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YL AN[ fiULTi-STICS - 1953

_RT I - PRODUCTION

Part I provides basic statistics on world agricultural production. It gives authoritative infor-mation on land use, agricultural population, crops, livestock numbers and products, food suppliesand their utilization, and on commercial fertilizers, pesticides, and agricultural machinery. It alsoincludes the more important series of agricultural commodity prices in many countries, as wellas index numbers of prices received and paid by farmers, and of agricultural production.

PART II - TRADE

The second part is a basic reference work on world trade in agricultural products and givesstatistics of the imports and exports of the major agricultural commodities. It includes regionaland world totals, computed from official and unofficial information. For some major commodities,data are given by trade season as well as by calendar year.

This two-volume yearbook is a valuable reference work for importers, exporters, and com-mercial houses, as well as official bodies concerned with food and agriculture. It is available fromany bookseller, or from any of the FAO sales agents listed on the back cover of this publication.

Price : Each part $3.50 or 17s.6d

FAO STATISTICAP, PUBLIC L'IONS

Monthly Bulletin of Agricultural Economics and Statistics Single copy $0.50, 2s.6d.Annual subscription $5.00, 25s.

This bulletin gives statistics of production, trade and prices based on information available onthe 25th of the month preceding that of issue. Each number contains one or two articles on mat-ters of current interest in the field of agricultural economics, and a section of commodity notes.Editions in English, French, and Spanish. Sample copies of the bulletin will be sent on request.

Second World Food Survey $0.50, 2s.6d.

A broad statistical survey of how the world's population is nourished. Against the unsatisfac-tory present situation are set desirable food consumption targets country by country for 1960.In English, French, and Spanish.

Yearboolc of Forest Products Statistics 1953 $2.50, 12s.6d.

This seventh issue of FAO's forestry yearbook contains new information for 1952 and reviseddata for 1951 from more than 100 countries. The text is in English, French, and Spanish, andthe tables in English and French.

Yearbook of Fisheries Statistics 1950-51 $3.50, 17s.6d.

Contains tables on catch, utilization, external trade and fishing craft. Text in English, French,and Spanish, and tables in English and French. The 1952-53 edition of this yearbook is in prepa-ration.

THE STATE OFFOOD AND AGRICULTURE

1954

REVIEW AND OUTLOOK

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

ROME, ITALY AUGUST 1954

NOTE

The statistical material in this publication has been

prepared from such information as has been available

to FAO not later than 15 July 1954

Printed in /taly

ii

TABLE OF CONTENTS

Foreword 1. ........ .I Summary 3

World Review and Outlook 5

Regional Problems and Policies 7Commodity Review and Outlook 10

II World Review and Outlook 15

The Supply Situation 18Agricultural Production 18

Long-term Production Trends 21

Prospects for 1954/55 21

International Trade in Agricultural Products 21

The Problem of Surpluses 28Food Consumption and Nutrition 30

Trends in Food Consumption Patterns 31

The World Economic Situation in 1953/54 and the Demand for AgriculturalProducts 36

The Economic Situation in 1953/54 in Each Region 38

Prices of Agricultural Products 40

Farm Prices 43

Retail Food Prices 44

Farm Incomes 46

Investment and Credit 49

The Demand Outlook 51

Summary 54

III Regional Problems and Policies 57

Western Europe 61

Changing Conditions in 1953/54 61

The Reorientation of Policies 62

Prospects and Long-term Problems 64

Eastern Europe and the USSR 67

Policy Changes 68

Changes in Consumption and Trade . 69

Forest Products 70

North America 70

Surplus Disposal . 71

Adjustment of Output 72

The New Agricultural Policy of the United States 73

Outlook 74

Latin America 75

Basic Policy Problems 76

Over-all Trade and Payments Position 77

Domestic Demand and Prices 77

Oceania 79

The United Kingdom Markets 80

Alternative Export Markets 81

Domestic Consumption Levels, Prices and Future Prospects 81

The Far East . 82

Problems and Programs of Development 82

Changing Pattern of Agricultural Production and Trade 83

Improvement of Supplies of Basic Foods 84

The First Five Year Plan of India 84

Development Problems and Policies of Pakistan 85

Economic Difficulties of Ceylon and Malaya 85

Reduction in Export Incomes of Burma and Thailand 85

Transitional Economies of Indonesia and the Philippines 85

Industrial Progress and Improvement of Food Consumption in Japan. 86

Economic Development in China 86

Near East 88

Production 88

Trade 89

Consumption 90

Adjustments in Food and Agricultural Policy 90

Africa 92

The Diversification of Economies 93

The Development of Internal Markets 93

The Improvement of Transport 94

The Quality of Production 94

Food Consumption and Nutrition 95

IV Review and Outlook by Commodities 97

WheatSupplies and Trade 99

Prices and Marketing Developments 101

Outlook . 103

Coarse Grains 103

Supplies and Trade 103

Outlook . 105

Rice 105

Current Situation 106

Outlook 107

iv

Sugar 108

Production 108Trade and Prices 109

Consumption 110Outlook 110

Livestock Products 111

Meat 111

Dairy Products and Eggs 112

Review of World Fisheries 115

Major Producers 115

Medium Producers 115

Selected Smaller Producers 115

Utilization 116

Herring, Sardines, Anchovies, etc. . 116

Cod, Hake, Haddock, etc 116

Salmon 117

Tuna, Bonitos and Mackerel . 117

Fats, Oils and Oilseeds 117

Fresh Fruit 120

Production and Trade 120

Trade Policy 121

Outlook 121

Dried Vine Fruit and Wine 122

Dried Vine Fruit 122

Wine 123

Coffee 123


Outlook 124

Tea 125


Outlook 127

Cocoa . 127

Production 127

Prices and Trade 128

Outlook 128

Tobacco, 129

Supplies and Trade 129

Prices and Consumption 131

Outlook. . . 131

Cotton 131


Outlook 134

Wool 134


Outlook 136

Jute 137


Outlook 138

Rubber 138


Outlook 139

Hard Fibers 140


Outlook 141

Farm Machinery 141

Near and Far East 141

Latin America 142

Forest Products 143

Recent Production Changes 144

Roundwood 145

Sawn Wood 147

Plywood and Fiberboard 148

Pulp and Pulp Products 149

Annex Tables 151

FiguresEstimated World Production of Major Agricultural Products. 20

Postwar Developments in the Volume of World Trade in Foodstuffs andBeverages 25 26

Wheat Supplies in North America and the Accumulation of Stocks . . . 29

IV. Food and Population : Distribution of the Population of the World Ac-cording to Daily Calorie Intake 32

V, Food and Population: Distribution of the Population of the World Accord-ing to Daily Intake of Animal Protein 33

Per Caput Supplies of Animal Protein in Relation to Per Caput NationalIncome 35

Per Caput Consumption of Cereals and Roots in Relation to Per CaputNational Income 36

Per Caput Supply of Cereals for All Purposes (Including Livestock Feeding)and for Direct Human Consumption 37

Movement of Prices of Selected Agricultural and Forestry Products . . 41

U.S.A. : Distribution of Retail Cost of Domestically Produced Food betweenFarm Value and Marketing Costs 45

Agricultural Incomes in the United States, United Kingdom and Australiaat Current Prices 48

Monthly Average Prices of Grain ; July 1952 - June 1954 102

World Imports of Rice and Net Imports of Rice and Other Grains in SixFar Eastern Countries 108

Monthly Average Prices of Fats and Oils in International Markets, 1951-54 119

Monthly Average Prices of Cotton (Including Export Taxes). 134

Rubber Prices in the United States and Malaya 1951-1954 139

Prices of Forest Products 146

VI

The year 1953 marked a turning point in thepostwar food and agricultural situation. Withthe abundant harvests of 1952/53, world produc-tion for the first time since th.e war caught upwith the growth of world population. But theexpansion of production was unevenly distribut-ed, and in 1953 heavy surpluses of certain com-modities accumulated in some countries, though,there was little improvement in the diet of millionsof inadequately fed people over large areas of th.eworld. This was the situation which faced therepresentatives of Member Govermnents at theSeventh Session of the FAO Conference whichmet in Rome in November 1953.

The Conference set itself two main problems inthis field : first, how the surplus stocks which hadal.ready accumulated could best be disposed ofwithout disorganizing world agricultural produc-tion and trade, and second, what should be doneto ensure that world production would continue toexpand in line with rapidly growing world require-ments without adding to existing or creating newsurpluses. Both problems are closely inter-relat-ed, and neither is of a character which permits ofa quick or easy solution. Nevertheless progresshas been made.

To assist in dealing with the first problem theConference made recommendations which havenow led to the setting up in Washington of a stand-ing Sub-Committee of the FAO Committee onCommodity Problems in order to provide a regularforum for inter-governmental consultations on agri-cultural surpluses and surplus disposal. Here theproblem can be kept under continuous reviewand any cases of hardship resulting from surplusdisposal operations brough.t up for examination.

On the second problem, the Conference recogniz-ed that the time had passed when food produc-tion must be increased by all possible means inorder to overcome the persistent postwar short-ages, and emphasized that from now on further

FOREWORD

1

expansion should be closely geared to marketdemand, without, however, losing sight of nutri-tional requirements. It therefore recommendedthat all governments should review their foodand agricultural pol.icies in the light of the newcircumstances. It recommended also that FAOsh.ould provide facilities for periodic internationalconsultations on a regional as well as on a worldbasis to enable governments to co-ordinate theirpolicies as closely as possible with full knowledgeof what vas being planned in other parts of theworld. This too is being done.

The present report reviews the more recent de-velopments in the world food and agriculturalsituation and also the immediate outlook. In1953/54 world production continued to expand.Surpluses, especially of .wheat, became more bur-dens-mile in some arcas, and in these areas farmprices and farm incomes tended to decline. Inother parts of the world, h.owever, supplies Werenot excessive and efforts to expand productionwere continued and in some cases intensified. Theoutlook- for 1954/55 suggests no essential changein this situation, which is summarized in Chapter Tof the report and reviewed more fully on a worldbasis in Chapter II.

Many governments are HOW 'beginning to re-shape thei.r agricultural policies to the new circum-stances. But as the situation is not th.e same inall parts of the world there are considerable dif-ferences in the policies being adopted. The thirdchapter of the report is therefore devoted to a re-view, of the main problems arising in each regionof the world and of the steps which are beingtaken to meet them.

Finally, the fourth chapter examines the presentsituation and outlook for each major agriculturalcommodity. Here too the situation varies widely,and the facts presented emphasize again the needfor a careful commodity balance in plans and pol-icies for agricultural production and marketing.

The over-all survey brings out some encourag-ing developments, and others which are less satis-factory. On the credit side may be counted thegrowing awareness of governments of the natureand importance of food and agricultural problems,and of the fact that the problems of one countrycannot be considered in isolation from those of itsneighbors. On the other hand, much scope re-mains for closer co-operation between countries.In framing national policies full account is all tooseldom taken of conditions in other countries.There is often a tendenc3r to look to the exportmarket for the solution of surplus problems, evenof a marginal nature, and to overlook to someextent the potentialities of the domestic marketand the needs of the domestic consumer.

Although the problems dealt with in this re-port are mainly of a fairly short-term characteraffecting the outlook for the next few years, I wouldemphasize that FAO's responsibilities also extendfurther ahead. It should be repeated that thepresent situation is not merely one of over-pro-duction and surplus. Over large areas of the worldagricultural production is still well below its pre-war level in relation to population. Fully halfthe world's people are still inadequately housed,clothed and nourished. With the spread of indus-trialization and knowledge, the demand for bet-ter standards of living is increasing and gradually

2

becoming " economically effective ." This, togeth-er with the unprecedented growth of the world'spopulation with the wider application of medicalscience, means that acute shortages could quicklyre-appear if there were any halt in the steady ex-pansion of world agriculture. There is no sign ofany slackening in the growth of human require-ments, and to meet them is essentially not ashort-term, but a continuing problem. If We failin its solution the social consequences would beserious indeed.

As I see it therefore, FAO's task is both to assistgovernments in dealing with the present food andagricultural situation, and also to endeavor toensure that the world's agricultural resources,which are limited and not expendable, are safe-guarded and improved to meet the ever-growingneeds of future generations. In agriculture, pres-ent and future problems cannot be divorced, andin thinking and planning for today We must alsothink and plan for tomorrow.

P. V. CARDON

Director - General

Chapter I

S . Y

WORLD REVIEW AND OUTLOOK

The change which ca.me over the world foodsituation in 1952/53 devel.oped further in 1953/54.In some areas surpluses of certain commodities,particularly wheat, became more burdensome. Inother areas per caput supplies, though some-whatgreater, remained nutritionally inadequate andeven lower than before the war.

Production

The marked up-ward trend of aggregate worldagricultural production continued in 1953/54, al-though the increase Was less striking than in theprevious year. The largest increases occurred inWestern Europe and the Near East. The FarEast and Oceania showed smaller gains, but inother regions there was little change in the over-all level of production from 1952/53.

Most commodities shared in the increased pro-duction over 1952/53. World cereal productionrose by two percent and, in spite of a poor crop inJapan, there was a welcome increase in rice pro-dUction in th.e Far Eas't -which ended the mostacute ph.ase of the postwar rice shortage. Wheatproduction, however, declined owing to a smallerthough still large crop in North. America. Therewere also marked increases in the output of live-stock products, especially milk, and of sugar, main-ly because of a record beet crop in Europe. Juteproduction fell heavily owing to crop restrictionsin Pakistan. Landings of fish, sh.owed little change.The production of roundwood i.s likely to havebeen slightly greater in 1953 than in 1952, andnew records were established for the productionof sawn wood and most manufactured forest pro-ducts.

Over the last four years world agricultural pro-duction is estimated to have increased by nearlythree percent annually, compared with an annualincrease in world population of about one and

Chapter I - SUMMARY

5

a half percent. World per caput production of allagricultural products and also of food regained,and indeed slightly exceeded, its prewar level in1952/53, and maintained that position in 1953/54.

Th.ere remain, however, marked disparities be-tween regi.ons. Thus per caput production in 1953/1954 was about 17 percent greater than before thewar in North America and is also appreciablyabove the prewar level in the Near East, WesternEurope and Africa. On the other hand, in LatinAmerica, the Far East and Oceania per caputproduction remained substantially less than beforethe Nvar.

Moreover, the still greater disparities in differentparts of th.e world between the absolute levels ofagricultural production, which primarily determinefood consumption levels, remain as large as ever.Production per caput is, for exampl.e, some fourto five times greater in North America and Ocea-nia than in the Far East, the Near East andAfrica.

Production Outlook

Although it is too early to 1.01111 any real judg-ment, it seems likely that world agriculturalproduction will be maintained in 1954/55 and itmay show some further increase. Crop restric-tions and somewhat less favorable weather maylimit the production of cereals, sugar and cotton.No marked recovery is expected in the productionof jute and hard. fibers, and the output of rubbermay continue to decline slowly. On the otherhand a continuing expansion of livestock produc-tion is probable, and increased supplies of oilseeds,coffee, tea and tobacco are expected.

Trade in Agricultural Products

In contrast to the expansion of agriculturalproduction, the total volume of world tracio inagricultural commodities has remained almost

unchanged in recent years at almost exactly its1934-38 level. In 1953 there was a marked fall inthe trade in cereals, due mainly to good harvestsand smaller import requirements in Western Eu-rope atul the Far East. But this fall was offsetby larger shipments of sugar, vegetable oils, frui.t,tobacco and coffee.

Surpluses

Excess stocks of some commodities continuedto accumulate in 1953/54, particularly in .NorthAmerica, where the value of holdings of th.c UnitedStates Commodity Credit Corporation's stocks ofagricultural products rose from $3,066 millions inMarch 1953 to $6,229 millions in March 1954.Cereals accounted for about 60 percent, and wheatalone for about 35 percent of the 1954 total.

Wheat represents the crux of the surplus prob-lem. Stocks of wheat held by the four mainexporting countries (United States, Canada, Aus-tralia and Argentina) increased by some 12 mil-lion. tons (33 percent) during 1053/54 and nowrepresent about 21/4 times their current annuallevel of exports. The carry-over at the end of1954/55 is likely to show a further increase,though less than in 1953/54.

For other cereals the surplus problem is lessacute. Although stocks of coarse grain increasedin 1953/54 and ma3r increase further next year,they do not appear unmanageable, particularlyin view of growing pig numbers. Stocks of ricewhich accumulated in Far Eastern exporting:, comn.tries are now moving more freely at 10 Wei! prices.

Stocks of sugar are also very heavy, but restric-tions on production in Cuba and the export quo-

tas under the International Sugar Agreement maygradually correct time position. Outside the 'UnitedStates, the surplus problm appears for the timebeing to be easing for most other commodities.Increasing efforts to dispose of the surpluses may,however, press doNi.,n inte-nationnl prices, particu-larly in view of the new 'United States poPey ofselling many products at world market prices,which means that domestic price supports wi I nolonger act as a support to international prices.

Demand and Consumption

In general the demand for agricultural productsin 1953/54 was well maintained. Time decline ineconomic activity in North America did not re-duce retail food sales, and in most other regionseconomic conditions tended to stimulate demand.

6

Nevertheless, the growth of surplus stocks is initself evidence that the growth of consumption(lid not fully keep pace with increasing production.

A primary cause seems to be time slow and limit-ed response of retail price levels to falls in farmand wholesale prices. It appears that the contin-ued growth of' agricultural production and ofconsumption levels will depend to a substantialextent on the possibility of reducing retail pricesby more efficient methods of production and mark-eting. A recent survey shows that in many coun-tries production and distribution costs (includingtransport and processing) each account for roughlyhalf the final cost of food to the consumer.

Prices of Agricultural Products

In general, farm prices of some though not allfoodstuffs tended to fall in 1953/54. Prices ofmost agricultural raW materials, including :forestproducts, were much steadier and in some casesshowed some recovery after the sharp fall3 in 1952.In time beverage group, prices of coffee and cocoarose sharply as a result of shorter supplies, withrepercussions on time price of tea.

Time most striking fall in 1953/54 occurred inthe international prices of cereals, though pricesupport schemes largely prevented any compar-able decline on domestic markets. Lack of stor-age space has intensified the pressure to sell inseveral exporting countries, and for the first timesales under the Wheat Agreement fell below themaximum price level. Moreover, as a result ofthe easier dollar situation in Western Europe pricepremiums on exports from soft currency areasvittually disappeared. Time prices of cereal exportsfrom the United States and a number of exportingcountries in Europe, Latin America and time NearEast are now much lower than prices to producersin these countries, and in some cases are heavilysubsidized.

Subsidies on exports have also been adoptedby various countries for butter, cheese, meat, lin-seed oil, dried beans and sugar.

Time trend of agricultural prices, and even offood prices, has not, however, been universallydownward. For example a comprehensive inter-national price index such as that of food importsinto °EEC', countries showed little change from1952 throughout 1953 and rose sharply in the firstquarter of 1954, while the United Kingdom indexof imported foodstuffs fell by only two percentfrom the first quarter of 1953 to the first quarterof 1954.

Farm Prices and Farm IncomesWhile farm price indices have fallen appreciably

in North. America, they have been considerablymore stable in Western Europe, and in some coun-tries in other regions, including the Far East,still show a rising trend.

Farm prices would, of course, have fallen moresteeply but for the operation of price support poli-cies in many countries, and the sudden increasein the cost of such policies is causing concern togovernments, taxpayers and producers. More andmore governments are tending to reduce the sup-port level, to limit their financial liabilities, or toadopt 1 ss rigid price support policies.

The ratio of prices received by farmers to pricespaid for production requisites has moved to thedisadvantage of farmers in nearly all countries inthe past few years. In consequence farm incomeshave fallen sharply in North America, but th.eyhave been more stable in 'Western I:la-trope, mainlybecause of the rapid rise in the volume of produc-tion. In Oceania farm incomes have fluctuatedwidely in the last few years. Data are lackingfor other regions.

Estimates based o.n United Nations data ofnational income suggest that in few countries areper caput incomes in agriculture comparable withthose in other occupations.

In most countries per caput farm incomes areof the order of two-thirds to one-half (sometimesless) of earnings in other sectors of the economy.Although farm incomes are nearly everywhererelatively higher in comparison with other occu-pations than in 1038, when the effects of the de-pression of the thirties were still considerable, inmany countries much of the gains of the earlypostwar years has since been lost.

Investment in AgricultureAgricultural development is still retarded by

lack of investment funds, and while efforts havebeen made to increase the 'flow of internationalinvestment, the share directly devoted to agricul-ture declined in 1953/54. A recent FAO surveybrings out the very wide disparities between differ-ent countries in the adNuacy of the supply offarm credit from banks, co-operatives and otherinstitutional sources.

Demand OutlookA review of current economic trends suggests a

slow improvement in demand for agricultural prod-ucts in 1054/55, though, unless special measures

7

are taken this is unlikely to reduce to any extentthe existing problem of agricultural surpluses.This emphasizes the need for carefully planned andselective expartsion of future agricultural produc-tion closely adjusted to market conditions.

Looking further ahead, the year 1055/56 seemslikely to see a continued expansion in the demandfor agricultural products. World supplies of grainand most other :foodstuffs will continue to be rela-tively abundant, and to that extent food import-ing cotuffries should enjoy favorable terms of trade.Prices of coffee should remain firm, and prices ofmost agricultural raw materials (including forestproducts) seem to be tending upwards after thepost-:Korean collapse, a tendency which would bestreir:thened by a revival of economic activity inthe :United States. Market prospects for exportersof the latter commodities, mainly in the less de-ve:loped regions, therefore seem likely to improve.

These relatively favorable developments, how-ever, might be frustrated unless there is (i) aneffective I'c-adjustment of the expanded NorthAmerican agricultural production to reduced in-ternational needs, and (ii) a gradual working downof' accumulated surpluses without severe pressureon world price :levels. Present policies in NorthAmerica are working towards these ends thoughboth, and particularly the second, will be difficultof achievement.

REGIONAL PROBLEMS AND POLICIES

Western Europe

Agricultural production in Western Europe in1953/54 was greater than ever before, the cropsof sugar beet and grains being exceptionally heavy.Weather conditions were favorable, but improvedmethods also contributed substanti.ally to thehigher yields.

The progress in production coincided with arevival in economic activity in oth.er sectors. Sup-plies neme adequate to meet the rising demand, andfor some products imports from outside Europewere reduce d. The general level of intra-Euro-pean trade in agricultural products increased,th.ough some couritries experienced difficulties indisposing of unaccustomed surpluses. A substan-tial part of Western Europe's butter exports wastaken up :for the first time by the U.S.S.R.

As agricultural production is expected to con-tinue to expand, mainly as the cumulative effectof the improved methods and more efficient equip-ment which have come imito use in recent years,

there is a growing concern with marketing andprices. The key problem is to stimulate con-

sumption, chiefly by reducing costs of production,distribution and retail prices, and also by payingmore attention to consumers' preferences.

Under the pressure of lower priced imports, of-ten directly or indirectly subsidized, there is aten.dency to reduce farm support prices and to limitcommitments to a certain volume of production.

Where costs are relatively high governments areurging farmers to become more competitive. Inmany countries a major obstacle is the over-supply of labor on the sm.aller farms, and untilthe number of small producers can be reduced,the only way to lower unit costs will be throughraising output. The effects of this on the mar-ket situation wilt require careful consideration.

Eastern Europe and the U.S.S.R.An important change of policy took place in

1953 when it was decided to devote more resour-ces to consumer goods industries, particularly toagriculture. In recent years the rapidly growingdemand for food and agricultural raw materialshas not been met. In future agricultural pro-duction requisites are therefore to be made avail-able in larger quantities, for collective andespecially for individual farms. Higher priceswill be paid for deliveries, and other forms offinancial assistance, such as investment credits,will be given. Further collectivization will notbe pushed to the point where it interferes withthe fulfillment of current production plans.

The expansion of livestock production is seen.as the m.ain long-term task. In the past the in-sufficient output has been largely due to lack offeed supplies. The U.S.S.R. is aiming at a muchincreased production of cereals, principally feedgrains, and intends to bring 14 million hectaresof new land under cultivation before the end of 1955.

Food consumption leVels are expected to riseappreciably in the next few years. The prospectsfor exports from Eastern Europe therefore appearto be limited. Already in the U.S.S.R. homeproduction is being supplemented by imports,particularly of fruit, butter and meat.

North America

Following another year of near record produc-tion in .North America, stocks of agricultural pro-ducts increased sharply in the United States andCanada. Falling agricultural exports account foronly part of .this increase ; for example in the

8

United States the increase in the value of govern-ment-held stocks in 12 months to March 1954 wasmore than five times the fall in th.e value of agri-cultural exports. Agricultural exports from NorthAmerica in th.e first eight months of 1953/54 werenot appreciably lower than in the same period of1952/53.

There was no decline in time high level of do-mestic demand for farm products. Nevertheless,the continuing fall in farm and wholesale pricesin North America was reflected only to a verylimited extent in lower retail prices and can havehan little effect in stimulating consumption.

The gradual decline of farm prices and farm in-comes is likely to continue through 1954. Thereduced purchasing power of the farm populationis already being felt in other sectors of the economy.

The -United States Administration is taking spe-cial measures to dispose of accumulated surplusesand to adjust future production to expectedrequirements. It has also proposed legislatio.n tomodify the present support price system. In viewof somewhat different circumstances in Callada,the government the,re has not yet considered anyspecial measures necessary.

Stock disposal measures in the United Stateshave limited or red.uced stocks of some products,but .have so far hardly affected the bulk of theholdings, more than half of which consist of grains.More vigorous measures are being taken to fosteragricultural exports. The decision of the -UnitedStates Commodity Credit Corporation to sell atworld market prices means that in the futureUnited States price supports will no longer helpto maintain international prices of some com-modities.

Adjustment of output was applied in the UnitedStates during 1954 to wheat, maize and cottonand continued for tobacco, but the diversion ofacreage to other cropS and, in the case of maize,the non-compliance of farmers, limited the over-allsuccess of these measures. Acreage restrictionsand marketing quotas are to be made more strin-gent in 1955.

No marked changes are expected in the demandor supply situation in 1954/55, but supplies of cropproducts are likely to be appreciably lower in1955/56, while supplies of livestock products willprobably increase.

Latin America

The agricultural surplus situation has so faraffected Latin America to a limited degree, main-ly for cereals. In spite of heavy competition,

Latin American agricultural exports in 1953 were20 percent higher than in 1952, thus reversingthe downward trend of the past few years. Theincrease was due to the recovery of Argentine ce-real production in 1952/53 and to large shipmentsof sugar, cotton, coffee and cocoa.

There was no appreciable in.crease in the total.agricultural output in 1953/54, a moderate expan-sion in food production being offset by sharp de-clines in cotton, hard fibers and inedible oilseeds.

Balance of payments considerations, the rapidgrowth of population and rising per caput incomeswith increased purchasing power are the maincauses of the continuing drive towards greaterself-sufficiency in nearly alt Latin American coun-tries. In recent years agriculture has lagged be-hind industrial expansion and many governmentsh.ave therefore adopted policies aimed at enhanc-ing incentives to farm production. These policiesdo not appear to have been modified as a resultof the surplus position in other regions.

Oceania

No major adjustments to agricultural produc-tion have yet become necessary despite grow-ing competition on world markets. The maindifficulties have been for wheat and for some sec-ondary products such as sugar and dried vine.fruits, while increasing competition is being feltin exports of dairy products. iProspects for meatand wool are favorable.

With a rapidl3r growing domestic demand andfavorable prospects for most of its main exportcommodities, it seems likely that agriculture inOceania can continue to expand without any largereadjustments. The biggest problem may be therising costs of production.

Far East

The acute phase of the postwar food shortagein the region has 110W come to an end and in1953/54, with a record harvest in India, the totalproduction of food grains, excluding China, maybe nine million tons (about nine percent) above theprewar level. Net imports of cereals, which con-tinued to be high in 1953 due to short crops inPakistan and Japan, will show a marked declinein 1954.

Lower international prices for cereals are contri-buting to the economic difficulties in Burma andThailand, whose revenues are drawn largely fromrice exports. Surpluses of rice accumulated in

9

these countries in late 1953, but exports are nowmoving more freely. But with increased produc-tion in importing countries, rice surpluses may re-appear in late 1954 if current price relationshipsbetween rice and competing cereals persist.

The main problem in the region is still to raisethe very low food consumption levels over mostof the area. There has been a noticeable improve-ment in Japan since the war, but for the regionas a whole per caput supplies show little or noimprovement over the nutritionally inadequateprewar level. As most countries in the regionare concerned to maximize. resources for generaleconomic development, no rapid improvement inconsumption levels can be expected.

The first Five Year Plan in India has madeconsiderable headway and with favorable weatherthe main agricultural production targets seemlikely to be reached or exceeded. Substantial pro-gress is also reported in China. In most otherFar Eastern countries agricultural progress appearsto have been slower, though progress is beingmade in extending the paddy area in Burma, Ma-laya and Ceylon, and in raising rice' yields in Indo-nesia and the Philippines.

In view of' the increased export prices of tea,coffee, jute and cotton and some revival of exportdemand for rubber, the terms of trade of FarEastern countries are likely to show an improve-ment in 1954/55.

Near East

The rapid postwar agricultural development inthe Near East has been very unevenly distributedand has been largely concentrated in food export-ing countries like Turkey, Syria and Iraq. It isin these countries that the effect of the surplussituation has been most serious, particularly inthe cereals sector. Agricultural production in thefood deficit countries has developed slowly and,on a per caput basis, has not yet regained its pre-war level.

Recent developments serve to emphasize thebasic problems of Near Eastern agriculture, whichare to establish a more intensive and diversifiedpattern of production with closer integration ofcrop and livestock husbandry, and to develop thedomestic markets in order to improve nutritionalstandards and to reduce the heavy dependence ofNear Eastern economies on agricultural exports.

Improvement of consumption levels, whileproceeding slowly, continues to be hampered bythe limited purchasing power of large sectors of

the population. Any significant expansion ofconsumption will also require a considerable de-velopment of marketing and distribution facilities.

Apart from the persistence in many parts ofthe Near East of unsatisfactory conditions in thesocial structure of agriculture, lack of investmentcapital (except in oil exporting countries) tendsto limit the scope of government activities in agri-cultural and other economic development ; thisdifficulty has been accentuated by rather wide-spread declines in foreign exchange receipts fromfood and agricultural exports.

