diseases, human and animal nutrition.

In. many less-developed countries, therefore,an immense task of education has to be carriedthrough with very slender resources if effectivearrricultural services are to be established. Incountries where illiteracy is rife, a first essentialis likely to be the training of the field and villageworkers who will be in direct contact with thefarmers. Necessarily, the training of these work-ers may have to be of a relatively simple charac-ter, at least in the early stages. More advancedagricultural training facilities will also be necessaryfor the higher levels of the extension service,and for the staffing of training and research centers.

EDUCATION THROUGH EXTENSION SERVICES

Extension or farm advisory work is an infor-mal and highly functional type of ed.ucation for thefarmer and his family, carried out primarily on

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the farm itself and in the home. Its aim is toteach improved methods of production and mar-keting leading to higher farm incomes and alsoways of establishing a better home and commu-nity life. While it may be advisable for practicalpurposes to concentrate on a few things at a time,an important underlying objective will also beto make farmers more receptive to new ideas sothat they seek on their own initiative ways ofimproving their farm operations.

The organization of extension services natu-rally varies a good deal from country to country.Of particular interest is the comprehensive servicein Japan, as the conditions of dense rural popula-tion and small farms resemble those obtaining inmany other countries in Asia and in some less-developed areas elsewhere.

General supervision of the service is exercisedthrough the Extension Division of the JapaneseMinistry of Agriculture and Forestry. 33 Eachprefecture has an extension office staffed with bothsubject matter specialists and extension advisers,while each prefecture is divi.ded into sub-areasof varying size. An average area contains 2.4towns or villages and about 4,000 farms, and 7to 8 field extension advisers are stationed in thearea extension office.

All subject matter specialists are stationed atprefectural government headquarters or at pre-fectural agricultural experiment stations. The lat-ter arrangement is especially suitable for main-taining close contact between the experiment sta-tions and the field extension advisers. In 1958,there were 579 subject matter specialists in variousfields of agriculture and, in addition, 92 in homeeconomics. Most of the agricultural specialistsdealt with rice production, animal husbandry, andfarm management, but some were concerned withvegetables and potatoes, soils and fertilizers, plantdiseases and pests. In all, 23 categories of subjectmatter were covered.

Field extension advisers numbered about 11,000in 1958. About four fifths were junior college orhigh school gTaduates, and many had receivedtraining at thc prefectural extension stations. Theseadvisers give on-the-spot assistance to groupssuch as farmers' settlements or agricultural studyclubs, as well as to individual farmers, though the

For a fuller discussion sec: Ministry of Agriculture an dForestry, Agricultural extension work in Jipan, Tokyo, [957;and Agricultural extension in Japan, 1958.

FIGURE IV-2. JAPAN: DEVELOPMENT OP IMPROVED CULTURAL PRACTICES AND THE USE OF MECHANIZED IMPLEMENTS

1 000 ha. Thousands

14_

12

10

700 -

600 -

500 - 496

400 -

300 -

200 -

100

4_9

188

AREA OF IMPROVED 12.3NURSERY BEDS

57

5.55.9

8.

9.9

AREA ON WHICH HORMONE

WEED KILLERS ARE USED

288

397

426

625

15.8

-7 '1 7 1 1

1950 '51 '52 '53 '54 '55 '56 '57

former method is preferred as it makes better useof the staff available.

The extension methods used include roundtable talks, training courses, field trips to progres-sive farms, competitions, agricultural fairs, etc.About so,000 demonstration plots are set up eachyear throughout the country, including some 4,000experimental fields in which several methods arecompared side by side. As in most countries, themain difficulties of extension work spring fi-om thegreat variety of natural conditions, from tradi-tionalism, and from the great variation of abilityfrom farmer to farmer. In each extension officethe ag,ricultural improvement extension programis established annually, based on the extension ad-visers' assessment of the main local problems in

2 000

1 800 -

1 600 -

1 400 -

1 200 -

1 000 -

800

162

NUMBER OF POWER

CULTIvATORS IN USE

9.6

18.4

35.0

1 I71947 '49 '51 '53 '55 '56

NUMBER OF POWER HULLERSIN USE, BY YEARS

76.3

115,0

1917 '49 '51 '53 '55 '56

SOURCE: Agricultural Extension Work in Japan, Extension Division, Development Bureau, Ministry of Agriculture and Forestry, Oct. 1957.

each arca. It has been found that it is necessaryto repeat certain advice each year at the appropriateseason, to which about half of the adviser's timein personal contacts with formers is devoted.Other kinds of work include seed collection,agricultural vil.lage establishment work, agricul-tural municipal commissions, co-operative asso-ciations, research and survey's, etc.

Because farm efficiency is influenced by manyfactors as well as by extension advice, it is difficultto evaluate the results of extension work alone.However, the rapid increase in the use of improv-ed methods in postwar Japan is undoubtedly duein large measure to extension work. A few spe-cific examples are shown in Figure IV-2.

Although it is easier to deal with the largely

1950 '51 '52

I

'53 '54 '55 '56 '57

110

100

90

80

70 --

60 -

50 -

40

30

20

7.710

literate agricultural population found in Japan,wic-lespread illiteracy does not preclude effectiveextension work, though for best results the meth-ods used must be adapted accordingly. In. somecountries, e. g., India and Pakistan, broad commu-nity development programs are important in pro-vidino.b informal education to farm. fainilies. Im-provement in levels of living of the rural popula-tion is believed possible only if the probleins ofilliteracy, poor health, low production in agric-ulture, etc., are attacked simultaneously. Suchprograms focus on helping the village communityas a whole, including the stimulation of local lead-ership and initiative to cope with the community'sproblems. Since agriculture is the main economicbasis for better home and community life, agric-ultural extension activities are prominent in com-munity development programs. Often, simple in-struction in all of these problems is given througha single village worker who has received relative-ly simple training in special schools set up forthe purpose. Where the general level of educa-tion of farmers is low and trained personnel isscarce, the community develop MCllt approachenables a few trained agriculturalists and othertechnicians, utilizing the services of multipurposevillage level workers, to spread their influence toa much greater number of farmers than woul.dbe possible by direct contact.

It is a truism that extension work will r.ot makeits full impact unless the extension worker winsand retains the confidence of farmers. If he isto accomplish this, he needs training adaptedto the conditions in which he will work. Bestresults wil.1 be obtained if he takes fully into accountexisting agricultural, economic, social, and cul-tural conditions in the community in which heworks, and understands the farmers' daily problems.In this way he will be more readily accepted intheir society. This will be easier if he himselfhas a rural background. When, as in manycountries, extension workers are largely recruitedfrom urban areas where educational facilities arebetter, they often find it hard to mix easilythe rural community and tend to spend much oftheir time in their offices, with occasional visitsto the holdings of larger farmers. Lack of directand regular contact with farmers, owing to in-sufficient extension personnel as well as to differ-ences of outlook or deficiencies of training, is

often a major weakness of the extension servicesin many less-developed countries, and can be made

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worse if the extension worker lacks transportfacilities. It is, however, becoming more commonto provide means of transport to extension work-ers, e.g., bicycles as in Japan, motorcycles as inthe Egyptian Province of the United Arab Repub-lic, or even horses.

The general scarcity of trained personnel hasalso led many less-developed countries to includeanion, die duties of their limited field staffs suchthings as regulatory work, production and distri-bution of seed, distribution of fertilizer, collectionof statistics, the operation of credit schemes and,in some cases, even the collection of taxes. Manyof these direct services are of importance. Forexample, it is of little use to persuade farmers touse improved seed, fertilizers, etc. if supplies arenot available. However, to the extent that ex-tension workers devote their time to such activ-ities, their time for educational work with farm-ers is reduced. Furthermore, some of theseactivities, e.g., tax collection and regulatory work,are incompatible with the maintenance of confi-dence between extension workers and farmers,and are detrimental to the main objective of ex-tension work. Recognizing this problem, a num-ber of countries, c. g., Afghanistan, have recentlytaken steps to separate the educational and non-educational activities of their field staffs, devotingthe extension services solely to ed.ucation.

In countries where the extension service is ofrecent origin, inexperienced, and understaffed, diffi-culties have arisen in making an appreciable impactupon agricultural producers unless activities areconcentrated in a limited number of areas whichcan be adequately served, as opposed to spreadingthe available extension force thinly over the wholecountry.

The way in which an extension service is or-ganized and administered naturally has much bear-ing on its effectiveness. Some countries haveestablished separate extension services in differentsubject-matter fields, e.g., soil conservation, cropproduction, and livestock. Apart from requiringadditional expenditure and technical staffing incomparison with a single comprehensive exten-sion service, this arrangement has resulted in unco-ordinated and sometimes contradictory advice beinggiven to farmers by officials representing differenttechnical departments, and has hampered the de-velopment of a close personal relationship betweenthe farmer and the local extension worker. Ifthe farmer is accustomed to seeing one officer in

the community, this officer rnay ultimately gainhis confidence. But if there are many officers,the farmer may become confused and reluctantto take any of them into his confidence. Anothermajor problem in many countries is overstaffingwith administrators and co-ordinators, thus re-.

ducing the percentage of extension service personnelhaving direct contact with agricultural prod.ucers.It is also likely to increase the amount of routineadministrative work to be undertaken by the ex-tension workers operating at the field level, andmay add to the complications of bureaucraticcontrol and interference in technical activities.

Finally, special reference should be made tothe importance of home economics as a branchof extension work. The fari family is an econom-ic and social unit, the wife not only managingthe home and bearing and rearing children, butoften contributing to the agricultural work in wayswhich may be critical to its success. She can betaught to make better use of available resources,including foodstuffs. The diet of many farm familiesin less-developed countries is not only inadequatein quantity but is also badly balanced nutritionally.

Home economics extension work, and perhapssome provision of improved production requisites,can encourage subsistence cultivators to produceadditional and more varied foodstuffs for their ownfamilies. This may involve the cultivation ofnew crops as well as a knowledge of how foodshould be prepared in order to safeguard its nu-tritional value, how to preserve it, and what isrequired in the diets of members of the family.The farm wife can also be helped to run her homeefficiently and with the best equipment available,to spend wisely, feed and market her poultry,and perhaps combine with her neighbors in thepurchase of articles such as a home canning ma-chine or oil-press. Although such steps wouldnot generally result in any large increase in mon-etary incomes, they could nevertheless bring aboutsignificant and much needed improvements infood consumption levels and general well-being.

In view of the large number of women workingon Emily farms and the heavy work they do inthe home and on the land, practical measures needto be taken to lighten their labor and make itmore productive. Improvement of water and fuelsupplies, introduction of more suitable tools, andimproved methods of carrying heavy loads aremeans to this end. and will also contribute to moreefficient farm operation.

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AGRICULTURAL EDUCATION

A shortage of .trained technical personnel ofall levels, e.g., for extension work, technical sup-port for extension workers, administration, re-search, teaching, etc., is characteristic of the less-developed countries and a limiting factor in mostprograms for agricultural improvement. There isusually a scarcity of training facilities and teachers,in part because the demand for specialized agri-culturalists has been small in these countries untilrecently. The generally rather scanty or non-existent education of many farmers in these coun-tries also hampers efforts to disseminate even simpletechnical information.

Building up an educational system, both gen-eral and agricultural, and the training of largenumbers of personnel needed at different levelsare obviously a broad and long-range task, mostof which is beyond the scope of this chapter. Itseems appropriate, therefore, to mention only afew pertinent points of more immediate interest.

"While extension services for farmers are animportant first step in spreading the use of im-proved agricultural methods and practices and instimulating a more receptive attitude toward newideas on the part of rural communities, such ac-tivities can obviously be facilitated by a systemof general and agricultural education for trainingfuture generations of farmers and making themmore ready to accept new techniques on a ration-al basis rather than in the light of traditionalbeliefs. The reduction of il.literacy would in itselfprovide new chaimels for the dissemination ofknowledge of improved agricultural practices. Fur-thermore, as elementary schools for more generaleducation are established in rural areas, simpleinstruction in improved methods of agriculture canbe included in the courses. Several countries arealso making provision for informal training afterchildren have left school through rural youthorganizations. This training can be a valuablesupplement to organized primary education.

As development proceeds, the establishment ofagricultural secondary shools for rural youth maybe envisaged, which would make available trainedtechnicians at the intermediate level with a ruralbackground for employment in government ser-vices to agriculture, as well as producing futurefarmers capable of utilizing more complex produc-tion techniques and methods of farm management.Facilities for training of a more highly-specialized

natm-e in colleges and universities are not yetavailable in some countries, and for the time beingthey must rely on foreign institutions for trainingthe more highly-qualified teachers, research work-ers, etc. This, too, is a handicap which is likelyto be overcome as economic development getsunder way.

Even in countries where higher educationalfacilities exist for advanced training in agriculture,difficulties sometimes arise in attracting studentsto undertake agricultural studies at the collegelevel. This is in many cases largely due to thelow social standing of agriculture and to the inade-quate housing for and salaries paid to personnel ofextension and other services to agriculture. At-tention to these factors is often needed if improveded.ucational facilities for rural communities are toplay a fully effective role. Timing is also impor-tant. A number of years must elapse before re-search or ad.vanced extension workers can betrained and obtain sufficient experience. It is there-fore necessary to allocate funds for their train-ing well in advance of the time when the addi-tional staff will be required. The same is true ofthe construction and equipping of research labo-ratories and experimental stations.

