- Email: [email protected]
Government grain reserves
higher than the market price, in order to profit the farmers. When the price was high, they should sell it at the normal price, lower than the market price, in order to profit the
Reports
consumers.“’
Government
grain reserves
Some historical notes During the 197Os, there has been a great deal of global interest in the establishment of government grain reserves. This interest was solidified in May 1973 with a proposal of the Director General of FAO concerning ‘international action to assure adequate basic food stocks’.’ This proposal found further support at the World Food Conference in November 1974. Since there have been numerous then, economic studies on various aspects of grain reserves.* But few, if any, recent reports provide much historical background beyond a few references to the 1973 FAO proposal or to Joseph’s experiences in ancient Egypt, roughly between 1720 and 1550 BC.3 My aim here is to provide an introduction to some of the in main historical developments government reserves occurring between the above two dates. It is quite incomplete. And much of it is derived from an exceptional but little known article by Derk Bodde in 1946.4 Still, this note should provide more historical perspective than is currently available. And hopefully it will stimulate someone to look more deeply into the matter.
Pharoah liked the suggestion, released Joseph from his dungeon, and put him in charge of the programme. ‘And the seven years of dearth began to come . . . and the dearth was in all lands; but in all the land of Egypt there was bread . Joseph opened all the storehouses, and sold unto the Egyptians . And all countries came into Egypt to Joseph for to buy corn; because that the famine was so sore in all
also Public storehouses were established in ancient Athens. Boeckh reports that ‘considerable supplies were purchased at the cost of the state’ and that the ‘grain was sold to the people at a very low price’. In some cases it was given away; this reportedly happened frequently in Rome. ‘In both cases they were made for the purposes of pacifying the poorer classes’.’
reserve
system
interpreting Joseph
a
suggested
in
established
ancient
dream
of
Egypt.
a In
Pharoah’s,
that he:
‘.
appomt officers over the land, and take up the fifth part of the land of Egypt in the seven plenteous years. And let them gather all the food of those good years that come, and lay up corn under the hand of Pharoah, and let him keep the food in the cities. And that food shall be for store to the land against the seven years of famine, which shall be in the land of Egypt; that the land perish not through the famine.”
FOOD
POLICY
November
1977
0
0
0
Farmers themselves are usually short-sighted people, incapable of watching out for their true interests. Unless the protected by government, farmers are helpless and easily exploited by merchants. Grain is a basic necessity of life, so that its price directly affects the welfare of all society. Natural calamities often prevent the price of grain from following the normal law of supply and demand.
The major problems
centred around
1. The long delays in statistical and price reporting. 2. Difficulties in transportation. 3. The complexity of the law. 4. The corruption of some government
China The most extended experience with reserves has been in China. An early description in English was provided in 1911 by Chen Huan-Chang.8 As early as 400 BC the minister of the State of Wei reportedly: government
As is well known, Joseph
0
lands.‘6
‘ . instituted
Egypt and Greece
In terms of operations, the programme was carried out for the farmers and other social groups, but not by them. ‘Furthermore, the government itself became a major operator in the agricultural market, for it acquired large quantities of grain which it stored in its own granaries’.‘* The programme was felt to be beneficial because (as summarized by Bodde):
a
system
whereby
the
would buy
from the farmers a certain percentage of their grain in years of good harvest, and in times of famine would sell this grain at the normal price.‘9
When the scheme was carried out, it ‘not only made the people rich but also made the state strong’.‘O The first measure to be called the ‘constantly normal granary’ (ch’angp’ing-ts’ang) was instituted in 54 BC. It were involved, once granaries established, the use of a constant pricing policy: ‘When the price of grain was low, they [the provinces] should buy it at the normal price,
The system reportedly was maintained in operation, on and off, until the early 1900s. A further and somewhat different perspective on reserves was subsequently provided by Hsiao.i4 He indicated that the ‘ever-normal granary’ (ch’ang-p’ing-ts’ang) was one of three sets of local granaries, the other two being charity or town granaries and community or rural granaries. Local granaries were distinguished from imperial granaries. Part of the reserves of the ‘ever-normal granary’ came from government sources, mainly through purchase with government funds, although contributions from wealthy persons were accepted. Hence they were essentially government granaries and were directly managed by local government officials. The grain reserve was lent to needy peasants or sold at below current market prices, as the
345
situation required. E&o claims that the system was never very effective, largely because of the apath& attitude of local u&i&.. The granaries gradually degenerated from the late 1700s wnwards and were assumed to have been finally liquidated by the revolution Of1911. it is not known to what extent these early grain reserve systems were emuiated, or devised independently, elsewhere.zs
The USA Henry Wallace became familiar with the Chinese system through reading the work of Chen Huan-Chang cited above, In 1918, he made brief reference to the Chinese experience in Wallaces ’ Fur’armer.‘” It was discussed in greater detail under the title of&The ever normal granary’ in I%%” and was mentioned again in 1927.1* Citing an unidentified Californian, who had suggested a variant for cotton, the latter editorial said:
‘The mathematical rules for buyia$ and selling should be fixed by statute and work automatically, nut being left to the discretion of pub5c o~cids. The go~~er~m~~t sho&d carry the interest and warehouse charges as a fegitimate contribution to the public welfare.’