Recent agricultural policy adjustments are onthe whole limited to measures intended to lessenthe impact of fluctuations in export demand.

Africa

In Africa surpluses of agricultural produce are atpresent only of local significance, though the ef-fects of surpluses in other parts of the world havealready been sharply felt in some territories. Porexample, the fall in cotton prices reduced Ugan-da's favorable balance of trade to one-third of its1952 level, while during 1953 the Nigeria Oil PalmProduce Marketing Board had for the first timeto draw on its accumulated funds to meet guar-anteed prices, which, however, will be somewhatlower in 1954. But the basic problems of Africanagricultural development remain as before and areonly accentuated by the present world situation.Some of the more precariously based economiesmust be diversified, internal markets rnust be de-veloped, transport systems improved and the die-tary levels of the rapidly increasing populationmust be raised.

COMMODITY REVIEW AND OUTLOOK

Wheat

World wheat exports declined further to 22 mil-lion tons in 1953/54, a fall of 16 percent from1952/53, owing to improved domestic crops in anumber of importing countries. Stocks held bythe major exporters on 1 July are expected toamount to 49 million tons (15 million tons morethan a year earlier) of which over SO percent isheld in North America. Acreage restrictions in theUnited States and smaller sowings in Canada willreduce production in 1954/55, but output may stillbe greater than the current level of domestic re-quirements and exports, and some fmther increasein stocks may occur in the coming year. Although

10

production in importing countries, particularlyEurope, may not prove as large as in 1953/54,th.ere may be only a moderate increase in importrequirements. Export prices declined generallyin 1953/54 and by the end of the season mostsales, both_ within and outside the InternationalWheat Agreement, were being made at identicalprices somewhat below the midpoint of the IWArange.

Coarse Grains

Exports of coarse grains in 1953/54 were thesarne as in the previous year and carry-overstocks at the end of the y ear were larger than atthe opening. Shipments to Europe where larger,although. European production increased over1952/53. Export p1-ices declined during the year.-United States supplies in 1954/55 may be at leastas large as in 1953/54, despite acreage restrictionson maize, and exportable supplies of maize in Ar-gentina will be somewhat larger owing to anotherincrease in the crop. Total supplies of coarse grains,are ample to meet likely import requirements andare tending to increase.

Rice

Significantly more rice was harvested in 1953/54than in any previous year. Two successive goodharvests have greatly altered the supply position,but most exporters were reluctant to adjust theirprices accordingly. TWO main importers showedless .willingness to buy, and world trade contractedsharply in 1953. Stocks began to accumulate insome areas and towards the end of 1953 exportprices started to decline. World trade in ricewill probably recover in 1954 from the low levelsof 1953, owing largely to a rise in Japan's importsfollowing a poor crop and to a large Indian pur-chase from Burma, facilitated by a comprehensivefinancial settlement between these two countries.This recovery, however, may prove to be a tem-porary one unless price relationships alter to makerice more attractive to buyers.

Sugar

World production of centrifugal sugar rose in1953 by nine perce,nt, notwithstanding further se-vere restriction on. Cuban production. Exception-Mly high_ yields WCIT obtained by European beetproducing countries. More significant still wasthe rise in production in many importing conn-

tries and in the British Commonwealth exportingcountries, representing the culmination of postwarexpansion and development programs. Although1954 production will probably be lower, the trendtowards higher production will continue in manydeficit countries and in territorie,s :which producefor protected markets. International trade insugar will be substantially lower than in 1953,in spite of the derationing of sugar in the UnitedKingdom and the emergence of India as a majorimporter. Nevertheless, a collapse of sugar priceshas been prevented by the negotiation of an Inter-national Sugar Agreement, which came into oper-ation at the end of 1953, and by the control meas-lireS adopted by the Cuban Government.

Livestock Products

Production of meat, milk and eggs increasedsubstantially during 1953, and trade in livestockproducts was also larger. The U.S.S.R. purchasedsubstantial quantities of butter and meat in worldmarkets. -Because of abundant supplies, pricesdeclined in many countries of the Northern Hemi-sphere, and the increases of prices for livestockproducts from Oceania 'ere less than in previousyears. In the -United States large quantities ofdairy produce were acquired by the governmentunder the price support program, and stocks vereat record levels.

Provided weather conditions are normal, pros-pects point to a .further expansion uf production.Because of very favorable pig/grain price ratios,pig meat production in North America will increasein 1954/55. Milk production, due to growingyields per cow and larger dairy herds, may alsocontinue to expand, though the major part ofthe increases will be used for manufactures. Inthe -United States, where the price support levelvas reduced, production is still expanding and it

is estimated that government purchases of dairyproduce will also be large in the current supportyear

Meat exports during 1954 naay :remain at thelevel reached in the past year as no great changesare expected in the exportable supplies of themain exporting countries. :Future developmentsin the butter trade \I'M depend largely on the de-mand: in the United Kingdom after the end ofrationing and on the continuation of purchases bythe U.S.S.R.

While prices of meat animals inay be more stablethan in the past year, prices of dairy produce maytend to be weaker, partly due to the presence ofthe surplus stocks in the United States.

111

Fisheries Products

The 1953 world catch of fish is estimated tohave approximated to the 1952 figure. A smalldecline in the total output of the major producerswas counterbalanced by increases among ineditunand small producing countries. There was a con-tinuation in 1953 of the trend in some countriesaway from salted fish production in favor offresh and frozen fillets. In countries whose catchesof herring, sardines and anchovies have shownsharp increases in postwar years, the increasedoutput is being used mainly for meal, oil and can-ned products.

The United States salmon catch in 1953 Watilower than that of the previous year, but in Cana-da the large British Columbian catch was respon-sible for a considerably increased pack of eannedsalmon.

There was a reduction in the United Statesoutput of tuna which resulted in record importsuf tuna for canning, particularly from Japan.

Fats, Oils and Oilseeds

'..Chere was a moderate decline in world produc-tion of fats and oils in 1953, largely owing to asharp "off-season" fall in the illediterranean out-put of olive oil. World exports rose about :fivepercent reflecting substantially inereased ship-ments from the United States and Africa,. Euro-pean import demand recovered from its low 1952level and the general level of international pricesof fats and oils was somewhat higher. The price,of linseed oil was an outstanding exception andcontinued its downward trend, mainly as a resultof heavy export sales from Argentina and fromUnited States government stocks.

Production and export supplies are larger in 1954than in 1953. fri West Africa production andexports have materially increased and the UnitedStates and Argentine governments have continuedto sell large quantities for export. Most priceson the international markets declined moderatelyin the first half of 1954 and the outlook is for acontinued downward trend in the latter half of1954 aial early 1955.

Frcsh FruitPPOCluetion of the main fruits, except apples

and pears, increased further in 1953 and feW othercrops have shown such ra,pid and mitinuous ex-pansion. Trade also expanded further, and 'Euro-pean imports, mainly of bananas and citrus fruits,

increased about 20 percent. Further progresshas been achieved in liberalizing imports, andtrade is expected to continue its upward trendin 1953/54.

Dried Vine Fruit and Wine

World production of raisins and currants in1953 remained at about the 1952 level as a sub-stantial reduction in the United States pack wasoffset by a larger output in Australia, Turkeyand Iran. World trade expanded slightly, thoughthe -United States and Turkey exported less. Unit-ed States subsidies have been extended to exports,and sinee tbe ope.ning of the 1953/54 season, Tur-key has also paid eXport subsidies. The UnitedKingdom discontinued bulk purchasing of driedvine fruit in -.December 1953. Contrary to theincrease in fresh fruit consumption, the consump-tion of dried fruit is lower than before the war.

Surpluses of common wines have occurred inrecent years in some of the major producing coun-tries and the .Prench and Spanish surpluses in-creased during 1953/54. Italy has no longer anysurplus and consumption has regained its prewarlevel.

Coffee

Although slightly higher than in the previousyear, world coffee production in 1953 was stillbelow the prewar average. Rising demand, mainlyfrom Europe and the United States, combined withdepleted stocks and prospects for reduced Brazi-lian supplies in 1954 (as well as some short-term.factors), stimulated a great rise in prices. InMay 1954, prices WM 50 percent higher than ayear earlier.

Indications are that production is likely torise in 1954 in Africa and in most Latin Americancountries oth.er than !Brazil. Whether these in.-creases will compensate for the frost damage inBrazil remains problematical. -Unless consumerresistance to high prices becomes more effective,no substantial :weakening of prices can be anti-cipated for the current year.

Tea

With world output stable at around 590,000 met-ric tons and generally improving demand, teaprices recovered substantially during 1953 andthe first half of 1954 from the 1952 depression.Especially important was the rise in United King-dom consumption, which accounts for about half

12

of the total quantity entering international trade,after the derationing of both tea and sugar.Consumption rose also in Continental Europe andin the United States. The tea industry will beable to adapt :itself to th.e increased world demandand production will probably rise in 1954.

Cocoa

Cocoa prices in 1954 reached the highest peakin more than half a century. In May, wholesaleprices were about 60 percent higher than at thebeginning of the crop year. Prices began to ad-vance Olen it became evident that world produc-tion would be lower than in the previous year,due almost entirely to a sharp decline in the GoldCoast and Nigerian output. The most significantdevelopment was a strong rise in Europeanconsumption. Demand in Europe, especiallyWestern Germany and the -United Kingdom,reached unprecedented levels. Due to thenormal time lag, the full effects of the higherprices of cocoa beans have not yet been felt oilthe retail market. In the United States the priceincreases severely affectetl demand, and the post-war downward trend of per caput consumptioncontinued notwithstamding the high national in-come. The search for substitutes and :ways toeconomize the 11Se of cocoa has been intensified.The outcome of the 1954 crop will give some indi-cation whether the 1953 production in Africa wasa normal cyclical movement or the beginning ofa long-term trend of declining production.

Tobacco

In 1953, world production of tobacco slightlyexceeded that of 1952, th.e reduced output in the-United States being more than matched by aremarkable increase in production of the Orientaltype of cigarette tobacco. World trade increas-ed over the low level of 1952. By the end of theyear the increase in the -United States stocks wasmodest. SOMO increase in stocks of Oriental to-bacco may be expected in 1954, though Orientaltobacco seems to be gradually regaining ami im-portant place in European consumption. Stocksof leaf tobacco in most importing countries arestill substantially below the desirable level. Onthe whole, tobacco prices increased slightly in1953/54. Consumption is increasing in nearly allcountries, and demand is strong. The improvedbalance of payments situatiou in Europe and Unit-ed States sales of tobacco against payment in

soft currencies are expected to increase NorthAmerican exports in .1954/55, and :world trade in1.954 is likely to be larger.

Cotton

\\T0]j(j stocks at the end of the 195'3/54 seasonare estimated at nearly eight months' consumptionat current rates. Large stocks accumulated duringthe year in the 'United States, 11,11ere :in spite ofacreage reductions, exceptional yields resulted ina crop seven percent greater than in 1952/53."Except in the -United States, stocks were by nomeans excessive. Crops had been generally rec:lucedin other major exporting countries, while theincreased production of India, the 'U.S.S.R. andChina was expected to be absorbed locally.

United States prices have been supported sincethe beginning of 1953 and remained fairly stable.With the United States decision to limit cot-ton production in 1954/55, however, the entirestructure of cotton prices has tended to moveupwards.

On average yields, a total United States cropof 11.5 million bales (30 percent less than m.1953/54) would be expected from the :reducedarea. World consumption is likely to be :main-tained in 1954/55 and even allowing for possibleincreases in production in other exporting coun-tries, some reduction in world stocks is in pros-pect. World trade has recently expanded underthe influence of rising prices, but may .level off asstocks in importing countries 'become replenished.

Wool

World consumption in 1953 WaS Only threepercent below the record 1950 level, due to a re-covery in the European industry and further ex-pansion in Japan. There was no correspondingrecovery in the United States. 'Towards the endof the year, consumption generally levelled off,and activity declined somewhat in the last fewmonths. Wool production in 1953/54 WaS main-tained at the record level of the previous season,but total supplies have been smaller as there wasno more than_ the normal calty-over in expoitingcountries. The reduced rate of mill operationshas consequently not resulted in any significantweakness in the market. Merino prices have onlydropped slightly, and crossbred prices have re-mained firm, possibly under the influence of theslow mate of shipment from South America.

1.3

Jute

Including the Pakistan jute Board's stocks,\which were liquidated in the course of the season,th.e total supply of ,jute in 1953/54 was nine millionbales. This appears to have been adequate forcurrent :requirements, as international prices .havenot advanced to a great extent, though there hasbeen a substantial recovery in prices to producers.

Activity in the jute manufacturing industryhas been satisfactory. TR Calcutta, ami increasein hessian output compensated for a decline inthe production of sacking, and there has been arecovery in European mill operations. In theUnited States the :rate of hessian consumption hasbeen maintained, and there, has been an :increaseduse of jute goods in the United Kingdom.

:Prospects for the 1054/55 season are very un-certain. Although the price of raw ;jute favors anincreased cultivation, it is reported that the Paki-stan Government has again decided on a veryrestricted acreage. The condition of the crop isgood, thou.gh the harvest is expected to be laterthan usual. As stocks have been substantiallyreduced, a further advance in raw jute prices maybe expected if jute rnill activity and the demandl'or jute goods are maintained.

Hard Fibers

Production declined in 1.953 f r the first timesince the war, although only by seven percent.The decline was practically confined to LatinAmerica. The °Make, including strategic stock-pile purchases, was not far out of line with output,so that prices were firmer than in the precedingyear. There are, however, still considerable un-sold stocks of henequen in Mexico and of sisalin French Africa, but government stocks of sisalin Brazil have been virtually cleared.

Although consumption was heavy, North. Amer-ica greatly reduced its purchases of hard :Rhers.European and Japanese purchases, on the, otherhand, :recovered .

Commercial demand is expected to improve, al-though purchases for the stockpile are likely tobe reduced. At the same time, the production ofall hard fibers is expected to decline further.

Rubber

Production in all major producing countriesagain declined in 1953, mainly On small holdings.At the same time, consumption recovered, there-

by reducing considerably the gap between cur-rent production and consumption. Most of theexcess production over commercial requirementsappears again to have been taken up by govern-ment stockpiles, which in the United States havenow practically reached the size originally sched-uled.

In 1954, the excess of production is expectedalmost to disappear, natural rubber output declin-ing further while consumption expands, capturinga larger share of the total natural/synthetic rub-ber market.

Farm Machinery

The increase in the number of tractors used inFar Eastern and Near Eastern countries has beenmainly limited to a few countries, and most ofthem are tending to consolidate recent expansionby increased attention to servicing and trainingof operators. More attention is also being givento the introduction of improved hand tools andanimal drawn equipment. The use of farm ma-chinery continues to expand rapidly in Latin Amer-ica and in 1953 Argentina and Brazil themselves

14

began to produce tractors. Developments to im-prove servicing facilities and to make machineryavailable to larger groups of farmers have beenslow and limited to a few countries. Farm ma-chinery pools, however, have recently been estab-lished or enlarged in Brazil, Chile, Peru and Gua-temala.

Forest Products

In 1953 the production of roundwood wasgreater than in 1952, and new records were estab-lished for the production of sawn wood and mostmanufactured forest products. The volume oftrade was also higher than in 1952 though itcontinued to decline in value. Roundwood wasan exception and there was a sharp fall of over40 percent in world trade mainly because of small-er imports of pitprops and pulpwood by the Unit-ed States and Western European countries follow-ing heavy stockpiling in 1951 and 1952. The fu-ture consumption of sawn wood is threatened bythe increasing use of substitutes encouraged byrecent high prices. The consumption of mostother forest products is expanding rapidly.

Chapter II

WORM RiL'VIEW 1313 OUTLOOK

Chapter II - WORLD REVIEW AND OUTLOOK

A dramatic change came over the Avorld foodand agricultural situation in 1952/53, when theproblem of heavy surpluses in some areas wasadded to the long-standing problem, intensifiedby the war, of inadequate supplies and malnu-trition over large pares of the world. This situa-tion developed further in 1953/54. 011 the onehand the rapid expansion of agricultural produc-tion continued. Surpluses, particularly of wheat,became still more burdensome in some areas, andin several countries farm incomes continued todecline. Yet in other arcas, food supplies, thoughsomewhat easier, still remained well below theirlow prewar level. Prospects for 1954/55 at pres-ent suggest no marked ch.ange in this situation.

The world picture is thus not sim.ply one ofover-supply in relation to effective purchasingpower, and certainly not of over-supply in rela-tion to nutritional needs. It is rather one ofunbalanced production and often of under-con-sumption. In some countries food consumptionlevels .have risen appreciably in response to moreabundant supplies, but the mere existence of'

surpluses shows that consumption has not ingeneral kept pace with increasing production.Retail food prices have hardly anywhere fallensignificantly, and many consumers who wouldbe ready to buy more of the larger supplies 110INTavailable cannot afford them.

Farm prices and farm incomes have fallensharply in some countries but in many they re-main firm and occasionally still show a risingtendency. Similarly, falls in international pricesof some commodities have been offset by risesin others, and a comprehensive price index, suchas that of food imports .into OEEC countries,has shown little movement up or down since 1952.

Again, grain is heavily in surplus in North Amer-ica, but grain production drives continue inmany other regions, including Latin America,the Far East, the Near East, Eastern Europeand the U.S.S.R. Sugar is in over-supply inexporting countries, but many importing coun-tries still aim to expand production.

Currency difficulties are not the whole, explan-ation of these discrepancies. The dollar short-age eased considerably in 1953/54 and seemsunlikely to become acute in 1954/55, while pricepremiums on supplies from " soft currencyareas have Adrtually disappeared. An importantcause is the increasing concern of.many countriesto develop their economies and tc.) raise their levelof productivity and national income. There areexamples of uneconomic agricultural expansion,but the great majority of present agriculturaldevelopment plans certainly do not fall into thatcategory. At the same time there is undoubt-edly a strong movement towards greater agricul-tural self-sufficiency in many countries, often toconserve foreign exchange for the import of capit-al goods.

Recent developments are also largely areadjustment from wartime dislocations, and tosome extent a move towards a more balanceduse of the world's agricultural resources. Evenbefore the war there were great disparities be-tween per caput agricultural production in differentparts of the world. Food production per head,for example, was nearly four times as large inNorth America, then a net food importing region,as in the Far East, the Near East and Africa.Wartime and post war developments increasedthese disparities and their effects, thoughdiminished in the last year or two, havenot yet been eliminated. For example, percaput agricultural production. in North. Americain 1953/54 was about 17 percent greater thanbefore the war, but about ten percent less in theFar East and Latin America. There is 1.ittle

doubt that the trend toward a further gradualreduction of these disparities will continue.

Behind the whole food and agriculture situationlooms the recent unparalleled growth of population,partly caused by the wider application of medicalscience, intensifying but also in some ways easingcurrent problems. In the last few years theworld's population has grown by about one anda half percent annually ; in some countries by

as much as three percent. Merely to keep pacewith the resulting increase in -food requirementsis a challenge to agriculture ; to do so and atthe same time to improve nutritional standardsa still greater challenge. Although there areno technical reasons -why the challenge cannotbe met, there are formidable problems of econom-ic oi.gaitization alui investment to be overcome.The growth of population means, however, thatin a .few years the present level of agriculturalproduction will be quite insufficient for the world'sneeds, and the rapid growth of requirementsshould in itself ease the problem of productionadjustment.

Because of the accelerating growth of worldrequirements there can be, in the long run, noslowing down of agricultural development in theworld as a whole. On the contrary, it seemsimportant not ti) lose the recent increased mornen-tUrn of expansion. But it is equally importantthat further expansion should be balanced andselective, both between commodities and be-tween countries, in order to facilitate the disposalof existing surpluses and to prevent their recur-rence.

THE SUPPLY SITUATION

Agricultural ProductionThe marked upward trend of agricultural pro-

duction continued irt 1953/54 though there wasno repetition of the remarkable spurt in 1952/53

TAB we. 1.

" The crop years included in this anyears /mined and southern hemisphere (

he ate rage if he thrPe yea rs Iii. Sphase of post IV))' eleld 1(11(1 lll TIC

e:4 rile the S. S... ,i i

NoTp: Th, iffiq hod f ealeulution is nneland ,igripulho1,, .19,34, but some rmi nor revisions in the indices fi' 1

N DEN NUMBERS OF' \-(iGiximil TirrAL AniticuurirRAL P ROD LiCTION ANO A vimAnEA NNUAL INC RE ASE IN COMPARISON WI-TIE THE er RO WTI-1 OF POPULATION

1)115 I 9 -

1951 .52 1952 .53

/93.1- 3 S average -- 100

other tables in the report cover 'Northern Ilcmispbere crops harvested in the first of thems harvested towards the end of that year and the beginnii g of the succeeding year.. In to 1950.51 has liven taken as a, postwar base as in most parts of the world the firsttraction had been completed by 1948/49.. it., Eastern Europe and China,11111g) -d from that followed in the calculation of the indices given in The 8/ale of Food,visiolis in the basic estimates of world commodity production have resulted in some952/53 and earlier years,

when the world output (excluding the U.S.S.R.,China a,nd Eastern Europe) rose by over fivepercent largely because of favorable weather.In the years since the period 1948/49-1950/51,agricultura] production has increased by :nearlythree percent annually compared with an annualincrease in population of about one and a halfpercent. Per caput production slightly exceed-ed its prewar level in 1952/53 and maintainedthat position. in 1953/54.

Prod.uction in 1953/54 increased shaiply inWestern Europe and in the Near East in compar-ison with the year before. The Far East andOceania showed smaller gains but elsewhere therewas little change from the 1952/53 level (Table 1).Western Europe and the Near East have alsoshown the greatest expansion in the last fouryears with an average annual increase of the orderof four to five percent, compared with abouttwo percent in other regions.

Developments in 1953/54 reduced to only a-limited extent the disparities in production whichemerged during and since th.e war. On a percaput basis both total agricultural productionand food production remain appreciably less thanbefore the war in the Far East, Oceania and LatinAmerica, but they are somewhat greater in Africa,Western. Europe and the Near East, and sub-stantially greater in North America (Table 2).Nor was there any appreciable change in thestill greater disparities between regions in theabsolute levels of per °ain't production, which

11153/51(ereli r)linarv)

Average annual. increasepostwar base period T to

1958/54

114 114 121 4.1 0.8136 148 147 2.2 1.8120 1.32 132 1.8 2.4108 121 123 2.4 2.6101 106 108 2.2 1.4125 134 139 4.8 1.9134 136 137 2.3 1.6

118 125 127 2.8 1.5113 117 1111 2.5

I 95n 51aviro1110,,,I. War

basel2

'1Arestern Europe 103.North America 135Latin Arneric 123()coania 112:War East (excl. ('h ina) 99Near iHast 116Africa 124

Al I above regions 114\\rorld 3 108

PopulationProduction

Pelee tot

primarily determine their food consumption levels.Food production per head of the population re-mains some four to five time greater in Oceaniaand North America than in the Far East, theNear East and Africa, while Europe and LatinAmerica fall into an intermediate position.

Food production expanded faster than popu-lation over the last four years in all the lesswell-fed regions of the world, except in LatinAmerica. The gain in per caput production wasmost marked in the Near East, slow but fairlysteady in the Far East and Africa, while in LatinAmerica there was a slow downward drift.

Most major commodities shaxed in the increasein production from 1952/53 to 1953/54. Worldcereal production increased by two percent, themost satisfactory feature being an increase of eightpercent in rice p.i..oduction (eight percent alsoin the Far East, in spite of a poor crop in Japan)which ended the most acute phase of the post-war rice shortage. Wheat production declinedslightly, mainly because of a, smaller, thouglìstill large, crop in North America. Livestockproducts, notably milk, contributed largely tothe increase in agricultural production and theoutput of sugar also increased sharply, in spiteof further restrictions in Cuba, mainly becauseof a record European crop of sugar beet. Onthe other hand there was a dramatic fall in juteproduction to about half the 1952/53 level owingto acreage restrictions in Pakistan, and smallerreductions in the world production of other hardfibers, natural rubber and cocoa,. Restrictions

1 See : State of Food and Agriculture, 1953, ParFigure HI.

19

1 Including rough esti ates for U.S.S.R., Eastern Europe an rl China

on production are likely to become :increasinglyimportant in 11954/55, particularly in the UnitedStates, and to limit the output of wheat, sugar,cotton and tobacco.

The world catch of fish, crustaceans and mol-lusks iu .1953 :was estimated at approximatelythe 1952 level of 26.0 million metric tons. Thetotal catch of five major producers for whichstatistics are available (Callada, japan, Norway,Unite(l Kingdom, and United States) hasshowis little change during the years 1951-1953at 10 to 11 million metric tons or about 40percent of the workl's total. No figures are avail-able for two other rnajor fish producers, the'U.S.S.R. and China, but it is estimated that eachof them accounts for about 2.0 million metrictons per year. The principal countries in themedium producing group have continued theirupward postwar trend of production in 1953.Production WaS also maintained or increased inmost of the smaller producing countries.

In regard to forest products, world productionof round wood was maintained in 1953 whilethe production of finished products increased,:largely by drawing on existing stocks of rawmaterials. New records were reached in 1953in the world production of sawn wood (265 millioncu.m.), wood' pulp (39 million tons), newspiint(10 million tons), oth.er paper and board (39 mil-lion tons), plywood (7.8 million cu.m.) and fiberbuilding boards (2.7 million tons).

The second FAO world forestry inventory wascom.pleted in 1953 and is discussed more fullyin Chapter IV. Growing stocks of timber in theworld's forests now in use are estimated at 96thousand million cu.m. (of -which about 60 per,

11 BB 1.0N 1948/49-19.50/51average

1052/531953/51

(prelimi-nary)

1948/49-I950/0laverage

1952/53I 953/51(prelimi-

nary)

/ . -3 8 average loo

Western Europe 103 114 121 94 102 107North America 138 152 150 118 123 119Latin America 128 136 138 98 97 96Africa 123 134 134 102 106 105Near East 114 133 140 95 104 108Far East (excl. China) 99 105 109 84 85 87Oceania, 111 117 1.20 96 93 93

All above regions 115 126 128 98 102 103Wo r 1 d 109 117 120 97 101 102

TABLE 2. .1x.orix Nuiu uSits OF T09.'A CAPUT IPoon iidoDUU'iiO'N

Total Fond Pronm On Per Caput Food 'oduction

100

10.0

1 00

1924-28

FIGURE I Estimated World Production of Major Agricultural Products

1929-33 1934-38 0, Ca N LO .1-'t WI in al ti) ,.......

CO Cr, o 1,1V V. 14 r, ; C4ul utC, Os 0, 0, Qs 0.

All cereals

Milk

WheatMaize

Rice

OatsBarley

Sugar

Meat (Europe, Americas and Oceania)

Rye

Citrus fruit

Vegetable oils

Eggs (Europe, N. America and Oceania)Cotton

TobaccoCoffee

RubberWool

Jute

Cocoa

Tea

Million metric tons (Semi-logarithmic scale)

cent are coniferous and 40 percent broad-leavedspecies) growing on a total forest area of 1,127million hectares. This is less than one-third ofthe total world area under forest of 3,900 millionhectares, though 600 million hectares of unexploit-ed forest are already accessible. The inventoryshows that the world's forests are potentiallycapable of furnishing a plentiful flow of forestproducts for a world population much higherthan today. It also brings out once more thecontrast between the fully exploited coniferousforests, where growth and drain roughly balance,and the under-exploited broadleaved forests.

Long- Term Production Trends

Year to year changes in agricultural productionare of course largely affected by the weather andare generally less significant than longer-termdevelopments, Avhich as a rule correspond moreclosely to changes in world demand. There canbe little doubt, for example, that the long-termrise in world per caput production of e.g. eggs,sugar, citrus fruit, rubber and wood pulp (FigureI and Table 3) reflects a growing demand for thesecommodities, though rubber is increasingly affect-ed by the synthetic product. Similarly the declin-ing per caput production of rye, potatoes, driedfruit and wine probably reflects a falling off inworld demand. Per caput milk production, thoughstill below prewar, has risen slowly, hut furtherdevelopment may be affected by the shift frombutter to margarine. In other cases, however, e.g.,rice, coffee, cocoa and wool, the low postwar indicesof per caput production are more likely to be theresult of the slow expansion of production ratherthan of any fall in demand, as is indicated by thecurrent high prices of these products. Again theunchanging long-term trend for cereals as a wholeis the result of a complex of opposing tendenciese.g., the slow recovery of production in the Far:East, especially of rice, and higher production,mainly of wheat and maize, in North Americafalling human consumption of cereals in the mostindustrialized countries and some increase incountries where standards of living are only nowbeginning to rise ; tower requirements of coarsegrains for horses (particularly oats) and to someextent for cattle because of improvements in theproduction and utilization of pasture, offset, how-ever, by larger requirements for pigs and poultry.The production figures, however, suggest no mark-ed change in the over-all demand for cereals, forin general the periods of higher production werealso years of low prices and surpluses.

21

l.t may he noted in passing that for a good manycommodities vorld per caput production in 1034-38was appreciably l(1wer thaif in earlier periods,partly because of dl roughts in 1984 and 1936 inNorth America, but probably mainly 1)ecause ofthe effect of the depressim on demapd. Thiscustomary prewar base period for world agricul-ture iras on the whole a time of somewhat sub-normal production and consumption.

Prospects for 1954155

It is too early to form any real j:udgme.nt of thetrend of' production in 1954/55. Acreage restrie-tiallS and generally .less favorable weatlier are like-ly to lead to some reduction in the production ofgrain and sugar, at least in North. America anclEurope. Restrictions on cotton production inthe United States aTO unlikely to be offset by anyincreases which may occur elsewhere. No marked:recovery in the production of jute and hard fibersfrom the low level of 1953 *seems likely, and naturalrubber production may continue to decline slowly.On the other hand, a continuing expansion of live-stock production seems probable given normalweather in the main producing ateas, and increas-ed supplies of ciilseeds, coffee, tea and tobacco arealso expected in 1054. World agricultural pro-duction as a whole seems likely to be fairly wellmaintained in 1954/55 in spite of increasing restric-tion schemes in exporting countries, and theremay 'well be a cwitinuation of the recent upwardtrend.