AGRICULTURAL RESEARCH

While the principles and methods of scientificagricul.ture, which have brought about such largeincreases in agricultural productivity in the moredeveloped countries, may have universal applica-bility, it is seldom possible to transplant themwithout modification to other climates and othernatural and economic conditions. There have beenseveral unfortunate instances where new varietiesof crops from developed countries have been rec-ommended to farmers in less-developed coun-tries without testing under local conditions, orwhere breeds of livestock have been introducedwithout first verifying their adaptability to localclimatic, food., and disease conditions. More andmore it is being found that indigenous varietiesof crops or breeds of livestock, after proper se-lection, give better results than imported. strains.Again, heavy expenditures of scarce foreign ex-change have sometimes been incun-ed to importfarm machinery which proved to be unsuited tolocal conditions.

There is thus a place from the outset for agri-

165

cultural research stations in less-developed coun-tries embarking on plans of agricultural develop-ment, though initially these research stations mayhave rather practical programs of work concernedprimarily with the testing and selection of im-proved varieties of crops and livestock, the test-ing of improved farming methods in the conditionsof the locality, or the improvement of local toolsand devising of simple types of machinery.

They would be concerned, too, with, e.g.,whether the additional returns to farmers are likelyto provide a reasonable margin of profit abovethe costs to them of putting a new technique intopractice; whether the new technique or new cropwould fit well into the customary pattern of farmoperations, or would disorganize them, e.g., byrequiring more labor at a season when the farmeris fully occupied; or whether an improved prac-tice might go against deep-seated local customs.Other investigations might turn on the technicaland economic feasibility of, e.g., large land rec-lamation and irrigation projects, or of the suit-ability of underutilized areas for colonization.

Since research programs in less-developed coun-tries are generally limited by the funds that canbe made available, shortage of trained personnel,equipment, etc., care in the orientation of re-search programs is of obvious importance. Thefull value is not always obtained from the resourcesavailable for a number of reasons. Fields of workare sometimes subdivided between technical de-partments to .such an extent that joint research proj-ects are impossible. For example, plant researchgroups may work on the selection of pasture va-rieties without the use of livestock, while grazingtrials may be carried out by veterinarians of thelivestock department who have no knowledge ofplant science. Again, research workers are some-times dispersed over a relatively large numberof experimental stations with the result that eachstation is seriously understaffed. Greater resultsmay often be obtained if available staff and facil-ities are located at a limited number of stations(according to the size of the country and climaticvariations) to provide better rounded researchteams, concentrate equipment, and avoid disper-sion of effort. At the same time it is of coursenecessary to carry out field trials at substationsor on private holdings in the major regions sothat materials and information adapted to localconditions can be made available to extensionworkers or directly to producers. Another weak-

ness is that directors of technical departments of-ten allocate research resources largely on the basisof their own scientific interests, rather than on theimportance of the project to the agricultural econ-omy. This often results in funds being devotedto research in. fields of only minor economic im-portance. Primary attention to the agriculturalproducts of greatest importance to the economyas a whole, and to the solution of the problemsof farmers as reported by the extension services,will normally be a more fruitful approach. Withthis in mind, several countries, e.g., Argentina,the United Arab Republic, and India, have setup agricultural research committees or institutesto establish priorities among the different kindsof ag-ricultural research. These limiting factors havealso led many of the less-developed countries toconcentrate on applied research, e.g., adaptability

This chapter has shown what wide responsibil-ities are now assumed by the governments of theless-developed countries in fostering agriculturaland general economic development. The waysin which they do so and the extent of their in-tervention vary a good deal according to thepolitical outlook of the government, its financialresources, the strength of its administrative machin-ery, and other factors. Nearly everywhere, how-ever, the role of government in economic mattershas taken on an importance which it seldom ifever liad before the Second World War.

Indirectly, nearly all governments carry outpolicies which profoundly influence the economicand social environment in which agricultural pro-ducers operate, though as alread.y noted by nomeans all these policies assist agricultural develop-ment, and some tend to have the opposite effect.On the more positive side, nearly all govern-ments provide some services to agriculture, espe-cially educational, technical, or social services.The majority also participate in some degree inthe financing of agricultural development, some-times indirectly by supplying funds for, e.g., agri-cultural credit, or by partial grants to stimulateprivate investment, sometimes directly by un-dertaking irrigation, afforestation, or other de-velopment projects, more often in both ways.In many countries, including Ceylon, Ecuador,

The role of government

166

trials on the basis of theoretical knowledge gainedelsewhere, restricting their efforts in more funda-mental research to those cases where particularlyimportant local problems make it necessary.

The closest possible link between the researchstations and the extension service is of particularimportance. The results of research llave littlevalue until applied by farmers. Equally, prematureadvice to farmers to adopt untested varieties ormethods of cultivation may badly shake their con-fidence in the extension service. In Japan, for ex-ample, the administration of extension and researchare both under the Development Bureau of theMinistry of Agriculture and Forestry and., as notedearlier, at least some of the subject matter specialistsin the extension services are normally located atresearch stations so that a regular and fruitfulinterchange of view is facilitated.

the Federation of Malaya, Ghana, and Mexico, toquote only a few examples, the share of publicfunds in fixed capital formation in all sectors oftb.e economy runs from one third to two thirdsof the total.

Stress has been laid on the importance of estab-lishing a favorable economic and social environ-ment if agriculture is to expand quickly enoughto meet the rapidly growing needs of the less-developed countries. If conditions are favorable,private capital is likely to flow inc-reasingly intoagricultural production (instead of being locked upin unproductive investment), while the initiativeof the farmers themselves would be likely to leadto an increased " nonfinancial investment and toa greater readiness to adopt improved methodsof farming. These factors might well llave anunexpectedly large effect on output. Price sta-bilization, improved methods of marketing, andsatisfactory systems of land tenure llave been dis-cussed at some length, and in many less-developedcountries these seem to be the measures whichcould perhaps do most at the present time to in.-crease farmers' incentives to expand their produc-tion. But they are, of course, by no means theonly ways in which governments can create a

more favorable climate for agricultural develop-ment. For example, the incidence of taxation maybe modified to this end, as in the case already

mentioned of Colombia. Crop and livestock in-surance is being increasingly considered as a meansof reducing some of the worse risks to farmers.Particularly important in many countries is theimprovement of the infrastructure, especially roads,railways, ports, and communications. Althoughin past decades, and especially before the FirstWorld War, such systems were often developedlargely by private capital (including foreign cap-ital) with varying degrees of public assistance, itseems clear that in the less-developed countriestoday this is a task which will fall mairdy on gov-ernments.

In a favorable social and economic environmentmeasures aimed directly at agricultural develop-ment would be likely to have a much greatereffect. Farmers would be more receptive to theteachings of the research, education, and extensionservices; international and bilateral technical aidwould be more readily assimilated; agriculturalproducers would also be more anxious to utilizec-redit productively; schemes for irrigation, drain-age, or reclamation would be utilized more quicklyand effectively by cultivators; private enterprisewould be more likely to augment direct govern-ment action not only in investment, but also inresearch, extension, and education where, e.g., manu-facturers of fertilizers and pesticides, seedsmen,etc. can play a useful role. In many less-develop-ed countries privately-sponsored schools and col-leges are an important part of the educational system..

A substantial and growing number of govern-ments in less-developed countries now plan andshape the course of agricultural and general eco-nomic development, though the method and scopeof planning vary greatly from country to country.In some it consists esscn.ially in framing broadly-defnied aims, sometimes in the form of a long-term " perspective, together with a program ofpublic investment, co-ordinated in varying degreesbetween economic sectors and government de-partments. This investment program is often re-vised annually in the light of the resources avail-able and other factors. Provision is sometimesmade in plans for investment in the private sector,and while this must be largely an estimate it isone which can be greatly influenced by govern-ment economic policy. In other countries moreemphasis is placed on establishing production goalsor targets, based on an appraisal of the futuregrowth of population, incomes and needs, of ex-port and import possibilities, and of the resources

167

which can be effectively mobilized in the periodcovered, usually from four to six years. Theseare all important steps if planning is to be adop-ted, and are of value in orienting the general direc-tion of economic g-,rowth and setting a frameworkfor private investment, as well as in making afirst allocation of an important part of the country'sin.vestment resources.

A further stage of planning, now being morewidely adopted, includes the assessment of the re-quirements in capital, in managerial and technicalskills, in capital equipment and requisites (includ-ing imported goods), and in other scarce resourceswhich will be needed to achieve the productiongoals, and the establishment of priorities for scarceresources of all kinds. It includes also a carefulappraisal of how most effectively to achieve theaims intend.ed, e.g., whether by expanding thearea cultivated or by raising yields, whether inall parts of the country or by concentrating onespecially suitable areas, whether by a few large-scale projects or primarily by a large number ofsmall-scale projects, etc. It is concerned, too -and here one comes back to the provision of afavorable environment - with the practical incas-tires necessary if the detailed plans are to be im-plemented, and if the multitude of small producersare to be encouraged to take the necessary action.

A good deal of flexibility is needed if planningis to be realistic and effective, and more and moreplanning tends to be conceived of as a continuousprocess. It is not enough to set targets, and toestablish the ineans and resources needed to im-plement them. The whole field of economicdevelopment must be kept under continuous re-view to see whether changing conditions, at homeor in foreign markets, need to be reflected in agri-cultural production targets and in the basic require-ments for their achievement. Similarly, it may befound necessary from time to time to modifypriorities, e.g., of financial or other scarce resour-ces, in order to prevent one sector from laggingso far behind as to hamper progress in other sec-tors, or to limit disproportionate growth in. onefield beyond its current usefuliiess. In the sameway it implies a constant lookout for social, eco-nomic, institutional, or other obstacles to bal-anced development, so that remedial action canbe taken.

Balanced gr, owth does not, of course, implythat some key sectors of thc economy, e.g., steel,chemicals, may not be picked out for special de-

velopment, in the expectation that if these develop,progress in less essential sectors will fol.low moreor less autom.atically. Such so-called " spearheaddevelopment is by now a conurionplace of eco-nomic planning. Agriculture, however, appears to bea key sector in the same way as, e.g., heavy industry,in that it is no less concerned with the provisionof basic needs. It is especially important in less-developed countries where food is the largestitem of expenditure in family budgets, so that thecost of food is a prime factor in the productioncosts of all. industries. If food production lagsbadly behind needs and food prices rise, the rateof growth of all other- sectors is likely to be im-periled. There are a number of examples in post-war economic history. If agriculture is notalways initially accorded such high priority, itis perhaps because it has always been there, andtends to be regarded as a reserve of finance andmanpower rather than a key sector in its own right.

Some transfer from agriculture to other sec-tors of the economy of investment funds, as wellas of manpower, is usually necessary in the initialstages of economic d.evelopment. But effectiveplanning should aim at finding ways of doing sothat do not hamper needed agicultural expansionand thereby slow down the pace of economicdevelopment as a whole.

The inc-reasing complexity of governments'participation in agricultural and other branches ofeconomic development has necessitated spreadingtheir action through a number of ministries andautonomous or semi-autonomous agencies at thecentral and frequently at local levels as well. Need-less to say, the success of an agricultural develop-ment plan will depend not only on the sound-ness of the direct and indirect policies anci measuresproposed, but also on the efficiency with whichthey are put into practice. In turn, the efficientoperation of the different bodies implementingthe plan will depend to a large extent on the degreeof co-operation and relationship between them aswell as on the quality and adequacy of their staffs.

In order to co-ordinate agricultural d.evelop-ment efforts spreaci over different departments,and to co-ordinate agricultural plans with thoseof other branches of the economy, planning boardsor councils, usually at the ministerial level, havebeen set up in a considerable number of under-developed countries. Co-ordinated action be-tween different ministries and agencies often pre-sents difficulties, however, even in long-established

168

and experienced administrations, and it is notsurprisin.g to find the same problems in manyof the less-developed countries. Close co-opera-tion between the central administration and thedevelopment administration at the provincial ordistrict level in. particular seems to be difficultbecause of the shortage of trained and experiencedstaff poor communications, and sometimes localopposition from established interests to social andeconomic changes.

The planning board or council is usually ser-viced by some form of planning sec-retariat, withclose contacts with those engaged in the moredetailed aspects of planning and of operationalwork in the functional ministries and agencies.Usually an initial period of " running-in " is

necessary before newly-created central planningsecretariats can establish fully harmonious andeffective co-operation with the functional minis-tries. Another problem is the wide range of up-to-date cconoinic and agricultural statistical in-formation needed for effective planning. Machin-ery to assemble and analyze this information hasto be strengthened (or established where it doesnot already exist) centrally and usually in thefunctional agencies and local and provincial cen-ters as well.

In organizing an adequate administrative struc-ture to carry out an agricultural development pro-gram, two major unes of action llave been follow-ed. The first has been to carry out the projectsinvolved through the existing central governmentadministrative structure, mainly through the min-istries of agriculture and public works. Thesecond has been the establishment of special auton-omous or semi-autonomous agencies for thispurpose. The first alternative in principle has theadvantage that ami existing ministry should be ableto work more effectively as an integrated unit,and to weld policies and concrete projects into aco-ordinated whole. On the other hand, existing-ministries are often handicapped by the rigidityof budgetary and other regulations, by the factthat their staffing and organization were usuallydesigned for other tasks when governments wereless concerned with economic matters, and bythe difficulty of adjusting salaries and workingconditions to attract and retain the most suitablestaff. It is for these reasons that many countrieshave set up autonomous or semi-autonomousagencies to carry out irrigation, land settlement,marketing, or other aspects of agricultural develop-

merit projects. These bodies are usually smallerand have considerable financial flexibility; they canpay higher salaries, and can often operate morequickly than a ministry, which has a more cum-bersome administrative machinery. Against theseadvantages, the establishment of more or less auton-omous bodies sometimes involves a degree ofduplication, tends to impair the effectiveness ofexisting ministries, and at times leads to the adop-tion of conflicting policies and measures. Bothsystems thus have advantages and weaknesses, butwith proper safeguards it is likely that either canoperate efficiently.