Wallace felt that there was merit in the idea and that ‘Some day the ‘“ever normat granary” idea wilt be made ta fir modern cuaditiuns’.” During the &d-19X%, Wailace, who was by then Secretary of Agriculture, argued for an ever-normal granary on a number of occasions.2o According to Badde : ‘The
urgent
need
far
subsequent, and much more general, Agricultural Adjustment Act of 1938. The msin emphasis, however, was an farm
price suppcirL2’
An international dimension
In January 1942 Wallace suggested a more widespread adoption of the principle in an article in the A&%zinri& ~~~~~~~~~~~ ‘As part of the effort to win the peace, I am hoping that what might be called the ‘ever normal granary principle’ can be established for a number of commodities on a worldwide scale.“”
Buch ~~~~s~~~i~~ was
During the summer of I943 a United Nations Conference on Food and with that of 1934, largely wiped out previous Agriculture was held at Hot Springs, surpluses and caused serious shortages in Virginia. some products. The return of good weather The conference recomin 1937, however, brought renewed mended, among other things, that surphzses, and this attemacion , . . focussed ‘adeQuate reserves should be maintained attentionon tk needfor an ail-weather farm to meet aft consum~t~o~~ needs’ and that program that woalld give protection against ‘provision should be made, when both types ofhazard.‘Z1 applicable, for the orderly disposal of surpluses’. The Some of the general features of an eversame conference normal granary were embodied in the propostr the establishment of a heightened
by the drought
of
1936, which,
Scope:
Information on policy proporals, decisions and implementation in sciance, technology and public affairs IS often diverse and difficult ty locate. The airrr of POLICY PUBLICATIONS REVIEW IS to facilitate easy access to the numerous policy-orientated pubiicatjons issued throughout the wurlei, many cf which do not appear in the establrshed information and distribution networks. Contents: Pubiicatioos incfuded in the journai are selscterl from a vast range of government, institutional, university, professional and other sources from ail over the world. The citatlclns are classified urrd@r 24 main categories for easy reference and include the following information where relevant: title -, author -brief description of - publication date ““_lprice scope or contents - serial number - source organisation country of origin. Each entry ts co&d for easy reference nwi cross-indexed in other categories where necessary.
Readership: Execufives, policy makers and pianrrers, researchers, information officers and iibraiians in gcrvernment, industry, universities, institutes and organisatiorls who need to keep up-to-date with the latert and most significant policy-orientated publications. ISSN 03074757
Annual tibwription and Frequenoy Pubtished atternate months
ipc science and technology press limited IPC Huuse,32 High Street, Guildford, Surrey, England GUI JEW
permanent international organization to deal with food and agriculture. This led to the formation of FAO in October 1945.24 In August 1946, it was proposed that FAO establish a World Food Board. Among other functions, it was to ‘establish a world food reserve adequate for any emergency that might arise through failure of crops in any part of the world’. The Board was to announce maximum and minimum prices for each of the commodities held in stock, and to add to, or release from, its stock when world prices for the commodities concerned fell outside declared limits. It was noted that ‘care would be needed to commence operations at the correct moment and to choose an appropriate world price’. Since the agency was normally to buy at a minimum price and sell at a maximum price, it was expected to earn enough to cover costs of storage of at least its average stockholdingsz5 A Preparatory Commission studied the proposal in 1946-1947. Reserves were broken down into three types: working, famine, and price stabilization. In the case of famine reserves it was proposed that they be held nationally by exporting and importing countries for use nationally and internationally under agreed conditions. The amount of reserve to be carried by each member was to be decided for each commodity by international agreement. This, and other proposals, however, were not adopted by the Council of FAO. ‘FAO member nations did not find it possible to agree to follow up further on these measures . . .‘26 National reserves were other studied again on several occasions2’ but evidently no other action was taken until the reappearance of a variant of the proposal in May 1973.= The experiences cited here are too fragmentary to lead to firm conclusions. But it is clear that government reserves have been used and/or discussed over a long period of time. The types of reserves have varied, as have the results. Joseph was perhaps most successful, but then, as Willett and Steele point out,29 he had unusually good advice and high level support. 3o Others have not been so fortunate. The situation is in an particularly complicated organizational sense at the international
FOOD
POLICY
November
1977
are those who Perhaps level. discouraged at the slow pace of international discussions can take solace in the long history of reserves that preceded them. Now might be a good time to initiate a more thorough investigation of that history. Dana
G.