International Trade in Agricultural Pro-ductsThe most notable feature of the international

trade in aglicultural products during 1953 wasthe continuing decline in grain shipments fromthe peal( reached in :1951, due mainly to goodharvests and lower import requirements in bothEurope and the Far East. This decline continuedduring the first half of 1954. Total wheat importrequirements of Western European countries, fOrexample, Were reduced by on.e and a half milliontons by the heavy 1053 harvest. Simultaneouslythere was a sharp recovery, in Argentine grain ex-ports from the low level of 1952, some increase inexports from the Near East and Oceania, and with-in 'Western Europe, a marked increase in exportsfrorri. France and Sweden. The main impact of'these changes was concentrated on North Americanexports w.hich in consequence were some 30percentlo-wer in 1953/54 than in 1952/53, compared with

r,ki31_,N 3. INDEX NUMBERS OF WORLD PER CAPUT PRODUCTION OF SELECTED COMMODITIES(EXCLUDING -U.S.S.R. AN)) CHINA)

a fall in world grain shipments as a whole of onlyeight percent. Exports of cereals from the U.S.S.Rto countries outside the " rouble area " were alsomuch lower and there was some fall in Far East-ern rice exports. In general wheat shipmentsfell more sharply than those of other grains, andsome countries, e.g. the Netherlands and Den-mark, increased their imports of coarse grainssince prices WCI'e favorable for livestock producers.

In contrast to the decline in grain, world tradein sugar increased sharply in 1953 compared withthe previous year, and shipments of vegetableoils and oilseeds, fruit, tobacco and coffee werealso larger. As a result, the total volume ofworld trade in agricultural products showed prac-tically no change from 1952, though there werefairly marked changes in the share of differentregions and the relative importance of differentcommodities (Table 4).

3 Raisins, figs, and dates.2 North America, Oceania and Western Europe Only.3 1936 100.... Not available .

SOURCE : PUbliCatiOnS of International institute of Agriculture and of FAO.

22

The increased trde in sugar was due mainlyto greater European imports and was largelyaccounted for by a special. United Kingdom pur-chase of Cuban sugar for stockpiling in anticipa-tion of de-rationing. Shipments of sugar againbegan to decline toward the erd of 1953 and arelikely to fall further in 1954 in view of the veryheavy 1953/54 production in European importingcountries. For tobacco, too, the increased tradein 1953 was to some extent fortuitous, partlyresulting from delayed shipments from the Unit-ed States to the United Kingdom, though th.erewas a marked increase in exports of Greek andTurkish tobacco. Increased intra-European tradeaccounted for most of the expansion in the caseof fruit ; thus exports of fruit from Italy increasedby 14 percent, while shipments of Spanish orangesto Germany doubled. For vegetable oils and cof-fee, however, the expansion was more general

COMMODITY1921-25average

1929-33average

1948/49-1950/51average

1952/53 1953/54(preliminary)

1934-38 average 100

All cereals 110 109 97 102 101Wheat 105 105 97 110 107

Rice 102 101 89 91 94

Maize 116 113 109 103 10413arley 105 111 97 114 115Oats 129 115 92 92 88Rye 108 109 79 83 85

Potatoes 91 98 87 79 80Sugar 104 101 104 118Oilseeds (oil equiv ) 98 100 107 107 110

Citrus fruit 73 84 119 128 130Dried fruits . . 84 95 86Wine 101 99 79 75 85

Coffee 85 106 78 82 81

Tea 100 100 100 106 103

Cocoa 78 82 92 85 81Tobacco 111 109 103 104 105

Cotton 110 98 89 102 103Wool 87 90 90'Tate 105 117 78 100 55Rubber 69 88 141 151 142

Meat 91 96 98Milk 86 88 91Eggs 2 117 126 126

Sawn wood 3 102 102 102Wood pulp 3 122 143 143

TABLE 4. INDEX NUMBERS OF THE VOLUME OF TRADE IN AGRICULTURAL PRODUCTS BY COMMODITY GROUPSAND BY REGIONS, AND THE SHARE OF EACH IN TOTAL WORT,D TRADE IN AGRICULTURAL PRODUCTS

23

... Not available.NOTE : The indices take into account trade between communist and non-communist countries, but not trade between the com-

munist countries themselves for which data are lacking. They are based on trade statistics for commodities weighted ac-cording to average prices in 1934-38. The regional indices and the figures showing the percentage share of world trade donot take into account forest products.

ITEM

Share of World Trade Indices of Volume

1931-38average 1952 1953

(preliminary)1948-50average 1952 1953

(prelimim )

Percent 1934-38 average - 100

All agricultural products .. 100 100 100 95 100 100

Cereals 20 22 21 96 111 103Sugar 6 6 7 112 114 130Oilseeds a 1 vegetable oils 9 7 7 68 72 74Fruits 4 4 4 86 104 114Livestock products 17 16 16 92 95 96Other foodstuffs 2 2 2 107 110 110

Al] foodstuffs I 58 57 57 90 98 98

Beverages and tobacco . . . . 12 12 13 103 106 111Natural fibers and rubber. . 30 31 30 103 102 101

Forest products 97 107 116

Europe

Gross exports 17.8 14.5 14.7 63 81 82Gross imports 63.4 53.1 57.2 88 84 90Net .imports 45.6 39.6 42.5 97 85 93

North America,

Gross exports 11.5 23.1 19.5 176 201 169

Gross imports 13.8 17.8 16.6 123 129 121

Net trade + 2.3 -- 5.3 -- 2.9 -- --

Latin America

Gross exports 18.7 15.0 18.4 101 80 98

Gross imports 2.5 4.8 4.5 155 190 180

Net exports 16.2 11.2 13.9 93 64 85

0 cean,i a

Gross exports 9.8 12.4 12.6 129 126 129

Gross imports 0.6 0.9 0.9 155 150 157

Net exports 9.2 11.5 11.7 128 124 127

Far E as t

Gross exports 29.3 20.7 20.3 65 71 70

Gross imports 16.0 16.0 14.5 73 100 91

Net exports 13.3 4.7 5.8 54 36 44

Near East

Gross exports 4.0 4.1 4.8 97 105 121

Gross imports 1.1 2.4 2.3 185 222 220

Net exports 2.9 1.7 2.5 65 62 86

A f rica

Gross exports 6.9 8.9 8.7 116 130 127

Gross imports 1.6 2.7 2.7 137 172 176

Net exports 5.3 6.2 6.0 111 118 113

and reflected both larger supplies in exportingcountries and an increased import demand.

It is apparent from Table 4 that world tradein. agricultural products, which rapidly regainedits prewar volume in the late foities and slightlyexceeded it in 1951 under the influence of theKorean boom, has since remained at almost exact-ly the 1934-38 level. The static condition ofworld agricultural trade is in sharp contrast tothe stead.y expansion of agricultural productionand indicates that a gradually diminishing pro-portion of the :world's output is entering interna-tional trade. The decline is fairly general formost major products, but is especially markedfor oilseeds, fruit, cotton, and latterly for sugarami cereals.

On the MC hand this fall reflects the trend inmany countries toward greater self-sufficiency,partly for balance of payments and partly for stra-tegic reasons. On the other hand it reflects theincreasing difficulty of some exporting countries,especially in the less developed regions, in main-taining their former volume of exports in the faceof the rapidly growing food requirements of theirOIVIA populations. A number of countries in theless developed parts of the world are indeed increas-ingly dependent on food imports, and hut for thisdevelopment the current level of Nvorld trade wouldbe appreciably lower than before the war.

As noted in last year's State of Food and Agri-culture, the declining food exports and increasingimports of the less developed regions WaS the factormainly responsible for the greatly increased shareof North American exports in world trade, a trend,however, :110W beginning to be reversed. Thus,in 1934-38 about twelve percent by volume ofthe world's gross exports of' agricultural productscame from North_ America. In 1951 North Amer-ica's share reached a peak of 24 percent, butby 1953 had declined to about 20 percent. InNorth America agricultural exports have increasedmuch more rapidly than agricultural production.The same is true to a less extent of Oceania, Ivhere,however, a special effort was made in the imme-diate postwar years to maximize exports by ration-ing domestic consumption and where exportsduring this period were also augmented fromstocks of wool accumulated during the war. Butin all other regions of the world, and for the worldas a whole, the export trade has lagged behindagricultural production (Table .5).

For imports the regional situation is altogetherdifferent. In the main importing regions, Europe,North America and the Far East, imports haveexpanded less rapidly than agricultural production

24

1.94S-00average

Index of gross ag,rieultural exports divided by index ofagricultural producti .

TABLE 6. RATE OF GROWTH OF AGRICULTURAL IM-PORTS COMPAR.ED WITH AGRICULT1TRAL PRODUCTION

index of gross agricultural imports divided by index tfagricultural production.

and these regions have tended to become moreself-sufficient. In other regions the reverse isthe case, particularly in Latin America and theNear East (Table 6). In view, however, of thecurrent efforts towards greater self-sufficiency beingmade by a number of countries in these regions,this trend may soon be reversed. Some of themajor developments in the postwar trade in food-stuffs are illustrated in Figure II.

World trade in forest products resumed itssteady expansion after the fluctuations of 1950-52,but although the volume of trade in 1953 WaShigher than in 1952, it continued to decline invalue. The volume of trade in sawn wood increas-ed by some 15 percent compared with the pre-vious year, mainly because of larger Europeanimports, and exports of most other finished prod-ucts also continued to expand, though shipmentsof wood pulp and pulp products as a whole did

Europe 85 76 76North America 91 94 84Far East 74 101 91

Oceania 138 156 126Africa 111 126 128Latin America 126 156 140Near East 159 182 164

AU regions . . 83 86 80

. . 1904-38 average = 100. . .

North America . 130 151 125Oceania 115 109 105

Africa 94 94 94Near East 84 84 84Europe 61 70 71.Latin. America . 82 72 68Vai East 66 74 66

All regions . . 83 86 SO

REGION 1948-50average 1951/52 1952/53

. 1934-38 average = 100 . . .

'Al3LE 5. C OMPABATI VE RATE OF DEVELOPMENTor AciiiiCULT URAL .EXPORTS AND AGRICULTURA /1.

PROD UCTION

1951/52 1952/53

FIGURE II Postwar Developments in the Volume of World Trade in Foodstuffs and Beverages

100

80

60

40

20

o

120

100

80

60

40

20

o

20

o

Gross exports Gross imports

1934-38 1948 49 50 51 52 53

1934-38 1948 49 50 51 52 53

1001

80 \\ \\\60 \\\\\\

\ \\ \

40 \\ \\

Others

Far East

atin America

North America

Ocean a

Others

Europe

Far East

Latin America

Others

North America

Africa

Latin America

Far East

CEREALS

S UGA R

25

100

80

60

40 ...

20

120

100

80

60

40

20

o

OILSEEDS AND VEGETABLE OILS

100

80

60

40

20

o

1934-38

o

1948 49 50 51 52 53

.1/

1934-38 1948 49 50 51 52 53

Othe rs

Latin America

Far East

Europe

OthersNear East and

Africa

Far East

Europe

North America

OthersFar East

North America

Europe

1934-38 1948 49 50 51 52 53 1934-38 1948 49 50 51 52 53

FIGURE II Postwar Developments in the Volume of VVorld Trade in Foodstuffs and Beverages

100

80

60

40

20

o

100

80

60

40

20

o

100

80

60

40

20

o

Gross exports

1934-38 1948 49 50 51 52 53

1934-38 1948 49 50 51 52 53

o

OthersAfrica

Latin America

LIVESTOCK PRODUCTS

TEA, COFFEE AND COCOA

40

Far East 20

o

26

-

100

80

60

Gross imports

Others

Latin AmericaNorth America

Europe

Others

North America

Europe

Others

North America

Europe

SS-

\..iii.\

\\Ni.

FRUIT

Others100

Europe80

Africa 60

Near East 40

North America20

Latin Americao

100

Others

North America 80

Latin America60

Oceania

40

Europe 20

1934-38 1948 49 50 51 52 53

1934-38 1948 49 50 51 52 53

1934-38 1948 49 50 51 52 53 1934-38 1948 49 50 51 52 53

TABLE 7. ESTIMATED STOCKS OF MAJOR AGRICULTURAL COMMODITIESNOTE : it iS to be emphasized that the quantities shown below include normal carry-over stocks in the countries concerned and

should not be taken to indicate the size of the surplus.

Wheat 1United States .

CanadaArgentinaAustralia

oarse Grains 1United States .

Canada

Rice (milled)Cambodia:VietNamBurma

t miland .

SugarCuba'Other exporters 6.United Kingdom.Other importers 9.

Linseed Oil 15United StatesArgentina

Soft Oils 1°United States

ButterUnited StatesCalladaOther IllajOE producers

CheeseUnited StatesCanadaOther major producers

Dried Skim Milk I

United StatesCanadaNetherlands.

Tobacco 12 I

United StatesCanada

Rubber I

Producing countriesand afloat

Consuming countries 13C ot ton j

Exporters : -UnitedStates

Others .

Importers

27

Exports1953

1951 stocksas % of 1953production

1 Exports 1953/54, July-June.USA - 1 Oct. for maize, 1 July for barley ami oats.

s 1953 stocks as % of 1953 production (1953-54 production for wheat and coarse grains)1 31 December.

Forecast.o Belgium, Brazil, Dominican R., Haiti, Peru, Philippines, Denmark, 31 Aug.

31 August.° February 1954.° Canada, France, JaPan, Netherlands, Sweden, USA :-31 Aug , except Japan and USA 30 june.

1° Including oilseed in terms of oil.A considerable proportion of stocks of dried skim milk were disposed,of in May 1954 through sales for feed purposes.Domestic grown tobacco farm weight.

13 Excluding government stra.,egic stockpiles.11 1953/54 exports.1, 1954 stocks as percent of 1953/54 production.... Not available.- Nono or negligible.

July 10.8 7.0 15.3 23.5 5.8 746.3 7.4 11.4 17.0 7.1 1022.5 1.2 4.8 4.2 3.1 703.0 2.3 2.9 4.2 2.0 78

25.0 18.1 24.3 30.0 3.2 28August 2.7 3.4 4.4 4.4 3.4 35

Thousand metric toses

Dec.85 150 215 35

100 225 700 971 '17350 400 -1 342 38

290 2 100 1 500 51 900 5 500 29440

7580540

7 560550

81 880725 2 200 11

as percent'" of consump

1 730 1 610 1 800 1 900 16 tion

July 414 405 371 310 42 136Dec. 213 211 230 50 116 33

Oct. 188 279 552 460 270 20

Jan.48 12 33 128 1718 20 25 32 21

90 83 62 67 281 7

Jan.96 101 108 196 3 3312 15 18 15 7 4283 60 74 82 298 14

.Tan.142 43 75 11245 37 45

t 4 11 1311 14 38

july1 532 1 647 1 742 1 745 258 187

88 95 98 93 14 148

Jan.

529 505 480 452 666 26251 320 356 391

Aug.

494 605 1 215 2 125 11780 1660

5921 241

9611 321

1 0321 106 1 775

141 730

STOCKSMonthCOMINIODITY

1951 1952 1953 1954

lIfillion nie II* tons Percent

not regain the boom leve] of 1951. On the otherhand there was a sharp fall of over 25 percent inworld trade in roundwood, mainly because of dras-tic cuts in imports of pitprops an.d pulp wood bythe "United States and Western European countriesfollowing heavy stockpiling in 1951 and 1952.

The Problem of Surpluses

The fec ture of the food and agricultural situationwhich has caused most concern in 1953/54 has beenthe continuing accumulation of excess stocks ofsome commodities, particularly in North America.Statistics of stocks are more fragmentary than thosefor production and trade, but the estimates inTable 7 give some indication of the magnitude ofthe main holdings in relation to current produc-tion and of their geographical location.

The surplus of cereals, and particularly of wheat,is much the most serious because of its sheersize, its effect on markets and on productionplans all over the world, and because there areas yet no real signs of its being liquidated, thoughacreage restrictions in the United States may limitfurther stock accumulations. The crux of thep7oblem is in North America (its developmentthere is illustrated in Figure III), though inevit-ably the surplus in that region has led to market-ing difficulties else-where, e.g. in Australia, Argen-tina and Turkey.

Although the main inflation of North Americanstocks came with the bumper crop of 1952/53

13 million tons or over 30 percent more than theaverage of the three preceding years wheat pro-duction in North America has exceeded utilization

TABLE 8. WHEAT : CROP AREA, YIELD AND PRODUCTION IN CERTAIN REGIONS

28

in every season but one since 1948/49 and therehave been substantial additions to the carry-over.The 1953/54 crop, though Smaller than in 1952/53,was still some seven million tons above the 1949-1951 average. Moreover, it met a reduced exportdemand and increased competition from otherexporters, so that the addition to stocks duringthe year will be about as large as the year before.

It is worth noting that the major cause of theincreased North American production was a succes-sion of good harvests rather than any great in-crease in crop area. Thus in the bumper year1952/53, when production was more than twicethe 1934-38 average, the increase in the crop areawas only 20 percent, but the increase in the yieldper hectare nearly 70 percent (Table 8).

While higher yields were to a considerableextent due to improved technical methods, theywere also largely the result of weather, generallyunfavorable in 1934-38 and much more favorablein the postwar period, particularly in 1952/53.In future seasons, therefore, acreage restrictionsmight be reinforced by a return to lower yields.Similar increases in yields per hectare are alsoapparent in the Western European wheat growingareas and in the exporting countries of the South-ern Hemisphere, though in these areas they arepartly offset by a marked reduction in the areacropped.

For other cereals the surplus problem is lessacute. Although stocks of coarse grains increas--ed in 1953/54, and may increase further in 1954/55since United States acreage restrictions on maizehave not been fully effective, they do not yetappear to be unmanageable, particularly in view

Belgium, France, German Federal Republic, Greece, Italy, Netherlands and United Kingdom.

ITEM 1948/49 1919/50 1950/51 1951/32 1952/53 1953/51

1934-38 average 100

North AmericaCrop area 120 129 110 108 120 116Yield per hectare 144 119 136 145 168 157

Gross production 173 154 151 156 203 180

Australia and ArgentinaCrop area 78 79 83 58 81 78Yield per hectare 122 130 121 103 146 136Gross prod.ucti on 96 102 100 57 119 110

Seven Major EUrOpean ImportersCrop arca 89 88 91 91 91 92Yield per hectare 103 116 115 109 122 1,s`t

Gross p. roduction 92 102 105 99 112 122

FIGURE III Wheat Supplies in North Americaand the Accumulation of Stocks

Million tons

A.part from cereals, the largest stocks are thoseof sugar, which have doubled in the last twoyears, but here the restrictions on production inCuba and the export quotas under the Internation-al Sugar Agreement may in time correct thesituation. Moreover world per caput consumptionof sugar is rising steadily, while that of cereals(for all purposes) tends to remain more static.For rubber, too, production and consumptionare coming closer together, with a falling produc-tion of natural and restrictions on the outputof synthetic rubber. Similarly, the drastic cur-tailment of jute production in Pakistan will effect-ively dispose of outstanding stocks. Excess stocksof dried skim milk in the United States and theNetherlands have been largely disposed of atlo-w prices for animal feeding, and prices havea,lso been reduced sharply in the United Kingdom.

The main accumulations of stocks of othercommodities have developed in North America,principally under United States price supportschemes. Investments of the Commodity CreditCorporation have increased more than tinvefoldsince 1952 ; apart from cereals they are partic-ularly heavy in cotton, tobacco, vegetable oilsand, more recently, dairy products and wool(Table 9). The measures being adopted by theUnited States Government to adjust future pro-duction to expected demand and to dispose ofexisting surpluses are discussed in Chapter III.

The problem of surpluses has bulked so largein recent thinking that it is important to seeit in perspective, without exaggerating or minimiz-

TAI3LE 9. INVESTMENTS OI"PHE UNITED STATES CO1VIMODITY CREDIT CORPORA,TION

TotalTotal excl. cereals

1313

29

li March

I Pledged for loans and inventories.Nono or negligible.

SOURCE : Report of Financial Condition and Operations, USDA Commodity Credit Corporation, March 1953 anil 1954.

292 24 648 503 1126 2 183108 20 511 651 819 1 292244 466 5 98 184

86 40 60 55 2098 393 4 14 5743 150 64 22218 145 15 12956 259 5 22 95

234 285 202 227 275463 1 732 62 322 1 306152 271. 2 31 5647 56 67 81

237 206 329

1 73.1 3 066 6 229505 1 095 2 616

COMMODITY1952

WheatIVIaizeCotton seed oilLinseed oilFlax seedButterCheeseMilkTobaccoCotton uplandCotton lintersWoolAll other

510

903496

129634

13184

898

1948-49 1949-50 1950-51 1951-52 1952-53 1953-54

NN Prod uction Additions to stocks.... Total utilizationStocks at end of year Exports

Domestic utilization

of growing pig numbers in th.e -United States.The same may be said of stocks of rice accumulat-ed in Far Eastern exporting countries which aremoving more freely now that :prices have ea,sed.

1953 1954 1952 1953 1954

Thousand metric ons Milliol United States dollars

ing its real dangers. For cereals, and especiallyfor wheat, the problem is one of world signifi-cance ami apart from widespread crop failuresthere seems little doubt but that the wheat sur-plus will throw its shadow over world trade forsome seasons to come. Moreover, many countriesin other parts of the world, e.g., Lati.n America,the Near East, the Far East, together with theU.S.S.R. and China, are maintaining programsof cereal expansion, and these must limit exportoutlets for North American grain. For sugaralso, accumulated stocks are too large to be dispos-ed of quickly, although Cuban restrictions andthe m.easures taken under the International SugarAgreement indicate how the problem may betackled. But here too, programs to expand pro-duction are being pressed forward by sugar im-porting countries for balance of payments or otherreasons. Outside the United States the surplusproblem appears for the time being to be easingfor most other commódities.

Most governments are now concerned to estab-lish policies which will bring production anddemand more closely into line, by stimulatingdomestic or export demand, or sometimes inevi-tably by restricting production. Meantime thereremains the problem of disposing of current sur-pluses. One important difference between thepresent and the interwar period of surplus is thattoday most of the excess stocks are under govern-ment control and there is correspondingly less dan-gel of an unorganized unloading of supplies ontothe market because of the financial difficulti.es offarmers and to some extent of private firms. Thedanger now is rather of a widespread extensionof two price schemes and the export of unwant-ed supplies at substantially less than the dom-estic price. Examples of this trend are givenin the section on agricultural prices. But whateversafeguards are taken such policies are apt todepress market prices and harm normal trading.

The FAO Conference, at its Seventh Session,recognizing this danger, urged governments to avoidiwthods of disposal that might result in unduepressure on markets or interference with normalpatterns of production and trade. The problemwas subsequently considered by the FAO Com.mit-tee on Commodity Problems which discussedmeans by which the disposal of stupluses mightbe used to raise nutritional standards, e.g. ofvulnerable groups in under-developed countriesor to aid economic development, and defined thegeneral ,principles which should be observed inthe disposal of agricultural surpluses. The Com-mittee on Commodity Problems also decided to

30

establish a Standing Committee in Washingtonfor continuing inter-governmental consultation onsurplus disposals and on the possible effects ofstich transactions.

In the long run, time problem is how to avoidthe recurrence of surplus situations, onceexisting stocks have been liquidated, and howto achieve greater stability of markets. Inother words, how production can be kept expand-ing to meet th.e growing requirements of theever increasing world population, and the needto raise nutritional standards, without at thesame time over-running temporarily the effectivedemand of consumers for particular products orin particular areas to an extent that excessivestocks accumulate, or that prices to producersare depressed tc.) an unprofitable level. Thiswas one of the main problems discussed by theSeventh Session of the FAO Conference in Novem-ber 1953 and its conclusions on such policies of" selective expansion of production and consump-tion " have been published in its report. Th.e

practical application of these policies is beingdiscussed further in a series of' regional meetingsand consultations under FAO auspices. Meansof ensuring a balanced and harmonious expansionof agricultural production is a basic task of theOrganization, and the problems which membercountries are meeting and measures th.ey areadopting for their solution are discussed through-out the latter sections of this report.

Food Consumption and Nutrition

The increased food production achieved duringthe past three years has been reflected to someextent in improved quality of the diet in countrieswhere food con.sumption levels are relativelyhigh and in an increased consumption of staplefoods in the countries where food consumptionis low. For a number of reasons, however, foodconsumption in most areas has not kept pacewith increasing production. Probably the mostimportant single factor is the generally continuinghigh retail j?rices of food. More abundant foodsupplies have caused farm prices to ease appre-ciably during the past year, but retail priceshave not fallen to the same extent and haveeven risen in some countries where food subsidieshave been reduced or discontinued (see page 44).Price rigidity, not only in the retail sector, isalso partly responsible for surpluses of severalfoodstuffs in North America and for difficultiesin disposing of rice supplies in Far Eastern export-ing countries. The emergence of surpluses follow-

ing earlier periods of acute shortage in manyparts of the world is a main indication of thelack of balance between food production andconsumption.

In comparing the slower expansion of foodconsumption than of food production duringthe past two or three years, other considerationsmust also be taken into account. For example,SOMO countries, especially those dependent onimports, have built up food stocks to safer levels,e.g. India. Larger quantities of grain have beenused as animal feed, which although increasingthe supply of the more nutritious livestock pro-ducts, appreciably reduces the total calories avail-able for human consumption. The same maybe said of the reduction in flour extraction rateswhich makes more bran available for animalfeed ; in this case, however, the nutritional qualityof the bread piocluced would be somewhat lower-ed through a loss of essential nutrients. The in-creased utilization of food materials to improvethe quality, variety and palatability of the dietrather than the quantity is of' course a normaland usually desirable accompaniment of increas-ing food production. Nevertheless, the fact re-mains that the quantity of foodstuffs consumedmeasured in terms of calories is still far too lowin many countries, especially in the Far East(see Annex Table I).

Exc'ept in a very few countries, food ration-ing of all kinds has no-w been abolished, pricecontrols have been removed or eased still further,and greater freedom accorded to private tradersin the distribution of foodstuffs. But unlesscountervailing steps to expand consumers' effec-tive demand are adequate, the removal of controlsespecially ort prices may inflict hardship on thepoorer sections of the population in many countriesand restrict the outlets for food, often of typeswhose consumption needs particular encourage-ment.

National average levels of food consumption,in terms of calories and proteins, have recentlybecome somewhat stabilized and it is difficultto detect significant changes year by year byfood balance sheet methods. For instance, nutri-tional levels in the OEEC countries as a -whole,which increased rapidly from 1947/48 to 1950/51,have shown rather little change during the pastthree years. In the Far East, the large absoluteannual increase in population in countries wherepressure of population on land is very heavy pre-cludes any rapid rise in per caput levels. InLatin America, the marked increase in food outputis being outstripped by sharply rising population;

31

food consumption levels have, however, beenmaintained and sometimes increased by lowerexports and larger imports.

In both these regions, as well as in other lessdeveloped territories, food consumption levels,except in a few countries, remain far behindthose of North America, Oceania and WesternEurope (Figures IV and V). The need tonarrow this wide gap by raising consumptionlevels in less developed countries is still the centralproblem of the world's food situation. But itis increasingly evident that the problem cannotbe solved merely by the application of improvedtechniques of production, important as they are.Unless means can be founcl to expand effectiveconsumers' demand and to absorb the increas-ing volume of production, farmers cannot beexpected to raise their output to the requiredlevels.

Trends in Food Consumption Patterns

Wartime and postwar food shortages and theneed to concentrate on the production of highenergy yielding foods led to enforced changesin the pattern of food consumption over largeparts of the -world. It is too early to judge wheth-er any of these changes is likely to be perma-nent, though there are indications that SOITle maybe. But it is already clear that with more abun-dant supplies and the relaxation of food controlsthere is a strong general tendency to return toprewar patterns of food consumption., exceptwhere changed price relationships have persisted.In Europe, for exaxnple, the consumption ofcereals and potatoes, bulky foods rich in carbo-hydrates, increased considerably during the warand postwar years in order to ensure an adequateintake of calories. By 1952/53, however, therewas a marked drop in. the consumption of thesefoodstuffs, especially of coarse grains of which theconsumption was half that of 1947/48. Similarlyin Japan considerable efforts were made to increasethe production of sweet potatoes, but their con-sumption is now even below that prevailing inprewar years. The decline in the consumptionof such foods in many countries has been accom-panied by a larger consumption of meat, eggs,and vegetable fats, which were formerly in veryshort supply. However, prewar levels have byno means been fully restored in all countries,especially in the -United Kingdom because of themore limited supplies of, e.g., meat for import.

The reversion to the prewar pattern of con-surnption might have been even more pronounced

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but for the uncertainties of the balance of pay-ments situation in some countries.

Some important alterations in prewar consump-tion patterns have occurred partly owing to govern-ment efforts and partly to changed price relation-ships ; in some cases these changes seem likelyto persist. In the former category rnay be placedthe impressive increase in the consumption offluid milk, stimulated in many cases by nutritionaleducation and other measures including subsidies.The reduced demand for butter at current pricesis, in some countries, a further factor in stimulat-ing the sale of fluid milk for human. consumption.It seems unlikely that the long-term trend towardshigher milk consumption levels in many countrieswill be reversed, even though in some cases, e.g.the United Kingdom, Denmark, Norway and theNetherlands, there has been some decline fromthe record levels attained a year or two ago.Examples of the more significant increases aregiven in Table 10.

TABLE 10. PER CAPUT FLUID WHOLE MILKCONSUMPTION

Not available.

Perhaps the most striking illustration of theeffect of changed price relationships is the increas-ing substitution of margarine for butter. Forexample, in the United States, per caput consump-tion of margarine is now almost equal to thatof butter, having increased nearly threefold fromthe prewar average of 1.3 kg. per year, whilebutter consumption fell by half during the sameperiod. In many other butter consuming coun-tries this displacement is equally rapid despitenumerous restrictions which handicap the sale ofmargarine.

Significant changes have also taken place inthe consumption of staple cereals. For instance,shortage of rice in postwar years and the highprices prevailing for rice compared with wheat

34

were largely responsible for an appreciable shiftfrom rice to wheat consumption in traditionallyrice constuning countries, of which two examplesare given in Table 11.

TABLE 11. PEE. CAPUT SUPPLIES OF RICEAND WHEAT (IN Turn's OF FLoun)

With the recent fall in prices of rice, there issome evidence that this trend is, at least partly,being reversed. For the most part, the increasein wheat consumption has taken place in largetown.s and coastal cities which have an easieraccess to wheat from abroad. The long-termtrend is uncertain since rice supplies are becomingeasier to get and rice-eaters' habits are not easilychanged, but an enlarged market for wheat atleast in some of the rice consuming countriesmay be permanent. For instance, an activecampaign is being carried on in Japan to encourageth.e production and consumption of wheat andbarley and to reduce the consumption of rice.