The or,anization and administration of ao-ri-.bcultural institutions and services is an integral partof agricultural development planning, requiringcareful consideration, at the planning as well asthe implementation stage. When developmentplans, of a scope too great to be handled by exist-ing agencies, are ad.opted, their implementationis unlikely to be more than partly successful. Asa consequence both farmers and the general pub-lic may lose confidence in planned development,and future programs will be correspondinglyharder to carry through. More progress is likely

169

to be made if the necessary expansion of the ad-ministrative structure and of institutional and otherservices to agriculture is made at the same timethat the scope of development plans is enlarged,rather than later, when the inadequacy of the exist-ing structure has already become apparent.

But no matter how well an agricultural planis formulated, or how efficient the administrativemachinery to implement it may be, in the finalanalysis it will be only by action of the farmersthemselves that agricultural production will increase.It is they who musi: make most of the extra effortand take many of the risks if the desired resultsare to be achieved. They should understand thebroad aims and objectives of the plan, and thisis facilitated if they or their representatives takea responsible part in drawing it up. Producerparticipation, moreover, can add greatly to therealism of a plan, as well as help to create a morefavorable psychological attitude toward it. Andunless the hunian and social, as well as economic,conditions in which farmers operate provi.de suffi-cient incentives for .them to take action, the resultsof government progi7arns and projects in the endare likely to Ell far below expectations.

X TABLES

ANNEX TABLE IA. - WORLD ' PRODUCTION OF MAJOR COMMODITIES

171

' Excluding U.S.S.R.., Eastern Europe, and !Vlainland China, except for forest products. - 2 Beef and veal, mutton and lamb, pork.

1953 1954 1955 1956 19571958

(prelim.)

Average1934-38

Average1948-52 1954/55 1955/56 1956/57 1957/58 1958/59

(prelim.)

Million 'nark ton

Wheat 95.0 113.6 119.3 124.2 123.5 126.0 138.6Barley 28.5 36.0 44.8 46.5 52.6 49.9 51.5Oats 37.5 42.5 42.3 45.7 43.9 40.8 43.3Maize 94.1 119.6 123.1 129.8 136.4 138.5 148.4Rice (milled equivalent) 70.2 74.8 82.5 88.4 92.5 86.8 94.1

Sugar (centrifugal) 20.0 26.3 31.0 32.0 33.5 34.4 38.6

Citrus fruit 11.1 15.2 17.8 18.3 18.1 18.2 19.4Apples 11.0 12.7 13.8 12.8 14.7 9.1 18.2Bananas 8.1 11.2 12.0 12.3 12.7 13.0 13.0

Vegetable oils and oilseeds (oil equivalent) 9.2 12.0 13.3 13.4 14.8 14.8 15.0Animal fats 3.01 4.12 4.65 5.09 5.27 5.28 5.29

Coffee 2.41 2.24 2.49 2.87 2.51 3.09 3.41Cocoa 0.74 0.76 0.80 0.84 0.90 0.77 0.86Tea 0.47 0.57 0.68 0.70 0.70 0.72 0.75Wine 18.0 17.6 21.2 21.4 20.8 16.7 20.7Tobacco 1.96 2.45 2.81 2.89 2.92 2.77 2.74

Cotton (lint) 5.31 5.78 6.48 6.85 6.53 6.14 6.53jute 1.95 2.03 1.66 2.31 2.30 2.16 2.51VVool (greasy) 1.51 1.57 1.75 1.81 1.91 1.86 1.88Rubber (natural) 0.96 1.75 1.84 1.95 1.92 1.93 1.99

Milk (total) 193.6 205.2 227.4 229.3 232.8 237.5 239.5h1eaO 26.9 30.3 35.5 37.3 39.0 48.3 39.0Eggs 5.82 7.48 8.70 8.85 8.98 9.21 9.29

Indices: 1952153-1956157 average loo

Index of all farm products 76 89 99 102 105 105 108

FOREST PRODUCTS Adillion cubic meters

Roundwood 1,470 1,552 1,601 1,625 1,597 1,580

Sawnwood 266.3 273.9 295.5 293.9 283.2 285.0Plywood 8.3 9.0 10.7 11.3 11.7 12.1

Million in tric tons

VVood pulp 39.1 42.4 46.6 49.8 50.1 50.0Newsprint 9.8 10.4 11.2 12.0 12.3 12.0

Other paper and board 38.5 40.8 46.4 48.0 48.9 49.7

WI/eat and wheat flour (wheat equivalent)BarleyOatsMaizeRice (milled equivalent)

Sugar (raw equivalent).

Citrus fruit'ApplesBananas

Vegetable oils and oilseeds (oil equivalent) 5

CoffeeCocoa beansTeaWineTobacco

Cotton (lint)luteWool (actual weight)Rubber (natural)5

h1eat (fresh, chiHed, and frozen)Eggs (in the shell)

FOREST PRODUCTS

Roundwood'SawnwoodPlywood

VVood pulpNewsprintOther paper and board

ANNEX TABLE IB. - WORLD EXPORTS OF MAJOR COMMODITIES

172

' Including exports from the rest of the world to the U.S.S.R., Eastern Europe, and Mainland China, but excluding exports from these countries, exceptfor forest products. - Excluding United States trade with its territories. - ' Oranges and lemons only. - Excluding copra imported into Malaya andSingapore for re-export, but inclucling copra smuggled from Indonesia and North Borneo imito Malaya and Singapore. - s Excluding imports into Malayaand Singapore for re-export, but including rubber smuggled from Indonesia into Malaya and Singapore. - Beef and veal, mutton and lamb, pork. -

Logs, pulpwood, pitprops, fuelwood, poles, pilings and posts. -

Average1934-38

Average1948-52 1954 1955 1956 1957

1958(prelim.)

15.37 25.16

dr,

22.79

Wien metric tot

24.82

s

31.74 29.56 27.33

1.74 3.23 5.46 5.16 7.03 6,35 6.400.72 1.23 1.48 0.94 1.33 1.45 1.459.33 4.34 5.42 4.68 5.87 7.10 8.23

9.67 4.40 4.29 4.82 5.44 5.55 4.97

9.63 10.74 11.89 13.07 13.54 14.71 14.41

2.07 1.89 2.60 2.86 2.40 2.69 2.740.69 0.57 0.71 0.98 0.87 1.14 0.86

2.48 2.35 2.91 3.03 3.01 3.35 3.37

4.19 3.63 4.51 4.61 5.00 5.17 4.85

1.66 1.94 1.80 2.12 2.37 2.28 2.260.69 0.70 0.72 0.72 0.77 0.80 0.650.40 0.42 0.51 0.44 0.52 0.50 0.541.94 1.64 2.39 2.69 2.50 2.79 2.770.49 0.54 0.59 0.64 0.64 0.68 0.67

3.01 2.36 2.64 2.39 2.86 3.08 2.640.82 0.86 0.90 1.00 0.89 0.82 0.931.08 1.10 1.04 1.17 1.21 1.23 1.181.04 1.82 1.87 2.07 2.07 2.05 2.12

1.15 0.96 1.10 1.18 1.31 1.41 1.490.25 0.24 0.34 0.35 0.35 0.38 0.37

Million cubic meters

° 18.4 21.3 27.0 26.6 27.3 24.928.7 32.1 35.7 31.8 33.8 32.9° 0.5 0.8 1.0 0.9 1.1 1.0

lillion metric tons

6.0 6.9 7.6 7.8 7.8 7.5° 6.0 6.2 6.6 7.0 6.9 6.7

2 3 2.8 32 32 3.6 3.5

ANNEX TA13LE 2A. - WESTERN EUROPE : PRODUCTION OF MAJOR COMMOD1TLES

173

' 13eef and veal, mutton and lamb, pork. - Including Eastern Europe. - On y p" al coverage of production of exploded and defibrated pulp.

Average1934-38

Average1948-52 1954/55 1955/56 1956/57 1957/58

1958/59(prelim.)

Wheat 31.07 30.32

11,

35.70

illion metric tot

37.81

s

32.00 40.47 38.96Rye 7.49 6.65 7.64 6.69 7.14 7.21 7.04Barley 9.08 10.93 13.71 14.74 19.05 17.51 17.75Oats 16.44 14.84 14.58 14.78 15.98 13.23 12.91Maize 9.73 7.15 8.55 9.71 10.10 12.16 11.10

Sugar (centrifugal) 4.02 5.14 6.55 6.87 6.49 7.11 8.15

Potatoes 96.87 76.26 80.93 73.03 84.07 78.59 73.25Citrus fruit 1.99 2.10 2.63 2.54 1.84 2.75 3.09Apples 7.42 8.75 9.50 8.69 10.30 4.29 13.21

Olive oil 0.81 0.86 0.85 0.72 0.90 1.08 0.83Animal fats 1.04 0.89 1.18 1.33 1.30 1.39 1.40

VVine 14.13 13.10 15.33 16,08 15.58 11.49 15.50Tobacco 0.19 0.25 0.29 0.34 0.30 0.37 0.31

Milk (total) 77.02 77.17 90.92 89.74 91.26 95.00 95.81Meat 8.56 7.52 10.23 10.51 10.77 11.13 11.27Eggs 1.95 2.10 2.66 2.71 2.77 2.95 3.04

Indices: 1952153-1956157 averaqe 100

Index of all farm products 83 87 101 102 102 107 I 108

Average 19581938 1948-52 1954 1955 1956 1957 (prelim.)

FOREST PRODUCTS' Million standards

Sawn softwood 10.24 I 9.87 10.72 11.13 10.85 10.60 I 10.61

Million cubic meters

Sawn hardwood 9.07 9.08 9.82 10.60 10.62 10.98 10.94Plywood 1.09 1.24 1.86 1.95 1.91 2.10 2.15

metric tons

Fiberboard (hard and insulating) 0.17 0.67 1.05 1.19 1.28 1.38 1.45Wood pulp (chemical) 6.67 5.96 7.66 8.37 8.69 9.20 9.10Wood pulp (mechanical)' 3.95 3.46 4.40 4.66 4.96 5.10 4.95Newsprint 2.80 2.33 2.86 3.12 3.42 3.52 3.51

Other paper and board 8.29 8.85 12.11 13.18 13.68 14.76 15.25

ANNEX TABLE 2B. - WESTERN EUROPE: Expowrs AND IMPORTS OF MAJOR COMMODITIES

174

' Oranges and lemons only. - 2 Including Eastern Europe. Prewar figures refer to 5938. - 2 Beef and veal, mutton and lamb, pork.

Average Average 19581934.38 1948-52 1954 1955 1956 1957 (prelim)

Million nierric ton

GROSS EXPORTS

Wheat and wheat flour (wheat equivalent) 1.47 0.76 2.31 3.40 2.31 3.09 3.59Sugar (raw equivalent) 0.86 1.37 1.68 1.83 1.56 1.84 1.36Citrus fruit 2.07 1.89 2.60 2.86 2.40 2.69 2.74Apples 0.19 0.31 0.41 0.66 0.53 0.74 0.38Wine 0.50 0.48 0.77 0.76 0.94 0.87 1.21

Bacon, ham, and salted pork 0.26 0.14 0.27 0.29 0.28 0.30 0.29Eggs (in the shell) 0.20 0.17 0.26 0.27 0.28 0.31 0.31Wool (actual weight) 0.23 0.11 0.09 0.10 0.11 0.11 0.10

Million cubic meter

Coniferous logs 2.39 1.71 0.88 0.92 0.63 0.70 1.08Broadleaved logs 2 0.50 0.45 0.67 0.94 0.66 0.66 0.58Pulpwood 2 3.03 3.53 4.11 5.74 5.22 5.18 3.94Pitprops 2 3.16 3.00 2.44 3.00 3.03 3.13 2.59Sawn softwood 2 13.86 12.66 14.88 15.39 14.05 14.79 13.65Plywood' 0.36 0.30 0.45 0.50 0.40 0.44 0.41

Million metric ton

Wood pulp 2 4.55 3.51 4.39 4.70 4.97 4.90 4.81Newsprint 2 0.92 0.87 1.02 1.12 1.30 1.29 1.33Other paper and board 2 1.20 1.51 2.24 2.46 2.48 2.72 2.61

GROSS /MPORTS

Wheat and wheat flour (wheat equivalent) 11.95 14.55 13.02 13.32 15.89 14.16 12.62Barley 2.41 2.53 3.95 3.58 5.06 4.62 4.70Maize 8.46 4.03 4.27 4.51 5.02 4.79 6.35Rice (milled equivalent) 1.31 0.35 0.42 0.59 0.59 0.51 0.45

Sugar (raw equivalent) 3.47 4.25 3.79 4.07 4.41 5.38 4.79Vegetable oils and oilseeds (oil equivalent) 3.00 2.52 3.02 3.09 3.43 3.58 3.33Oranges 1.28 1.33 1.92 2.05 1.73 1.95 2.11

Coffee 0.69 0.48 0.61 0.67 0.75 0.75 0.79Cocoa beans 0.36 0.33 0.40 0.40 0.39 0.45 0.38Tea 0.26 0.23 0.28 0.26 0.27 0.31 0.30Wine 1.68 1.39 2.00 2.40 2.13 2.53 2.65Tobacco 0.37 0.34 0.39 0.41 0.40 0.41 0.42

Cotton (lint) 1.76 1.40 1.57 1.42 1.51 1.72 1.44Rubber (natural) 0.36 0.59 0.71 0.79 0.76 0.79 0.80

Meat (fresh, chilled, frozen) 1.12 0.81 0.77 0.93 1.14 1.17 1.11Canned meat 0.08 0.18 0.20 0.20 0.19 0.23 0.24Bacon, ham, and salted pork 0.39 0.21 0.31 0.31 0.32 0.34 0.35Butter 0.57 0.39 0.32 0.40 0.44 0.45 0.46Cheese 0.23 0.27 0.28 0.28 0.30 0.31 0.33Eggs (in the shell) 0.31 0.21 0.29 0.31 0.32 0.34 0.36

ANNEX TABLE 3A. - EASTERN EUROPE AND U.S.S.R.: P RODUCTION OF MAJOR COMMODITIES

175

SOURCE: Based generally on the official statistics of the countries concerned.' Albania (except for milk and eggs), Bulgaria, Czechoslovakia, Eastern Germany, Hungary, Poland, and Romania. 1958 production of some products

has been estimated for Albania, Bulgaria, and Romania. - 6 Wheat, rye, barley, oats, maize. - Thousand million. - FAO estimate. - 6 Including pulses...-6 Average 1949-53.