Dalrymple
Dana G. Dalrymple is an agricultural economist with the US Department of for US Agency and Agriculture international Development, Washington, DC, USA. “Proposal by the Director General on International Action to Assure Adequate Basic Food Stocks’, FAO, CL 60/l 1, May 1973 (Item 7 of the Provisional Agenda of the FAO Council), 7 pp. are 2A number of these studies conveniently summarized in Analysis of Grain Reserves, A Proceedings, compiled by David J. Eaton and W. Scott Steele, USDA in cooperation with the National Science Foundation, Economic Research Service Report No 634, August 1976, 200 pp. 3These dates were provided by Charles Whittier of the Libran/ of Congress and represent the Hyksos or Shepherd King period. 4 Derk Bodde, ‘Henry A. Wallace and the Ever-Normal Granary’, The Far Eastern Quarterly. August 1946, pp 41 l-426. I am indebteded to Wayne Rasmussen for this reference. ’ Genesis, Chapter 41, v 34-36. 6 Ibid. v 54-57. Further details of operation are provided in Chapter 47. ‘Augustus Boeckh, The Public Economy of fhe Athenians, trans by Anthony Lamb, Little Brown & Co, Boston, 1857, pp 121-123. a Chen Huan-Chang, The Economic Principles of Confucius and his School, Columbia University Studies in History, Economics and Public Law, Vols 44-45, pp 568-577. The No 113, 1911, noted existence of reserves was previously by John Henry Gray in China:A History of the Law, Manners, and_ Customs of the People, edited by W.G. Gregor, Macmillan, London, 1878, Vol II, pp 57-58. ’ Bodde, op cit. Ref 4. p 413 (discussed by Huan~Chang, op cit. Ref 8. on pp 568-570). ” Huan-Chang, op cit. Ref 8, p 570 (also cited by Bodde, op cif. Ref 4, p 413). ” Ibid. p 572 (also cited by Bodde. op cit. Ref 4, p 413). ‘2 Bodde, op cit. Ref 4, p 422. ” Summarized by Bodde, ibid, p 414 (based on Huan-Chang. op cit. Ref 8, pp 573-577). Rural China, Hsiao, l4 Kung-Chuan imperial Control in the Nineteenth Cenfury. University of Washington Press, Seattle, 1960, pp 144-148, 180, 615 (fn
177). This section is part of a detailed chapter on ‘Famine Control: She-Ts’Ang and other Granaries’, pp 144-l 83. 151n the case of Frederick William I of Prussia (1713-l 740): ‘His grain surplus administration bought up at a fixed price whatever the peasants could not sell in fay years, in order to dispose of it in lean years below the market price for the benefit of the lower urban middle class.’ Leonard D. White, et Abroad; Great Britain, McGraw-Hill, Germany, (cited by Bodde. op 425-426).
al, Civil Service Canada, France, 1935, ~172 cit. Ref 4. PP
l6 ‘Storage of Food’, Wallaces’ Farmer, 6 December 1918, p 1772. (This reference and the next two are reproduced by Bodde, opcit.Ref4,pp415-417). l7 ‘The ever normal granary’, Wallaces’ Farmer, 8 October 1926, p 13 14. ‘a ‘The ever normal granary’, Wallaces’ Farmer, 21 January 19.27, p 85. ‘¶ /bid. While Wallace credits the Chinese for the concept of the ever-normal granary, Bodde credits Wallace for the term itself. Prior to that time the Chinese term (ch’ang-p’ing-ts’ang) was translated as some variant of ‘constantly normal granary’ (Bodde, op cit. Ref 4, p 415). ‘a As, for example, in his speech of ‘The Joseph idea, the drought, and the Great Lakes American consumer’, Exposition, Cleveland, Ohio, 19 August 1936 (cited by Frederick V. Waugh in ‘Reserve stocks of farm products’, in Agricultural Policy; A Review of Programs and Needs, Advisory National Commission on Food and Fiber, Technical Papers, Vol V, August 1967, p 9). 2’ Bodde, op cit. Ref 4, pp 419-420. *’ Further details on the Wallace proposal are provided by Don F. Hadwiger in Federal Wheat Commodity Programs, Iowa State University Press, 1970, pp 28-31. Substantial stocks were of course built up after World War II but these were a by-product of a price support programme rather than the result of a conscious desire to establish a formal reserve. ” Henry A. Wallace, ‘Foundations of peace’, Atlantic Monthly, January 1942, p 37 (cited by Bodde, op tit, Ref 4, p 423). “‘As cited in Functions of a World Food Reserve; Scooe and Limitations, FAO Commodity eolicy Studies 10, 1956, p 43. The reference is to Resolution XXV. ‘=/bid, pp 46-47. A New York Times article of the period (August 8) referred to it as an ‘international ever-normal granary’. Another Times article the next day (August 9) called it ‘an internationalization of the “ever-normal granary” plan instituted in the United States by Henry A. Wallace, as Secretary of Agriculture, in the 1930s’. The article attributed its inception to Sir John Boyd Orr. Director General of FAO. (Cited by
347
Reporfs Bodde, op tit, Ref 4. p 424.) 26 Ibid (Functions .), pp 4748. 27 As, for example, in National Food Reserve Policies in Underdeveloped Countries, Commodity Policy FAO Studies 11, 1958,70 pp.