One factor likely to affect future trends ofconsumption is the increasing recognition bygoveriunents of nutritional considerations in plan-ning agricultural programs and the efforts in lessdeveloped areas to expand the production ofcheap but nutritious foodstuffs such as pulsesand fish, th.ough this sometimes involves thedifficult process of overcoming established prefer-ences for traditional diets. For instance, a plantfor large-scale commercial production of so-called" soya-milk " is being installed in Indonesia.Another example is in Chile where efforts arebeing made to stimulate fish production andconsumption, and where consumer acceptancetests of edible fish flour have already been complet-ed successfully.

A further factor which may affect the patternof feod consumption for individual countries isthe changes in age groups associated with the

age

. . . . K:lograms per head . . . .

Ceylon 8.3 8.8 13.2 ...Japan 4.5 2.7 5.9United Kingdom. 100 153 158 153Norway 188 242 249 242Italy 36 44 48 49United States 120 126 127 127Australia 110 144 130New Zealand 187 206 215 215

YEAR Rice Wheat

. . . . Kilograms per head

Ceylon1934-38 average 145 :3

1948/49-1951/52 aver-age 99 25

1952/53 92 321953/54 94 :33

,rapan:1934 39 average 141 131948/49-1951/52 aver-

age 106 321952/53 113 271953/54 98 27

1950/

COUNTRYPrewaraver-age

1948/19.19

1951_-1951/1952aver-

1952/1953

growth of population. Preliminary calculationsindicate that in most countries average calorierequirements for the population as a whole willnot be significantly changed, but that there m.aybe a shift in requirements for certain types offood. For example, where birth rates remainhigh and infant mortality rates are falling, theproportion of children in the population will tendto rise, with a corresponding increase in the re-quirements for milk and other protein-rich foods.Recent studies establish beyond doubt that pro-tein malnutrition among young children is themost serious deficiency disease prevalent in the.under-fed areas of the world.

A more general question is th.e long-termchanges in consumption patterns accompanyingincreased industrialization and rising real income.The most complete data on such changes relateto the United States. In that country total perca,put food consumption, in terms of retail weight,hardly changed over the period from 1909 to 1952,but there were considerable :improvements in thenutritional quality of the diet. The consumptionof grain products, potatoes and SWeet potatoes,

which are of importance mainly as sources ofcalories, was reduced by about 40 percent. Onthe other hand, the consumption of protectivefoods increased considerably, e.g. eggs by over40 percent, green vegetables by about 60 percentand citrus fuit and tomatoes by 80 percent. Con-sumption of meats, poultry and fish increasedby only two percent, though within this groupthe consumption of beef has become lower andof poultry higher. Before World War II similartrends were apparent in most of the industrializ-ed countries in Europe.

It does not, of course, follow that industrializa-tion in the less developed countries will be accom-panied by similar changes in food consumptionpatterns. Where the calorie intake is extremelylow, the first need is for increased supplies ofhigh energy foods, and there is little doubt thatthis will be the early response to rising per caputreal incomes. Nevertheless, in the long run itis likely that the proportion of the income spent,on high energy foods will fall and that the consump-tion of protective foods will increase. FiguresVI and VII show the consumption of animal

FIGURE VI Per Caput Supply of Animal Protein in Relation to Per Caput National Income

35

Grams per head per day Logarithmic scale

80

70I

1

o NEW4LLAND

60

o ARGENTINA. USTRALIA ..7.".

.S.A.I DENMARK

0 SWEDEN .......0.CANADA

50 IRELAND ..! o ° SWITZERLANDL...,FINLAND

40....FRANCE " UNITED KINGDOM

NETHER ANDS ° BELGIUM

30

AUSTRIA , W . G E 1'2 M A N Y

.....7'........s VENEZUELA

U.OF. S. AFR CA C H I L E

20 ITA LY.......

S .RHODESIA MEXICO-'".-../ °

BRAZI L........" e G R E E C E

0

....r. °PERU 0.22TURKEYEGYPT I

CEYLON I

PA I STAN 0 °PHILIPPINES10 o JAPAN

INDIA

3

$30 $50 $100 $200 $500 $1000 52000Per caput national income

FIGURE VII Per Caput Consumption of Cereals and Roots in Relation to Per Caput National Income

protein and of cereals and starchy roots in anumber of countries in relation to per caput national.income.

This does not mean that per caput consumptionof cereals for all purposes will decline as incomerises. On the contrary, as agricultural develop-ment proceeds hand in hand with industrializa-tion, emphasis on livestock farming which ispredominant mostly in the ad.vanced countries,is likely to spread increasingly to the less develop-ed countries. This will entail the use of largerquantities of cereals for feeding animals. FigureVIlf shows in fact that per caput consumptionof cereals for all purposes is currently larger incountlies with relatively high national incomesthan in low income countries where per caputhuman consumption is usually high.

THE WORLD ECONOMIC SITUATIONIN 1953/54 AND THE DEMAND FOR

AGRICULTURAL PRODUCTS

The world economic situation became somewhatmore stabilized in 1953/54 after the violent fluc-tuations in the period since 1950. The trendof developments was not the same in all partsof the world and the position in each region isreviewed bri.efly below. Two features, h.owever,were of particular importance in their influenceon the demand for agricultural products. Onewas the surprisingly limited effect of the down-

36

turn in economic activity in North America onthe situation in other regions. The second wasa marked easing, at least temporarily, of thedollar shortage.

In setting their economic policies for the imme-diate future most governments have endeavoredto safeguard themselves against any continuationor intensification of the slackening of businessactivity in the United States and of the milderdecline in Cartada, but so far these seem to havehad little material effect in other parts of theworld. The industrial countries of Western Europeare enjoying relatively prosperous times, andthere was no sign of a reversal of their increasedeconomic a,ctivity up to the end of the first quarterof 1954. Economic conditions continue to improvein Oceania, and while some countries in LatinAmerica, the Far East and the Near East arestill experiencing serious balance - of - paymentsproblems, others have considerably improvedtheir position.

The North American recession has not yetled to any fall in the domestic dernand for food-stuffs, and elsewhere economic conditions havegenerally tended to stimulate demand. The highlevel of world demand for agricultural productswas thus maintained in 1953/54, and the some-what fragmentary and incomplete data availableindicate that the volume of retail food sales tothe end of 1953 was somewhat larger than ayear earlier, at least in Europe and North America,though in the United States, sales in the first

Calories per head per day from cereals.potatoes and other roots

Logarith mic scale

YUGOSLAVIA

PERU.

.TURKEYaEGYPT .S. RHODESIA

2000

PAKISTAN

erINDIA

IRELAND

W.GERMANY,_.

NETHERLANDg

FINLAND

FRANCEBELGIUM

NOR WA34---etU.K.--

AUSTRALIADENMARK o

SWITZERLAND

......

°SWEDEN

°JAPAN

CEYLONPORTUGA

.CHILE AUSTRIA

1000 .NEW ZEALAND

CANA'DA U.S.A.

$30 $100 $200

Per caput national$300 $500

income$1000 $2000

FIGURE VIII Per Caput Supply of Cereals for All Purposes (Including Livestock Feeding)and for Direct Human Consumption

India

Pakistan

Ceylon

Egypt

Brazil

Japan

Greece

Chile

Italy

Uruguay

Austria

Netherlands

Western Germany

France

Norway

United Kingdom

Belgium

New Zealand

Austral ia

Sweden

Canada

U.S.A.

Countries are arranged in orderof per caput national income

quarter of 1954 showed no increase over the firstquarter of 1953 (Table 12). Marketing difficultiesand surpluses have developed not because of anyfalling-off in world demand, but because of unbal-anced production, or because demand did not ex-pand quickly enough to keep pace with production.

Although the decline in United States economicactivity led, as is usual, to a parallel decline inUnited States imports, other countries' holdingsof gold and dollars, which had grown substantiallyin the last three quarters of 1952, increased fur-

37

ther in 1953 by $2,600 million to a record totalof $23,000 million. This upward movement hascontinued in 1954. Nearly all the increase wentto Continental Western Europe and the sterlingarea. About $2,200 million of' the increasefesulted from transactions with the United Statesthese in.cluded a record outflow of United Statesgrants, mostly for military purposes, UnitedStates off-shore purchases, and lower net exports.The latter are possible because recovery f'rom thewar has now reached a point when the rest of

Per caput consumption for human food Per caput consumption for all purposes

100 200 300 400 500 600 700 800 900

Kg. per caput

TA,BLE 12. ESTIMATED VOLUME OF RETAIL :FOODSALES IN EA.CII QUARTER OF 1953

Food and tobacco.2 Food co-operatives.3 Food, drink and tobacco.

Co-operative retail sales.A similar index for the first two months of 1951 would

be 100.SOURCES : ECE, Economic Survey of Europe in 1953 (with

subsequent figures supplied by ECE Research andPlanning Division) and United States and Cana-dian official statistics.

the world has less need for the exceptionally largeshipments of food and capital goods from NorthAmerica which were vitally necessary in the firstperiod after the war.

The easing both of the dollar shortage and thefood supply situation has restored a greater free-(10m of choice to the main importing countries.The United Kingdom, for example, in restoringthe import of grain to private trade has liftedrestrictions on the import of grains from " hardcurrency " areas. Premiums on non-dollar grainshave disappeared and their prices on the worklmarket have fallen to about the same level asgrains from the dollar area. This trend has beenstrengthened by United States measures to makepossible to a limited extent and under specialconditions imports of United States foodstuffsagainst payments in national currencies ratherthan dollars. For the present, at least, currencyconsiderations count for much less than beforein international trade in agricultural products,and for more and more commodities somethingapproximating to a world market is again begin-ning to emerge.

The Economic Situation in 1953154 inEach Region

Almost all economic indicators in the United.States showed a persistent decline during 1953/54.The index of industrial production (seasonallyadjusted) fell from a peak of 137 (1947-49 = 100)

38

in July 1953 to 123 in April 1954. This fall often percent was as much as during the wholeof the previous recession from July 1948 to July1949. Although the decline of industrial produc-tion was faster than in 1948/49, there was no accel-eration, but rather a flattening out of the curvein March, April and May 1954. Unemploymentincreased with reduced industrial activity to3.7 millions (5.8 percent) in March 1954 and fellless than is usual at this time of the year to3.3 millions in May. Decreased employment,coupled with a generally reduced work week,is curtailing labor incomes. Farm incomes alsofell, and total personal income was reduced by1.8 percent during the seven months from October1953 to April 1954. But the fall in incomes hasbeen offset by lower taxes, and total disposableincomes, and hence purchasing power, have remain-ed almost unchanged, though their distributionbetween different sections of the population mayhave altered to some extent. Retail sales in thefirst quarter of 1954 were some four percent lessthan a year earlier, but the main decline wasin durable goods and as already noted retail foodsales were at about the same level as in the firstquarter of 1953, while retail p1-ice levels remain-ed almost unchanged.

The main direct effect of changes in UnitedStates economic activity on the rest of the worldis through repercussions on United States im-ports, which run closely parallel with the indexof total industrial production. This relation-ship has so far held true in the present recession.Imports of agricultural products, however, fellrather more than those of other products, andthere was a noticeable decline in imports of agri-cultural raw materials in the last quarter of 1953.

Although some of the same economic trendsas in the United States have been visible in Callada,their effect has so far been smaller, and the fiscalyear 1953/54 was the most prosperous in thecountry's history. Despite a fall in farm incomes,gross national product and both governmentand consumer expenditures increased by aboutfive percent. Nevertheless the expansion in pro-duction slowed down appreciably in the secondhalf of 1953. Unemployment rose to a postwarpeak of five and a half percent in March 1954and was particularly heavy in agricultural machin-ery and other industries servicing agriculture.Moreover, exports have declined, mainly owingto smaller shipments of wheat, newsprint, lumberand agricultural machinery.

Economic developments in Western Europeshowed a very different trend in 1953/54 from

COUNTRY II 'TI IV

Corresponding e. of 1952 = 100

Austria' 107 114 116 115Belgium 2 107 109 102 103Demnark 3 103 105 107 1.05

Finland 4 97 102 104 103Germany (Western). 108 108Netherlands 102 103 103 105Norway 3 100 99 104 103Swaden 100 100 101 102

Switzerland 3 103 101 103 103United Kingdom. 105 105 104 105

Canada 102 104 105 106-United States 5 105 104 102 1101

those in North. America. Industrial production.,which liad stagnated in 1952, started to expandonce more as from the second quarter of 1953,partly under the influence of United States defenseexpenditure, including off-shore purchases. Forthe area as a whole the industrial output wasseven percent higher in the first quarter of 1954th.an a year earlier. The fastest progress wasin Western Germany and. Italy, but there werealso substantial increases in the United Kingdom,the Netherlands, Yugoslavia, Austria and Greece.The Scandinavian countries, Belgium and France,however, showed little or no industrial expansion.

Export values increased appreciably in the secondhalf of 1953, with the main gains in WesternGermany and the United Kingdom. Much ofthe increase, however, was due to an expansionof intra-European trade aud largely reflectedincreased consumption in Western Europe. Im-ports increased more slowly, largely because agri-cultural expansion reduced food import require-ments, and the terms of trade became morefavorable. As a result, total gold and foreignexch.ange holdings of EPU member countries,including the reserves of the sterling area heldin London, increased by about $2,300 millions(nearly 25 percent) during 1953. In view of thisdevelopment and greater internal financial stability,currency restrictions were considerably relaxed.Agricultural products met a strong demand 011the domestic markets.

A growing pressure of consumer demand, hithertointentionally kept at a low level., appears to havebeen the main reason for drastic changes in policyin the U.S.S.R. and most Eastern European coun-tries during 1953/54. These are designed to speedup the output of consumer goods, particularlyagricultural products. According to publisheddata they are likely to lead to a higher rate ofinvestment in agriculture in 1953/54, and especial-ly in 1954/55 and 1955/56. The change in em-phasis has also shown itself in a sharp increase

TABLE 13. VALUE Ob' UNITED STATES IMPORTS

39

illussian imports, e.g., of butter, fruit and othergoods, and also in increased shipments of goldfrom the U.S.S.R. in payment as well as largerexports of cotton, timber, petroleum and certainminerals. Exports of grain, on the other hand,have declined and a drive has bc'.en started toexpand grain production, probably mainly foranimal feedin.g.

Economic acti.vity in Latin America as a wholeshowed little improvement in 1953/54. Industrialproduction continued to expand, though ratherm.ore slowl.y than before, and agricultural out-put was maintained, but milling was affectedby reduced foreign demand. The payme.ntsdifficulties experienced in 1952, due in large partto the sharp deterioration in Latin America'sterms of trade, were eased in 1953/54, partlyowing to rising prices of some export products,including coffee, cocoa, meat and wool, but stillmore through severe restrictions on imports.Total imports were some 15 percent less in 1953than in 1952. Not all Latin A_merican republicsbenefited, however, from the general improvementin the balance of payments, in particular thoseaffected by the reduced North American demandand lower prices for non-ferrous metals, grainand cotton. The value of the Peruvian sol declinedrather sharply, Chile unified its multiple exchangerates without, however, stopping the downwardtrend on the free market, Brazil established anew exchange system, and Mexico, Bolivia andParaguay liad to resort to devaluation.

The continuing unfavorable terms of tradeof most Far Eastern countries, in particular thehigh import prices of capital goods, are a limit-ing factor on the pace of economic developmentand to some extent therefore on the expansionof consumer demand for agricultural products.India, which, like China, is not heavily dependenton foreign trade, is perhaps the least affected,and recent progress suggests that the main indus-trial and agricultural production targets set in

1952 1953 1951

PrEM3rd qr. 1th jr. 1st jr. 2nd qr. 3rd qr. 4th qr. 1st qr.

Mallon U. S. dollarsTotal imports 2 536 '2 782 2 751 2 815 2 657 2 556 2 832

Total imports of agricultural products 1 027 1 072 1 124 1 082 1 012 966 1 073

of which crude foodstuffs 470 544 575 515 514 582 644

other than crude foodstuffs 557 528 549 567 498 384 429

its first Five Year Plan will be achieved. Inorder to accelerate progress, the governmenthas reversed its earlier policy and has programmedfor controlled deficit financing to the extent of$500 millions in 1954/55. In view of large recentincreases in the production of food and consumergoods there is thought to be little danger of infla-tion, but if necessary the government will useits substantial foreign exchange resources toiinport additional food and other supplies. Ja-pan is facing serious economic difficulties as aresult of reduced United States aid, the problemof war reparation payments to other countriesin South East Asia, and its high internal pricelevel, all of which have greatly reduced the com-petitive power of its exports of manufactured goods.Other Asian countries are also experiencing balance-of - payments difficulties in 1953/54. Burma andThailand, for example, are having to adjust theireconomies to lower export prices for rice, whileMalaya and Indonesia are affected by the lowprices of rubber and tin. Pakistan was badlyhit by the collapse of cotton and jute prices afterthe Korean boom, and by the partial failure ofthe wheat crop in two successive years, but hassince improved its position with the help of alarge gift of United States wheat and higher pricesfor jute.

Lack of capital, except in oil exporting countries,also retards economic development and the growthof the domestic demand for foodstuffs in theNear East. Turkey continues its remarkable pro-gress, but payments difficulties, due in part toheavy imports of capital goods, compelled herto suspend the liberalization of imports fromthe EPU area. Egypt, a country receiving littleor no capital from abroad, showed deflationarytendencies and a slower rate of capital investment.

In Australia and New Zealand the economicsituation continued to improve in 1953/54. Indus-trial activity increased further, inflationary pres-sures diminished, and prices of most export prod-ucts eXcept wheat, were higher than in 1952/53.

Prices of Agricultural Products

In spite of the generally sustained level of demand,the marked recent changes in the supply situationhave inevitably been reflected in price levels.Broadly speaking, prices of some, but not allfoodstuffs, tended to fall during 1953/54, pricesof raw materials, including forest products, weremuch steadier after the sharp falls of 1952, whilein the beverage group, coffee and cocoa, prices

40

rose sharply as a result of shorter supplies (Fig-ure IX), with repercussions on the consumptionand price of tea.

It is in the cereals group that the most strikingfall in prices has occurred. A steady decline inthe export price of wheat and coarse grainsreflected the marketing difficulties encounteredby grain-exporting countries, while the recordrice harvest of 1953/54 reversed the long up-ward trend of rice prices. Prices of sugar be-came steadier fbIlowing the restriction on Cubanproduction and the negotiation of the new Inter-national Sugar Agreement. The market for oil-seeds and vegetable oils became much firmerin 1953, but again weakened somewhat in early1954 with increasing supplies. .Price movementsof livestock products were less clear-cut. Higherprices were agreed for dairy products shipped tothe United Kingdom from the Southern Hemi-sphere and Denmark, but otherwise prices tendedto fall except where they were maintained bygovernment supports. Export prices of eggs fell

FIGURE IX

Notes

Dairy ProductsCheese : wholesale price of Gouda cheese, full cream.Butter : Netherlands ; fixed wholesale price for 84 % fat content

Denmark ; price to producers.Livestock

Beef cattle : Argentina ; Liniers market (Buenos Aires) steers,special, 460-490 kgs. live weight, for export.Australia : frozen beef, bone-in, ox and heifer, slaughterweight, average priCe to producers for hinds and crops.U.S. : Chicago, good steers, live-weight 900-1100 lbs,

Pigs : U.S. : Chicago, barrows and gilts, live-weight, 220-240 lbs,choice quality.

Grains

Wheat : Canada I : No. 1 Northern Manitoba, basis in store FortWilliam-Port Arthur, outside IWA.

U.S. : No. 2 Red Winter, cash price at Chicago.Canada Il : No. 3 Northern Manitoba, outside IWA.

Maize : U.S. ; No. 3 yellow, cash price at Chicago.

Sugar and Vegetable OilsSugar : f.o.b. export price to destination other than U.S. (No. 4

contract).Coconut oil : 3 % %, afloat, c.i.f. European port.Linseed oil : No 1 C.W. cash price to producers.

BeveragesCocoa : Accra, spot New York.Coffee : Brazilian Santos No. 4, ex-dock, New York.Tea : Calcutta, for export (leaf) auction price, excludes export duty

and excise.

Forest ProductsSawn softwood : 2 X 7 Redwood battens, u/s f o.b.Pulpwood : f.o.b.Wood pulp : Bleached sulphite, average monthly export value.Newsprint : Average monthly export value.

Raw MateriaisRubber : U.S. : wholesale, smoked sheets, N.Y.Wool : U.K., 64's Dominion clean, cost delivered in the U.K.Cotton : Karnak, good, Alexandria.Jute : Pakistan, middle quality, Narayangan.

150

100

9080

300

250

200

150

100

908070

60

50

200

150_

10090807060

400

3.10

200

150

10090

8070

60

so

FIGURE IX Movement of Prices of Selected Agricultural and Forestry Products(January-June 1950 100)

(Semi-logarithmic scale)

250 ,-A

150

100

9080

300

250

200

150

1009080

70

6050

400

300

250

200

150

100908070

50

Dairy Products Grains

H - Maize U. S. I - Wheat U.S. J - WheatCanada 1

Grain Prices c.i.f. North Atlantic Ports(U.S.ti per metric ton)

A - Dutch cheese B - Dutch butter C - Danishbutter

Livestock

D - Beef cattle Argentina E - Beef cattle AustraliaF - Beef cattle U.S. G - Pigs U. S.

Sugar and Vegetable Oils

L - Wheat Canada 2 M - Maize ArgentinaN - Barley Iraq

Beverages

A - Linseed oil Canada B - Coconut oil StraitsC - Sugar Cuba

Forest Products

D - Cocoa U.S. E - Coffee U.S. F Tea India

Raw Materials

1 2 3 4 1 2 3 4 1 2 3 4 1 21951 1952 1953 1954

G - Wood pulp Sweden H - Sawn softwoodSweden I - Newsprint Finland J - Pulp wood..U.S.

1 2 3 4 1 2 3 4 1 2 3 4 1 21951 1952 1953 1954

L Rubber U.S. M - Wool U.K. N - CottonEgypt O - Jute Pakistan

sharply. Beef cattle prices became steadier afterthe marked fall in North America, and the mark-ed rise in Southern Hemisphere exporting coun-tries during 1952/53. Prices of pigs tended toincrease in North America, and in some, but notall, countries in Western Europe. The generaleffact of these changes was to reduce the existingvide disparities in livestock prices in differentparts of the world.

In the raw materials group, prices have beengenerally stable. There was a slow downward trendof rubber prices during 1953, but the market forrubber and also for cotton became firmer in early1954, while there was an appreciable rise in juteprices following drastic restrictions on production.Wool and hides showed no definite price trends.Tobacco priceswere firmer in North America, buttended to fall elsewhere. Prices of forest productsremained remarkably stable, some 20-30 percentbelow the 1951 boom level but slightly higher thanat the end of 1952.

A characteristic aspect of the clevelopinent offorest products prices is the time lag between thefellings of roundwood and the marketing of finish-ed products, which varies from one to three years,though changes in market conditions affect pricesof raw materials and finished products simul-famously. This explains the financial difficulties ofthe forest industries in the main exporting countriesin 1952/53. Changes in market prices are alsoreflected considerably later in international trade.Thus while prices already had become stabilizedand even showed some advances in 1953, the val-ue of exports by the northern European countries

( UNTR V

TABLE 14. WHEAT : COMPARISON OF PRODUCER AND EXPORT PRICES

Estimated average pricesto producers

1952/53 1953/54

42

in this year was lower than in 1952 despite alarger volume of trade.

For many agricultural products the downwardmovement of prices in 1953/54 would of course.have been much greater but for various stabiliza-tion schemes. The restrictions of sugar and juteproduction have already been mentioned. Simi-larly the recovery of cotton prices was only pos-sible because of the withdrawal from the marketof excess supplies in the United States. Againthe halt in the downward trend of rubber priceswas partly due to the suspension in the UnitedStates of rotation stocks sales and a systemati.climitation on the output of synthetic rubber.

Price support schemes have maintained the do-mestic price levels for cereals in many countries,but have not prevented a considerable fall in priceson the international markets. Lack of stor-age space has intensified the pressure to sell insome countries, e.g., Australia, Burma, Callada andTurkey. With increasing competition, free wheatexport prices have declined to the same level asprices under the International Wheat Agreement,and the latter throughout 1953/54 were for thefirst time significantly below the maximum levelof the renewed Agreement. Many wheat exporters,including the -United States, Argentina, Turkey,France and Sweden llave made greater use of'subsidies in order to remain competitive. In early,Tune 1954 the United States Government increasedthe subsidy on wheat exports from 45 to 55 centsper bushel, East Coast ports (equivalent to $16.5to $20.2 per metric ton), and soon after the Cana-dan Wheat Board also decided to reduce export

July/Dec.1952

Average value of exports f.o.b.

Jan./June1953

July/Dee.1953

Estimal average return to producers.Guaranteed aice to producers.

I Ave I,' {op fist nine months of 1953/51.4 Averain ir No. 1 Northern Port Arthur or Vancouver.4 initial- uilynieut to grtwirs, subject to Mud adjustment.Esti mat, d cost of production which is guar:Inteed lo producers ; final re ali =D. On not yet known.0.1.1. priees a Argentine wheat at North Atlantic ports ; average under jan./June 1953 relates only to March/June.

... Not available.None or negligible.

SOURCES : National statistics and data on average returns to producers supplied by governments to FAO.

Jan. /March1954

U. N. d011arS Per Me frie 1011,

8 We den 1106 195 104 93 81 69France 1103 1103 93 81 94 68Argentina 2160 2100 795 779 773

United St9.tes 177 373 79 77 82 71Canada 462 '51 69 73 72Australia '62 452 71 73 74 68Turkey 2106 2106 125 108 87

prices by 10 Vs cents per bush.el. Similar condi-tions are developing in the coarse grains market. InMay 1954, the -United States announced an exportsubsidy of 15 cents per bushel (U.S.$6 to 7 per metricton) on shipments of barley, maize and rye, and.of 10- cents per bushel (about U. S. $7 per metricton) on shipments of oats. Cereals are the moststriking, but not the only example of subsidizedexports. Thus the United States has offered sur-plus butter for export at 40-45 cents per pound,compared with tire domestic price of about 60 cents,and Norway, Sweden, Finland and Ireland havealso exported butter at prices substantially lowerthan those paid to domestic producers. The sameis true of exports of cheese from Austria, meatand slaughter cattle from France and Switzerland,linseed oil and dried beans from the UnitedStotes, and sugar from France, Belgium andDenmarlz.

Nevertheless it would be wrong to think of' thetrend of agricultural prices, or even of food prices,as universally downward. As already noted pri-ces of a number of commodities are rising. Sti.11

more significant, tire price index for all foodstuffsimported by OEEC countries, the largest worldmarket for agricultural imports, showed no signi-ficant decline during 1953 and rose sharply in thefirst quarter of 1954, while a similar index for theUnited Kingdom fell by only two percent dur-ing the year. The fall in_ prices of cereals andsugar thus appears to have been offset by risingprices of vegetable oils and beverages and of live-stock products imported into the United King-dom.

TABLE 15. PRICE INDICES OF IMPORTE!) FOODSTUFFS

First two months.SOUR( E : ()EEC and Un ted K ingdom statistics.

Farm Prices

The increasing pressure of supply in many com-modities was reflected in farm price levels, despitethe operation of price support policies. The de-cline was naturally sharpest in the major surpluscountries. In the United States and Canada the

43

farm price indices fell by a further six percent andeleven percent respectively during 1953, thoughthey recovered slightly in the first quarter of 1954.In Western Europe farm prices have been consider-ably more stable. Comparing the first quarterof 1953 with the first quarter of 1954, the indexof farm prices fell by two to three percent inIreland, Denmark, Finland and the Uaited King-dom, showed not more than one percent changein Austria, the Netherlands and Switzerland,and rose by two to six percent in WesternGermany, Belgium and Norway. In France andItaly wholesale prices of agricultural products,which usually follow farm prices rather closely,fell by two to three percent.

Unfortunately rather few comparable indices areavailable outside North America and Europe. Thefarm price index fell by about ti,vo percent inSouth Africa and by six percent in Australia, whilein Mexico wholesale prices of agricultural productstose by six percent. Prices also tended to rise inthe Far East ; the index of wholesale prices roseby about one percent during 1953 in Burma andin India by seven percent, while in Japan thepoor harvest drove the farm price index up by13 percent.

There is little doubt that e. g. Western Euro-pean farm prices would have been less stablewithout the operation of price support policies,but this does not fully account for the differencein price trends between that region and NorthAmerica. By no means all Western European prod-ucts are covered by price support measures, andon the whole price support schemes are as com-prehensive in North America as in Western Eu-rope. Moreover, the relative stability of farmprices was evident in European exporting coun-tries such as Denmark as well as in importingcountries. Tire main explanation seems to lie inthe greater imbalance between production and re-quirements in North America tiran in Europe.

Nevertheless the sudden inflation of' the costto the taxpayer of farm price support policies inboth North America and Western Europe is caus-ing concern to governments, and also to produc-ers who see the continuation of their outlets threat-ened and fear a sharp fall in prices. In WesternEuropean countries, for example, tire guaranteedprices of cereals, until recently usually compar-able with or below tire cost of imported supplies,are now generally above world market levels, par-ticularly with tire increasing tendency to subsi-dize exports ; the cost of the guarantees has thusbecome substantial. In the United States, thecurrent level of support prices for wheat, intensifi-

COUNTRY

Firstquar-ter

1953

Secondquar-

ter195:3

Thirdquar-ter

1953

Fourthquar-ter

1953

Firstquar-ter

195,11

1952 100

A.I I ()EEC coun-tries 101 10(1 100 t(10 104

United Kingdom . 97 98 96 95 95

ed by a series of good harvests, has led to a volumeof production well beyond th.e capacity of the do-mestic al the shrinking export market, and hasinvolved the government in heavy expenditures.In other cases where guaranteed prices were in-tentionally fixed at a high level as an incentive toproduction, e.g., for livestock products in someWestern European countries, the expansion of'production has outrun the absorptive capacity ofthe market at current price :levels. Moreover,high support prices, e.g., for butter, have some-times encouraged a transfer of d.emand to alterna-tive products. With the fall in world prices andincreased production of some foodstuffs, subsidiesvhich originally could be regarded primarily asconsum.er subsidies are now becoming largelyproducer subsidies, e.g., milk and wheat in theUnited Kingdom.