Average1950-54 1955 1956 1957 1958 (prelim.)

Million metric tons

EASTERN EUROPE'

Wheat and rye 22.0 23.1 21.5 24.6 22.6Total grains' 37.6 44.5 38.8 47.0 41.3Potatoes 57.6 51.6 66.2 64.5 60.3Sugar beet 21.9 24.1 19.8 26.3Milk 20.8 23.4 23.6Eggs' 10.1 11.3 12.7 13.0

U.S.S.R.

Wheat° 37.0 46.0 65.0 56.0 75.3Total grains' 84.3 107.0 127.6 105.0 139.4Potatoes 75.7 71.8 96.0 87.8 86.1Sugar beet 22.0 31.0 32.5 39.7 54.1Sunflower seed 2.0 3.8 3.9 2.8 4.5Mill< 36.3 43.0 49.1 54.7 57.8Meat 5.4 6.3 6.6 7.4 7.9Eggs 3 14.5 18.5 19.5 22.3 23.5Cotton (raw) 3.9 4.0 4.5 4.2 4.4Flax (fiber) 0.22 0.38 0.52 0.44 0.44Wool 0.21 0.26 0.26 0.29 0.32

ANNEX TABLE 3B. - EASTERN EUROPE AND U.S.S.R..: Exroms AND IMPORTS OF MAJOR COMMODITIES

FOUR COUNTRIES OF EMTERN DIROPE2

Wheat and ryeOther grainsRice (milled equivalent)MeatEggs'ButterCheeseCitrus fruit 4CoffeeTeaCocoa beansTobaccoCotton (lint)Wool (clean basis)FlaxOilseeds (oil equivalent)Edible vegetable oilsRubber (natural)Sugar (raw basis)

U.S.S.R.

Wheat and ryeOther grainsRice (milled equivalent)MeatEggs

ButterCheeseCitrus fruitCoffeeTeaCocoa beansTobaccoCotton (lint)Wool (clean basis)Flax

Oilseeds (oil equivalent)Edible vegetable oilsRubber (natural)Sugar (raw basis)

Thousand metric tons

430.9373.710.7

104.4537.3

7.83.9--

2.80.30.12.24.61.60.7

99.96.71.6

846.0

2 755.5910.6

7.511.0

--8.9

5.7--

4.6343.314.34.6

40.634.8

209.7

378.6463.8

34.0104.2551.5

8.53.61.25.00.10.82.9

11.23.42.5

80.019.1

--309.3

2 597.91 253.1

23.331.11.3

24.30.7

6.4--

8.1307.112.627.641.858.927.0

174.4

162.3309.343.8

138.3533.3

6.74.3

5.1

3.32.3

67.46.2--

359.8

5 833.41 527.6

71.371.2

142.049.18.1

5.7--

6.0307.013.235.839.745.530.2

190.5

176

233.576.3

4.642.457.91.33.20.10.7

1.- 6

2.60.4

-11.113.50.4

502.2

2 247.6676.1

7.510.0

--8.9

4.7--

2.6260.910.8

3.627.530.1

6.4

279.2118.2

5.933.549.84.92.41.23.2

0.78.7

0.111.811.6

--147.5

1 525.1822.122.731.11.3

24.30.7

4.7--

5.1249.110.08.3

33.755.726.912.4

6.592.612.543.221.43.82.8

-0.13.04.00.4--

7.75.0--

129.6

4 833.01 011.4

37.871.2

142.049.1

8.1

-5.4

-4.0

259.210.914.239.240.429.714.0

3 249.41 214.2

193.6160.0261.933.413.155.113.84.7

20.252.1

307.343.716.2

464.892.266.2

160.5

29.1290.8487.1239.2231.4

5.70.4

77.01.5

10.214.155.219.946.5

--763.6195.335.3

933.3

3 013.21 363.2

180.2137.7249.5

40.411.646.018.14.4

21.854.3

301.943.519.3

454.3120.380.553.5

466.677.5

637.6207.3225.2

5.90.3

87.83.5

16.016.473.351.448.8

--801.5

96.5140.7336.4

4 897.31 385.2

201.7171.7329.9

57.618.470.520.2

6.823.157.5

334.652.023.2

607.0105.1101.6114.0

123.963.0

370.5116.8224.9

8.30.3

108.55.1

21.044.191.1

108.857.3

--716.045.6

145.5645.4

2 173.2817.582.9

103.8227.3

9.93.50.21.33.30.1

25.7234.614.23.6

410.665.78.2

29.0

29.1290.8294.7180.6225.9

5.2--

37.8-

10.2--

49.4-

27.5--

756.8107.4

1.0351.1

1 724.21 077.4

77.5114.7220.428.93.32.23.53.4

29.0227.4

12.78.4

367.386.820.5

64.157.4

457.6174.0218.9

5.3-

39.80.2

12.7--

64.50.9

25.8-

796.087.716.9

121.5

4 082.91 095.5

147.9140.0303.851.611.0

-0.64.3

31.5223.514.814.1

357.157.229.2

3.352.9

181.174.4

218.24.7

-42.90.1

11.8--

82.10.8

24.2-

713.442.948.1

109.7

SOURCE: Official statistics in national publications and ECE/FAO question lanes. Por trade within tl e Communist group of countries the present table isbased on the statistics of importing countries and thus includes U.S.S.R. deliveries under special aid programs, which are omitted from the U.S.S.R.export statistics. Por more detailed statistics, see The Agricultural Trade of the U.S.S.R. and Other Countries of Eastern Europe 1953-1957, a StatisticalReview, ECE/FAO Agriculture Division, Geneva, 1959.

' U.S.S.R., Albania, Bulgaria, Czechoslovakia, Eastern Germany, Hungary, Poland, Romania, Mainland China, Mongolia, North Korea, North Viet-Nam. - Czechoslovakia, Eastern Germany, Hungary, Poland. - Million. - Excluding Eastern Germany.

Exports hnports

Total To other countries in Total From othercountriesinCommunist bloc' Communist bloc'

1955 1956 I 1957 1955 1956 1 1957 1955 I 1956 1957 1955 1 1956 1 1957

PRODUCTION

Sawn softwood

Sawn hardwoodPlywood

ANNEX TABLE 3C. - U.S.S.R.: PRoDucTioN AND EXPORTS OF FOREST PRODUCTS

Average1948-52

8.80

1953

12.08

177

1954

12.55

1955

Million standards

13.75

Million cubic meter

1956

13.93

1957

14.37

1958(prelim.)

15.61

7.30 9.96 10.35 11.34 11.49 11.85 12.350.66 0.95 1.02 1.05 1.12 1.15 1.18

&lion metric tons

Fiberboard 0.02 0.04 0.05 0.05 0.07 0.09 0.10VVood pulp (chemical) 1.08 1.56 1.68 1.74 1.85 1.90 2.23

VVool pulp (mechanical) 0.43 0.61 0.66 0.72 0.77 0.80 0.82

Newsprint 0.24 0.29 0.32 0.36 0.36 0.40 0.42

Other paper and board 0.92 1.76 1.95 2.04 2.22 2.30 2.90

Million cubic meter,EXPORTS

Pulpwood 0.05 -- -- 0.55 0.53 0.60 0.82Pitprops 0.29 0.44 0.78 0.84 0.64 0.82 0.99Sawn softwood 0.82 1.30 1.74 2.32 2.21 3.46 3.63Plywood 0.05 0.05 0.06 0.09 0.05 0.10 0.11

Index of all farm products

ANNEX TABLE 4A. - NORTII AMERICA : PRODUCTION OF MAJOR COMMODITIES

' Beef and veal, mutton and latnb, pork. - Includes exploded and defibrated pulp.

172

Indices: 1952153-1956157 average -- loo

68 92 97 101 106 101 107

Average1934-38

I Average1948-52 1954 1955 1956 1957

1958(preHm.)

Average1934-38

Average1948-52 1954/55 1955/56 1956/57 1957/58 1958/59

(prelim.)

Million metric to Is

Wheat 33.80 44.54 35.81 39.57 42.93 35.96 49.83Oats 65.60 25.30 25.19 28.11 24.97 24.75 26.83Maize 53.20 82.36 78.24 82.84 88.47 87.68 97.28Rice (milled equivalent) 0.62 1.25 1.89 1.65 1.46 1.27 1.39

Potatoes 11.94 12.83 11.41 12.14 12.98 12.87 13.80Citrus fruit 3.62 6.41 7.32 7.47 7.56 6.42 7.14

Vegetable oils and oilseeds (oil equivalent) 1.19 2.66 2.86 3.20 3.66 3.38 4.00Animal fats 1.30 2.37 2.51 2.77 2.93 2.82 2.79

Tobacco 0.62 1.02 1.10 1.06 1.06 0.83 0.89Cotton (lint) 2.76 3.11 2.98 3.21 2.90 2.39 2.52

Milk (total) 54.44 59.55 63.03 63.63 63.85 65.23 65.50Meat' 8.08 10.84 12.37 13.13 13.75 13.28 12.71Eggs 2.42 3.77 3.95 3.94 4.01 3.98 3.96

FOREST PRODUCTS Million standards

Sawn softwood 11.86 18.14 18.43 19.99 19.04 17.36 17.61

M'Ilion cubic meter

Sawn hardwood 12.08 18.10 17.80 18.68 18.77 15.34 14.56Plywood 0.82 3.49 4.99 6.42 6.71 6.75 6.90

Million metric to is

Fiberboard (hard and insulating) 0.64 1.21 1.53 1.65 1.72 1.61 1.69Wood pulp (chemical) 5.20 13.70 17.02 19.16 20.62 20.26 20.17Wood pulp (mechanical)' 3.44 7.23 8.32 8.87 9.20 8.97 8.61Newsprint 3.38 5.74 6.51 6.92 7.32 7.44 7.13Other paper and board 10.05 20.50 23.09 24.85 27.20 26.37 26.55

GROSS EXPORTS

Wheat and wheat flour (wheat equivalent)BarleyMaize

Rice (milled equivalent)

Oranges

Vegetable oils and oilseeds (oil equivalent)

TobaccoCotton (lint)

Coniferous logsBroadleaved logsPulpwoodSawn softwood

ANNEX TABLE 4B. - NORTH AMERICA: EXPORTS AND IMPORTS OF MAJOR COMMODITIES

' Excluding United States trade with its territories. - Oranges and lemons only.

179

'Elliott cubic melera

6.07 18.54 13.25 13.64 21.98 20.26 19.170.50 1.44 2.15 2.96 3.56 2.55 0.250.80 2.31 1.96 2.78 3.02 4.52 4.560.07 0.54 0.56 0.52 0.82 0.74 0.57

0.15 0.23 0.33 0.30 0.41 0.33 0.160.02 0.41 0.85 0.84 1.17 1.32 1.20

0.20 0.22 0.22 0.27 0.25 0.24 0.231.29 1.03 0.94 0.56 1.03 1.57 1.00

... 0.33 0.60 0.71 0.72 0.54 0.60

... 0.23 0.25 0.22 0.26 0.24 0.27

... 5.68 4.64 4.87 5.21 4.81 3.518.41 11.14 12.59 10.79 10.22 10.76

Million metric tot s

Wood pulp 0.80 1.83 2.38 2.72 2.63 2.64 2.48Newsprint 2.80 4.50 5.14 5.42 5.55 5.51 5.27

GROSS /MPORTS

Sugar (raw equivalent) 3.21 3.88 4.04 4.21 4.45 4.42 5.00Citrus fruit 0.11 0.19 0.22 0.21 0.21 0.21 0.18Bananas 1.35 1.49 1.64 1.60 1.59 1.66 1.70Vegetable oils and oilseeds (oil equivalent) 0.90 0.55 0.52 0.56 0.54 0.52 0.56

Coffee 0.81 1.27 1.08 1.24 1.34 1.32 1.29Cocoa beans 0.27 0.31 0.26 0.25 0.27 0.26 0.22Tea 0.06 0.07 0.07 0.07 0.07 0.07 0.07

Jute 0.07 0.08 0.06 0.05 0.08 0.06 0.04Sisal 0 16 0.20 0.19 0.20 0.18 0.19 0.25Wool (actual weight) 0.10 0.29 0.15 0.17 0.17 0.14 0.11

Rubber (natural) 0.52 0.81 0.66 0.71 0.65 0.62 0.54

Average1934-38

Average1948-52 1954 1955 1956 1957

1958(prelim.)

Million metric tot s

Index of all farm products

' Beef and veal, mutton and Ian* pork.

73 89

VVood pulpAll paper and board

Average1948-52

0.220.69

180

Indices: 1952153-1956157 average- too

1954 1955

Million cubic meters

8.10 9.12 9.24 8.27 8.00 8.20

0.310.88

0.321.05

1956

0.331.16

1957

Million metric tons

0.341.26

1958(prelim.)