2* ‘Proposal by ‘, op cit. Ref 1. “Joseph W. Willett and W. Scott Steele, ‘Recent US experience in trade and agriculture: lessons for forecasters’, Symposjum on International Trade and Agriculture, Tucson, Arizona, 17-20 April
1977,p 14. 30The other side of the story is that the government’s complete control of the reserves enabled it to take over the land and enslave the population (Genesis, Chapter 47: 13-26).
Marketing and rural industries in the agricultural development of Latin America The case of the Inter-American The overall
socioeconomic
production-oriented agricultural
development
of
success rural
and
programmes
will largely depend on the capability of the developing countries to efficiently distribute the food produced to those who need it, and to adequately reward farmers for their efforts. In modern, urbanized industrial economies of Western Europe and North America and in the rapidly growing cities of the Third World, the distance over which food has to be transported in time, form and mileage is large and growing. Losses occur at every stage of the distribution of food from producers to final consumers, and in every process to which food is exposed: threshing, cleaning, washing, cutting, sorting, grading, drying, packing, trans~rting, milling, extraction, storing, cooking, and serving. Food scientists, agronomists and economists have not arrived at a global estimate of these losses. Yet, data gathered on individual crops in some countries indicate that in the case of fresh fruits and vegetables half the crop is often either completely lost or deteriorates substantially in quality on its way from the producers to the consumer’s table. Therefore, even a improvement in relatively small marketing efficiency can significan~y increase the availability of food for many of the neediest people in the developing countries, and substantially improve their standard of living.’ Indeed marketing is widely considered a catalyst for development.2 In response to the above indicated need bilateral as well multinational development banks and technical cooperation agencies - such as FAO, UNDP, IICA, IBRD . . . - have
348
Development
provided funds for prep~ation and implementation of a wide variety of marketing and agroindustrial projects and of corresponding technical cooperation activities.
marketing and agroindus~ial loans The Inter-American Development Bank (1DB) has assigned a high priority to agriculture ever since its inception in 1961.3 As of 31 December 1976 the Bank had channelled %24OOM, or almost one quarter of its lending, to that If rural health, sanitation, sector. transport electrification are and included, nearly one-half of IDB’s loans are benefiting, directly and indirectly, the rural sector of Latin America: 25M acres of land have been improved or brought into production, including 3.5M acres through irrigation. 01900M farm credit went to and agricultural producers cooperatives. Innovative projects have been implemented in rural community development, forestry, marketing, agroindustries, fisheries, livestock animal health, development, research and extension. In addition, the Bank’s substantial has been cooperation technical instrumental in project identification, appraisal and preparation, institutional strengthening of member capabilities of borrowing countries. Traditionally IDB’s emphasis has been on production-oriented irrigation, livestock credit and agricuhural
Bank development projects. In recent years the number of marketing and agroindustrial projects - made in the form of specific loans as well as components of integrated agricultural or rural development programmes - has begun to grow substantially. Between 1973-76 1DB made 10 marketing loans worth $1236M compared to 13 loans 1961-72 worth $91_8M. between Consequently, on 1 January 1977 the IDB marketing agroindustry and portfolio consisted of 23 loans mounting to $2 1 SM (Table 1) and over 20 technical cooperation operations amounting to about $1.6M. The major types of facilities financed by IDB loans are shown in Table 2. The loans for marketing and agroindustries averaged 8.5% of total agricultural sector lending from 196 l76. Because of often long lead-time in project preparation, there were large fluctuations around this average: in the six years ‘62, 64, 66, 68, 72, and 74 no loans were approved; in 1976 there was an unprecedented ‘bunching’ of six loans amounting to $98~5M or 21.9% of all agricultural loans. (See Table 3)
Footnotes
to Table 7
1 Due to substantial international grain price increases, which occurred in 1973, IDEMA found itself in financial difficulties, having had to subsidize wheat imports at levels way above those originally contemplated. As a result, it proved difficult to put up the local counterpart funds on a pari-passu basis, In February 1974, IDB, therefore, agreed to reduce the total project cost from $26.1 M to $19,5M. 2 Indicates agroindustrial and marketing which form part of sub-projects, integrated projects.