No country has yet abandoned its farm pricesupport policy, but there is some tendency to re-duce price support level.s, and more than one gov-ernment is feeling its way toward a limitation ofits commitments or a more flexible price supportsystem. In the -United States the parity ratio fordairy products has been reduced from 90 to 75percent, ami a flexible parity system with supportlevels changing in accordance with the supply si-tuation has been proposed. In the United King-dom guaranteed prices for pigs and milk wereslightly reduced at the February 1954 price review,and the guaranteed price for milk limited to acertain volume of production. There have alsobeen changes in the methods of implementingprice supports, particularly for cereals and meat,following the return to private trading ; thesechanges leave considerably more play to marketdemand. Sweden has reduced guaranteed pricesof breadgrains, butter and eggs and restrictedthe guarantee to sales on the domestic market.In France lower guaranteed prices are to be an-nounced at the end of duly for Nvheat and areunder consideration. for milk. Other examplescould be quoted.

Outside North America and Western Europefarm price support policies are less widely develop-ed, but similar problems seem likely to arise. Forexample, guaranteed prices to rice growers showa veiy wide variation from country to country,e.g., time price paid in Ceylon is four times thatin Burma at current exchange rates. Exportprices of rice are still high in relation to time re-cently reduced prices of wheat. Although someexamples could be mentioned, e.g., the abandon-ment in Brazil of price supports for the 1951cotton crop, the plans of the Government of Urn

44

guay to reduce the guaranteed wheat producers'price, there has so far been hardly any tendencyto change farm price policies in these regionsmost countries are continuing their efforts to ex-pand production, including the production of com-modities such as cereals and su.gar which are insurplus supply in other countries. In the longrun, however, in these regions as in North Americaand Western Europe, the probable outlook is forlower farm prices and lower price supports forproducts for which large surpluses exist.

Retail Food Prices

In most countries retail food prices remainedrather stable in 1953. The last effects of infla-tionary pressures raised indices of retail food pri-ces by 22 percent in Brazil from the last quarterof 1952 to the last quarter of 1953, by 10 to 15percent in Japan, Indonesia and Iran, and byabout seven percent in Pakistan., Australia andNew Zealand. There was a fall of some five per-cent in France, Egypt, Cuba and Mexico, but inmost other countries indices of retail food priceschanged by no more than a few points during theyear.

An unsatisfactoiy feature of recent price trendshas been the unusually slow and limited responseof retail prices to changes in wholesale prices, andthe widening gap between the cost of, food atthe farm gate and the cost to the consumer. Thistendency is very apparent in North America.During the years 1952 and 1953 farm prices fellby 17percent in U.S.A. and 23 percent in Canada,and were followed closely by wholesale prices, butretail food prices fell in the same period by onlytwo percent and eight percent respectively (Ta-ble 16). A similar trend is evident in some Euro-pean countries, e.g., Italy and Belgium, wherefarm prices fell somewhat during the past twoyears while retail prices continued to creep up-wards. In some instances, however, e.g., the Unit-ed Kingdom and Norway, the divergent pricetrends were largel3r due to the reduction of con-sumer food subsidies.

As it is only the retail price which affects thefinal demand, the rigidity of retail prices despitefalling farm and wholesale prices must have reduc-ed the expansion of demand which might havefollowed from lower farm prices, and in this waycontributed to the piling up of surpluses and tend-ed to reduce farm prices still further.

Farm and retail price indices are not strictlycomparable in that the farm indices include rawmaterials, which do not appear in the retail indices

FIGURE X U.S.A. : Distribution of Retail Costof Domestically Produced Food between FarmValue and Marketing Costs (including Transport

and Processing)$ 1000 Million

45

40

30

20

10

1945 1946 1947 1948 1949 1950 1951 1952 1953

SOGReic: U.S. Department of Agriculture, Marketintl Trans-port Situation, February 1954.

175-7.i"Marketing b II

eg.ggs Retail cost

Farm value

45

'FABLE I C. PERCENTAGE CHANCE IN INDICES, FARMPRICES, WHOLESALE PaTeES OE AGRICULTURAL

P.RODITCTS AND RETALL F001 PRICES

(ouNTitY

North Am,ericaU.S.A. ......Canada

Western, EuropeUnited KingdomGermany (Western)FranceItalyFinlan.dNorwaySwedenDenmark-Netherlands.Belgium .. ..Ireland, Rep. of.Switzerland .Austria

Other AreasMexicoAustralia (NSW)South Africa .

EgyptJapan.IndiaBurma

Farmpriceindex

Pr Tentage char Ige

1723

6

47

436

I()

2

34

+ 13

+ 16

Wholesaleprices

of agrie.products

15--- 22

-1-

'2458

H- 9199

To October-November 1953.2 To july-Augast )953.3Excluding* wool.

Food and tobacco only.Unweighted average for different food products.General wholesale prices.

... Not available.

(these forni an appreciable part of the farm out-put in the United States, Mexico, South Africaand Egypt among the countries included in Tabl.e16), while the retail prices cover imported aswell as home produced foods. These differencesin coverage may affect the magnitude of thepercentage changes shown in Table 16, but donot appear to affect their general implication.For example, during the two years under reviewfarm prices of a " market basket " of domestical-ly produced foods in the United States fell byover ten percent asid retail prices of the samefoods by less than four percent, while marketingcosts increased by nearly th.ree percent.

A recent survey of available data brings outhow largely the cost of food processing and distri-bution bulks in the retail price. In eight countriesfor which fairly comprehensive estimates llavebeen made, these marketing charges representedfrom 30 percent up to 50 percent aild at times

Indexof retail

foodprices

602

17

2

28

nearly 70 percent of the final cost to the con-sumer of his total purchases of food. i Th.us

the United States, for which the data are mostcomplete, marketing costs amounted to 68 percentof the retail cost of food in 1932 during the depres-sion, fell to 46 percent in 1945 in the period ofwartime control, and rose again to 52 percent dur-ing the years 1948-51 and to 55 percent in 1953/54.It is evident, therefore, that greater efficiency inmarketing and economies in the cost of processingand distribution can be comparable in importanceto greater efficiency and reductions of cost onthe .production side in bringing foodstuffs withinthe purchasing power of consumers and thusraising food consumption levels and nutritionalstandards. It is equally evident that lower pro-duction costs will be ineffective for this purposeif they are absorbed in the marketing marginand not passed on to the consumer.

Farm IncomesFarm incomes depend not only on the level of

prices of agricultural products, but also on thevolume of production and the ratio between theprices received by farmers and those they payfor fertilizers, machinery and other necessary farmrequisites. Rather few countries publish statisticsof such price ratios, and in most of these themovement of prices during the past few years hasoperated to the disadvantage of farmers (Table 17).The decline has been much more marked inNorth America, however, than in Europe, wherein some countries, e.g., Switzerland and Finland,price relationships have remained remarkablyconstant during the past three years. japan is anexception to the general trend and there recentprice movements have tended to bene.fit farmers.

In North America the decline of the price ratioin the past three years has been due mainly tofalling farm prices, the level of ,prices which far-mers have to pay showing relatively little change.On the other hand, where the ratio has fdlenin European countries (e. g. Western Germany,Belgium, the Netherlands), the effect has beenprimarily due to the rising prices of farm requi-sites.

The size of thci marketing margin varies notonly with the efficiency of marketing, but also withthe kind o:F food mainly consumed (the over-all mar-gin naturally tends to be larger when bulky, perish-able or highly processed foods form a large partof the diet), and with time type of service providedto the customer. lit more advanced countries, sav-ings due to the greater efficiency of marketing tendto be offset by more elaborate services and a higherdegree of processing.

46

Estimates of farm incomes themselves are prepar-ed annually by a limited number of countries,mainly in the more developed regions, and showa similar trend. Thus in North America, forwhich income data are the most complete, farmincomes rose to a peak in. 1951 after the recessionof 1949, but have since fallen steadily, and inboth the United States and Callada were rathermore than 20 percent less in 1953 than in 1951.The percentage fall is about the same both in termsof money and of real purchasing power (net incomedeflated by cost of living index) and also for farm-ers and for agricultural incomes as a whole, includ-ing the wages of paid farm workers. As the num-ber of people engaged in agriculture is falling, how-ever, the decline in per caput farm incomes wouldbe rather less than in farm incomes as a whole.In North America the fall in prices of farm productswas almost entirely responsible for the declinein agricultural incomes, as both the total volumeof production and production costs showed rela-tively little change.

In Western European countries, on the otherhand, both the net incomes of farmers and totalagricultural incomes (including farm workers'wages) have been maintained or have tended torise since 1951 in terms of money, though notalways in terms of purchasing pOlVer. Not allcountries making such estimates, however, haveyet published figures f'or 1953 or 1953/54. Thegreater stability of farm incomes in Europe thanin North America results partly from the firmerprices of farm products, and partly from the sharpincrease in the volume of production. Grossreturns to farmers have therefore increased andthis has largely offset the rising costs of produc-tion resulting from the increased prices of farmrequisites.

Farm incomes in Oceania have fluctuated sharplyin terms of money, falling heavily from the 1951peak to 1952, but recovering considerably in 1953.Owing to inflationary tendencies, only broughtto a halt in 1953, the purchasing power of farmincomes has fallen, however, since 1951. Recentmovements of farm incomes from year to yearin one country from each of the above regions,the United States, the United Kingdom and Austra-lia, are illustrated in Figure XI. Unfortunatelycomparable data are not available for countriesoutside these regions.

In 1954 farm incomes in the United States areexpected to decline by around five percent compar-ed with 1953 because of a continuing adversemovement of prices and a smaller volume of produc-tion as a result of restrictions. Production restric-

Jai uaryFebruary 1951.July-December 1951.

tions in the United States will operate still morestrongly in 1955. Similar tendencies are likelyin Caclada during 1954, particularly in view offarmers' intention to reduce the wheat acreage,th.ough some of this alea will be transferred toother crops.

In Oceania, on the other hand, farm incomesmay increase in 1954 compared with 1953. Al-though costs may continue to rise slowly, firmerprices for wool and slight increases in prices forthe remaining contracts with the United Kingdommay outweigh any weakening in the export marketfor wheat. Moreover, incomes will be augmentedby the somewhat increased volume of production.

For Western Europe prospects are that the rela-tive stability of farm incomes may be maintainedin spite of increased competition from overseassupplies and a tendency to reduce price supportlevels, since it is the policy of a number of govern-ments to maintain a reasonable stability of farmincomes. Moreover, the lower cost of imported

TABLE I 7. RATIO OF P {ICES RECEIVE I) AND PRICES PAID BY IAI1 1 le.11S

47

coarse grains is a favorable factor in the importantlivestock sector. It is too early to say how thevolume of output in 1954 will compare with th.every large 1953 production, but there are at leastno restrictions on production as in some otherareas.

Th.e above paragraphs are based in the mainon estimates prepared by the agricultural author-ities of the countries concerned. In addition,however, national income statistics published bythe United Nations' on the .basis of informationsupplied by the countries themselves, show theindustrial origin of the net domestic product. Theythus provide a basis for roughly estimating howincomes in the agricultural sector, including forestryand fisheries, have moved in relation to incomesin other occupations (Table 18).

A number of points come out of these compari-sons. In the first place, only in New Zealand

UN Statistical Series H. No. 5, February 1954.

1

Co uNTRY l'rEm 1951 1952 1953Jan./1 ime

1953July/Dec.

1951Jam illjarch

I anuary-june 1950 100

U'nitecl States (a) Prices received. 125 119 109 .105 107(b) :Prices paid .. 113 114 112 [II 113(c) Ratio a lb 111 104 97 95 95

Canada (a) Prices received. 117 107 102 94 92(b) Prices paid .. 110 114 113 114 111(r) Ratio alb 106 94 90 82 83

113elgiuni ..... (a) Prices received 106 1H 107 105 '108(b) Prices paid .. 110 114 120 121 1122(r) Ratio a lb 96 97 89 87 189

:Finland (a) Prices received. 2124 126 123 121 122(b) Prices paid 2126 1119 121 121 122(r) Ratio a lb 298 106 102 100 .100

Netherlands . . . (a) Prices received. 112 122 114 115 118(b) Prices paid . . 115 126 125 122 127(0) Ratio alb 97 97 91 94 93

Norway (a) Prices received 111 120 115 120 126(b) :Prices paid . . 124 132 136 135 137(r) Ratio alb . . . 92 91 85 89 92

G ermany( Western) (a) Prices received. 111 118 111 113 114(b) Prices paid 121 131 132 130 130(c) Ratio al b 92 90 84 87 88

japan (a) Priees received. . 2127 140 .145 154 162(b) Prices paid . . . 2128 131 .131 135 140(c) Ratio a/b 299 107 110 114 116

Switzerland . . . (a) Prices received . 103 104 103 103 104(b) Prie,es paid . . 106 109 108 107 106(c) Ratio alb . . . . 97 95 95 96 98

FIGURE XI Agricultural Incomes in the UnitedStates, United Kingdom and Australia at Current

Prices

UNITED STATES$ thousand million

30

20

10

1,000

500

o

1948/49

Million

1,000

500

o

Gross receiptsNet income of farmers and farm workersNet income of farmers

1111 1111 11 1Production costs

Agricultural wages

3 Net income of farmers

UNITED KINGDOMMillion ill,

i I I IV\X,

¡ffigg

AUSTRALIA

1949/50 1950/51 1951/52 1952/53 1953/54

48

among the countries listed have average agricul-tural incomes in 'recent years been consistentlyhigher tlian average incomes in other occupations.Rough parity between farm and non-farm incomesappears to llave been reached in the United King-dom, and the divergence is not very great in West-ern Germany and Denmark. In most countries,however, per caput incomes in agriculture rangefrom two-thirds to one-half of those in otheroccupations as a 'whole, and are sometimes evenlower. The estimates do not include any incomereceived by the farm population from non-agricul-tural sources, e.g., handicrafts or part-time em-ployment in industry and services, but these re-ceipts would be too small to have much effecton the general picture. The estimates are, how-ever, influenced to some extent by the fact thatin most countries there tend to be a larger num-ber of children in farm than in urban families.The figures, of course, show only the compar-ative position in each country and tell nothingof the absolute level of incomes. It i.s certain,for example, that average farm incomes in th.eUnited States are much larger than in manycountries with higher percentage ratios, and therather low figures for the United States in Table18 reflect the high incomes gained outside agri-culture rather than a low level of farm income.

For all countries for which the comparison isavailable, the relative position of agriculture hasimproved stibstantially compared with 1938, when.,however, agricultural incomes were still seriouslyaffected by the depression of the thirties. Post-war trends vary from country to country. Thusin Western Germany, Denmark and Turkey therelative position of the farmer seems to be gradual-ly improving. In Austria, Ireland, Peru and the:Philippines, to quote only a f'ew examples, .heseem.s at least to be holding his own. On the otherhand, in some countries, including Japan, Italy,Belgium and to a less extent the United Statesand Norway, agricultural incomes have lost groundin relation to incomes in other industries duringthe past few years.

The margin of error in estimates of this kindmust be considerable, and the concepts of nationalincome and farm 'population vary somewhat fromcountry to country. No account should thereforebe taken of small differences between. countries.The year to year estimates for single countries,however, should be more comparable and probablyreveal general trends without excessive distortion.On the whole it appears that while farmers llaveimproved their relative position in most parts ofthe world in comparison with the thirties, those

1948/49 1952/53 195354

(not available)

1949/50 195051 1951/52

1948 1949 1950 1951 1952 1953

TABLE 18. PER CAPITT INCOMES IN AGRICULTURE, FORESTRY AND FISHERIES AS A :P4:11.1FENTAGE OF PER OAP TINCOMES IN ALL OTHER OCCUPATIONS

... Not available.SouncEs : Based on UN estimates of national income and FAO estilnates of agricultural population.

gains are not everywhere being held and in a goodmany countries farm incomes are once morefalling- further behind incomes in other occu-pations.

INVESTMENT AND CREDIT

Although over-all statistics of public and privatefunds invested in agriculture are very inadequate,.i.t i.s well known that lack of capital is a majorfactor retarding agricultural development in mostparts of the world and particularly in th.e Far Eastand Latin America. Not much progress can bereported in the provision of funds for agriculturein recent years, except to some extent in themobilization of domestic capital.

Some attempts have been made, however, tofacilitate the investment of foreign capital. Anumber of capital importing countries have adoptedmeasures to attract more foreign capital, and theUnited States, the largest capital exporti.ng coun-try, has reduced taxes on profits from foreign in-vestment. A recent United Nations report' estimatedthe current net ammal outflow of private capitalat about $2,000 million, no more than the levelreached in the 1920's, despite the marked decline

1- The International Flow of Private Capital 1945-1952, (E/2531) United Nations, New York, January1954.

49

in the real purchasing power of money and th.e largeexpansion of th.e world's economy. This figureis of course the total for all industries, and to allcountries including such developed countries asCanada. The report emphasizes the tendencyfor the bulk of' such funds to be invested in enter-prises under the managerial control of the foreigninvestor, which appreciably limits the possibilityof investment in agriculture.

The International Bank has remained the mostimportant source of public funds in the field offoreign investment, and in the last fiscal yearthe total of' loans authorized increased considerably.Those directly aiding agriculture, however, remain-ed about constant so that the sh.are of agriculturedeclined. Agriculture of course benefits indirect-ly from substantially increased loans for, e.g.,

electric power and transportation facilities.The United States Export Import Bank main-

tained in 1953 the same level of loan authorizationsas ia the previous year, but granted none directlyaiding agriculture. There has been sonle revivalof portfolio investment, particularly in Swiss capi-

tal exports, but these contribute to agriculturaldevelopment only marginally in strengthening thecurrency position of the borro-wing countries.Financing of colonial development continues, withincreasing direct borrowing of colonial govern-ments or individual enterprises on the metropol.i-

Co U NT RV 1938 1918 1949 1950 1951 1952

New Zealand 150 156

Percent

204 132

United Kingdom 101 10:3 93 89 93Germany (Western) 44 67 72 80 85 93Denmark 67 77 82 81 78 87

Austria 59 60 65 60 63Canada 33 62 57 55 68 60

Turkey 30 51 42 52 61 60

Greece 58 61 51 56 56Finland. 66 71 52 50 58 52Norway 59 58 52 51 52

Ireland (Rep of) 31 48 47 44 44 48

11talyUnited State

4833

7055

5744

5448

4744

4442

Belgium 45 47 41 40

Peru 36 37 41 40faptui 40 35 32 32

Philippines :31 29 29 34

I D. I NTE lt NANI 0 NAT, 13 A8 K FOIL REEDS -

STIJL CTION AN D DEVELOPMENT L OANS THOP171,1)

IN 952/1953 AN D 1953/54

Includes credits to Alltitralia, Finland, Iceland. In inand Peru.Includes credits to Australia, Iceland, Italy, i'onn ma and

include, a crudit of $30 million to Yugoslavia, partly forutilii.ation nircst resources and production of superphos-phate,.

Notw o negligibleSolTRCE : IBRD , Annual Report 1052153 all d PPOSS e ease s.

tan markets, in addition to loans from metropolitan(rovernments and financial institutions.

Domestic sources still, however, provide thegreat bulk of the funds for agriculture. Agricul-tural credit from public or co-operative organiza-tions is probably the largest source of domesticcapital, and an analysis of the recent supply ofsuch funds in 34 countries during 1951 and 1952is given in Annex Table Il. The largest amountof loans, of the order of $3,000 million in both years,was issued in the United States. In France andJapan such loans exceeded $1,000 million, whilein many other countries total loans were also sub-stantial. The data do not, however, cover allloans to agriculture in these countries ; majorsources, for example, not covered by the tableare merchants in agricultural requisites and, espe-cially in less developed countries, private money-lenders.

The growing need to develop their agriculturehas led many countries in recent years to expandtheir systems of agricultural credit. This has beendone in three main ways : by setting up specialinstitutions where these were previously lacking

50

by enlarging the role of the Central Banks in pro-vidin.g funds to agriculture ; and by reorganizingand strengthening the co-operative credit move-ment. Annex Table II suggests, in fact, someincrease in the provision of farrn credit in 1952compared with 1951. Thus of 20 countries forwhich comparable data are available, 13 showedincrea,sed loans in 1952, against one with nochange, and 6 which reduced the level of lending.For these countries, however, total loans issued in1952 were four percent lower than in 1951, theover-all figures being considerably affected by amarked decline in the rate of lending in the Unit-ed States. Loans outstanding at the end of 1952\MT higher in 17 of the 21 countries for whichcomparative figures are available, and lower inonly four. Total loans outstanding at the endof 1952 for the 21 countries were 12 percent higherthan a year earlier.

The very different level of credit facilitiesin different regions and countries, however, is evi-dent from Table 20, which relates the amountof loans issued in 1952 to the agricultural area(arable equivalent) and the agricultural population.On an area basis, loans tend to be highest in fairlyadvanced countries with a considerable pressureof rural population such as Japan, Italy andBelgium. On a per caput basis they are highestin advanced countries with a high agriculturaloutput per man (e.g. New Zealand, United States),or with well-developed co-operative organizations(e.g. Scandinavian countries). They are alsohigh. in Israel where special attention is beinggiven to agricultural development. The tableernphasizes, however, the extreme inadequacy ofinstitutional agricultural credit on either basisof comparison in most countries in the Far East,the Near East, Africa and Latin America. Thegreatest difficulty in providing adequate creditfacilities in under-developed countries is admit-tedly the general shortage of capital, but it appearsthat in many cases lack of proper financing insti-tutions has been largely responsible for theirinability to mobilize for agricultural developmenteven the limited domestic resources available.

Commercial banks are an important source ofagricultural credit in more advanced countries.In the United States, for example, 51 percent ofthe total agricultural credit outstanding at theend of 1952 came .from commercial banks and in-surance companies (including in this case muchof the long-term or farm real estate loans), whilein Italy the corresponding figure was 56 percent,in Mexico 38 percent, in New Zealand 28 percentand in Norway and Sweden 12 percent. Corn-

ITEM

1 July1952

to 30 June1953

July1953

II) 90 June1951

Wion U. S. dollars

To tal loans authorized . . 178.7 289.1

Directly aiding agriculture. . 142.2 243.0_Machinery and spare parts . 1.3 2.9irrrigation and flood control. 19.5 5.0Grain storage 0.3Timber equipment 3.5Processing industries. 0.9 20.0Multi-p ltrpose 1(0ms . 17.0 14.8

IndCrectly aittiny two:culture. . 42.0 213.7Transport 42.0 104.6Power 109.1Other 294.5 32.4

Percent

Percent directly aiding agricul-ture 23.6 14.9

TABLE 20. OUTSTANDING 1. NSTITITT ION At. AG RIODD-TITRAL ('REDIT AT E N ) 1952 IN R (MATT ON TO AGitt. CI TT, -

TITRAT, A REA AN D AGRICULTURAL POPULATION

Average loa os outstanding ji, r 1,'f are in agricultura! land(arable c, airatent)i

,TaT)an

ItalyBelgi urnFrance,USA, Ph i 1 ippi nos,

NeW Zealand:Brazil'Yugoslavia, Ceylon, Al-

geria,, Egypt, TurkeyMalaya, Southern Rho-

desia, Syria, Tndia 2,

Mexico

Average loans outstanding per head of agricultura! population 3

New ZealandSweden, Israel-USA., ChileFinland, Norway

Belgium, France, .I.talyAustria, West, Germany,

CyprusIB ra z i ,

'Yugoslavia, Philippines,Mexico, Algeria,

Ceylon, Malaya, Egypt,r_'rtirkey

Ind i a, 2

Above $500Between $400

" $300" $200

$100$ 50$ 25

and $500and $400and $300and $200and $100and $

$ :15 and $ 25$ 5 and $ 15

$ 1 an.d. $ 5

Less than $ 1

NoTt: : It should he borne in mind that figures ill ihis (ablerefer to credits granted by financial hilstitations nks.insurance colnpanies. co-operatives, etc.! only and donot cover advances li y merehants, den le rs. privot emoney-lenders, ete. The loiter, of cour,,e, **lily :inimportant role particularly in the more underdevel-°lied. areas.

Agricultural land COVOI'S arable land (ineludillg 1,1/ardg1171d fanOW), permanent pastures and rough grilzingever data :for the latter are available. rid roproved pas-tures and rough grazings have beer: converted to itrableland equivalent " by a rough conversion filet mir, usually ofone tenth.

1 1..*ottns outstanding at end 1951.Estimated total population directly dependent on agricul-ture : see F.,40 Year Boalt of Agricultural Statistics.

mercial 'banks are not, however, an importantsource of credit for small or subsistence farmersand play a minor part in countries where subsist-ence farming predominates.

Co-operative societies cater for the needs ofboth large and small farmers. They are the maindirect source of institutional short-term creditin a mimber of countries, especially in Europe.They contributed, for example, 55 percent of theloans outstanding at the end of 1952 in Austria,44 percent in Sweden, 36 percent in Finland,30 percent in Belgium and 21 percent in Germany.They were also very important in Japan with acontribution of 64 percent, in Turkey with 45

51

percent, and in Israel twelve percent. In oth.ercountries ill the Near East and in Latin Americathe contribution of co-operatives is negligible.In India and Pakistan they were the largestsingle source of institutional credit, though theactual funds provided Were very small.

Specialized banks and other institutions playan important part in financing long-term agricul-tural projects in most countries of Europe and. NorthAtnerica, ami also in some less developed coun-tries. In most under-developed countries, however,such institutions have still to be established. Spe-cialized institutions llave been set up in recentyears in Western Europe, in Latin America, andin the Far East. An interesting development inthe Near East is the proposal now under consider-ation to establish a common bank for all Arabcountries, which would, inter alia, make loansto agricultural or industrial credit institutions.

Fear of adding to inflationary pressures andlimited capital resources have underlined the :needto make the most rational use of agriculturalcredit. This has been sought by direct govern-ment control of' major loans and investments inagriculture, by centralized administration throughthe central banks or other official agencies as inAustralia and India, and by adjustment of interstrates as in the United Kingdom. To a certainextent control is exercised also through the super-vision of credits granted, e.g., in th.e United Statesand some Latin Am.erican countries.

THE DEMAND OUTLOOK

The filture level of world economic activity,and hence the level of demand for agriculturalproducts, will be influenced largely by the situationin North America. If the recession th.ere wereintensified and protracted its effect would be boundto spread to an increasing degree to other countries.The situation in North America is therefore diseuss-ed below in some detail.

As pointed out earlier, most mojel' economicindicators have been declining in the United Statesalthough the fall slowed down in the first quarterof 1954 and the available data for May and earlyJune suggested some slight improvement. Butthere are still some adverse signs, particularlyin the continuing reduced rate of new orders formanufactures, especially of machine tools, in theexpected decline of expenditures for new plantand equipmen.t, and in the indications that thereduction of inventories is not yet at an end. Onthe other hand the general climate is still ratheroptimistic.

AmouNT COUNTRY

Above $100Between. $ 80 and $100

$ 60 and $ 80$ 40 and $ 60$ 20 and $ 40

$ 10 and $ 20$ 5 and $ 1.0

$ ( $ 5

Outlays for new construction are rising and thistrend seems likely to continue, whi.le the remark-able rise in industrial share prices in the springof 1954, though largely due to lower taxes on pro-fits, also reflected the confidence of investors,man of them cautious institutional investors.

Although .Federal budget expenditures are tobe reduced, the decline in the net cash balancewill be very small. The slow rise in local govern-ment spending- is likely to continue. Moreover,i the fall in inventories tapers off, gross privateinvestment should not be very different fromthe 1953/54 level. As no further major changesseem likely in other components of the grossnational product, the level of United States eco-nomic activity in 1954/55 will depend largely onCOOSUMOr expenditures. Thus variations in con-sumer expenditures, which in recent years haveaccounted for over 60 percent of the gross nationalproduct, are likely to determine whether the levelof economic activities will go up or down.

The decline in personal 'incomes due to higherunemployment, shorter working weeks and fallingfarrn incomes in 1953/54 is being partly offset byreductions in bicorne taxes. Actual consmnptionexpenditures are therefore likely to fall less thanmight haVe been expected from the decline ofindustrial produ.ction and reduced governmentexpenditures, and may be encouraged by lowerexcise taxes. On the other hand, surveys sug-gest .that purchases of houses, automobiles andother durable goods will be lower in 1054 than in1953.

Government action may also influence economicdevelopments. Some action has in :fact alreadybeen taken, e.g. by the Federal Reserve Bank bypurchases of government securities designed toexpand the money supply and by two reductionsin reserve requirements and by reductions indiscount 'ates. Congress, in addition to tax adjust-ments, has provided additional funds in 1954'for road construction and public buildings. Thesemeasures are widely credited with restrainingthe deflationary MO vements of the last nine months.But they have not prevented the gradual decline,and in coder to reverse this trend much strongermeasures may be needed. Although the presentUnited States administration is guided by a phil-osophy of the least possible interference with themarket mechanism, it has stated that " it willnot hesitate to make greater use of monetary,debt management and credit policy, includingliberalized use of Federal Insurance of privateobligations, or to modify the tax structure, orto reduce taxes, or to expand on a large scale

52

the construction of useful public works, Or to taleany other steps that may be necessary. "I How-ever, the effectiveness of any such measures maydepend largely on how quickly the necessary legis-lative and administrative action can be taken.

Ou the whole it seems likely that, unless sub-stantial new measures are adopted by the govern-ment, United States business activity, and hencethe level of demand in 1954 may average at ora little below the level of the first quarter of theyear. In that case the domestic demand forconsumer goods would probably be Very littlebelow its present level, thus providing a marketfor about the same volume of farm products atsomewhat reduced prices. The foreign demand forUnited States prod.ucts, which has shown a down-ward trend since mid-1953, may be stabilized ator slightl3r below the level of early 1954. Thusth.e main agricultural problems of 1954/55 arelikely to be due to excessive supplies rather thanshrinking demand.

In 1955/56 there may be some further modifi-cation of United States government policies torestore the growth of economic activity and tolead to fuller employment. 13ut apart from anew increase military expenditure, the rate (.4.'recovery seems unlikely to restore the nationalproduct fully to the per caput level of 1953/54.International prices of farm products have asyet (with the exception of cereals) been little af-fected. by North. A.merican surpluses, being partlyinsulated by the -United States farm price sup-port program. The level of that price supportfor time 1954 crop has been recently reducedfor some commodities, however, and may be low-ered further. Moreover, the decision of the UnitedStates Comm.odity Credit Corporation to sellabroad at world market prices means that forsome commodities United States price supportswill no longer help to keep up the level of inter-national prices.