0.351.30

ANNEX TABLE A. - LATIN AMERICA: )110DUCTION OF MAJOR COMMODITIES

Average1934-38

Average1948-52 1954/55 1955/56 1956/57 1957/58

1958/59(prelim.)

Million metric torts

Wheat 8.62 7.96 11.75 9.51 11.56 10.64 10.75Maize 18.00 15.13 17.37 19.05 18.43 20.28 20.52Rice (milled equivalent) 1.33 3.07 3.80 3.63 4.07 3.96 4.09

Sugar (centrifugal) 6.89 12.33 12.40 12.84 14.33 14.99 16.55

Citrus fruit 3.28 3.73 3.99 4.21 4.42 4.54 4.50Bananas 4.20 7.60 8.60 8.80 9.10 9.40 9.40

Coffee 2.11 1.89 1.96 2.26 1.87 2.42 2.71Cocoa 0.24 0.25 0.30 0.30 0.30 0.30 0.31Tobacco 0.21 0.32 0.37 0.39 0.39 0.39 0.38

Cotton (lint) 0.59 0.86 1.12 1.28 1.16 1.26 1.29

Millc (total) 12.22 14.59 17.42 18.33 18.93 19.17 19.71Meat 5.03 6.10 6.14 6.46 7.08 7.31 7.26Eggs 0.48 0.58 0.75 0.78 0.79 0.83 0.83

FOREST PRODUCTS

Sawnwood

100 103 106 111 114

181

' Excluding trade between the United States and its territories. - u Beef and veal, mutton and lamb, pork.

ANNEX TABLE 513. - LATIN AMERICA : EXPORTS ANO IMPORTS OF MAJOR COMMODITIES

Average1934-38

Average1948-52 1954 1955 1956 1957 1958

(prelim.)

Million metric tot s

GROSS EXPORTS

Wheat and wheat flour (wheat equivalent) ..... 3.45 2.00 3.38 4.23 3.03 2.83 2.41Maize 6.61 1.20 2.27 0.53 1.11 0.84 1.74Rice (milled equivalent) 0.10 0.25 0.16 0.13 0.25 0.13 0.12

Sugar (raw equivalent) 4.05 7.06 6.56 7.74 7.90 8.64 8.96Bananas 2.04 1.91 2.32 2.36 2.36 2.65 2.72Linseed and linseed oil (oil equivalent) 0.55 0.19 0.29 0.18 0.08 0.17 0.19

Coffee 1.40 1.61 1.35 1.57 1.70 1.57 1.55Cocoa beans 0.21 0.18 0.22 0.22 0.21 0.20 0.19

Cotton (lint) 0.34 0.39 0.73 0.69 0.77 0.52 0.59Wool (actual weight) 0.19 0.19 0.16 0.17 0.19 0.13 0.16

Meat (fresh, chilled and frozen)' 0.59 0.34 0.25 0.28 0.49 0.50 0.52Canned meat 0.12 0.12 0.10 0.10 0.10 0.14 0.12

Milion cubic meter

Broadleaved logs 0.40 0.34 0.40 0.43 0.37 0.39Sawn softwood 1.25 1.19 1.12 1.10 1.71 1.50

Million metric tons

GROSS IMPORTS

Wheat and wheat flour (wheat equivalent) 1.69 2.84 3.37 3.79 3.60 3.26 3.15Rice (milled equivalent) 0.39 0.37 0.30 0.21 0.22 0.32 0.37

Sugar (raw equivalent) 0.25 0.36 0.42 0.48 0.29 0.48 0.39Potatoes 0.18 0.24 0.21 0.19 0.20 0.21 0.13

FOREST PRODUCTS

Sawnwood

' Beef and veal, mutton and Iamb, pork.

Average1948-52

4.19

182

1954 1955

4.73 4.85

19581956 1957 (prelim)

Million cubic meters

4 59 4.56 4 60

ANNEX TABLE 6B. - OCEANIA: EXPORTS AND IMPORTS OF MAJOR COMMODITIES

Average1934-38

Average1948-52 1954 1955 1956 1957

1958(prelim.)

Million metric tonGROSS EXPORTS

Wheat and wheat flour (wheat equivalent) 2.82 3.13 1.99 2.55 3.57 2.56 1.45Barley 0.07 0.26 0.63 0.36 0.63 0.64 0 32Oats 0.01 0.19 0.03 0.11 0.20 0.09 0 07

Sugar (raw equivMent) 0.56 0.47 0.80 0.80 0.82 0.98 0.87Copra and coconut oil (oil equivalent) 0.13 0.13 0.16 0.17 0.17 0.17 0.16

Beef 0.15 0.13 0.17 0.25 0.24 0.28 0.28Mutton and lamb 0.27 0.30 0.34 0.33 0.31 0.30 0.34Butter 0.24 0.21 0.18 0.24 0.25 0.21 0.24Cheese 0.10 0.12 0.11 0.11 0.11 0.10 0.10Wool (actual weight) 0.49 0.66 0.62 0.71 0.72 0.80 0.73

GROSS IMPORTS

Wheat and wheat flour (wheat equivalent) 0.06 0.21 0.26 0.28 0.31 0.33 0.31Sugar (raw equivalent) 0.09 0.11 0.12 0.12 0.11 0.12 0.13Rubber (natural) 0.01 0.04 0.05 0.06 0.05 0.04 0.05

ANNEX TABLE 6A. - OCEANIA: PRODUCTION OF MAJOR COMMODITIES

Average1934-38

Average1948-52

1954/55 1955/56 1956/57 1957/58 1958/59(prehm)

Million metric tons

Wheat 4.38 5.30 4.70 5.39 3.74 2.74 5.63Sugar (centrifugal) 0.94 1.04 1.48 1.36 1.37 1.51 1.63

Wool (greasy) 0.59 0.69 0.79 0.85 0 93 0.87 0.89Milk (total) 10.18 10.43 10.52 11.28 11.78 11.43 11.00Meat 1.42 1.58 1.79 1.88 1.85 1.95 2 06

Indices: 1952153-1956157 average = loo

Index of all farm products 78 I 90 98 104 104 100 110

ANNEX TABLE 7A. - FAR EAST (EXCLUDING MAINLAND CHINA) : PRODUCTION OE MAJOR COMMODITIES

' Becf and veal, mutton and lamb, pork.

1113

Average1934-38

Average1948-52 1954/55 1955/56 1956/57 1957/58 1958/59

(prelim.)

Million metric to is

WheatMillet and sorghumRice (milled equivalent)

12.1314.9465.28

11.3413.2866.62

13.5318.11

72.30

13.9615.4278.63

13.7615.4482.45

14.6916.51

76.73

13.0316.2084.14

Sugar (centrifugal) 4.18 3.10 4.68 5.07 5.23 5.54 5.55Sugar (noncentrifuga° 3.67 4.03 4.46 4.87 5.25 5.49 5.48

Starchy roots 21.62 26.25 31.95 33.84 33.86 34.92 34.68Pulses 6.78 7.11 8.24 9.31 9.16 9.91 8.35

Vegetable oils and oilseeds (oil equivalent) 3.96 4.02 5.05 4.85 5.17 5.04 4.92

Tea 0.46 0.54 0.64 0.66 0.66 0.67 0.70Tobacco 0.79 0.59 0.74 0.77 0.84 0.84 0.80

Cotton (lint) 1.22 0.90 1.30 1.20 1.26 1.31 1.35jute 1.94 1.99 1.64 2.24 2.23 2.10 247Rubber (natural) 0.97 1.65 1.74 1.82 1.77 1.78 1.99

Meat 1.65 1.77 1.99 2.20 2 30 2.37 2.41Mills (total) 23.23 25.25 26.74 26.48 26.45 26.71 27.13

Indices: 1952153-1956157 av rage = loo

Index of all farm products 86 87 100 103 106 105 108

Average1948-52 1954 1955 1956 1957 1958

(prelim.)

FOREST PRODUCTS Million c Mic meters

Sawn softwood 16.86 21.03 24.52 30.02 31.80 31.40Plywood 0.25 0.67 0.83 1.03 1.15 1.35

Million metric tons

VVood pulp 0.78 1.65 1.93 2.21 2.47 2.35bJewsprint 0.16 0.45 0.48 0.55 0.59 0.61Other paper and board 0.90 1.77 2.09 2.42 2.79 2.90

ANNEX TABLE 713. - FAR EAST (EXCLUD'NG MAINLAND CHINA): EXPORTS AND IMPORTS OF MAJOR COMMODITIES

Broadleaved logsSawn hardwoodPlywood

GROSS IMPORTS

Wheat and wheat flour (wheat equivalent)Rice (milled equivalent)BarleyMaize

Sugar (raw equivalent)Vegetable oils and oilseeds (oil equivalent)

Cotton (lint)Jute

13,1

Million cubic meters

Million metric tons

' Excluding copra imported into Malaya and Singapore for re-export, but including copra smuggled from Indonesia and North Borneo into Malaya andSingapore. Excluding imports into Malaya and Singapore for re-export, but including rubber smuggled from Indonesia into Malaya and Singapore.

... 0.76 2.20 2.50 2.98 3.27 3.20

... 0.56 0.89 1.08 1.09 1.06 1.06

... 0.02 0.17 0.24 0.30 0.35 0.39

1.03 4 95 4.15 4.49 5.59 7.87 7.73

6.13 3.12 3.40 3.11 4 03 3.95 3.900 05 0.69 0.82 061 1.20 1.17 1.030 21 0 20 0.24 0.43 0.47 0.67 0.79

1.68 1,18 2.64 2.33 2.13 1.92 2.040.37 0.25 0.38 0.49 0.48 0.53 0.49

0.90 0.52 0.74 0.66 0.86 0.89 0.760 05 0.27 0.25 0.29 0.23 0.18 0.13

Average1934-38

Average1948-52

1954 1955 1956 19571958

(prelim.)

Million metric to isGROSS EXPORTS

Rice (milled equivalent) 8.96 3.05 3.08 3.53 3.49 4.00 3.37

Sugar (raw equivalent) 3.31 1.01 1.83 1.59 2.03 2.01 2.02

Vegetable oils and oilseeds (oil equivalent)' 1.71 1.32 1.23 1.51 1.53 1.42 1.12

Tea 0.36 0.39 0.47 0.40 0.47 0.44 0.48

Cotton (lint) 0.68 0.27 0.19 0.28 0.24 0.18 0.17

Jute 0.79 0.84 0.89 0.99 0.87 0.81 0.92

Rubber (natural)' 0.96 1.69 1.75 1.92 1.81 1.83 1.82

' Wheat, barley, oats, naize, millet, sorghum, rice. -n Beef and veal, mutton and Iamb, pork.

185

' Wheat and wheat flour, barley, maize, oats, sor,hums, millet, rye, rice. - n OrangeS and lemons only.

ANNEX TABLE 8A. - NEAR EAST: PRODUCTION OF MAJOR CommoDMES

Average1934-38

Average1948-52 1954/55 1955/56 1956/57 1957/58

1958/59(prelim.)

Million metric tow

Wheat 9.50 10.95 13.55 14.09 15.22 17.80 16.53Barley 4.24 4.66 5.88 5.41 6.22 7.45 6.39Rice (milled equivalent) 1.09 1.34 1.50 1.35 1.65 1.81 1.35

Total grains 18.63 21.27 25.82 26.51 28.46 32.11 29.52

Sugar (centrifugal) 0.22 0.42 0.59 0.69 0.71 0.78 0.84Pulses 0.70 0.78 0.83 0.82 0.84 0.89 0.85

Citrus fruit 0.79 0.85 1.12 1.25 1.18 1.31 1.35Dates 0.87 0.85 1.06 1.01 1.10 1.08 1.06Bananas 0.05 0.07 0.08 0.11 0.11 0.11 0 11

Vegetable olla and oilseeds (oil equivalent) 0.32 0.41 0.52 0.50 0.61 0.53 0.62Tobacco 0.09 0.14 0.15 0.17 0.17 0.16 0.15Cotton (lint) 0.56 0.66 0.74 0.76 0.81 0.80 0.95

Milk (total) 9.70 10.36 10.17 11.16 11.70 11.06 11 34Meat 0.65 0.85 1.01 1.10 1.19 1 21 1.26

Indices: 1952/53-1956/57 ovcrage loo

Index of all farm producís 72 84 97 101 109 110 112

ANNEX TABU, SU. - NEAR EAST: EXPORTS AND IrsipolLEs OF MAJOR COMMODITIES

Average1934-38

Average1948-52 1954 1955 1956 1957 1958

(preli m.)

Million metric tonGROSS EXPORTS

Wheat and wheat flour (wheat equivalent) 0.24 0.27 1.28 0.33 0.42 0.44 0.27Barley 0.36 0.46 1.03 0.46 0.78 0.53 0.57Rice (milled equivalent) 0.15 0.27 0.13 0.25 0.25 0.32 0.41

Total grains 0.94 1.11 2.65 1.11 1.54 1.39 1.32

Citrus fruit 0.30 0.20 0.36 0.31 0.36 0.37 0.38Tobacco 0.04 0.07 0.07 0.06 0.07 0.09 0.07Cotton (lint) 0.47 0.47 0.52 0.57 0.51 0.54 0.56

GROSS IMPORTS0.29 1.43 0.91 1.31 2.12 2.45 2.02

Wheat and wheat flour (wheat equivalent) 0.52 1.79 1.18 1.84 2.65 3.12 2.65Total grains 0.33 0.54 0.73 0.84 0.92 0.90 0.94Sugar (raw equivalent)

Million cubic meters

Sawn softwood 0.38 0.71 0.62 0.47 0.51 0.48

WheatBarleyMaizeMillet and sorghumRice (milled equivalent)

Sugar (centrifugal)

Starchy rootsPulses

Citrus fruitBananas

Groundnuts (oil equivalent)Vegetable oils and oilseeds (oil equivalent)

Coffee

Cocoa

Wine

Cotton (lint)Sisal

Mill< (total)Meat

Index of all Pon producls

' Beef and vea1, mutton and Iamb, pork.