FOOD
POLICY
November
1977
Reports
consumers.“’
Government
grain reserves
Some historical notes During the 197Os, there has been a great deal of global interest in the establishment of government grain reserves. This interest was solidified in May 1973 with a proposal of the Director General of FAO concerning ‘international action to assure adequate basic food stocks’.’ This proposal found further support at the World Food Conference in November 1974. Since there have been numerous then, economic studies on various aspects of grain reserves.* But few, if any, recent reports provide much historical background beyond a few references to the 1973 FAO proposal or to Joseph’s experiences in ancient Egypt, roughly between 1720 and 1550 BC.3 My aim here is to provide an introduction to some of the in main historical developments government reserves occurring between the above two dates. It is quite incomplete. And much of it is derived from an exceptional but little known article by Derk Bodde in 1946.4 Still, this note should provide more historical perspective than is currently available. And hopefully it will stimulate someone to look more deeply into the matter.
Pharoah liked the suggestion, released Joseph from his dungeon, and put him in charge of the programme. ‘And the seven years of dearth began to come . . . and the dearth was in all lands; but in all the land of Egypt there was bread . Joseph opened all the storehouses, and sold unto the Egyptians . And all countries came into Egypt to Joseph for to buy corn; because that the famine was so sore in all
also Public storehouses were established in ancient Athens. Boeckh reports that ‘considerable supplies were purchased at the cost of the state’ and that the ‘grain was sold to the people at a very low price’. In some cases it was given away; this reportedly happened frequently in Rome. ‘In both cases they were made for the purposes of pacifying the poorer classes’.’
reserve
system
interpreting Joseph
a
suggested
in
established
ancient
dream
of
Egypt.
a In
Pharoah’s,
that he:
‘.
appomt officers over the land, and take up the fifth part of the land of Egypt in the seven plenteous years. And let them gather all the food of those good years that come, and lay up corn under the hand of Pharoah, and let him keep the food in the cities. And that food shall be for store to the land against the seven years of famine, which shall be in the land of Egypt; that the land perish not through the famine.”
FOOD
POLICY
November
1977
0
0
0
Farmers themselves are usually short-sighted people, incapable of watching out for their true interests. Unless the protected by government, farmers are helpless and easily exploited by merchants. Grain is a basic necessity of life, so that its price directly affects the welfare of all society. Natural calamities often prevent the price of grain from following the normal law of supply and demand.
The major problems
centred around
1. The long delays in statistical and price reporting. 2. Difficulties in transportation. 3. The complexity of the law. 4. The corruption of some government
China The most extended experience with reserves has been in China. An early description in English was provided in 1911 by Chen Huan-Chang.8 As early as 400 BC the minister of the State of Wei reportedly: government
As is well known, Joseph
0
lands.‘6
‘ . instituted
Egypt and Greece
In terms of operations, the programme was carried out for the farmers and other social groups, but not by them. ‘Furthermore, the government itself became a major operator in the agricultural market, for it acquired large quantities of grain which it stored in its own granaries’.‘* The programme was felt to be beneficial because (as summarized by Bodde):
a
system
whereby
the
would buy
from the farmers a certain percentage of their grain in years of good harvest, and in times of famine would sell this grain at the normal price.‘9
When the scheme was carried out, it ‘not only made the people rich but also made the state strong’.‘O The first measure to be called the ‘constantly normal granary’ (ch’angp’ing-ts’ang) was instituted in 54 BC. It were involved, once granaries established, the use of a constant pricing policy: ‘When the price of grain was low, they [the provinces] should buy it at the normal price,
The system reportedly was maintained in operation, on and off, until the early 1900s. A further and somewhat different perspective on reserves was subsequently provided by Hsiao.i4 He indicated that the ‘ever-normal granary’ (ch’ang-p’ing-ts’ang) was one of three sets of local granaries, the other two being charity or town granaries and community or rural granaries. Local granaries were distinguished from imperial granaries. Part of the reserves of the ‘ever-normal granary’ came from government sources, mainly through purchase with government funds, although contributions from wealthy persons were accepted. Hence they were essentially government granaries and were directly managed by local government officials. The grain reserve was lent to needy peasants or sold at below current market prices, as the
345
situation required. E&o claims that the system was never very effective, largely because of the apath& attitude of local u&i&.. The granaries gradually degenerated from the late 1700s wnwards and were assumed to have been finally liquidated by the revolution Of1911. it is not known to what extent these early grain reserve systems were emuiated, or devised independently, elsewhere.zs
The USA Henry Wallace became familiar with the Chinese system through reading the work of Chen Huan-Chang cited above, In 1918, he made brief reference to the Chinese experience in Wallaces ’ Fur’armer.‘” It was discussed in greater detail under the title of&The ever normal granary’ in I%%” and was mentioned again in 1927.1* Citing an unidentified Californian, who had suggested a variant for cotton, the latter editorial said:
‘The mathematical rules for buyia$ and selling should be fixed by statute and work automatically, nut being left to the discretion of pub5c o~cids. The go~~er~m~~t sho&d carry the interest and warehouse charges as a fegitimate contribution to the public welfare.’