In Canada 1954/55 is officially expected to bea time of slower expansion, but not of recession.This view i.s .partly based on a continuing high:investment tate and on slightly 'higher governmentexpenditures. The government is, therefore, bud-geting for only liniited tax concessions and forsome easing of credit ti) prime the economy.ficulties are likely to continue in finding expoitmarkets not only for agricultural products, butalso for finished manufactures which are meetingincreasing competition from the United States

Economic Report of the President. U. S. Govern-ment Printing Office, Washington, 1954, p. 113.

and Western Europe. However, even if the offi.cialview proves somewhat too optimistic, no declinein the domestic demand for agricultural prod-ucts is likely.

There are no signs at present of any change inthe generally favorable economic development ofWestern Europe and another prosperous year islikely if there is no sharpening of the recession inNorth America. This is the general tenor of allresponsible econornic forecasts. Thus the Unit3dKingdom Economic Survey of 1954 expects thatpersonal consumption will at least remain at itspresent level, that exports will not be seriouslyreduced and that production will continue to rise.It is hoped that internal savings will increasesufficiently not only to provide the necessary capi-tal for domestic investment but also to continuefinancing economic development in the Common-wealth. In these circumstances, the demand foragricultural products is likely to increase ; controlsover food consumption and many remaining im-port restrictions have been removed.

The .progress of economic expansion in WesternGermany also seems to be assured. While real.incomes of wage earners are unlikely to increaseas rnuch as in 1953, the rising volume of employ-ment may lead to rising domestic consumptionand a strong demand is probable for agriculturalproducts. Th.e French Government has adoptedan 18-months program of economic expansion,designed to increase national income, industrialproduction, and the total wage bill by ten percent.If the program succeeds there should be a corres-ponding rise in domestic consumption and a sustain-ed demand for agricultural products. There weresome signs in early 1954 that economic conditionsin France had begun to improve. In the rest ofWestern !Europe, with the possible exception ofSpain, economic development is also likely toimprove though not at a uniform pace.

In spite of the remarkable improvement ofWestern Europe's balance of payments, parti-cularly with the 'United States, there is still somedanger of a recurrence of th.e dollar problem, asmuch of the improvement has been due to UnitedStates aid and off-shore purchases. The UnitedStates administration has requested only about$3,500 million for foreign operations in. 1954/55,25 percent less than in 1953/54, and this reducedrequest may be severely trimmed. by Congress.Moreover. Europe's share may be lower. Buttaking into account unallocated funds and out-standing contracts, military aid and off-shorepurchases are likely to be twice as large in 1954/55

53

as in the previous year]. T.his should maintainand might even increase the flow of dollars toEurope in comparison with 1953/54. Unless Unit-ed States imports decline drastically, the dollatgap therefore seems unlikely to reappear in 1954/55,even though its underlying causes may not bepermanently removed, and there should be nomajor renewed restrictions On trade in agriculturalproducts.

The slow improvernent in Latin Ain.erica,'seconomic situation is likely to continue in 1954/55,though the outlook is more uneven. Thus theless favorable terms of trade for countries export-ing, e.g., grain., and the more favorable termsfor those exporting, e.g., coffee, are likely to persist.Argentina is expected to show an upward turn inindustrial production, and export difficulties forgrain may be partly offset by improved prospectsfor wool and possibly meat. Any improvementfor these products would also benefit Uruguay.The lower production of coffee in Brazil may bepartly compensated by higher prices and perhapsa larger volume of other exports. Other coffeeproducers who have not suffered from Host damagewill benefit still more from higher prices. if thepresent upswing in the demand for non-ferrousmetals is sustained, Chile's and Bolivia's presentbalance of payments difficulties will be mucheased. Mexico is expecting a high.er level of agri-cultural proauction in 1954 and an improved 'bal-ance of payments, but the effects on demand areobscured by the possible price rises due to therecent devaluation. Cuba's total output i.s likelyto be adversely affected by further official restric-tion of the sugar crop. No majal changes areexpected in the other republics, though . a lesseningof inflationary pressures i.s possible. in .viewof the low level of income and consumption inmost :Latin Amen can countries, any improvementin the economic situation should be quickly .reflect-ed in increased domestic demand.

I At the beginning of 1954/55 the .11'oreign ()ptira-tions Administration (f0A) still a.aad S9.800million From previous appropriations ''i ' paid out,and it is expecteut that total actual expenditures by'VOA in 1954/55 will about equal the S5,000 mil-lion disbursed in 1953/54. Europe's sima le in the 1954/1955 requesi of' slightly over $900 million is aboutha ir of lesi :vein*, not, in a lu I il on to dollars stein-nting From previous apimyriations, there will be acon) inuat it o of military Off-shore purchases in 1954-/1955. In .1953 i lie 'alime of inilitat:w goods purchasedabroad u dner " off-shore proc ure.ntent eontractstupounted to $300 .trtillion. New contracts rr)laced inthat year were of time value of about $1,500and total contracts outstanding S1,900

The main factors determining economic develop-ment in Oceania are the prospects of agriculturalexports in 1954/55, which are generally favorableexcept for wheat. The outlook for wool is favo-rable and exports of meat ami dairy productsto the 'United Kingdom market are secure despitethe ending of long-term contracts. The consider-able economic improvement achieved in 1953/54and continuing large development projects suggestthat there will be no fall in th.e present high levelof domestic demand.

Wi.th a probable increase in foreign demand fòrrubber, jute and other Far Eastern products, theterms of trade of the raw material exportingcountries of the Far East may show some improve-ment in 1954/55. The coming year may witnessa growing conflict between urgent claims for eco-nomic development, and the pressing need for im-provement of the current extremely low consump-tion level. Some countries are already committedto a policy of social welfare expenditures, which itwould be difficult to curtail. It would be idle,however, to expect that expenditures on consump-tion and social welfare will cause the region'seffective domestic or import demand for foodand agricultural products to 'increase rapidly.Most governments are taking a realistic view oftheir resources and giving increasing attention toplanning economic development on an integratedbasis. The interest expressed by several govern-ments of the region in an increasing flow of foreigninvestment, loans and grants is readily under-stood in the context of the extreme poverty ofthe peoples and almost universal urge for economicand social betterment mainly through self-help.

In the Near East no major changes are expectedin economic conditions and in the domestic demandfor agricultural products. Countries without for-eign aid or special sources of foreign revenue, e.g.from oil, will continue to be hampered in theirdrive for economic development ami for raisingconsumption .levels. With growing agriculturalproduction, the problem of finding export marketsat .remunerative prices for Turkish and Syriangrains and perhaps for cotton from Egypt, Syriaand Turkey may become more acute and thereis little likelihood that improved terms of tradeNvill expand their purchasing power for imports.

Summary

The effects on the rest of' the world of a continua-tion and deepening of the United States recessionwould ba sorious indeed. If, however, as nowseems more probable, the Clown-swing in the

54

United States is slowly coming to an end, theoutlook for 1954/55 in th.e more advanced regionsof the world North America, Western Europeand Oceania is likely to be one of modestimprovement. In that case the total demand foragricultural products may be expected to showsome increase. Unless special measures are taken,however, the increase in demand i.s unlikely toaffect to any great extent the existing problemof agricultural surpluses.

In the less developed parts of the world wherethe need to increase consumption is, of course,greatest, there are no indications of any consider-able expansion of th.e effective demand for agricul-tural products. In a few countries with large-scaledevelopment programs, governmental measurestend to limit any rise of demand resulting fromexpanded economic activities. With a low levelof foreign investment and relatively small domesticcapital resources, the major part of the cost ofeconomic development has to come from currentoutput if inflation and foreign exchange difficultiesare to be avoided. A few countries are usingdeficit financing on a limited scale, while othersare trying to increase available investment fundsthrough taxation and through encouraging andmobilizing domestic savings. Under such cir-cumstances any :increase in per caput effectivedemand will necessarily remain small.

Thus the general outlook for total demand in1954/55 is one of slow increase, though not enoughto greatly affect the surplus problem. In conse-quence prices of cereals and other products inheavy supply may be somewhat weaker in 1954/55than they were in 1953/54. This emphasizesthe need for a selective rather than an over-all

. expansion of agricultural production.Looking finther ahead, 1955/56 should see con-

tinued world economic progress with a correspon-ding expansion in the demand for agriculturalproducts. World supplies of grain and mostother foodstuffs will continue to be relativelyabundant and no recovery in prices seems likely.Food importing countries should therefore con-timie to enjoy favorable terms of trade and bal-ances of 'payments, even though -United Stateseconomic aid and military payments may decline.Prices of coffee and other beverages seem likelyto remain very remunerative. For agriculturalraw materials, present indications are that thecollapse after the Korean boom has passed itslowest point and that consumption and pricesare again tending 'upwards. This tendency shouldbe reinforced if the United States has recoveredfrom the slight recession of 1953/54 and enlarges

its imports of raw materi.als and finished products,and if European countries continue a high levelof industrial production. Market .prospects forraw material exporters, mainly in the le,sss developedregions, therefore seem likely to improve.

These relativel3r favorable developments, how-ever, might be frustrated unless there is an effectivereadjustment of the expanded North Americanagricultural production to reduced international

needs, and a gradual working down of accumulatedsurpluses without severe pressure on world pricelevels. Present policies in .North America areworking toward these ends, though both., andparticularly the second, will be difficult of achieve-ment. They would be facilitated by econo.micrecovery in the United States leading to an ex-panding domestic market.

Chapter III

REGIONL OLIC

Chapter III - REGIONAL PROBLEMS AND POLICIES

The previous chapter reviewed briefly the maindevelopments in the world food and agriculturesituation in 1953/54, discussed some recent trends,and reached tentative conclusions on prospectsfor 1954/55. The chapter wh.ich follows exam-ines the impact of the situation now emerging onthe problems of agriculture in each region of theworld, and the shifts in agricultural policy whichare being made in consequence. In spite of largedifferences in conditions and problems, a numberof commo.n trends seem to be emerging in the agri-cultural policies of many, though not all, coun-tries in widely separated regions, and some com-ment on these trends may be useful before proceed-ing to a region-by-region discussion.

The most striking is perhaps the growing tend-ency in many countries toward agricultural self-sufficiency. Formerly autarchic policies in agri-culture were adopted mainly for the economicprotection of farmers or for defense reasons. Bothmotives still operate, but since the war they havebeen powerfully reinforced by balance-of-pay-ments difficulties, and also by the increasing inter-est of governments in fostering general economicdevelopment. This often makes them reluctantto spend foreign exchange on agricultural importsin order to maximize the funds available for theimport of capital equipment.

These various motives are so strong that theemergence of surplus stocks of some commoditiesin other regions has scarcely halted the trend to-ward greater self-sufficiency, except perhaps insome parts of Western Europe. In the less-devel-oped regions in particular, there are as yet fewindications of any major change of direction inagricultural policy. Agricultural development hasbecome an essential part of the over-all economicplanning of these countries. Their governmentsare increasingly conscious of growing food require-ments. Wartime and postwar shortages haveimpressed on them the importance of assuredfood supplies and sometimes made them mistrust-ful of too great dependence on imports. Theytherefore see no reason to change their production

59

plans because of temporary surpluses in other partsof the world. This attitude can be readily under-stood in cases where conditions of soil and climateare suitable for the type of production envisaged,for governments in less-developed regions expectsteady progress in technical methods of agricul-ture which will gradually wipe out any disad-vantages in this respect which they may have inrelation to other countries.

A point which should not be overlooked inthis connection is that in a world where the freeplay of economic forces is everywhere modified bygovernment action, it is becoming more and moredifficult to judge where the balance of economicadvantage lies. For example, a country may bea high-cost producer of any given commodity, rel-ative to world prices, not because of any deficien-cies in agricultural methods or in conditions ofsoil and climate, but because its currency is over-valued, or because high incentive prices fixed dur-ing earlier periods have not yet been adjusted, orbecause competitive exports are directly or indi-rectly subsidized. In these circumstances, achange in government policy, e. g., devaluationmay, within limits, transform a high-cost producerinto a low-cost producer overnight, and vice versa.Price comparisons at any one time do not neces-sarily give a reliable indication of comparativeadvantage.

Again, even when the balance of advantage ismore clear-cut, a country may be unable to changeits production pattern for practical reasons. Itmay have to continue high-cost production of acertain commodity because there is no suitablealternative use for its land. For example, eventhough conditions of soil, topography or climatemay be unsuitable for cereal growing and betteradapted for pasture and cattle, it will be impos-sible for a country to take up livestock produc-tion and import its cereals if the population is toopoor to provide a market for meat and milk.Conversely, a country may be naturally adaptedfor cereal production, but be forced to specializeon livestock husbandry because the small size of

its farms rules out any less intensive form of agri-culture. Or again, the uncertainties of the exportmarket may swing a country towards the produc-tion of basic foods rather than the industrial cropsfor export which it is inherently better able toproduce. Or the need for a more balanced agri-cultural rotation may lead it to develop cropswhich in th.emselves would be uneconomic.

Enough has been said to make it clear that farmore than simple price or cost comparisons haveto be taken -into account when deciding whethera country should attempt to become more self-sufficient in any commodity, and to bring out thedifficulties of clianging present production patterns.Yet -when all this has been allowed for, there re-main a good many cases where the extreme dis-parity of prices Or costs suggests that efforts toreach self-sufficiency have been pressed beyondreasonable limits, and where a re-appraisal ofagricultural production pol.icy seems overdue. Un-duly high-cost production of commodities for whicha country is not well adapted is bound to retardmore sound types of development and to depressliving standards.

A second feature which seems to occur allover tlie world is the relative neglect of the devel-opment of tire domestic market and the nutritionalneeds of the country's OWn population, both ingeneral agr.icultural planning and in tire disposalof surpluses. When the supply of a commodityexceeds current effective demand, for example,there are broadly three possible courses of actionto restrict production, to expand exports, or toencourage home consumption. The reader of thesucceeding regional sections will find not a fewcases where governments have restricted produc-tion, many where they have tried to expand ex-ports, but -rather few where any very substantialmeasures have been taken to expand the domes-tic market. Similarly, when importing countrieshave increased their domestic production the ten-dency has often been to restrict imports ratherthan to expand consumption, e.g., in the inter-est of capital accumulation for economic devel-opment. But the fact remains that a majorityof the world's people are still not adequately fed.,and that in some countries under-nourishment isso acute th.at the mass of the population is lethar-gi.c and incapable of a full day's work.

It is noted elsewhere in this report that even ina region with high consumption levels, such asNorth America, domestic sales are limited by lackof purchasing power in the lower income groups.In less developed regions this applies to an CArerl

60

greater extent. Increased consumption of prod-ucts with a high elasticity of demand, at the par.ticular economic level of tire country, would there-fore result from higher real incomes (which mostcountries are striving to attain) or from lower re-tail prices. It may seem paradoxical thereforethat with tire possibility of increased sales on thedomestic market, so many countries are concen-trating their efforts on expanding export outlets.For there can be little doubt that in all countries,increased efficiency would make possible econo-mies both in the production and marketing ofagricultural products, which in turn would enableretail prices to be lowered. That more countrieshave not made such attempts probably resultslargely from the adjustments of policy and some-times also from social conditions which may beimplied.

For example, many governments are concernedto maintain and stabilize farm incomes, an entire-ly justifiable social objective. They have there-fore a direct interest in maintaining farm prices,particularly where they have given price supportsto farmers, and a fall in farm prices is liable toinvolve them in direct financial liabilities. Forimported commodities the simplest means of main-taining farm prices is to limit imports by tariffsor, quotas. For commodities in which a countryis roughly self-sufficient th.e simplest means is toexport any quantity which cannot be sold at homeat current price levels. More and more countriesare beginning to sell agricultural products abroadat a loss, often with the aid of export subsidies,in order to limit their financial liability on tirelarger quantities sold on tire domestic market.

As noted earlier, however, the cost of productionrepresents only about half the final cost of food.to the consumer ; the other half is made up ofthe cost of processing, transport, storage and dis-tri.bution. A good part of the latter are certainlynecessary and unavoidable and there are caseswhere some increases maY be warranted in orderto improve the quality of the final product. How-ever, distribution and processing in industrializedcountries have tended to become sometimes over-elaborate in the course of years and could oftenbe simplified, thus reducing retail cost. In lessdeveloped countries, the system of distribution issimpler and less well organized, but none the lessexpensive. Tire distribution trades offer one ofthe few means of earning a living open to peoplewithout land or jobs, and with only limited re-sources. Th.is applies particularly to food distri-bution, for which little initial capital is necessary.

In consequence the :percentage of th.e non-farmpopulation engaged in distribution is high, butthe businesses are correspondingly small with a,

low turnover, and they can survive only by aarg-ing high margins. LOWer COStS WOUld be possibleonly by reducing the number of businesses and:raising the average turnover. But this raises so-cial problems and might mean that the govern-:ment had to provide jobs or unemployment :relief:for the displaced traders. Thus in both econom-ically well developed and less developed coun-tries, the problem of reducing food distributioncosts bristles with difficulties. In addition theInwering or abolition of indirect taxes where levi-ed on retail food purchases, and the reductionof high prices charged by private and public foodimport monopolies, provide in some countries othermeans of reducing the cost of :Food to the con-sumer.

The impatance of lower retail pri ces if :foodconsumption is to keep pace with the more rapidincrease in production is becoming increasinglyrecognized, though so far the tendency has beento relate this primarily with the need to reducefood production costs. There is no doubt thatsuch reductions are possible by improved methodsof farming, and that in this way farm incomescould be maintained or improved side by side witha fall in farm prices. But it is no less certainthat there is also scope for improved methods ofmarketing and lower distribution costs, and inspite of the difficulties it appears that the problemsof reducing retail prices should be tackled fromthis end as well. There are indications, e. Lr.,countries as widely separated as the United King-dom and Argentina, of increasing interest of pro-ducers' organizations in co-operative marketing,and it may be that it is through the developmentof producers' and consumers' co-operatives thatsome solution of the problem will come. Butthere are so far few indications of rapid progress.

An important point to he borne in mind isthat, in general, production costs can be loweredsubstantially only by increased productivity, un-less measures are possible to reduce the cost ofinput factors. But increa3ed productivity usuallyimplies increased product ion and this may aggra-vate the surplus problem, as is emphasized by re-cent experience in countries where -farm pricesand especially retail prices tend. to be rigid. Thisdanger can be :reduced if a more flexible pricesystem can be developed, and if retail prices re-spond more quickly to a decline in f'arm prices thanthey usually have in the last two years.

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There are undoubtedly good reasons .for the,emergence of the policy trends which have beenselected for comment, but they do not ru.n easilytogether. Although in each country the case forincreased self-sufficiency may be strong, it fitsbadly with the parallel trend Lo expand exportsif both are continued the result can only be C011-flict and frustration. In the same way, the continu-ing emphasis in ma.ny countries Oil increasingproduction cannot easily be reconciled with th.ecomparative neglect of measures to develop thedomestic market and to ensure a parallel increasein. consumption. In many countries the timeseems ripe for a general reappraisal of food andagricultural policy ; such reappraisals would bemore effective if they were made with an ade-quate knowledge of the programs of other coun-tries so that governments would be in a positionto co-ordinate their policies as far as possible withthose of their neighbors. The forthcoming FAOregional consultations and the sessions of theCommittee on Commodity Problems, Council andConference afford opportunities for an exchangeof views wi.th this end in mind.

WESTERN EUROPE'

Changing Conditions in 1953 /54

Agricultural production in Western Europe asa whole in 1953/54 was greater than in any pre-vious year, and easily surpassed the previousrecord of 1952/53 both in crops harvested andlivestock production. The increased productionof sugar, bread grains and coarse grains (27 per-cent, 10 percent and 16 percent respectivelygreater than in 1952/53) was especially impressivearel materially changed the supply situation in anumber of countries. Although favorable weatherhas played an important part, the unusuallyrapid rate at which crop and livestock yields haverisen in recent years is evidence also of a vigorousapplication in many countries of improved me-thods of farming and more efficient management.

The general economic background in WesternEurope has already been discussed. The increased:farm output coincided with, and contributed to,a revival of general activity, and therefore met

Austria, B&Igium, :Denmark, Finland, France,German Federal Republic, Greece, itceland, Ireland,lttaly, Luxembourg,.:Notherlands, Norway, Portugal,Spain., Sweden, Switzerland, United Kingdom, Yu-n-oslwia

with a strong demand. It came also at a timewhen the balance of payments problem was greatlyeased, so that restrictions on imports from outsidethe area could be relaxed, and when greatly increas-ed supplies of agricultural products, particularlygrains, were available on the world markets. Allthese factors greatly influenced the supply andtrade situation in the region.

More than half of Western Europe's agriculturalimports are made up of textile fibers, rubber,oilseeds and other tropical products. The effectof changes in domestic production is thereforeconcentrated on the remaining part, mainlycereals, sugar, livestock products, and fruits andvegetables. European production of all the lattercommodities increased in 1953/54, and in conse-quence imports from other areas were oftenreduced, while European countries with marginalexport surpluses could genendly dispose of themonly at prices well below those paid to their OW31farmers.

Bread grain imports into Western Germany,Italy and Greece, for example, were reduced,while in France and Sweden exportable surplusestotaling more than one million tons became avail-able. Italy and Sweden -withdrew from the Inter-national Wheat Agreement, the first because itsdeficit had become less than its import quotaunder the Agreement, the second because ithad ceased to be a net importer and liad wheatto export. Both France and Sweden, finding thattheir domestic wheat prices were well above theworld market price, had to dispose of their surplusesat considerably below cost. Some feed import-ing countries, however, including Denmark andthe Netherlands, took advantage of the largersupply and lower prices of coarse grains andincreased their imports even though their ownproduction was also expanding.

Even before the processing of the record 1953harvest began, exports of sugar from France,:Denmark, Belgium and Spain were competing ina falling market, which was feeling the pressureof abundant supplies. The average 1953 worldprice was lower than in any year since 1944.While Cuban sugar was delivered to French portsfor Fr. frs. 35 per kg., the French factory pricewas Fr. frs. 72.20. In 1953 Denmark exportedonly 30 percent of the quantity exported in 1952,and Belgian exports Were restricted by the quotafixed under the International Sugar Agreement.

For commodities normally traded betweenEuropean countries, e. g., livestock products andcertain fruits and vegetables, some importing

62

countries began to reduce the quantities imported,and the countries with export surpluses had tofind markets elsewhere. A number of butterimporting countries reduced their foreign pur-chases considerably as domestic productionincreased. On the other hand, the UnitedKingdom bought larger quantities of butter inpreparation for the abolition of rationing, andnew outlets were found in Eastern Europe. Thusthe U.S.S.R. became the second largest importerof butter, taking 30 percent of Dutch exportsin 1953.

The trade situation thus changed differentlyfor the various countries, depending on whetherthey were importers, exporters or self-sufficientfor particular commodities. In the main, itcould be said that agricultural production andtrade developed satisfactorily ; consumption levelswere maintained or increased, and the generallevel of intra-European trade was raised. Inparticular there was a marked increase in thevolume of such trade in fruit and vegetables.Where difficulties were experienced, they occurredmainly in countries with suddenly increased exportsurpluses and with no long established channelsof trade. The traditional exporters of livestockproducts, particularly Denmark and the Nether-lands, are efficient low-cost producers who canhold their own so long as competing exports fromother countries are not heavily subsidized on alarge scale. Probably their chief cause for con-cern was the rapidly increasing output of pigmeatand eggs within the main importing countries, th.eUnited Kingdom and Western Germany, andsudden restrictions on imports so.metimes imposedby importing countries wishing to protect theirinternal price level. But when for exampleFrance, Switzerland, Norway, Austria and Bel-gium wished to find a market for certain marginaland perhaps temporary surpluses of some livestockproducts they had to export at a subsidized price.

The Reorientation of Policies

The alteration in the trading relationships ofSOIlle countries for major food products, broughtabout by increased production and in some casesresulting in marginal shifts from a deficit to asurplus position, has revived fears of supplyoutrunning demand. There is growing concernamong Western European farmers that anyadditional production may find a market only atgreatly reduced retail prices, with a consequentdrastic decline in farm incomes. The key problemsare therefore felt to be the stimulation of con-

sumers' food expenditure and the reduction ofproduction and marketing costs.

To a certain extent food consumption habitscan be changed by governmental measures, suchas the provision of free or subsidized milk toschoolchildren, but it is the level of real incomesof the whole population which will largely determinefuture food consumption levels. An annual ex-pansion of national income at an average rate ofthree to five percent seems the most that canreasonably be expected in most countries. Sincea given rise in income is invariably accompaniedby a much smaller rise in food expenditure,especially at the levels of income ruling in north-western Europe, the annual rate of increase infood expenditure is unlikely as a rule to exceedtwo percent, though there may be exceptions inindividual countries where the national incomemay advance particularly rapidly or where incomesare so low that there is still a high elasticity ofdemand.

Against this must be set the current rate ofexpansion in agricultural production. Even mak-ing full allowance for the favorable weather ofthe last two crop years, it seems certain that theannual rate of in.crease appreciably exceeds twopercent and is likely to continue to do so. Agri-culture is showing the cumulative effects of theefforts made in recent years to modernize equip-ment and methods of production and of the encour-agement given to farmers by high and oftenguaranteed prices. Better selection of seeds andbreeds of livestock is giving higher yields, ferti-lizers and pesticides are being used in increasingquantities, draft animals are being displaced bytractors with a consequent saving of land forfood production, the general standards of farramanagement and technical knowledge are beingraised. All these factors are continuing to operatein favor of higher production.

Under pressure of lower priced and often subsi-dized imports, governments are beginning to countthe cost of this expansion and to consider howmuch longer they can afford to protect domesticproducers on the present scale. This basic problempresents itself in a variety of ways in differentcountries so that the response is far from uniform,though up to now no country has indicated anyinteiation to abandon all protective measures andprice guarantees. In the Scandinavian countriesfood consumption levels are already high and nogreat expansion of domestic demand can beforeseen. Sweden, whose policy in recent yearshas been to aim at providing 90-100 percent of

63

its food requirements, has now more than attainedthis objective and in 1953 had export surplusesamounting to one-quarter of its production ofbread grains and butter and one-tenth of its pro-duction of eggs. Prices of these products h.avebeen reduced in 1953/54 and the governmentoffers the farmers no price guarantee for that partof production -which is in excess of requirementsfor the home market. It is recognized that someof the less suitable farms will have to reduce orgive lip production of these commodities, andsome marginal land will be turned over to forestry.

Denmark is the most important Europeanexporter of agricultural. products in 1953 nearly70 percent of all Danish exports were of agriculturalorigin and the whole farming industry isgeared to this end. Produces' organizations arewatchful of production trends in the countries towhich they export and, while making every effortto maintain their long-established lead based onrationalization of methods and uniform highquality of produce, will be prepared for a systematiccontraction of output if markets shrink. Thisnecessity is already recognized for sugar, theproduction of which is to be restricted to homerequirements.

In the Neth.erlands food consumption levelsare, on the average, somewhat lower than inSweden and Denmark. Real wages are tendingto rise, and agriculture may find more domesticoutlets for its produce. But in the long run theNetherlands faces similar problems to those ofDenmark. The pressure of producers in WesternGermany for a higher tariff on eggs to protecttheir OW11 increasing production is a warning ofthe possible contraction of a market which. in1953 took about 85 percent of Dutch egg exports.Similarly, the Dutch trade in skim milk powderis threatened by expanding production in othercountries such as Belgium, Finland and countriesoutside Europe. Some of this skim milk powderhas had to be sold at greatly reduced prices foranimal feeding stuffs.

Ireland, another food-exporting country, hasaimed to reduce its dependence on imported feedsupplies. The area under the plough is beingincreased, more wheat and sugar beet are beinggrown, and the quality of the pastures is beingimproved. Much ill-drained or derelict land isalso being reclaimed. The export trade has beenassisted by the rapid development of various foodprocessing industries.

The United Kingdom and Western Germanyhave special problems arising from their depend-

ence on food imports. Consu Aim' levels,improving in 1953 more rapidly tliaii in otherparts of northwestern Europe, may yet riseappreciably, especially if increases iff nati(:malincome are received mainly by the lower incomegroups. This m.ay reduce the marketing problemsof home producers, but the question of cost isall-important. If food becomes dearer, laborcosts in industry increase and this hampers theexport trade in manufactured goods. The dan-gers of such a (levelopment have been partlyconcealed in the past year by all improvement inthe terms of trade, but this position may be onlytemporary. In any case, these countries will wishto buy food in the cheapest market and are urgingtheir own farmers to become more competitive.

In the 'United Kingdom, the level of guaranteedminimum prices has been fixed on the assumptionthat increasing efficiency will permit steady reduc-tions in government subsidies. The price reduc-tions of February 1954 are not drastic but areexpected to be followed by further reductions yearby year, unless costs increase substantially. Pigprices were cut by five percent and milk by threepercent. A demand for an inciense in agriculturalwages was rejected in June 1954 for the first timein many years.

Western Germany has announced that itspolicy is to make homeproducers fully competitivein a common European market within ten years.Price levels, insofar as they can be influenced bythe government, are expected to be established onthe basis of costs of production on well managedfarms, and not on those of farms :which are defec-tive in structure or management. Home pro-duction will probably continue to expand, butWestern Germany is being pressed by debtorcountries to accept, more agricultural :imports inreturn for its manufactures.

Belgium and Switzerland still rely to a consider-able extent on food imports; but the margins arenarrowing for a number of commodities InBelgium a lower price for sugar beet is expectedto result in a reduction in the acreage planted.In Switzerland where meat and milk productiolihave developed to the point where export out/etsuvero sought at subsidized prices, a special taxhas been imposed on imported feeding stuffs todiscourage further expansion of livestock output.The reduction of butter imports has meant theloss of revenue from a levy -which liad been usedto keep clown the retail price of domestic dairyproduce, and consequently the producers' price ofmilk has been slightly reduced.