ANNEX TABLE 9A. - AFRICA: PRODUCTION OF MAJOR CONIMODITIbS

Average1934-38

Average1948-52

70

Average1948-52

186

1954/55

Indices 1952153-1956157 avera e loo

1954

1955/56

Million metric ton

1955

Million cubic nieters

1956/57

1956

1957/58

1957

1958/59(prelim.)

1958(prelim.)

2.66 3.15 4.30 3.88 4.31 3.71 3.902.60 3.18 3.77 2.95 3.69 2.17 3.244.62 6.99 8.63 8.76 9.28 8.73 9.199.31 10.67 11.38 11.14 11.17 10.99 11.03

1.11 1.72 1.89 1.99 1.93 2.07 2.08

0.95 1.36 1.73 1.92 1.97 2.15 2.25

35.40 45.43 51.41 52.31 52.76 52.03 51.771.02 1.43 1.59 1.51 1.50 1.35 1.46

0.38 0.77 1.01 1.08 1.22 1.25 1.230.30 0.31 0.45 0.49 0.50 0.50 0.50

0.56 0.71 0.82 0.94 0.94 1.15 1.051.73 2.56 2.52 2.53 2.75 2.80 2.83

0.14 0.28 0.43 0.50 0.52 0.53 0.56

0.49 050 0.49 0.52 0.58 0.46 0.542.14 1.72 2.51 2.07 2.49 2.12 1.90

0.14 0.22 0.26 0.26 0.28 0.30 0.300.16 0.23 0.29 0.30 0.31 0.33 0.33

6.82 7.87 8.65 8.72 8.85 8.87 9.041.52 1.84 2.00 1.98 2.05 2.06 2.08

106103101 10687 101

FOREST PRODUCTS

Sawnwood 1.30 1 1.79 1 1.80 1.95 1.98 1.98

187

ANNEX TABLE 913. - AuRicA: EXPORTS AND IMPORTS OF MAJOR COMMODITIES

Average1934-38

Average1948-52 1954 1955 1956 1957 1958

(prelim.)

Million metric tons

GROSS EXPORTS

Wheat and wheat flour (wheat equivalent) 0 52 0.33 0 53 0.60 0.35 0.30 0.36Barley 0.21 0.55 0.64 0.46 0 47 0.10 0.24Maize 0.67 0.36 0.79 1.02 1.31 1.39 1.58

Sugar (raw equivalent) 0.69 0.71 1.00 1.05 1.08 1.15 1.11Oranges 0.15 0.40 0.53 0.66 0.56 0.76 0.67Bananas 0.14 0.22 0.34 0.36 0.35 0.39 0.39

Groundnuts and groundnut oil (oil equivalent) 0.33 0.32 0.51 0.46 0.58 0.54 0.66Palm kernels and oil (oil equivalent) 0.30 0.33 0.38 0.36 0.37 0.35 0.38Palm oil 0.24 0.33 0.39 0.37 0.38 0.36 0.37

Coffee 0.13 0.28 0.35 0.47 0.54 0.56 0.59Cocoa beans 0.46 0.48 0.47 0.48 0.52 0.57 0.44

Wine 1.41 1.12 1.59 1.90 1.53 1.90 1.54Tobacco 0.03 0.07 0.09 0.08 0.09 0.08 0.08

Cotton (lint) 0.13 0.19 0.24 0.24 0.26 0.24 0.27Sisal 0.16 0.22 0.27 0.29 0.30 0.32 0.34

AliIlion cubic meter

Broadlcaved logs 1.19 1.88 2.36 2.32 2.40 2.41

Million metric tonsGROSS IMPORTS

Wheat and wheat flour (wheat equivalent) 0 28 0.75 0.77 0.79 0.96 0.93 0.76

Rice (milled equivalent) 0.39 0.18 0.23 0.35 0.34 0.45 0.49Sugar (raw equivalent) 0.41 0.55 0.87 0.94 0.94 1.00 0.99

ANNEX TABLE so. - TOTAL CATCH (LIVE WEIGHT) OE FISH, CRUSTACEANS, MOLLUSKS, ETC. IN SELECTED COUNTRIES

188

1938 Averae1953-5g7

1953 1954 1955 1956 19571958

(prelim.)

Thousand metric tons

WORLD TOTAL 20500.0 I 27878.0 24910.0 26800.0 28120.0 29600.0 29960.0 33400.0

A. 1953-57 average catch: 1 000 000 tono and wore

Japan 3 562.0 4 828.1 4 521.6 4 544.6 4 912.8 4762.6 5 399.0 5 505.0United States (incl. Alaska) 2 253.1 2 716.7 2 437.5 2 706.4 2 738.9 2 959.4 2 732.5 2 671.4China: Mainland ... 2 398.4 1 900.0 2 294.0 2 518 0 2 640.0 2 950.0 6 020.0U.S.S.R 1 523.0 2 375 4 1 983.0 2 258.0 2 495.0 2 616.0 2 535.0 ...Norway 1 152.5 1 875.8 1 557.1 2 068.2 1 813.4 2201.3 1 754.7 1 415.5United Kingdom 1 198.1 1 071 5 1 122.0 1 070.2 1 100.4 1 050.4 1 014.7 999.0

B. 1953-57 average catch: sao 000 tons and more butless than 1 000 000 tons

Canada (incl. Newfoundland) 836.8 999.6 925.1 1 025.8 963.7 1 091.9 991.7India 946.3 819.0 828.5 839.0 1 012.3 1 233.0 1 064.4Germany, Western 776.5 742.0 730 4 678.0 776.9 770.8 753 8 715.2Spain (incl. Ceuta and Melilla) 423.5 712.4 635.1 650.2 760.1 748.9 767.9 835.7Indonesia 472.0 642.4 616.9 628 5 669.8 636.9 ...Union of South Africa (incl. South West Africa) 66.7 597.8 638.8 623.1 607.1 536.9 583.2France (incl. Algeria) 530.3 519.1 520.3 500.2 522.7 537.9 514.5 524.7

C. 1933-57 average catch: 100 000 tons and morebut less than 500 000 tons

Iceland 327.2 476.1 424.7 455.4 480.3 517.3 502.7 ...Portugal 247.2 445.1 425.2 438.7 424.7 472.2 464.6 455.2Denmark 97.1 424.8 342.8 359.4 425.3 463.0 533.3 598.1Philippines 80.9 377.0 311.9 364.6 385.2 416.0 407.5 ...Netherlands 256.2 320.2 343.3 339.2 319.5 298.1 300.8 313.8

Angola 26.2 317.6 220.4 261.2 290.4 420.5 395.5 278.2Korea, South 838.3 302.2 258.0 249.5 259.3 340.9 403.1 395.1Korea, North 925.2 290.4 122.0 235.0 312.0 ...Pakistan ... 267.9 249.0 259.7 270.9 277.0 282.8 203.7Thailand 161.0 220.0 205.0 229.8 213.0 217.9 234.5 196.3

Italy 181.2 215.7 208.4 217.6 218.0 218.6 210.3 209.3Peru ... 212.9 147.8 176.1 213.3 297.3 483.1 750.0Sweden 129.2 205.9 199.7 201.1 219.5 197.4 222.1 ...Brazil 103.3 173.5 160.7 172.0 ... ...Chile 32.2 173.2 107.2 143.5 214.3 188.3 213.1 225.8

China: Taiwan 89.5 172.8 130.4 152.2 180.3 193.2 208.0 229.7Federation of Malaya ... 139.6 147.0 137.3 136.8 138.5 138.3 139.5Morocco 43.7 120.0 140.8 105.5 96.3 110.2 147.1 163.7FurIcey 76.0 117.9 102.5 119.4 111.5 139.5 116.7 101.3?oland 12.5 114.2 94.4 105.7 113.2 127.4 130.3 ...

Viet-Nam 180.0 110.0 ... 130.0 130.0 135.0 143.0Mexico 17.1 102.2 ... 90.9 105.8 134.8 117.5 ...Faeroe Islands 63.0 101.1 88.8 89.4 105.6 116.3 105.63urma ... 100.0 ... 100.0 ...Zambodia ... 100.0 ... 100.0 ...

French Equatorial Africa 100.0 ... 100.0Muscat and Oman 100.0 ... 100.0 ...

ANNEX TABLE IO. - TOTAL CATCH (LIVE WEIGHT) OF FISH, CRUSTACEANS, MOLLUSKS, ETC. IN SELECTED COUNTRIES (CONCLUDED)

' Only 23 of the 143 countries included in group E publish regularly annual statistics on fish catch.

189

1938 Average1953.57 1953 1954 1955 1956 1957 1958

(prelim.)

Thousand metric tons

D. 1953-57 average catch; 50 000 tons and more butless than loo neo tons

Belgian Congo 0.9 86.0 66.6 65.7 80.6 96.2 122.4 139.0Argentina 55.3 78.3 77.2 78.2 79.0 75.4 81.6Belgium 42 8 71.8 74.4 72.6 80.0 69.1 62.9Germany, Eastern 68.7 62.3 62.8 63.6 74.9Venezuela 21.; 65.9 63.3 51.8 69.6 61.3 83.1 80.3

Finland 44.4 63.1 62.1 65.5 63.3 60.2 64.5 61.5United Arab Rep. (Egypt) 38.1 62.5 52.1 56.7 63.4 70.3 80.0Greece 25.0 59.7 46.0 52.5 60.0 65.0 75.0French West Africa 57.7 50.2 51.3 54.1 61.1 72.0Australia 33.5 52.6 52.0 53.7 52.5 49.9 55.3 53.6Tanganyika 16.0 52.5 50.0 50.0 52.4 55.0 55.0

E. 1953-57 average catch: less than 50 000 tons'

Hong Kong 45.0 39.6 46.7 45.9 ...Aden 41.4 75.8 51.9 34.8 21.8 22.6New Zealand 27.0 38.5 36 6 36.9 39.2 ... ...Uganda 35.1 23.4 24.6 34.4 45.0 48.0 ...Ceylon 33.1 25.5 29.7 31.3 40.3 38.5 40.7

Greenland 4.7 26.9 25.0 24.9 25.8 27.4 31.5 33.5

Ireland 12.8 26.2 19.0 21.5 23.6 30.5 36.6

Yugoslavia 16.8 26.1 25.7 23.0 22.6 28.4 30.7 31.4

Ethiopia and Eritrea, Fed. of ... 20.8 20.5 25.2 18.1 ...Colombia 10.0 20.3 16.0 16.0 18.0 21.2 30.1 25.0

Kenya ... 15.0 18.7 17.6 12.7 12.7 13.4 ...Ryukyu Islands 12.0 13.3 8.8 15.1 13.6 13.7 15.8 16.5

Cuba 10.0 13.2 10.2 11.5 12.8 15.6 ... ...Sudan 8.8 12.4 12.1 12.9 13.6 13.5 9.9

Tunisia 9.6 11.6 11.5 13.6 10.8 11.9 14.0 15.2

Israel 1.7 8.9 7.7 9.2 10.7 10.3 11.6 12.6

Singapore 1.5 8.3 5.7 6.3 6.2 9.6 13.8

Hawaii 7.0 7.5 8.6 9.3 7.0 7.5 4.9 5.1

Sc. Pierre and Miquelon 1.9 7.3 5.9 6.8 6.8 9.3 7.9 8.3

Ruanda Urundi ... 6.1 4.2 5.6 5.6 5.4 9.7 11.5

Uruguay 3.6 4.9 3.4 4.0 4.9 5.4 6.9 6.4

Mauritius 2.0 1.7 1.6 1.6 1.7 1.7 1.7

Malta and Gozo 1.1 0.9 1.0 0.8 0.8 0.8 1.0

ANNEX TABLE II. UNITED STATES COMMODITY CREDIT CORPORATION, QUANTITY AND VALUE OF INVESTMENT

WheatRice

Barley

OatsMaize

Grain sorghum

ButterCheese

Dried milk

LinseedLinseed oilCottonseed oil

Cotton heteraCotton, uplandWool

Tobacco

Other commodities

TOTAL

Quantity (30 April)

Thousand metric tons

24 208 28 156 29 073 24 45358 763 1 322 804

622 2 044 1 987 1 774

589 1 052 1 222 650

20 568 22 255 29 192 34 8011 029 2 927 2 887 2 040

165 149 34 16

164 176 130 87

298 101 81 65

382 201 41 351

31 37 26

469 170 5

279 318 141 201 674 1 817 2 839 2 056

55 70 54 24

281 366 402 451

Change from previous year

Value (30 April)

Million dollars

24 174 33 937 2 155 2 633 2 795 2 411 2 402 3 105732 535 6 98 232 107 104 81

2 698 3 242 34 107 92 87 114 155

732 1 376 32 58 60 32 32 5737 211 39 206 1 296 1 437 1 926 2 289 2 414 2 4868 295 13 498 60 167 128 105 393 706

45 20 245 212 44 21 60 2674 5 146 156 111 73 62 470 59 109 38 30 24 26 20

59 279 56 25 5 42 7 31

13 14 927 185 64 2 7

58 67 31 5

973 1 628 1 268 1 439 2 268 1 580 642 1 26081 103 82 35

427 414 270 406 535 609 590 594175 237 287 396 405 401

SOORCI3: Report of Financial Conditions and Operations, United States Department of Agriculture, Commodity Crecit Corporation, April 1955, 1956, 1957,1958, and 1959.

' Stocks pledged for oustanding loans and stocks in price support inventory.