Wallace felt that there was merit in the idea and that ‘Some day the ‘“ever normat granary” idea wilt be made ta fir modern cuaditiuns’.” During the &d-19X%, Wailace, who was by then Secretary of Agriculture, argued for an ever-normal granary on a number of occasions.2o According to Badde : ‘The
urgent
need
far
subsequent, and much more general, Agricultural Adjustment Act of 1938. The msin emphasis, however, was an farm
price suppcirL2’
An international dimension
In January 1942 Wallace suggested a more widespread adoption of the principle in an article in the A&%zinri& ~~~~~~~~~~~ ‘As part of the effort to win the peace, I am hoping that what might be called the ‘ever normal granary principle’ can be established for a number of commodities on a worldwide scale.“”
Buch ~~~~s~~~i~~ was
During the summer of I943 a United Nations Conference on Food and with that of 1934, largely wiped out previous Agriculture was held at Hot Springs, surpluses and caused serious shortages in Virginia. some products. The return of good weather The conference recomin 1937, however, brought renewed mended, among other things, that surphzses, and this attemacion , . . focussed ‘adeQuate reserves should be maintained attentionon tk needfor an ail-weather farm to meet aft consum~t~o~~ needs’ and that program that woalld give protection against ‘provision should be made, when both types ofhazard.‘Z1 applicable, for the orderly disposal of surpluses’. The Some of the general features of an eversame conference normal granary were embodied in the propostr the establishment of a heightened
by the drought
of
1936, which,
Scope:
Information on policy proporals, decisions and implementation in sciance, technology and public affairs IS often diverse and difficult ty locate. The airrr of POLICY PUBLICATIONS REVIEW IS to facilitate easy access to the numerous policy-orientated pubiicatjons issued throughout the wurlei, many cf which do not appear in the establrshed information and distribution networks. Contents: Pubiicatioos incfuded in the journai are selscterl from a vast range of government, institutional, university, professional and other sources from ail over the world. The citatlclns are classified urrd@r 24 main categories for easy reference and include the following information where relevant: title -, author -brief description of - publication date ““_lprice scope or contents - serial number - source organisation country of origin. Each entry ts co&d for easy reference nwi cross-indexed in other categories where necessary.
Readership: Execufives, policy makers and pianrrers, researchers, information officers and iibraiians in gcrvernment, industry, universities, institutes and organisatiorls who need to keep up-to-date with the latert and most significant policy-orientated publications. ISSN 03074757
Annual tibwription and Frequenoy Pubtished atternate months
ipc science and technology press limited IPC Huuse,32 High Street, Guildford, Surrey, England GUI JEW
permanent international organization to deal with food and agriculture. This led to the formation of FAO in October 1945.24 In August 1946, it was proposed that FAO establish a World Food Board. Among other functions, it was to ‘establish a world food reserve adequate for any emergency that might arise through failure of crops in any part of the world’. The Board was to announce maximum and minimum prices for each of the commodities held in stock, and to add to, or release from, its stock when world prices for the commodities concerned fell outside declared limits. It was noted that ‘care would be needed to commence operations at the correct moment and to choose an appropriate world price’. Since the agency was normally to buy at a minimum price and sell at a maximum price, it was expected to earn enough to cover costs of storage of at least its average stockholdingsz5 A Preparatory Commission studied the proposal in 1946-1947. Reserves were broken down into three types: working, famine, and price stabilization. In the case of famine reserves it was proposed that they be held nationally by exporting and importing countries for use nationally and internationally under agreed conditions. The amount of reserve to be carried by each member was to be decided for each commodity by international agreement. This, and other proposals, however, were not adopted by the Council of FAO. ‘FAO member nations did not find it possible to agree to follow up further on these measures . . .‘26 National reserves were other studied again on several occasions2’ but evidently no other action was taken until the reappearance of a variant of the proposal in May 1973.= The experiences cited here are too fragmentary to lead to firm conclusions. But it is clear that government reserves have been used and/or discussed over a long period of time. The types of reserves have varied, as have the results. Joseph was perhaps most successful, but then, as Willett and Steele point out,29 he had unusually good advice and high level support. 3o Others have not been so fortunate. The situation is in an particularly complicated organizational sense at the international
FOOD
POLICY
November
1977
are those who Perhaps level. discouraged at the slow pace of international discussions can take solace in the long history of reserves that preceded them. Now might be a good time to initiate a more thorough investigation of that history. Dana
G.