64

In France, there is room for a rifiC iii fOOd con-sumption levels, which are at present kept down.by the high costs of production on many farms.An increase in agricultural exports is art importantpart of the program to improve the balance ofpayments, and at the same time agriculturalimports are to be tx,,duced. Efforts are to bemude to increase production on farms in backwardregions with inadequate equipment and facilities.Temporary measures of governmecit assistance areenvisaged, but the ultimate aim .is to reducecosts of production as a sbund basis for raisingthe standard of living of the producers. Thechronic sinplus of wine is to be reduced by timeelimination of low quality vines, and the conver-sion of sugar beet, apples and wine into alcoholunder heavy govermnent subsidy .is also to berestricted. Reductions in the guaranteed prices.for wheat and milk are under consideration.

In Mediterranean countries the main emphasishas to be placed on measures to raise the produc-tivity of the soil as an essential step to economicprogress. To sustain a growing urban population,the agricultural community must increase itsmarketable surplus of cereals and livestock prod-ucts. In relation to northwestern Europe, foodconsumption levels are low, yet in these southerncountries the mate of increase in production i.s

generally slow. An exception is northern Italy,whose agriculture has many features in commonwith that of ryathwestern Europe. Marketingproblems m.ay take on more importance as Medi-terranean countries face increasing competitionin the export of fruits, vegetables and wine fromNorth Africa and Israel and of tobacco and citrusfruits fi..onf North America. Mediterranean pro-ducers have also to compete with the horticulturalspecialists situated near the large cities of theimporting countries. Spa:in has suffered a shortageof wheat and will endeavor to reduce the areadevoted to vines and sugar beet and to grow morecereals.

Prospects and Long-term ProblemsOne problem will override all others in the

coming year r the increase of consumption. Allmeasures to expand production or change itspattern must be related to this end. Efforts madewithin agriculture itself can at best provide onlya partial solution to the problem. Along withincreased efficiency on the farm must go a wholeseries of measures aimed at raising the purchasingpower of final consumers : the promotion of indus-trial activity and full employment ; the improve-

ment of the economic position of the lowest-paid members of the community ; the reductionof fiscal charges on basic food commodities ; in-creased efficiency of marketing ; the provision ofspecially nutritive foods at reduced prices toschoolchildren and other needy groups, and similarschemes.

Production at lower unit costs is becoming themost durable and effective means of protectionfarmers can aim at. If unit costs can only bereduced by expanding production, as is often thecase, then the reduction has to be all the greaterin order to market the larger supply. In countrieswhere surpluses are appearing the most welcometechnical improvements will be those which reducethe cost of producing the present volum.e of output.

Unfortunately, farm structure is far from satis-factory in many countries, holdings frequentlybeing too small to provide full employment forthe occupants. The mobility of agricultural laboris limited, and since most farm labor in WesternEurope consists of OW1101'S of small farms and theirfamilies, it is not always the lack of non-farmemployment which causes such immobility. Farmowners may not -want to give up low income farmsbecause they prefer their independent way oflife, or cannot sell their land at a remunerativeprice, or because of their greater security in com-parison with landless wage earners in times ofunemployment or inflation. Thus agriculture hasremained overstocked with labor in many coun-tries and the level of farm incomes is accordinglydepressed. Only in Sweden have considerablee.fforts been made to _reduce gradu.ally the numberof marginal producers, resulting in an annualdisappearance of nearly 5,000 small, high-costunits. The final goal in Sweden is to establishunits not smaller than 30 hectare. The need to raisethe average size of farms has also been stressedby other governments, but has not yet becomepractical policy. In a number of other C01111-tries where the same need exists the problem.has received _little consideration, either because ofthe lack of alternative employment or because thepolicy is to maintain the agricultural populationat a level considered desirable on grounds otherthan economic.

Past experience has shown that changes in farmstructure come about only very slowly. Even anupswing of general economic activity may havelittle effect on the maldistribution of labor, sinceit tends to take away from agriculture neededhired labor on larger farms rather than attractingthe redundant farmers who operate small high-cost farm units.

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An additional defect of farm structure impedingthe increase in labor productivity is fragmentation..In spite of governmental efforts in all countries,progress in consolidation has been slow, even wherethe need for it is great, as in Italy, Austria, WesternGermany, Belgium, France ami Switzerland,where 30 to 50 percent of the total agriculturalarea is in need of consolidation.

For the time being lower costs per unit produc-ed may therefore continue to depend primarily onhigher yields. Great progress has already beenmade in th.is direction, but in all countries thereexist regions which have not yet fully shared intime improvement. It seems important from nowon to concentrate efforts upon these regions andto work out assistance programs adapted to theirneeds, such as advisory work, credit for the pur-chase of equipment, grants for the introduction ofimproved methods. Programs on these lines arealready being developed, particularly in France,Belgium, 'United Kingdom and Western Germany.Instead of trying to secure a uniform level ofproducers' prices which will CESUre a certainminimum standard of living even to the leastefficient farmer, more must be done to see thatthe available resources find their- way into thehands of those farmers who can use them mosteffectively. This confronts governments and farm-ers' organizations wi.th different and moredifficult problems than in recent years, when therewas a more indiscriminate emph.asis on highertotal production. But in the long run the generalprosperit3r of agriculture will depend on theirsolution.

Apart from reducing costs of prod.uction, anexpansion in demand can also be achieved bydelivering better quality produce for the sameprice and by reducing the margin of cost betweenthe farm gate and the COILSTUTICY.

In a number of cases marketing problems andt.equests for government support arise, not be-cause there is a lack of demand for certain prod-ucts, but because consumers are asking for abetter or different quality than the one tradi-tionally offered. There may be a slow demandfor poor quality fruits but quick sales for thebetter qualities. The price of fat pigs may fallbut lean pork is in demand. The larger part ofthe marginal surpluses of livestock products andfruits could be marketed in the countries wherethey arise without consumption per head becom-ing excessive. This absorption depends not onlyon price/income relations but also On new waysand MearlS of processing and distribution, inparticular for fiuid milk and fruits. It is for

the farmers themselves to take action to bringabout the necessary reorganization and adap-tation.

Among the reasons for the wide margins be.tween producers' and consumers' prices are theirrational organization of distribution, the seasonalvariation in supplies (e.g., meat and milk) and theinsufficient attention paid to the requirements ofthe market. In some cases, e.g., the Frenchand German milling industries, the capacity ofprocessing plants is not in keeping with therequired volume of supplies. Obsolete or redun-dant plant is kept in use at the expense of theconsumer or, through processing subsidies, of thetaxpayer. In Austria, the excess capacity ofdairies and resulting heavy overhead costs isone of the reasons preventing the price of dairyproducts from falling sufficiently to dispose ofthe present marginal surplus of milk. On theother hand, inadequacy of storage facilities insome cases prevents the ironing out of seasonalfluctuations in supply or the carry-over from yearto year of relatively small surpluses whose releaseon to the market has a disproportionately depress-ing effect on prices and undermines stability. Sucha situation could usually be remedied withoutheavy expenditure.

The wide price fluctuations which are t:ypicalof the markets for many agricultural products aredeplored on all sides, but little effective action canbe taken without a thorough knowledge of thecauses. In reality there is not one market butmany, spread out along the chain from producerto consumer. Very little is known about the

TABLE 21. WESTERN EUROPE : PRODUCTION OF SELECTED COMMODITIES

CON oDrry

Bread grainsFranceGermany (Western)

Coarse grainsiSugarCitrus fruitsApplesWineOlive oilTobaccoBeef and vealPigmeatMutton and lambEggsMilk

Index o f all farm products

Barley, oats and maize.

1934-38average

Thousand metric tons

38 254 35 725 30 216 41 845(8 912) (8 437) (8 903) (9 309)(5 586) (5 365) (6 410) (6 462)35 189 31 016 33 077 39 045

3 962 4 876 5 433 6 8832 012 1 891. 2 511 2 8317 441 8 345 11 281 9 290

14 080 12 650 12 910 115 100736 694 626 935188 243 229 270

3 849 3 264 3 837 4 0754 054 3 202 4 494 4 694

753 575 664 6831 939 1 961 2 324 2 327

80 243 74 216 84 943 90 015

100 103 114 121

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relationship of supplies and prices at the variousstages, but it is clear that if some of the fixedcharges, such as taxes and transport charges, whichare imposed could be reduced, the prices receivedby farmers would show less variation.

At the same time, when a real reduction takesplace in farm prices and costs of production, itwill not benefit either the producer or the consume].unless a substantial part of the benefit finds itsway to the consumer in lower retail prices. Histor-ically, retail prices have generally been slow tofollow a downward movement in farm prices,hindering the expansion of consumption whichis so essential to the prosperity of agriculture.

The foregoing remarks indicate that somethingmore far-reaching, and at the same time less oner-ous, than a simple system of guaranteed pricesis required. Agricultural policies have to be co-ordinated with more comprehensive policies foreconomic expansion and for the reform of theeconomic structure of the various countriesthe policy for agriculture itself needs to be selec-tive and dynamic, with constant attention to theneeds of the market and a discriminating use offinancial an.d technical assistance in regions whichneed it most.

That international co-operation falls short ofwhat is required is equally evident. The growingtendency for countries to provide export subsidiesin order to ciispc,se of their surpluses will inevitablyprovoke new protective measures to counter them.Progress along the lines described above will inany case be slow, but more effective internationalco-operation could greatly assist the process of

1948-50average 1952/53 1953/54

TABLE 22. WESTERN ET1ROPE : EXPORTS AND IMPORTS OF SELECTED COMMODITIES

adjustment to the changing circumstances. Norcan this international co-operation be confined toEuropean countries alone. The surpluses existingin other parts of th.e 'world and the measures takenfor their orderly disposal will, without any question,have a profound influence on the situation ofEuropean agriculture.

EASTERN EUROPE AND THE U.S.S.R.

The year 1953 brought about a marked changein the economic policies of Eastern Europeancountries and the U.S.S.R. All these countries

1 Bulgaria, Czechoslovakia, Eastern Germany,Hungary, Poland, :Romania.

67

Trade figures prewar for Germany refer to 1937 te Titory ; postwar figures to the territory of the Fetleril Republic.Dried fruit equivalent.

a Average of two years.3 Wheat equivalent.4 Oil equivalent.... Not available.

decided to allocate more resources to consumergoods industries, and particularly to agriculture.

Hitherto, primary attention had been given tothe development of industry, with emphasis onheavy industry. In consequence industrial pro-duction targets Were generally reach.ed, thoughthe growth was often uneven between basic andmanufacturing industries and between differentbranches of the same industry. The rapid increasein employment outside agriculture, however,brought about a marked inciense in the demand forfoodstuffs and also for agricultural raw materials,which has not been met. Official statementsemphasize that there were a number of reasonsfor the failure of agriculture to respond to theincreasing demand, none of which can be rightlyconsidered in isolation from the others.

COMMODITY 1934-38average

1948-50average 1952 1953

Gross Exports

Citrus fruits1 181

Thousand nie

745

trie tons

180 1 400Spain 2(819) (393) (823) (1 059)

:Raisins and currants 1 118 84 94 10,8Greece (104) (79) (87) (106)

Wine 501 422 501 504Olive oil 110 60 64 70Bacon, ham and salted pork 265 102 220 257

Den.mark (189) (86) (178) (220)Butter 272 195 189 210

Denmark (149) (134) (117) (137)Netherlands (50) (47) (50) (53)

Cheese 141 130 215 224Eggs in the shell 197 149 203 220

Denmark (83) (72) (89) (96)Netherlands (53) (38) (80) (96)

Gross Imports

Wheat and wheat flour 11 891 14 750 13 860 12 610United. Kingdom

Maize(5 681)8 460 (44 :13).568(.47)

k4 65b)3 950

(4 761 )4 190

Rice (milled) i 270 258 218'Vegetable oilseeds and oils 3 005 2 337 2 648 2 540Wine 1 680 1 333 1 550

France (I 331 ) (I 074) (1 176) ( )Coffee 686 458 553 560Cocoa 357 327 392Tea 258 331028 252 250Tobacco 372 337 313 373Cotton I 752 I 394 I 344 420Jute 580 411 528Wool (clean basis) 501 4:53921536 429 535Rubber 359 697 655

(i) .1:nswificient supply of resources to agriculture

Efforts were made to equip ag-riculture withmodern machinery, huí state and collective farmsbenefited far more than individual farmers, whostill constitute the majority, except in the U.S.S.R.and Bulgaria. The situation was similar For

:fertilizers, insecticides, etc., which were producedin increased quantities (except phosphatic fertiliz-ers, for which there was a shortage of raw mate-rials), but Were rlOt always made available to theproducers who could use them most efficiently.The higher yields which are claimed for tire stateand collective :farms thus appear to have beendue, at least in part, to the advantages whichthese enterprises have enjoyed.

(il) The method of operating the system of compulsorydeliveries

By penalizing tire producers who remained out-sirle the collective farms, particularly those withthe largest holdings, the system did .not encourageany increase in production. The low prices fixedfor compulsory deliveries and the size of thequotas imposed restricted farmers' cash receipts.Moreover, the incentive to produce :vas weakenedby the lack of consumer goods on which farmerscould spend additional earnings from increasedsales.

(iii) The too rapid extension of the system ofcollective farming

Outside the -U.S.S.R., wh.ere the process ofcollectivization WaS already complete, many collec-tive farms were established without proper accountbeing taken of the elements necessary for theirsuccessful functioning, such as managerial ability,an adequate supply of trained technicians and a:receptive attitude on the part (..)f the peasantstowards the rIeW methods of production.

In these circumstances, it WaS clear t.hat if arapid improvement in the situation, was to beobtained, more encouragement would have tobe given to th.e independent producers. T.hat isan essential feature of the IleW policies now beingfollowed.

Policy Changes

order to improve agricultural production, allEastern European countries have introduced anumber of measures dealing with many aspects

68

of development. In Poland and Czechoslovakiathe transfer of labor from agriculture is either tobe brought to a halt or to be allowed only in alimited measure for particularly important non-agricultural occupations.

Tire further extension of co-operative farmingand tire integration of scattered plots of individualfarms is envisaged in all countries, but there isincreased recognition of time fact that too rapid apace of' collectivization of agriculture would bedamaging to production. Peasants will be encour-aged to join the " lower types " uf co-operatives inwhich they remain individual OWTlerS of theirlatid and their products. These types of co-operatives do not meet with resistance OH thepart of the peasants.

Moreover, all governments have decided tohelp independent farmers by providing substantial.investment credits, supplying the means of pro-duction, reducing the compulsory delivery quotasand seeking to improve tire prices of agriculturalas against manufactured products. Special ad-vantages are granted for production of industrialcrops and for animal breeding, and all countriesaim at increasing their output of livestock prod-ucts.

In the U.S.S.R., :much attention is being con-centrated on livestock. Total numbers of cattleand sheep were smaller in 1053 than in 1928 andpig numbers Were only three percent greater.The insufficient output of livestock products hasbeen largely due to tire lack uf fodder and to atax system which cl iscouraged investment inprivately cultivated plots and even induced farm-ers to give up their private livestock. This taxsystem is to be changed and a direct incentive tothe re-establishment of private cow ownershiphas been introduced. In addition, the revisionuf tire tax and tire price systems is intended toincrease over-all farm income.

Intensive Measures are being taken to increasegrain production, mainly by bringing under cul-tivation 14 million hect ares of rIeW land (including1 million hectares of fallow) before the end of1955 with the help of an arm.y of young Me11equipped with tire necessary machinety. If suc-cessful., the 11CW land might produce up to .15-20million tons of additional cereals 1 Efforts are

it is not clear whether the original 1055 targetunder the curroi it five-year plan of at least 175 milliontons of cereals la is 110W been abandoned. Since it wouldimply an iinrPose of abont 35 percent over the 1953production of about 130 million tons it could not inany case be achieved. First secretary of the C.P.Co'rminittee, Kruscliev, in his speech of February

also being made to increase sales to the govern-ment over and above the compulsory deliveries.

In Eastern European countries the decreedmeasures are designed to bring about in 1954/55increases in total agricultural production rangingfrom five to ten percent above that achieved in1953, a comparatively poor year for agriculture.Such an increase would help to diminish theimport of food and .feeding stuffs info Czechoslo-vakia and Eastern Germany and to do away withthe mutsual import of grain into Poland, which hasbeen of the order of one million tons a year inR)53 and 1954.

Changes in Consumption and Trade

In 1953 the U.S.S.R. began a policy of supplyingconsumers with more goods, including importedfoodstuffs. According to figures published inOctober 1953, sales of meat should increase in1954 to 2.2 million tons compared with 1.2 in1950, and sales of whole milk products to 2.3million tons as compared with 1.1 million. Cattlenumbers fell from 58.8 million in 1952 to 56.6million in 1953 and domestic production couldhardly supply such an increase in consumptionwithin one year c.:cept by increased slaughterings,with a further retnction in numbers, which wouldbe inconsistent with the long- term policy.

In the spring of 1953, after retail prices weregreatly reduced, certain extra food supplies camefrom stocks. In arldition, supplies are beings'upplemented by imports. Particular attention isbeing paid to fruit imports, which until recentlyhad not been considered important enough tomerit foreign exchange, and during 1954 some100,000 tons of durum wheat will be exchangedagainst Italian citrus fruits, almonds, etc. In1953/54 the quantity of butter imported from timeNetherlands, Denmark, Norway, Finland, Sweden,Argentina, Australia and NeW Zealand amountedto 70,000 tons, of which 40,000 tons came fromWestern European countries. The U.S.S.R. hasbecome the second largest importer of butter,though part of the quantity received has apparentlybeen re-exported to Eastern, Germany. In addi-

1954 launching the new cereal program, 6poke of anincrease of 35 percent not in production, but in" reserves and state purchases " which acconntfor perhaps one-third to one-half of the gross outpui.

is a much lower target which might be achiev-ed if farm sales are increased and the bulk of theimmense miren of new land successfully brought intocultivation in the time allowed.

69

tion, sugar has been bought :from Cuba and theUnited Kingdom, and bacon, meat and lard fromDenmark. France, time Netherlands, South Africaand Uruguay. Altogether, a,ccording to a state-ment by the Ministry of Trade, imports of food in1954 are to amount to four thousand millionroubles (one thousand million dollars).

There are thus small prospects for any consider-able increase in the present level of exports offoortstriffs and feed from Eastern Europe and the'U.S.S.R. The bulk of the exports available fromthe southeastern countries of the region will beabsorbed by Czechoslovakia, Eastern Germany,turd perhaps Poland. The neW importance given tothe production of cereals in the U.S.S.R. is easy to'understand, bearing in mind not only the increasein internal requirements (about three million moreinhabitants each year and a rise in incomes perhead), but also the fact that even if the plans ofthe other countries of the region are fully achievedby 1955/56 this -would only restore per caput sup-plies to their prewar level. In 1953, more than twoand a half million tons of cereals had to be importedby Eastern Germany, Poland and Czechoslovakia,and most of this probably came from the U.S.S.R.which exported 3.7 million tons of grain in 1953/54,of which only 1.1 million tons 'went to WesternEurope. No doubt time Eastern European coun-tries, given a favorable harvest, could export acertain amount of grain in exch.ange for otherproducts, but such exports seem unlikely greatlyto exceed half a million tons.

The participation of Poland, Czechoslovakia,Hungary and time -U.S.S.R. in the InternationalSugar Agreement suggests that prospects forsugar exports may be more favorable, althoughthe U.S.S.R. itself is still a net importer.

Apart from certain exports (4 eggs from Poland(15 to 20 thousand tons a year) and small quantitiesof a number of other prod.ucts (tobacco, oilseeds,certaiir textiles, malt, hops, certain livestock prod-ucts, etc.), the prospects fui exports of agricul-tural produce appear to be very limited.. On theoth.er hand, sortie export of petroleum products, ofraw materials for industry and eVell of manufactur-ed products and equipm.ent may be possible inthe future, if the goods offered in exchange areacceptable.

It is impossible to estimate h.ow lar EasternEuropean countries will go in providing. IICIV outletsfor the agricultural products of Western Europeand oth.er regions, but if the intention is to increaseconsumers' supplies the volum.e of such trade,at least for a time, might become important.

Forest Products

"Housing is still one of the major problems ofthe U.S.S.R. and new housing and the furnitureto go with it, together with the very rapid indus-trial expansion, will probably absorb the bulk ofany increase in sawn wood production for a longperiod to come. Because of these heavy require-ments, imports, chiefly from Finland, are likely tocontinue at about their present leve] and areunderstood to be essential for th.e still continuingrebuilding of the Leningrad district, an areaheavily deficit in sawn wood.

No great rise in exports of sawn wood from theU.S.S.R. to Western Europe and other regionswould therefore be expected, despite the consider-able measure of success achieved in expandingsawn wood production. On the other hand, .if

East-West trade continues to develop, there issome possibility of the U.S.S.R. stepping up itsexports of sawn wood to pay for industrial equip-ment and food and other consumer goods whichare badly needed.

More detailed information has recently becomeavailable about the forest resources of th.e U.S.S.R.and the progress of its forest industries. Th.ecountry possesses some 425 million hectares ofaccessible forests or about one-fourth of the totalworld area and nearly one-third of the arca inuse. The growing stock of forests in use is some33,000 million cu.m., of which 30,000 millionmini. are conifers, more than half the world totalof conifer forests. Despite these enormous resour-ces, the production of industrial roundwood hasbeen little greater than the European productionand only two-thirds of the output in North Amer-ica, though fuel wood production is th.e highestin the world.

Present plans are to increase the production ofindustrial wood by 56 percent (some 30 million(Aim.) over the 1950 level by 1955, and it isunderstood that fair progress has been made,though developments are not fully up to schedule.Most of the increased production is intended forSaW11 WOOd, of which the U.S.S.R. was the world'ssecond largest producer with an output of 49.5million cu.m. in 1950. It is planned to raise thistotal to about 77 million cu.m. by 1955, but in1952 only 85 percent of the scheduled progresshad been completed and it is uncertain if thegoal will be reached. The expansion has had tobe extended into remote regions where saw

capacity is low and has to be increased abouteigh tfold.

70

An increased output of wood pulp and paper isalso planned. Wood pulp production fell from1.16 million tons in 1938 to about one quartermillion tons at the end of the war, and only regain-ed its prewar level in 1950 with an output of1.6 million tons. Production reached 2.1 milliontons in 1953, but nevertheless substantial importswere required. Newsprint development has beenstill faster ; by 1948 the production of 272 thou-sand tons was 20 percent greater than in 1938,while in 1953 it rose to 480 thousand tons. Simi-larly the output of other paper and board reached1,240 thousand tons in 1950 and 1,650 thousandtons in 1953 (nearly twice the 1938 production).Even so, imports of paper and board into theU.S.S.R. showed a noticeable increase in 1953/54.

NORTH AMERICA

Another near record output in 1953/54 accentu-ated the problem of agri.cultural surpluses in theUnited States and .to a lesser extent in Canada.The domestic demand for foodstuffs remainedhigh in spite of the lower level of economic activity,though the consumption of cotton declined.Moreover the fall in agricultural exports washalted and in the first eight months of 1953/54they were less than one percent below the Sarrieperiod of 1952/53. The sharp rise in stocks ofagricultural products is only explained to a limitedextent by the reduced export demand. Thusfrom the end of March 1953 to th.e end of March1954 CCC stocks rose by OVer $3,000 millions,while agricultural exports in the same periodwere about $500 million lower than a yearearlier. Although some of the factors whichhave reduced United States agricultural exportsaffect also Canada, Canadian exports have declinedonly slightly from the high 1952 level, except forwh.eat which in the first seven months of 1953/54was about one-quarter less than in the samemonths of 1952/53.

Although the statistical position suggests thatthe smplus problem is serious in both North Amer-ican countries, policy developments have beenvery different. The United States administra-tion i.s reviewing its entire agricultural poli.cv inorder to reduce accumulated stocks in an orderlyfashion and to adjust future output to the likelydemand. In Canada, on the other hand, it isfelt that th.e situation (loes not yet warrant specialmeasures. It is pointed out that the exception-ally high yields of the last three crop years can-not continue indefinitely ; th.at Canada may rea-

sonably expect to maintain her share of the im-ports of her traditional customers, in particularthe United Kingdom ; and that domestic percaput food consumption, which began to increasein 1952 ma,y rise still further.

Surplus Disposal

Special action for the disposal of agriculturalsurpluses held by the United States Governmenthas so far been mainly directed towards findingIICW foreign outlets.

A variety of legislative provisions operate to-ward this end. Section 550 of the Mutual SecurityAct (as amended in 1953) requires that not lessthan $100 million and not more than $250 millionof funds authorized for foreign economic ai.d in11.953/54 sh.ould be used for sales of United Statesagricultural surpluses to friendly foreign nationsagainst local currencies. Up to the end of May1954 such sales amounted to more than $220million. Section 4 h of the CCC Cha,rter Act per-mits certain barter transactions. In 1953/54 theseamounted to about $36 million, principally ingrains, more than three times the amount thusmoved in 1952/53. Under Section (5 j) of thesame act, $20 million worth of wheat was sold toSpain, the money equivalent to be used for off-shore procurement. Under Section 32 of the Agri-cultural Adjustment A.ct of 1935, which also coversdomestic disposal programs, exFort payments aremade for certain fresh, processed, and dried fruits,and honey. Less than $12 million were disbursedunder this provision in 1952/53. Section 416 ofthe Agricultural Act of 1949 permits the donationto needy persons of government stocks which arein danger of spoilage ; practically all of these giftsat an annual rate of about $70 million in 1954 aredirected abroad. l'he Famine Relief Act (P. L.216, already expired) provided up to $100 millionworth of surplus stock to alleviate serious foodshortages abroad, but less than $10 million havebeen utilized (wheat to Bolivia, Jordan and Libya).The renewal of the authority and restoration of theoriginal amount is now being sought in Congress.'Under special legislation over 600,000 tons ofwheat (about $70 million worth) were given toPakistan in 1953/54 to relieve famine conditionsthere. 'Under other special foreign relief programsabout $14 million worth of food was distributedto individuals in East Berlin and Eastern Germany,and another $12 million worth as Christmas giftsto needy families in 20 countries in Europe, LatinAmerica and the Near East.

71

Among the domestic outlets for surpluses, thedonation of foodstuffs by the Federal Governmentto the National School Lunch Program, to privatewelfare agencies, and for other purposes amountedin 1953/54 to an annual rate of about $200 million,two-thirds of which were for school lunches. Di-rect domestic commercial sales of surplus stocksllave remained relatively low at about $50 mil-lion a year in 1953/54. Altogether in 1953/54dl isposal programs were moving agricultural prod-ucts back into consumption at an annual rateof $800 million, 1 of which about $250 million ap-pear to have been for domestic consumption.

Govermnent holdings of surplus agriculturalproducts at th.e end of March 1954, however,amounted to over $6,200 million (Table 9) andwere still increasing, and attempts are thereforebeing made to accelerate their disposal. In hismessage to Congress on his new farm program,President Eisenhower proposed " to set a,sidereserves up to the value of $2,500 million from thestocks presently held by the CCC," to be " usedin contructive ways. Such uses will include schoollunch programs, disaster relief, aid to the peopleof other countries, and stock-piled reserves athome for use in war or national emergency.The order of magnitude of " aid to people of othercountries, " which seems to cover what is nowSection 5,50, is indicated in a bill which wouldI.imit the President's authority under this aidprogram to friendly countries to a total of $1,000million during the next three years, i.e., an averageof $330 million a year. In addition, it is proposedto set aside $100 million worth of surplus com-modities for help to governments regardless oftheir friendliness toward the United States, andto authorize the use of a further $300 millionworth for gifts in famine and other ¡'chef'assistance.

The CCC, reversing its previous policy, has start-ed to sell many commodities abroad at world mar-ket prices, which are far below United States sup-port prices. These commodities include butterand other dairy products, wheat, coarse grains,lima beans, cottonseed and linseed oil. Stocks ofdried milk Irave been almost fully disposed of tudomestic animal feed producers at a nominalcharge. No other major changes in marketingpolicies for government-owned sur pluses are plan-ned for 1954/55.

'Testimony of John H. Davis, Assistant Secretaryof Agriculture, given before the House Committeeon Agriculture, 27 April 1954.

A.part from a reported plan to try out on asample basis a sort of FOod Stamp Plan, 1 thedevelopm.ent of the school lunch program alreadymentioned and the reduction of the support p1-icefor dairy products, little seems to have been doneSO far in the Urtited States to increase domesticconsumption of food in excess supply. Never-theless, th.ere appears to be a considerable unsatis-fied demand for food among the 10Wer incomegroups. According to one study, 2 a comparisonof the 1050-52 per caput consumption of the25 percent of the labor force earning l.ess than$2,000 a year with estimates of potential consump-tion shows that per caput consumption of, e.g.,dairy products could be increased by 24 percent,that of flour and cereals by 22 percent and thatof sugar and syrup by 23 percent. Similarly, ina recent household survey in Seattle, Washing-ton, 3 110t one of the least prosperous parts of thecountry, it was found that " sixty percent of thelowest income group desired additional food ex-penditures, while only 24 percent of the highestincome group desired more Practically allthe additional money desired for food productswas to be spent on three general groups of com-modities including dairy products, fruits and vege-tables, poultry and red meats.

On the whole it appears that in spite of the highaverage level of food consumption in North Amer-ica, there would be a considerable response inthe volume of sales if the retail cost could be re-duced by lower production and marketing costs.For some commodities, e.g., butter, the effect of:lower retail prices on current surpluses might bedirect, while for other commodities, e.g., feedgrains, the effect would be indirect. As noted inChapter II, however, while farm pri.ces fell by17 perce.nt in U.S.A. and 23 percent in Canada dur-ing 1952 and 1953, and were followed closely bywholesale priccs, retail food prices fell by only

I This plan as practiced in the thirties and earlyin the wa' r, consiSted of distribution of food stampsto beneficiaries of public or private relief, entitlingthem to receive certain foodstuffs gratis equal inquantity to tho3e they bought under regular con-ditions in retail stores.

BunK : un Analysis of Certain Eslimales ofFood .1?equiremenls and Demand, A:gr. Economic Ile-search, Vol. F F 1., No. I, Washington. Jan. 1951." Potential " constuription is a theoretical figure sup-posed to indicate caput consuinption in the try-Pothetieal ease that consumption uf below $2,000tinnual 'income :families would be raised to the con-sumption level of :families with an average annualincome of more than $2,000.

E.L. 13Aum AND F.L.I GOODIUDGE: U.S. journal ofFarm Economies, Feb. 1954, p. 1 3 5.