190

6 189 7 261 8 633 7 816 7 251 8 933

+ 97 + 17

Percentage

+ 19 9

1956 1957 1 1958 1959195519541958 I 19591954 1955 1956 1957

7 + 23

ANNEX TABLE 12. - AVERAGE WORLD EXPORT UNIT VALUES IN U.S. DOLLARS : MAJOR COMMODITIES

Average1958

19571958

(prelim.)

eollars per metric ton

77.7 65.8 62.0 62.2 63.1 63.3 63.0 61.2 62.3 62.4 62.2 62,0109.2 95.3 85.0 82.7 89.1 85.9 87.5 81.6 82.2 85.2 81.7 81.768.6 52,6 50.4 49.1 41.3 50.5 47.6 46.8 46.5 47.4 50.1 52.375.6 60.6 57.4 50.2 58.9 56.3 55.5 52.0 51.6 50.8 50.3 48.6

171.8 131.3 114.7 120.5 116 5 112.9 110.4 119.7 120.0 117.4 125.2 122.2

102.4 96.6 103.9 99.1 106.8 120.0 120.7 109.5 102.1 99.9 96.2 98.1

96.4 106.4 124.0 151.8 106.9 116.1 151.1 148.5 184.1 215.2 90.3 120.099.8 99.2 103.2 93,7 100 5 101.2 102.6 99.2 92.6 94.0 94.2 93.995.1 101.0 124.2 121.6 130.1 127.3 125.8 131.4 116.0 124.1 163.3 123.7

223.4 234.0 297.2 349.5 296.7 314.2 298.1 305.7 345.2 337.8 342.7 369.6

169.1 161.6 141.4 168.3 139.7 137.9 110.2 142.6 158.3 168.9 169.5 175.7154.1 129.2 122 6 124.3 126.9 120.7 119.7 119.3 124.1 122.7 124.1 126.3111.1 104.0 93 3 86.4 94.7 91.9 93.5 87.8 87.8 90.1 89.3 83.1225.0 198.0 203.9 172.0 213.5 221.3 212.3 190.7 179.0 174.8 154.5 162.4

612.4 562.4 703.9 603.4 683.2 701.2 671.2 634.8 623.6 618.2 597.8 574.0279.2 263.5 236 5 280.6 227.7 249.4 236.1 252.3 267.1 268.4 272.9 311.4216.6 191.8 220.0 199.6 232.0 227.5 213.2 217.0 211.2 206.6 195.3 187.1

272.4 251.7 237.8 264 8 249.4 240.1 232.3 239.3 240.2 240.3 215.9 263.0306.9 322.9 341 3 306.5 347.7 342.6 316.1 318.0 320.6 327.5 289.4 281.1

407 5 369.7 418.4 369.6 435 8 449.2 394.6 425.7 375.4 388.0 352.4 355.2

127.2 141.0 129.2 133.3 128.6 129.7 146.6 111.1 133.9 138.7 138.0 123.9456.1 444.4 400.9 487.6 431.0 393.8 397.2 455.3 436.3 480.8 501.1 523.3

306 7 402.3 435.5 410.4 469.2 447.4 454.4 426.5 442.9 390.3 402.8 383.9702.1 656.9 700.8 688.7 718.3 638.9 714.2 614.0 614.1 704 0 703.2 736.7871.6 872,4 803.1 827.8 784.5 801.6 691.0 841.7 792.4 823.5 827.4 872.9

573 3 560.0 635.2 508.7 675 6 624.0 592.0 555.5 494.1 473.3 489.3 571.5951.5 956.9 851 0 614.8 772.3 753.9 832.2 800.1 681.6 580.8 568.4 618.4705.4 647.1 636.7 599.9 518.8 539.1 666 8 730.2 594.7 579.7 574 8 630.3

332.1 306.0 322.3 314.4 340.5 325.5 332.1 318.8 335.8 318.6 292.7 312.5

499.8 398.0 401.4 380.0 449.5 441.8 409.6 414.3 402.1 347.8 396.0 378.3

58.9 47.4 57.2 59.6 49.0 56.9 52.4 57.4 52.0 69.8 56.7 55.573.9 72.1 62.1 50.2 77.0 70.1 67.1 64.9 60.2 55.2 57.5 62.6

1 143.4 1 282.2 1 075.3 902.3 1 121.3 1 102.9 1 042.5 1 008.8 957.7 928.3 914.7 826.0674.5 956.9 568.2 851.5 519.6 474.5 568.5800.5 894.2 944 9 824.0

984.9 1 398 3 1 262.5 1 223.2 1 354.2 1 151.1 1 211.8 1 r42.12 1 171.5 1 185.9 1 22:42 1 223385,62

162.4 144 3 166.1 217.0 164 2 172,4 173.4 189.6 184.1 206 3

1 239.6 1 285.8 1 305.6 1 351.4 1 353.4 1 390.3 1 337.0 1 396.4 1 407.5 1 363.5 1 268.5 1 367.5

147.1 119.6 129.5 125.0 131.3 116.6 98.1 123.6 130.5 127.4 122.0

309.6 184.5 278 6 298.0 301.0 253.3 240.8 203.8 294.1 326.6 271.8

895.0 826.9 739.0 699.1 753.4 749.5 724.6 730.5 712.2 747.1

213.2 184.0 196.4 195.4 214.8 194.3 207.3 208.4 205.8 174.5

286.7 164.2 118.4 143.0 146.3 143.5 134.5 137.6 137.6 135.6

1 536.5 1 480,4 1 520.6 1 148.0 1 688.3 1 704.4 1 640.9 1 505.5 1 324.2 1 180.5

576 2 574.7 622.0 506.0 638.0 611.2 615.0 563.4 532.4 482 8

191

634.8193.3142.8

1 079.7498.6

1947-49 1950.51

Wheat 94.4 72 6Wheat flour 127.2 99.8Barley 81.6 63.9Maize 78 4 69.3Rice (milled) 152.7 131.1

Sugar (raw) 103.0 110.2

Apples 112.1 98 2Bananas 102 1 102.6

Oranges and tangerines 116.3 104.4

Raisins 264 7 260.2

Copra 204.5 209.3Palm kernels 129.7 146.3Soybeans 118.3 107.5

Groundnuts (shelled) 198.9 177.4

Olive oil 919.4 690.4

Coconut oil 356 4 362 6Palm oil 240 0 255.6Palm kernel oil 336.4 332,1

Soybean oil 467.6 391.3

Groundnut oil 464.9 442 2

Catde 118.5 143.4Beef and veal 322.9 396 9

Mutton and lamb 288.5 255.9Bacon 724.4 626.9Canned meat 539.2 768.7

C:heeses 691.0 525.5Butter 996.1 835.3Eggs (in shell) 767.3 624.7

Milk (condensed) 349.5 308.2k1ilk (powdered) 547.4 406.7

Potatoes 58.2 49.3Oilcakes 86.7 74.0

Coffee 533.4 1 039.5Cocoa beans 530.6 630 3Tea 1 162.3 1 027.1

Wine 235.1 171.2

Tobacco (unmanufactured) 1 142.0 1 137.4

Linseed 193.0 155.0

Linseed oil 554.9 383 3

Cotton 784.6 1 011.9Jute 314.2 286.5Sisal 277.2 347.2

Wool (greasy) 992.7 2 135.4Rubber (natural) 380.0 878.3

1 1952-53 1954-55 1956.57 (prelim.) Iv IV

122.9286.5

699.8198.0146.1

985.4510.0

ANNEX TABLE 13. - U.S.S.R.: AGRICULTURAL INVESTMENT AND OuTpuT

SOURCE: Official statistics.' It is understood that the increase in state payments represents primarily increased prices rather than a larger volume of deliveries. - Conventionalunits of 15 h.p.

192

Item Time reference First period Second periodAverageannual

increase

.... Thousand million roubles .... PercentageCAPITAL

State investment Averages 1951-55 and 1956-57 12.6 22.3 18Investment by collective farms 13.3 22.7 17

Long-term state credit to collective farms 1950 and average 1955-57 3.0 6.4 13

State payments for deliveries by collective farms and private producers ' 1952 and 1957 31.3 96.7 25

MillionsMANPOWER

Conventional working days performed on collective farms 1952 and 1956 8 847 11 103 6

ThousandsManpower on state farms 1952 and 1957 1 640 3 016 13

FARM MACHINERY

Tractors' 1953 and 1958 1 239 1 700 7

Grain combines 1953 and 1957 318 483 11

Trucks 1953 and 1957 424 660 12

Thousand metric tons

Use of mineral fertilizers 1953 and 1957 6 569 10 432 12

Million hectares

SOWN AREA Averages 1950-53 and 1954-57Fodder crops 24.7 38.5 12Other crops 128.4 146.6 3Total 153.1 185.1 5

Millions

LIVESTOCK NUMBERS Averages 1949-53 and 1954-58Cattle 57.3 62.9 2Pigs 27.1 39.7 8Sheep 89.0 112.1 5

Thousand million roubles

AGRICTJLTURAL PRODUCTION Averages 1949-53 and 1954-58Gross value 300.0 400.0 6

Million metric tons

Grain 80.9 112.9 7Potatoes 75.7 83.3 2Vegetables 10.0 13.9 7lugar beet 21.1 35.4 11Cotton (raw) 3.5 4.2 4'lax 0.23 0.40 12

s1eat Averages 1951-54 and 1955-58 5.5 7.1 7

lilk 36.1 51.1 9

vVool 0.22 0.28 6

Thousand million

]ggs 15.2 20.9 8

ANNEX TABLE 14. - NATIONAL. PRODUCT PER CAPUT', SHARE OF DOMESTIC PRODUCT ORIGINATING IN AGRICULTURE,

AND PROPORTION OF AGRICULTURAL AND RURAL POPULATION

Per caput netnational productat factor cost

U.S. $ Percentage

2 3 I 4 5

Share of domesticproduct generated

in agriculture

193

Proportion of totalpopulation

dependent onagriculture a

Proportion of ruralpopulation in total a

Disparity factor(per caput incomegenerated in agri-culture/per caputincome generated

in other industries) a

Ratio

SOURCES: C01. T: United Nations Statistical Papers, Series E and H, Per capita national pro hict of 55 countries 1952-54, and national sources for Sweden,Australia, Yugoslavia, and Turkey. Col. 2: United Nations Yearbook of National Accounts Statistics, 1957, and national sources for Sweden andAustralia. Col, 3: FAO, Production Yearbook, 1957, Table 4, and national sources for United States, United Kingdom, Australia, Sweden, Nether-lands, Norway, Finland, Turkey, and Japan. Col. 4: United Nations Demographic Yearbook, 1955.

' The data derived from the main sources refer to the concepts used in the sources and to the period 1952-54, except where otherwise stated; the data fromSweden refer to gross domestic product at market prices and the year 1950; the data from Australia to narional income and net product of agriculture in1953[54. In Yugoslavia and Turkey, the exchange rate of the currency has fteen ad(usted. -- a Figures in parentheses refer to proportion of total male workersengaged in agriculture, other data to proportion of total population dependent on agriculture. In most countries, the data are derived from the latest avail-able census and may therefore refer to a period slightly different froto that of columns t and 2 (195)). In the United States, data referring to farm popula-tion; in the United Kingdom, annual returns referring to 1953 have been used; in Denmark, Norway, Germany, the Netherlands, Ireland, and Italy, currentreports on agricultural manpower, referring to 1953, have been used, assuming total manpower to be a constant fraction of the total population over the yearsbetween the census and 1953. - ' The data refer in each case to the year indicated in the source, which may differ somewhat from the tinte reference in theother columns. - The " disparity factor " expresses the proportion of income originating in agriculture, as per caput of the population dependent on agricul-ture, over income originating in other industries, as per caput of population dependent on other industries. Tisis factor has been derived from the data incolumns 1, 2 and 3, by calculating the per caput amounts originating in each of the two main sectors atad thereafter the proportion between these amounts.

United States 1 870 5 14 36 0.3

Canada 1 310 12 16 38 0.7

Sweden 1 160 14 23 53 0.5

New Zealand 1 000 24 (22) 39 1.1

Australia 950 22 (16) 31 1 . 4

Luxembourg 890 10 17 (22) 42 0.5

Belgium 800 8 13 37 0 . 6

United Kingdom 780 5 ( 7) 20 0.8

Denmark 750 21 (24) 35 0.6

France 740 16 (26) 44 0.6Norway 740 15 (27) 68 0.5

Finland 670 24 42 (46) 68 0.4

Germany, Western 510 10 (14) 29 0.7

Netherlands 500 12 (16) 45 0.7

Israel 470 12 18 16 0.6

Argentina 460 19 (30) 38 0.5

Puerto Rico 430 20 (47) 60 0 , 3

Ireland 410 33 (44) 59 0.6

Austria 370 16 22 (25) 51 0.7

Chile 360 15 (37) 40 0.3

Italy 310 25 (39) 0.5

Union of South Africa 300 16 (47) 57 0.2

Lebanon 260 20

Colombia 250 39 53 64 0.6

Panama 250 34 (58) 64 0.4

Brazil 230 30 (63) 64 0.3

Greece 220 36 (49) 63 0.6

Portugal 200 30 (52) 69 0.4

Yugoslavia 200 30 59 (60) 84 0.3

Turlsey 190 23 (34) 63 0.6

Japan 180 27 46 0.4

Jamaica 170 46 (70) 78 0.3

Philippines 150 43 (71) 76 0.3

Ecuador 150 40 (62) 72 0.4

Honduras 150 50 (83) 69 0.2

Paraguay 140 51 56 (63) 65 0.8

United Arab Republic (Egypt) 120 35 (63) 70 0.3

Peru 120 33

Ceylon 110 53 (51) 5 1.1

Thailand 80 48 66 90 0.5

Belgian Congo 70 27 (69) 0.2

Korea, South 70 38 80

Pakistan 70 59 (76) 89 0.5

Kenya 60 83 95

India 60 48 70 (69) 83 0.4

Burma 50 44

SOURCES: United States:

United Kingdom:

Italy:

Yugoslavia:

ANNEX TAL/LE 15. FAMILY LIVING EXPENDITURE IN SELECTED COUNTRIES

(all figures rounded)

'Urban: Stu( y of consumer expo &titres, incomes and savings. Statis lea! tables, Urban U.S. -- xpso. Tabulated by theBureau of Labor Statistics, U.S. Department of Labor, for the W larton School of Finance and Commerce, Universityof Pennsylvania, Vol: s 2, US, 1956-57. Farm operators: Farmers' expenditures in 1955 by regions. U.S.D.A., StatisticalBulletin No. 224.