Dalrymple
Dana G. Dalrymple is an agricultural economist with the US Department of for US Agency and Agriculture international Development, Washington, DC, USA. “Proposal by the Director General on International Action to Assure Adequate Basic Food Stocks’, FAO, CL 60/l 1, May 1973 (Item 7 of the Provisional Agenda of the FAO Council), 7 pp. are 2A number of these studies conveniently summarized in Analysis of Grain Reserves, A Proceedings, compiled by David J. Eaton and W. Scott Steele, USDA in cooperation with the National Science Foundation, Economic Research Service Report No 634, August 1976, 200 pp. 3These dates were provided by Charles Whittier of the Libran/ of Congress and represent the Hyksos or Shepherd King period. 4 Derk Bodde, ‘Henry A. Wallace and the Ever-Normal Granary’, The Far Eastern Quarterly. August 1946, pp 41 l-426. I am indebteded to Wayne Rasmussen for this reference. ’ Genesis, Chapter 41, v 34-36. 6 Ibid. v 54-57. Further details of operation are provided in Chapter 47. ‘Augustus Boeckh, The Public Economy of fhe Athenians, trans by Anthony Lamb, Little Brown & Co, Boston, 1857, pp 121-123. a Chen Huan-Chang, The Economic Principles of Confucius and his School, Columbia University Studies in History, Economics and Public Law, Vols 44-45, pp 568-577. The No 113, 1911, noted existence of reserves was previously by John Henry Gray in China:A History of the Law, Manners, and_ Customs of the People, edited by W.G. Gregor, Macmillan, London, 1878, Vol II, pp 57-58. ’ Bodde, op cit. Ref 4. p 413 (discussed by Huan~Chang, op cit. Ref 8. on pp 568-570). ” Huan-Chang, op cit. Ref 8, p 570 (also cited by Bodde, op cif. Ref 4, p 413). ” Ibid. p 572 (also cited by Bodde. op cit. Ref 4, p 413). ‘2 Bodde, op cit. Ref 4, p 422. ” Summarized by Bodde, ibid, p 414 (based on Huan-Chang. op cit. Ref 8, pp 573-577). Rural China, Hsiao, l4 Kung-Chuan imperial Control in the Nineteenth Cenfury. University of Washington Press, Seattle, 1960, pp 144-148, 180, 615 (fn
177). This section is part of a detailed chapter on ‘Famine Control: She-Ts’Ang and other Granaries’, pp 144-l 83. 151n the case of Frederick William I of Prussia (1713-l 740): ‘His grain surplus administration bought up at a fixed price whatever the peasants could not sell in fay years, in order to dispose of it in lean years below the market price for the benefit of the lower urban middle class.’ Leonard D. White, et Abroad; Great Britain, McGraw-Hill, Germany, (cited by Bodde. op 425-426).
al, Civil Service Canada, France, 1935, ~172 cit. Ref 4. PP
l6 ‘Storage of Food’, Wallaces’ Farmer, 6 December 1918, p 1772. (This reference and the next two are reproduced by Bodde, opcit.Ref4,pp415-417). l7 ‘The ever normal granary’, Wallaces’ Farmer, 8 October 1926, p 13 14. ‘a ‘The ever normal granary’, Wallaces’ Farmer, 21 January 19.27, p 85. ‘¶ /bid. While Wallace credits the Chinese for the concept of the ever-normal granary, Bodde credits Wallace for the term itself. Prior to that time the Chinese term (ch’ang-p’ing-ts’ang) was translated as some variant of ‘constantly normal granary’ (Bodde, op cit. Ref 4, p 415). ‘a As, for example, in his speech of ‘The Joseph idea, the drought, and the Great Lakes American consumer’, Exposition, Cleveland, Ohio, 19 August 1936 (cited by Frederick V. Waugh in ‘Reserve stocks of farm products’, in Agricultural Policy; A Review of Programs and Needs, Advisory National Commission on Food and Fiber, Technical Papers, Vol V, August 1967, p 9). 2’ Bodde, op cit. Ref 4, pp 419-420. *’ Further details on the Wallace proposal are provided by Don F. Hadwiger in Federal Wheat Commodity Programs, Iowa State University Press, 1970, pp 28-31. Substantial stocks were of course built up after World War II but these were a by-product of a price support programme rather than the result of a conscious desire to establish a formal reserve. ” Henry A. Wallace, ‘Foundations of peace’, Atlantic Monthly, January 1942, p 37 (cited by Bodde, op tit, Ref 4, p 423). “‘As cited in Functions of a World Food Reserve; Scooe and Limitations, FAO Commodity eolicy Studies 10, 1956, p 43. The reference is to Resolution XXV. ‘=/bid, pp 46-47. A New York Times article of the period (August 8) referred to it as an ‘international ever-normal granary’. Another Times article the next day (August 9) called it ‘an internationalization of the “ever-normal granary” plan instituted in the United States by Henry A. Wallace, as Secretary of Agriculture, in the 1930s’. The article attributed its inception to Sir John Boyd Orr. Director General of FAO. (Cited by
347
Reporfs Bodde, op tit, Ref 4. p 424.) 26 Ibid (Functions .), pp 4748. 27 As, for example, in National Food Reserve Policies in Underdeveloped Countries, Commodity Policy FAO Studies 11, 1958,70 pp.
2* ‘Proposal by ‘, op cit. Ref 1. “Joseph W. Willett and W. Scott Steele, ‘Recent US experience in trade and agriculture: lessons for forecasters’, Symposjum on International Trade and Agriculture, Tucson, Arizona, 17-20 April
1977,p 14. 30The other side of the story is that the government’s complete control of the reserves enabled it to take over the land and enslave the population (Genesis, Chapter 47: 13-26).
Marketing and rural industries in the agricultural development of Latin America The case of the Inter-American The overall
socioeconomic
production-oriented agricultural
development
of
success rural
and
programmes
will largely depend on the capability of the developing countries to efficiently distribute the food produced to those who need it, and to adequately reward farmers for their efforts. In modern, urbanized industrial economies of Western Europe and North America and in the rapidly growing cities of the Third World, the distance over which food has to be transported in time, form and mileage is large and growing. Losses occur at every stage of the distribution of food from producers to final consumers, and in every process to which food is exposed: threshing, cleaning, washing, cutting, sorting, grading, drying, packing, trans~rting, milling, extraction, storing, cooking, and serving. Food scientists, agronomists and economists have not arrived at a global estimate of these losses. Yet, data gathered on individual crops in some countries indicate that in the case of fresh fruits and vegetables half the crop is often either completely lost or deteriorates substantially in quality on its way from the producers to the consumer’s table. Therefore, even a improvement in relatively small marketing efficiency can significan~y increase the availability of food for many of the neediest people in the developing countries, and substantially improve their standard of living.’ Indeed marketing is widely considered a catalyst for development.2 In response to the above indicated need bilateral as well multinational development banks and technical cooperation agencies - such as FAO, UNDP, IICA, IBRD . . . - have
348
Development
provided funds for prep~ation and implementation of a wide variety of marketing and agroindustrial projects and of corresponding technical cooperation activities.
marketing and agroindus~ial loans The Inter-American Development Bank (1DB) has assigned a high priority to agriculture ever since its inception in 1961.3 As of 31 December 1976 the Bank had channelled %24OOM, or almost one quarter of its lending, to that If rural health, sanitation, sector. transport electrification are and included, nearly one-half of IDB’s loans are benefiting, directly and indirectly, the rural sector of Latin America: 25M acres of land have been improved or brought into production, including 3.5M acres through irrigation. 01900M farm credit went to and agricultural producers cooperatives. Innovative projects have been implemented in rural community development, forestry, marketing, agroindustries, fisheries, livestock animal health, development, research and extension. In addition, the Bank’s substantial has been cooperation technical instrumental in project identification, appraisal and preparation, institutional strengthening of member capabilities of borrowing countries. Traditionally IDB’s emphasis has been on production-oriented irrigation, livestock credit and agricuhural
Bank development projects. In recent years the number of marketing and agroindustrial projects - made in the form of specific loans as well as components of integrated agricultural or rural development programmes - has begun to grow substantially. Between 1973-76 1DB made 10 marketing loans worth $1236M compared to 13 loans 1961-72 worth $91_8M. between Consequently, on 1 January 1977 the IDB marketing agroindustry and portfolio consisted of 23 loans mounting to $2 1 SM (Table 1) and over 20 technical cooperation operations amounting to about $1.6M. The major types of facilities financed by IDB loans are shown in Table 2. The loans for marketing and agroindustries averaged 8.5% of total agricultural sector lending from 196 l76. Because of often long lead-time in project preparation, there were large fluctuations around this average: in the six years ‘62, 64, 66, 68, 72, and 74 no loans were approved; in 1976 there was an unprecedented ‘bunching’ of six loans amounting to $98~5M or 21.9% of all agricultural loans. (See Table 3)
Footnotes
to Table 7
1 Due to substantial international grain price increases, which occurred in 1973, IDEMA found itself in financial difficulties, having had to subsidize wheat imports at levels way above those originally contemplated. As a result, it proved difficult to put up the local counterpart funds on a pari-passu basis, In February 1974, IDB, therefore, agreed to reduce the total project cost from $26.1 M to $19,5M. 2 Indicates agroindustrial and marketing which form part of sub-projects, integrated projects.
FOOD
POLICY
November
1977