Report of an enquiry into household expenditure in 15.53-54. Ministry of Labour, London, 1957.

Striatum ed elasticita dei consioni di un campione di famiglie italiane, Istituto nazionale per lo studio della congiuntura.

Statisticli godi;njak ENRj, 1958.

Japan: Urban: Family income and expenditure in postwar Japan, 1946-1955. Bureau of Statistics. Farm households: Report onfarm household cost-of-living survey, April 1955 - March 195 6 (in japanese), Ministry of Agriculture, 1957.

Colombia: United Nations, Analyses and projections of economic development, 3. The economic development of Colombia. Geneva, 1957(E/CN. 12/365/Rev, 1.).

Jamaica: Kingston: Household expenditure survey 1953-54. Jamaica, Department of Statistics, 1955. Rural areas: Rural householdexpenditure survey 1056: Jamaica, Department of Statistics, 1957.

Ghana: Gold Coast, Statistical atad Economic Papers, No. 2 (1953 Accra survey of household budgets), No. 3 (1954 Ahuse surveyof houselwlel budgets) atad No. 6 (Survey of population and budgets of cocoa-producing farmers in the Oda-Swedrit-Asamankesearea 1955-56).

Ivory Coast: Emptéte nutrition niveau de vie, Subdivision de Bongottattou, 1955-195 6. Territoire de la COte-d'Ivoire, Service de lastatistique.

United Arab Rep. (Egypt): Analysis Qr the surveys in the villages of Egypt, 1955 (in Arabic).

Thailand: Thailand economic farm survey, 1953. Division of Agricultural Economics, Ministry of Agriculture, Bangkok.

India: Urban atad rural: The national sample survey, No. 3, Tables with Notes on the Third Round, August-November 1951. Delhi,Department of Economic Affairs, 1954. Agricultut:al laborers: B. Ramamurti, Agricultural labour, how they work and live.All-India Agricultural Labour Enquiry. Delhi, Ministry of Labour, 1954.

See also: FAO, Review of food consumption surveys. Rome, 1959.

191

United States

United Kingdom

Italy: North

Italy: South

Yugoslavia

Japan

Jamaica

United Arab Rep. (Egypt)

Ghana

Ivory Coast

Thailand

India

Year Coverage

Per capue expenditureper year Thereof apene on

In national currency In US$ Food Clothing Housing,etc.

1 Otheritems

19501955

1953 /54

1953

1953

1955

1955

1955/56

19541956

1955

1953

19541955

1955 /56

1953

1951

1950/51

UrbanFarm operators

UrbanRural

NonfarmFarm

NonfarmFarm

WorkersFarm

Urban workersFarm

KingstonRural

Rural

AccraAhuse townCocoa farmers

Rural (one district)

Farm

UrbanRuralAgricultural labor-

ers

$1 2708990

£220£210

Lire 284 000" 200 000

" 194 000" 146 000

Dinar 56 30048 700

Yen 56 80049 500

£48

Eg. £ 33

21

24

£45£27

£23

CFA 32 000Francs (per con-

sumption unit)

Baht 4 600

Rupees 422295

100

1 270990

620590

455

320

310235

140120

160135

...135

95

6070

125

75

65

100

65

9060

20

31

35

33

32

4255

45

52

56

67

45

49

5669

68

6966

6464

66

80

71

53

66

85

1211

1013

19

16

19

18

1412

11

11

6

11

...

12

17

17

4

9

77

6

Percentage

27

23

21

19

17

13

15

11

13

11

16

15

5

14

10

9

7

9

8

2

30

31

36

36

22

16

21

19

8

33

24

23

15

10

9

8

13

31

19

7

TOTAL F000 EXPLND1TURE

Bread and cerealsStarchy food, etc.SugarPulses and nutsVegetables and fruit

Meat productsFish productsEggs

Mill< productsButter

Fats and oilsNonalcoholic beveragesAlcoholic beveragesMeals outside che homeOther food

TobaccoClothing

ANNEX TABLE 16. - INCOME ELASTICITY COEFFICIENTS OF FOOD EXPENDITURE

IN RU RAI AND URBAN DISTRICTS IN SELECTED COUNTRIES

SouRcEs: As for Annex Table 15, except for the United States, which is: Household food consumption survey 1955. Report No. 1. Food Consumption of Householdsin the United States, U.S.D.A., 1956.

' County of London and other urban areas with more than mo,000 population. - 'Central North Region. - 3 South. - 'Fourth round. - 'Includingpotatoes. - 'Plus meat. - 'Including condiments.

195

United States United Kingdom1955 1953/54 Italy 1953 2 Italy 1953 Japan 1955 India 1952'

Rural Urban Rural ' Urban Rural Urban Rural Urban Rural Urban Rural Urban

0.18 0.39 0.6 0.7 0.65 0.58 0.74 0.69 0.48 0.6 0.87 0.79

0.01 0,16 -0.2 0.05 0.27 0.21 0.33 0.20 0.38 ), 0.2

0.69 0.330.20 0,16 0.4 0.05 ... - 0.55 S ... ...0.02 0.27 0.9 0.9 0.78 0.50 0.92 0.89 1.43 1.09

- 0.17 0.16 ... ... 0.30 0.65 ... ...0.16 0.36 0.6 0.6 '0.60 '0.67 50.60 '0.79 0.33 0.6 ...

0.27 0,31 0.3 0.3 0.88 0.71 1.25 1.07 ". 1.15 1.260.28 0.24 0.5 0.0 0.81 0.63 1.06 0.93 1.03 0.5 S

0.01 0.18 0.7 0.30.02 0.28 0.45 0.1

0.50 0.38 0.76 0.78 60.83 61.2 1.86...

1.53...

0.17 0.50 0.1 0.0 )

t, 0.81 0.54 0.83 0.70 1

- 0.13 - 0,02 0.0 0.0 () ( '0.31 1.16 1.01

0.06 0.28 0.2 0.05 )

0.86 0.72 1. 18 0.95¡ 0.71 1.05 ... ...

0.95 0.85 2.0 3.3 1 0.80.920.22

0.850.34

2.50.7 5'00.6 ) .15

i1.29 1 0. 74 1.09 .,1.52

( 0.541.60.4

...0.93

...1.01

2.5 3.3 0.90 0.78 0.95 0.48 0.18 -0.2 ...... ... 1.53 1.16 1.13 1.24 1.95 1.7

ANNEX TABLE 17. - AVERAGE FOOD CONSUMPTION IN RURAL AND URBAN AREAS IN SELECTED COUNTRIES

(per rapla per day)

196

Protein

' Per nutrition unit - adult male, 25 years of age and over. - Rijeka, Split, Garazin, Zagreb. - Per consumption u

SOURCES: United States: Dietary Levels of Households in the U.S. Household Food Consumption Survey 1955, Report No, 6.

United Kingdom: Domestic Food Consumption and Expenditure:1956, Ministry of Agriculture, Fisheries and Food, Annual Report of the NationalFood Survey Committee.

Yugoslavia: E. Ferber and H. Mayer, Prilog ispitivanju prehrane...and Prehrana i tdezin titjejcaj...

Poland: A. Szczygiel, Results of a food consumption survey carried out among the families of workers and clerks employed in four branchesof in-dustry, Zagadnienia ekonomiki rolnej, No. 3/1958.

Japan: Nutrition it; Japan, 1957, Ministry of Health and Welfare, japan.

Colombia: FAO, Report to the Government of Colombia on food and nutrition policy in Colombia, ETAP Report No. 858, 1958.

Ecuador: La realidad alimentaria del Ecuador - Un estudio de cinco encuestas alimentarias. National Institute of Nutrition, Quito.

Costa Rica: Estudio cooperativo INCAPIFAO. Instituto de Nutricion para Centroamerica y Panama.

India: A supplement to the results of diet surveys in India 1935-48, Netv Delhi 1953 (Indian Council of Medical Research); Diet and nutritionstudies in rural areas in Bombay State, Karat Cotntnunity Project Area,

Nigeria: Tribal nutrition and health in Nigeria, 'The Journal of Clinical Nutrition, Vol. 2, 1952-53. B.M. Nicol, The nutrition of Nigerian pea-sants with special referettce to the effects of deficiencies of the Vitamin B.

Cameroons: Enquete sur Palimetztation au Cameroun. Evodoula, 1955.

Ivory Coast: Enquete nutrition - niveau de vie, Subdivision de Bongottanou,1955-1956. Territoire de la C6te-d'Ivoire, Service de la statistique.

Date Coverage of sample CaloriesTotal Animal

Fat

Grams

United States 1955 Urban:' all households 3 050 103 152

Rural farms 3 660 109 170

United States 1955 Urban: all households 4 230 121

Rural farms 4 880 124

United Kingdom 1956 London 2 560 75 46 109

Provincial conurbations 2 639 77 43 108

Other urban 2 610 75 42 108

Rural 2 786 78 41 108

Yugoslavia:Croatia 1956 Four industrial towns,' 837 families 2 540 76 27 83

1954 64 villages 2 470 79 25 65

Poland 1957 Industrial workers 2 723 63 31 98

1955/56 Individual farms 3 547 88 37 106

Japan 1956 Urban areas 2 034 70 25 24

Rural areas 2 158 68 20 19

Ecuador 1953 /54 Urban: Cuenca 1 843 53 20 43

Rural: Otavalo 1 697 55 2 22

Quinind6 2 035 56 29 42

Costa Rica 1950 Urban 1 987 59 18 35

Rural farms 1 889 48 7 31

India 1935-48 Urban (Delhi) 3 293 119 6 36

Bihar (mainly rural) 2 277 74 6 22

1953/54 Rural (Bombay State selected area) 2 588 71 7 169

Cameroons (French Adm.):Evodoula 1954 Mainly cocoa farmers 1 955 48 14 65

Ivory CoastBongouanou 1955 /56 Village 2 061 61 25

" Campements" 2 384 79 36

ANNEX TABLE 18. - ILLITERACY R.ATES FOR SELE'CTED COUNTRIES, BY URBAN AND RURAL AREAS

Date of censusor survey

SOURCE: UNESCO, Statistical Division, April 1959.

Age level of population

197

Population

Percent illiterate

Total Male Female

Percentage

Argentina Census 1947 14 and over Urban 8.8 7.0 10.5Rural 23.2 20.9 26.2Total 13.6 12.1 15.2

Brazil Census 1950 15 and over Urban 21.7 15.3 27.1Suburban 38.6 31.3 45.3Rural 66.9 60.9 73.3Total 50.6 45.2 55.8

Ceylon Census 1946 15 and over Urban 23.1 15.7 34.7Rural 39.9 23.6 58.3Total 37.0 22.1 54.8

Chile Census 1952 15 and over Urban 10.4 7.5 12.7(2% sample) Rural 36.0 33.0 39.3

Total 19.9 18.1 21.5

Costa Rica Census 1950 15 and over Urban 8.1 6.1 9.7Rural 27.9 26.7 29.3Total 20.6 19.9 21.4

Cuba Census 1953 15 and over Urban 11.1 11.0 11.2Rural 10.0 42.6 36.7Total 22.1 24.2 20.0

Cyprus Census 1946 15 and over 6 towns 27.1Villages 43.3Colony 39.5

Dominican Republic Census 1950 15 and over Urban 29.5 23.5 34.2Rural 67.3 65.3 69.5Total 57.1 55.3 58.9

El Salvador Census 1950 15 and over Urban 34.7 27.2 40.8Rural 77.1 72.8 81.5Total 60.6 56.4 64.5

Greece Census 1951 15 and over Urban and semi-urban 19.5 9.5 29.0Rural 33.7 14.9 49.9Total 25.9 11.9 38.6

Honduras Census 1950 10 and over Urban 43.6 41.4 45.6Rural 74.7 72.3 77.2Total 64.8 62.9 66.7

Japan Sample survey 1948 15-64 years " complete " or Urban 1.2" partial " illiterates Rural 2.6

Total 2.1

Panama Census 1950 10 and over Urban 7.2 6.0 8.3(excluding tribal Indiana) Rural 42.9 41.1 44.9

Total 28.3 27.7 28.9

Puerto Rico Census 1950 10 and over Urban 18.0 14.4 21.2Rural 29.7 26.8 32.9Total 24.7 21.8 27.6

Union of South Africa Census 1946 10 and over Urban 54.7 58.4 46.9(native population) Rural 78.3 78.0 78.5

Total 72.4 71.5 73.3

United States Sample 1952 14 and over Urban 2.0 2.1 1.9Rural nonfarm 2.1 2.7 1.5Rural farm 5.7 7.1 4.1Total 2.5 3.0 2.1

Venezuela Censas 1950 15 and over Urban 29.5 23.7 35.2Rural 72.0 67.0 77.3Total 47.8 42.8 52.8

Tip. Squarci - Roma, Via Labicana 92

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