72

two percent and eight percent respectively in thesame two years. The lower farm prices can thushave had little effect in expanding consumption.Cotton consumption in North. America, which in1053/54 declined by 860,000 bales Or about ninepercent from the previous year, would also prob-ably benefit from lower prices to the consumer.Over the first four months of 1959-, consumer.prices for apparel Iliad declined by less than 0.1.percent compared with a year earlier, despitelower wholesale prices for textiles.

Adjustment of Output

As supplies of certain farm products are in ex-cess of th.e anticipated demand and reserve re-quirement, the restrictions prescribed by the UnitedStates Agricultural Adjustment Act become oper-ative. For the 1954 wheat harvest the crop area.was limited to 62 million acres against 79 millionsin 1953, and actual plantings were indicated inmid-March at only two percent above this limit. 4Supplies will also be limited through marketingquotas accepted in a referendum of wheat grOlVerS.A similar limitation on maize plantings of 17 per-cent (about 10 million acres) in commercial maizeproducing areas appears, however, to have beenineffective as the indicated acreage is only 366,000acres less than in 1953. 'Presumably some com-mercial growers have n.ot complied with therestrictions and an appreciable area may havebeen added in non-commercial areas. Moreoveran additional 12 .million acres is reported underother coarse grains, particularly oats and barley,so that there may be a much increased out put in1954 of coarse grains as a whole. Some of theland taken out of other crops has also been divertedto soya beans, where the acreage is reported tobe twelve percent greater than in 1953. Market-ing quotas were also established for cotton in 1954(11.5 million bales from 21.4 million acres against16.3 million bales from 25.2 million acres in 1953)and acreage restrictions and allotmerits were againapplied to tobacco.

Still more severe restrictions are proposed for1055. The wheat acreage is to be reduced by afurther twelve percent to the minimum of 55 mil-lion acres permitted under present legislaticm.

:Parrners a,re allowed to plant wheat above theirallotments provided the yield from such excessacreage is not destined :for Imman consumption, butiis to be used :for pasture, hay, silage or .for ploughingunder to hnprove soil; provision has also buen madeto increase the allotment uf durum wheat.

In addition " cross-compliance " is being made acondition for price supports ; farmers must re-main. within their acreage allotments for all thecrops they gro if they intend to apply for pricesupport on any one. Further., farmers who haveto divert more than ten acres from any controlledcrop will have to comply with acreage allotmentsfor all crops on their holdings except hay andpasture. Both measures are designed to avoidshifting the surplus problem from one crop toanother.1 Altogether the new restrictions areexpected to take about ten million acres out ofcrop production.

For some commdities, existing United Stateslegislation .provides for some flexibility in supportprices, and support prices of milk for manufac-ture and of butter were accordingly red.uced from90 to 75 percent of parity in 1953/54 with th.e hopeof increasing domestic consumption and checkingany further increase in CCC stocks of butter,cheese and dried skim milk.

Present agricultural legislation in Canada doesnot provide for direct government interventionto adjust output. The Canadian Wheat Boardis virtually the sole handler of export wheat andalso largely controls the marketing of oats andbarley.

The Board makes an initial advance payment toproducers, the final returns being determined atthe end of the crop year by the receipts fromdomestic and export sales. The Board might thustry to influence production by lowering the initialpayment. For the coming crop year 1954/55 anannouncement of the initial payment is beingdeferred until nearer the end of the current cropyear. According to spring reports, however,Canadian farmers planned to sow nearly one milli.onacres less to wheat tiran in 1953/54, this being areduction of four percent. Some reductions are alsoindicated for rye and potatoes, but the flaxseedacreage is expected to be doubled.

For agricultural products other than wheat anAgricultural Prices Support Board is authorizedto buy at prices established by the Board in orderto maintain general market prices above a given" floor " or, alternatively, to pay directly to pro-ducers the difference between the Board's and theaverage market price in a given. period. Amongthe products handled by the Board are apples,beef cattle, butter, cheese, dried beans, dry skim

'l'o be effective on all :farms, it seems that the U.S.Administration would also have to proclaim acreageallotments for almost al] non-basic commodities towhich acreage used to be diverted from basic crops.

73

milk, eggs, hogs and honey. The Board stilloperates on its initial allocation of C$200 millionin 1946 of which up to 31 March 1953 aboutC$42.4 million had been used for price supportoperations.

The New Agricultural Policy of theUnited States

Because of difficulties in bringing agriculturalproduction and requirements closer togeth.er, whilemaintaining a reasonable stability of farm incomesand avoiding sharp fluctuations in output andprices, the United States administration has pro-posed new farm legislation. The President'sfarm message to Congress states that since th.erestrictions on output already proposed may notappreciably reduce surpluses because of expectedhigher yields On the reduced acreages, shrinkingforeign markets, and the planting of alternativecrops, " we must move without further delay totreat the fundamental causes of our presentexcess supply. "

Th.e program emphasizes that by using fundsof th.e agricultural conservation program, divertedacreage should be utilized for soil conservation.

The most important new features of the pro-posed program are a flexible rather than a rigidprice support, the general application of' a newparity formula, the freezing of a part of the ac-cumulated excess reserves, the fostering of' ex-ports, and an increase in the borrowing authorityof the CCC from $6.75 to $8.5 million. Onlythe latter feature has so far been implemented.Under the proposed program, prices of basic cropswould continue to be supported provided farmerscomply with acreage restrictions and marketingquotas when such are in effect. Price supportlevels would be announced before the plantingseason and a 90 percent ceiling for such supportsis proposed, but also a floor ranging from 75 to90 percent according to the suppl3r situation. Sup-port levels would be adjusted up or down by onepercent for each two percent of variation in totalsupply of tire commodity in. question (except formaize where the ratio is 1 : 1).

Legislation passed in 1948 included a new parityformula based on price/cost relati.on over the lastten years, but the application of this feature tothe basic crops has been repeatedly postponed.For wheat, Maize, cotton, and peanuts, it is nowproposed that the new base should become effec-tive from 1 January 1956, but with the provisothat tire change be made in annual instalments

TABLE 23. NORTH AMERICA : PRODUCTION OF SELECTED COMMODITIES

C01%11110DI'JOY

WheatMaizeRiceBeef and vealPigmeatButterEggsMilk 2SoybeansGroundnutsCottonseedTobaccoCotton (1 Mt)

Index of all farm products

of five percent. For wheat thi.s would mean stretch.-ing the change over three years.

The major commodities affected by these propos-ed changes are wheat, maize, cotton and wool.For wool it is proposed that prices should be leftto find their OWn level, and instead of price sup-ports direct payments should be made to growersto raise their average returns to 90 percent of par-ity. Such. payments would be uniform to rewardefficient production and marketing.

Outlook

No marked change in the high level of UnitedStates domestic demand for farm products, orin the reduced current level of agricultural exportsseems likely in 1954/55. Equally, however, sup-plies of most farm products are expected to remainlarge, and no marked improvement in the surplussituation seems probable. The increased borrow-ing power of tlse Commodity Credit Corporationshould suffice to carry on price support operationsat least through 1954/55, and while present pricesupport programs continue farm prices may de-cline relatively slowly. Farm production costsshow .little change, however, and the " cost/pricesqueeze " in United States agriculture is likelyto continue, though perhaps to a somewhat re-duced extent. As noted in Chapter II, net farmincomes are expected to be about five percentlower in 1954 th.an in 1953.

The more stringent acreage restrictions in 1955are likely to reduce United States crop productionconsiderably and the expected increase in live-stock production due to larger feed supplies is

1934-38average

133 800165 600

9563 9503 6101 1442 163

53 3461 170

5404 927

6182 755

74

100

1948-50average 1952/53 1953/54

(prcl.)


/ 1937-41. The average production for the years 1931-38 was Oniony a:11y low owing to the effects of the extreme dronghtsof 1934 and 1930.

2 For the United States, production Oil farms only

expected to reduce livestock prices. Farm .i.n-comes in 1955 may therefore decline appreciably.

Canada is starting the 1954/55 season \yids anunprecedented carry-over of wheat and the im-proving supply position in other regions is likelyto create additional export difficulties. There isalso an unusually heavy carry-over of coarse grtsinsand the larger supplies in the United States andArgentina will increase competition in exportmarkets. Domestic consumption, particularly oflivestock products, however, is likely to remainhigh_ Canadian farmers' cash receipts in 1954/55may be somewhat lower than in 1953/54 and tisisis likely to be reflected in net incomes since nodecline in production expenditures is expected.

The reductions which have already taken placein farm incomes in North America have liad re-percussions on the general economic situation.While production of machinery as a whole in-creased in the United States in 1953 "in a few,machinery lines such as farm tractors ... oper-ations were at reduced rates during a large pastof the year. " Similarly in construction activ-ities " farmers were the only important groupspending less than a year earlier. "

In Canada also " there is more farm equip-ment in the hands of dealers and manufacturersth.an a year ago. "2 The possible effect of fur-ther reductions in farm incomes therefore cannotbe ignored.

1 U.S. Department of Commerce : Survey of aurrentBusiness, February 1954, pp. 16 and 19.

2 EMI. Div. Marketing Service, :Dept. of Agricul-ture, Ottawa : Current Review of Agricultural Conch,tions in Canada, Vol. 15, No. 1, Jan. 1954, -r). 15.

42 580 54 07486 029 83 8011 780 2 1825 289 5 291.5 122 5 749

883 7903 451 3 704

59 783 59 8296 903 8 224

943 6225 022 5 615

962 1 0862 965 3 282

135 148

47 37381 1832 3836 6995 062

8963 758

62 8737 260

7146 094

9893 564

147

TARLE 24. NORTH AMERICA : EXPORTS AND IMPORTS OF SELECTED COMMODITIES

COMMODEVY

Gross Exports

Wheat and wheat, flourMaizeRiceMeat,EggsMilk, (condensed and evaporated)CheeseButter'Vegetable oilsTobaccoCotton (lint)

Gross Imports

BananasSugar 3CocoaCoffeeTeaWoolJute

Index of c 11 farm products

Gross Exports

01'058 Imports

For North America as a whole the 1954/55 sea-son is unlikely to see any substantial improve-ment in its major agricultural problem of excesssupplies. Unless the series of good harvests ofthe last years is sharply interrupted, both countriesare faced with the need to take effective measuresto bring supplies and requirements more closelyinto line by expanding markets, especially domes-tic markets, and by curtailing the output of prod-ucts for which no increased market can be fore-seen.

LATIN AMERICA

During 1953/54 most Latin American countrieshave been striving to increase agricultural produc-tion, which in previous years liad been laggingbehind industrial development. To achieve thisobjective, governments have either continued tocarry out or have under active consideration pro-grams and measures aimed at giving greater in-centives to farming. Argentina, for example, hascontinued to push forward its Second Five YearPlan. Chile is starting a comprehensive Eight

1948-50 1952

Thousand 'metric tons

average

6 030 16 361 21 755799 2 150 2 528

72 468 79516 52 38

2 34 3724 160 7034 60 3

2 2 I.

14 199 251203 221 197

1 294 1 051 924

1 367 1 457 1 4534 917 5 572 5 842

261 295 272907 1 269 1 260

56 66 6368 198 17574 76 45

Includes beef aud veal and pigmeat.2 Includes soya, groundnut and cotton oils and equivalents in oil of exported beans.'In terms of raw sugar.

Negligible.

100 176 201

100 123 129

1953

16 6063 370

69439327710

238248644

1 4916 087

2731 310

6813678

Year Agricultural Program. Mexico has trans-formed its Two Year Emergency Food Programinto a permanent feature of the administration.Uruguay is giving the final touches to a LivestockDevelopment Plan. Brazil is actively using thenew Foreign Exchange Law for the protection andencouragement of agriculture.

Progress is retarded, however, by recent devel-opments in the world market. Prices for a num-ber of products exported by Latin America llavefallen during the past two years, and produetionof some of them has tended to decline. Recentdecreases in regional production of cotton, oil-seeds and hard fibers and the further restriction inCuban sugar production largely reflect this situa-tion. Nevertheless, in some instances, LatinAmerican countries are finding new markets fortheir products ; e.g., recent purchases by theU.S.S.R. have allowed Argentina to dispose of asubstantial part of her accumulated stocks oflinseed.

On the other hand, the output of grains has con-tinued to expand in every country. Official sup-port prices at incentive levels are being maintain-

1934-38average

169

121

ed. In deficit countries, the expanded produc-tion has been easily absorbed by the local mar-ket, and Uruguay, which liad a record wheat cropduring the last season, 1.1as been able to sell itsexportable surplus to Brazil and Paraguay.

In Argentina, however, where grain exportsin 1953 were considerably larger than in 1952, arather sizeable stock remained unsold at the be-ginning of' the 11CW season, which, added to thegood crops of 1953/54, put exportable suppliesat significantly higher levels than in recent years.To cover the disposal of larger supplies of grains,Argentina has been very active since 1953 in renew-ing and concluding bi-lateral trade and pa3rmentsagreements with a number of countries and, atthe same time, in developing an intensive pro-gram for enlarging storage and warehousing facili-ties. Whether the volume of grain exports canbe expanded in the years immediately ahead stillremains to be seen, but the general feeling in Ar-gentina is that the surplus element in presentstocks may be considered fairly small, althoughwheat exports to Brazil have slowed down andare at a lower price than before, and exports toBolivia have not been possible on account of'United States shipments of 100,000 metric tonsto that country. It is considered that no advan-tage would be reaped from revising downwardsthe targets set in the Five Year Plan.

Most significant for many Latin American coun-tries during the last year has been the rise in coffeeprices. This rise is largely due to the severedamage caused by frost on the Brazilian coffeeplantations in 1953. In the State of Parana alone,but for the frost, production would have reachedabout 7.7 million bags during the 1954/55 coffeecrop season, whereas it is now unlikely to exceed1.5 million. .Coffee production in Brazil will onlybe able to recover slowly from such a setback.

Basic Policy Problems

A striking feature of current agricultural poli-cies in almost every country in Latin Americais the strong drive toward national self-sufficiency.Specific instances of' this trend may be found inthe recent establishment of the sugar-beet industryin Chile, although the sugar output has been fur-ther curtailed in Cuba, and in the wheat cam-paigns actively conducted for instance in Brazil,Peru, Colombia and Mexico, in spite of the stocksof wheat accumulating in Argentina and in wh.eat-exporting countries in other regions. This policyof self-sufficiency associated in several instances

76

with the drive to improve land use and to m.odern-ize agriculture is based mainly on foreign ex-change considerations. Most Latin Americancountries are reluctant to use their foreign ex-change earnings for the importation of food andother agricultural products, unless it is impossibleto produce them locally.

It is well known that in Latin America trendsin investment are closely linked to the balance of'payments situation and levels of foreign reserves,largely because of the region's dependence onforeign countries for the supply of capital goods.If exports cannot be expanded, therefore, importsof capital goods both for agricultural and indus-trial purposes can only be maintained or expand-ed if there is a reduction of current rates of im-ports for consumption and a larger inflow offoreign investment.

A reduction of :imports for consumption is pos-sible in certain countries and has already beenattained in some by a selective control of imports.But in general a cut in imports of consumer goodsis difficult unless the domestic production of suchgoods can be expanded rapidly. This is the pol-icy that governments are in fact pursuing. In thefield of agriculture, the expansion is to be achievedboth by extending the area under cultivation andby improving farming efficiency. It is impressive,for instance, to recall that the number of tractorsin the area has increased about six times since 1939.

The greatest possibilities of rapid agriculturalexpansion in the deficit countries, however, areto be found in the case of wheat and other grains,sugar and cotton, the products now in surplussupply in the world market. The problem forthese countries is therefore whether to producethese commodities (even at the risk of developinga high-cost production) in order to save foreignexchange, or to import them at a lower imme-diate cost, but at the price of limiting the coun-try's possibilities for economic expansion.

On the side of the exporting countries, the prob-lem of continued agricultural expansion is stillmore difficul.t if they have to face stiff competitionin the world market. Typical cases are the pro-duction of sugar in Cuba and the grain and oils 3edscrops in Argentina. Development of agriculturein these and other countries in a similar positionwill certainly be retarded as long as current worldconditions persist.

For other products, such as coffee, cacao andbeef, prospects for larger exports are more favor-able. But an increased production of these com-modities by the nature of things can be obtained

only slowly and the development of the exporttrade is also limited by the rapidly growing domes-tic demand.

There are thus major difficulties in the way ofany short-term .readjustment of current protec-tive agricultural policies, although in the case ofsome export crops, such readjustment may proveessential. In the long run, howe,ver, many govern-ments are likely to find it advantageous to de-velop the production of the commodities for whichtheir iaitial conditions are best suited, and torelax the strong, current trend toward self-suffi-ciency at all costs. A more comprehensive intra-regional and international co-ordination of agri-culture would then be possible.

Several countries have taken steps to attract alarger flow of foreign investment either by eliminat-ing existing obstacles (Argentina, Brazil, Chile,Colombia), or by settling former debts with foreignholders (Ecuador, Peru) in order to clear and im-prove their external credi.t conditions. It is tobe noted, however, that foreign investment inthe region as a whole represents only a minor partof total investment, particularly in the field ofagriculture.

TA LE 25. LATIN- AMERICA : VOLUiVIE OF AGRICUL-

TURAL EXPOlitTS

YEAH,Gro,

exports

Gross exports minus gross import,s.

Over-all Trade and Payments Position

Under the influence of changing national a.ndinternational conditions, the over-all balance oftrade and payments in the region improved some-what in 1953. Althetigh there were some increas-es in total exports, th.e improvement over 1952was mainly due to the sharp reductions in im-ports.

Measures contributing to improve the balanceof payments situation are the reduction or elimina-tion of export taxes, the granting of preferentialexport exchange rates, the concession of specialsubsidies or export premiums, and finally th.e more

Netexports

77

comprehensive procedure of monetary devaluation(Bolivia, Chile, Mexico). By these measures ex-port proceeds in national cuhencies were increas-ed and high-cost export products in danger ofbeing priced out of the market continued to moveabroad. In this 'way a stimulus for producingfor export was maintained, in spite of increasingcompetition from other producing areas.

Reductions in imports were more pronouncedin the non-dollar countries of the region, especiallyBrazil. In October 1953 a new exchange systemadopted by this country established premiums forexports and an auction market for the sale of'import permits. 'The new system is basically in-tended to encourage agriculture. Not only willagricultural exports be subsidized by export pre-miums, but proceeds accumulating from the auc-tion of' available foreign exchange, which alreadyin the first six months of operation of the newsystem amounted to 5.6 thousand million cruzeiros,will be used for financing agricultural projects.

Among the other non-dollar countries, Chilewas affected by a drop in the values of exports dueto a decline in demand for Chilean copper. Thevalue of exports from Argentina advanced signif-icantly because of much larger shipments ofgrains and wool than in recent years.

In dollar countries both exports and importswere slightly less during 1953 than in 1952. Thedecline in exports occurred mainly in Mexico,Cuba and Venezuela because of reduced exportsof cotton, sugar and minerals. Exports increasedparticularly in Colombia, on account of' the muchlarger volume and value of coffee shipments. Inmost other countries in the region imports weremade at similar or slightly increased rates com-pared with th.e previous year.

During 1953, as a result .of trade policies andincreased production, there was a sharp reversalin the past downward trend of both gross andnet exports of agricultural products from the re-(ndon The index in Table 25, comprising seventy-tWO major agricultural products, illustrates thisdevelopment. The larger proportional gain in netexports than in gross exports reflects a declinein gross imports due to larger domestic productionas well as the control of imports in certaincountries.

Domestic Demand and Prices

Latin America is a region where consumption,particularly of food, is expanding very rapidly.The high rate of population growth (2.4 percent per

1934-38 average = 100

1950 99 88

1951 92 78

1952 80 64

1953 (pral.) 98 85

annum) is primarily responsible, but the increasein the purchasing power of the population alsoplays a part. These factors are naturally addingto the difficulties that countries have to face inshaping their food and agricultural policies. Allurgent increase in production has to come princi-pally in the way of energy-producing foods whichthus compete with other more nutritionally desir-able foods in the use of available resources. Thestrong campaigns for increased wheat productionin several deficit countries where livestock develop-ment is lagging considerably behind populationgrowth may be explained by this quick expansionof consumer demand.

The rapid expansion in consumption also ex-plains why the current picture in Latin Americais one of recurrent food scarcities and inflationrather than one of surplus production and stableprices. In many instances, transportation andmarketing deficiencies contribute to make thesupply problems more acute.

A typical example of the problems Latin Amer-ican countries are currently facing is given byMexico. This country's economy has been expand-ing rapidly during the last few years, but so hasits population and consumer dema,nd. In orderto check inflation last year the government adopt-ed various restrictive measures such as a signif-icant cut in the rates of public investment andtight restriction of bank credit for commercialpurposes. At the same time extensive facilitieswere granted to agriculture for accelerating theexpansion of food production.

As foreign exchange reserves continued to dwin-dle, Mexico in April 1954 devalued its peso by30 percent, or f'rom 8.65 to 12.50 per dollar.

TABLE 26. LATIN AMERICA : PRODUCTION OF SELECTED COMMODITIES

COMMODITY

Beef and veal, pork, mutton and lamb.

1934-38average

Thousaml metric tons

14 500 16 300(2 319) (3 550)8 130 10 880

(5 380) (7 564)11 690 12 500(5 515) (5 159)1 856 1 920

(1 059) (1 125)6 480 7 4905 687 5 527

123 132

78

Through this devaluation the government expectsto encourage exports and the inflow of foreigncapital and to discourage competing imports andthe outflow of Mexican funds. Also the govern-ment hopes uhat this measure will correct condi-tions of international disequilibriurn that develop-ed largely because of reduced export demand andprices and the inflation of domestic prices thattook place in previous years. It is to be expect-ed, however, that further inflationary pressureson domestic prices will be felt as a consequenceof the monetary devaluation, which, in turn,will possibly slow down the increase in per caputconsumption levels.

During 1953, fluctuations in industrial activity,government trade and spending policies, as wellas changes in agricultural output, manifestedthemselves diversely in the various Latin Americancountries. Inflationary pressures for instance, weresubstantially reduced in Argentina. The domesticdemand for food was firm but weakened for otherconsumer goods. Prices generally tended to leveloff and the cost of living declined slightly. InBrazil and Chile, however, inflationary pressurespersisted, though in the former country pricesincreased at slower rates than in 1952. Inflation-ary conditions also persisted unabated in Paraguayand Bolivia, mainly due to increased budget defi-cits and expansionist bank credit policies. Scar-city of supplies was felt in both countries and morenoticeably of food in Bolivia. Price increases alsopersisted in Peru, mainly reflecting higher ratesof public investment and the declining trend inthe exchange value of the currency. Some infla-tion developed in Colombia during 1953 as highercoffee p1-ices and a progressive devaluation of the

1948-50average 1952/53 1953/54

(preliminary)

Maize 18of which Argentina (7

Wheat 8of which Argentina (6

Sugar (centrifugal) 6of which Cuba (2

Coffee 2of which Brazil (1

Bananas 4Meat

index of all farm products

4

000892)620634)480838)118446)820904

100

17 795(4 800)9 770

(6 500)12 560(4 894)1 959

(1 118)7 7205 598

132

TABLE 27. LATIN AMERICA : EXPORTS AND IMPORTS OF SELECTED CorvugonITIEs

' Including wheat flourie wheat.

coffee export exchange rate expanded coffee grow-ers' incomes and demand. The remaining coun-tries of the region generally showed a fair degreeof price stability, wit h surflics at satisfactory levelsfor meeting the increased ch irand at stable prices,both at the wholesale and the consumer level.

OCEANIA

Oceania has thus far been affected only to alimited extent by the increasing competition inworld agricultural markets. Despite the region'sgreat dependence on exports of farm products,the continued strong demand for wool, meats anddairy products as well as the special marketingarrangements with the United Kingdom for thelatter two groups of products have contributedtoward maintaining the favorable economic posi-tion of both Australia and New Zealand in 1953/54.The major exception was to be found in wheat,where there was a sharp decline in both volumeand price of exports. Apart from wheat, themain Oceanian export prices have continued theirrising tendency up to 1953/54, with nicat and dairy

79

contract prices above 1952/53 levels and woolprices showing little change.

The continued advance of export price levelshas, however, been reflected in some further increas-es in the general price level in both countries.This tendency toward higher prices and, thus,higher costs of production is viewed with softieconcern, especially at a time when inflationarypressures have subsided in nearly all the region'scompetitive and export markets. Table 28 showsth.at particularly in Australia the general pricelevel and agricultural wages have risen since 1948more than those in Denmark and the Netherlands,the major European competitors and in theUnited Kingdom, the major export market.

With the ending of rationing of meat and dairyproducts in the United Kingdom, increasing com-petition will be felt by Oceanian agricultural pro-ducers and it is unlikely that export p1-ices will

advance much further. Wool prices eased somewhatearly in 1954 but subsequently recovered, whilewheat prices may perhaps fall further. As a resultof the favorable conditions of production and thehigh labor efficiency of the region's agricultural


1948-50average 1952 1953

Gross Exports

Maize 6 620 1 550 720 1 150Wheat,' 3 445 2 370 270 2 600Sugar 4 030 7 020 6 980 7 700Coffeo 1 398 1 630 1 593 1 710Bananas 2 040 1 940 2 140 2 200Beef (fresh, chilled and frozen) 507 338 145 140Wool (clean basi ) 117 143 1.04 160Cotton (lint) 340 370 100 470Cacao 208 184 147 200

Gross Imports

Wheat,Rico (milled terms)

1 670390

2 470370

3 510320

3 500350

Sugar 240 360 300 310

Potatoes 180 250 200 230Bananas 180 170 190 170

Coffee 29 49 34 35

Cotton (lint)Beef (fresh, chilled, frozen)

98

5423

5025

4520

Condensed and evaporated milkPowdered milk

254

4542

6073

5570

Index o f all /CUM VrOdUCt8

Gross Exports 100 101 80 98

Gross Imports 100 155 190 186

TABLE 28. 18-DEx NumnuitS OF A(1121-CULTERAL WAGES, COST OP LIN': I:EN NUM.. \VROLESALI.: iPRICESIN SETA:C,TED COUNTRIES

Prelim inarY.: All five countries devalued their currency by about 30 percent in September 1919.

industry, current export prices for most commodi-ties continue to be remunerative. Some pricedeclines would not present serious problems, ex-cept for Australian dairy products, sugar, eggsand dried vine fruits.

Farm 411.COMCS in Oceania are among the highestin tire world, both in absolute terms and compared-with incomes of industrial workers, but if theyare to be maintained at the high levels of recentyears, the problems HOW emerging are how toabsorb any possible price declines by expandingthe volume of production in the most profitableenterprises and how to maintain or increase presentprofit margins by reducing costs of productionthrough greater efficiency.

The over-all market outlook for tire region'sfarm products, however, remains favorable aseconotnic development wit.hin the .region proceedsand Oceanian export markets are not likely to expe-rience any important contractions.

The United Kingdom MarketThe most important development of th.e, year

1953/54 affecting Oceanian agriculture was thegradual elimination of government food tradingin the United Kingdom. Trade in grains, and inmeats, butter and cheese was restored to privatehands in 1953 and 1954 respectively. At thesame time rationing and price controls on meats,butter and cheese were eliminated. Moreover,the .modification of the trade and supply policypursued in the United Kingdom involves the endingof bulk purchasing contracts. The meat and dairycontracts with New Zealand lapse in 1954, andthose with Australia in 1954 and 1955 respectively.After this, trade will be in private hands with theexception that minimum prices for meat exports

80

from Australia to th.e United Kingriom are gove,rn-ed by the long-term agreement extending to 1967.

While the United Kingdom hopes to obtaincheaper food prices by restoring competitive pri-vate trade in its domestic market, any price de-pressing effects on major Oceanian export productsare likely to be limited to wheat atril dairy products,whose prices may decline under the pressure ofsurpluses in other exporting countries. On theother hand, though market prospects for meat inthe *United Kingdom are somewhat uncertainas a result of the return to private trading, thetotal demand for meat is expected to remain strongand there is little fear of serious competition fromArgentina in this market.

In the long run, adjustments may be necessaryin those sectors where Oceanian production costs areless competitive, e.g., dairy products in Australia,but in view of the favorable position of Oceania'smeat industry compared to other exporting coun-tries and the anticipated strong demand in theUnited Kingdom, it is unlikely that the minimumguarantees for Australia will have to come intooperation. Th.e general guarantees of' unrestrict-ed entry granted to both countries will continue.Thus, the ending of th.e United Kingdom bulkpurchasing policy is not expected to harm theexport trade of the two countries.

The volume of' 1953/54 United Kingdom importsof wheat from Australia was reduced followingthe release of government-held stocks in connec-tion with decontrol of tire grain trade and thegreater availability of wheat from other sources.As imports return to normal levels, a competitivemarket is expected, of which Australia shouldbe able to secure a good share. In Vi.CNV of thenon-participation of the United Kingdom in thenew International Wheat Agreement, Australia's

CouNTRYAgricultural wages Cost of living G eneral wholesale pri ces

1918 1 959 1953 1948 1 952 1953 1918 1952 1953

Australia 100 207 1221 100 170 178 100 184 189

New Zealand 100 142 146 100 128 134 100 140 1138

United KingdOITI 100 125 132 100 126 130 100 149 150

Denmark 100 127 137 100 123 123 100 143 134

Netherlands 100 130 135 100 130 130 100 140 134

export quota was cut by 36 percent in ord.er toenable the country to continue to supply the tra-ditional United Kingdom market.

The United Kingdom demand for New Zealandand Australian wool is likely to remain at highlevels, dependent upon economic conditions remain-ing favorable.

On balance, prospects for disposing of Oceania'sexportable surpluses on tire United Kingdommarket at remunerative prices are therefore good.These prospects are further strength.ened by theexistence of preferential tariff protection on tradewith the United Kingdom, though it should beremembered that this does not cover the two im-portant commodities of wool and wheat. Further-more, where these preferences were fixed in moneyterms, the percentage benefit to Oceania will havedeclined considerably since prewar.

Alternative Export Markets

With trade between Oceania and the UnitedKingdom favored by special marketing arrange-ments, by preferential tariffs and by membershipof the sterling area, alternative export marketsare of minor importance except for wool and wh.eat.

Tire imposition of strict quotas on imports ofdairy products into the United States virtuallycloses this market, while the European continentalmarkets for dairy products are likely te be veryfully supplied from Denmark and tb.e Netherlands',and from the countries now turning toward exports.The nearby and important Asian markets, whichhave increased their purchases of Australian wheat,especially in the form of flour, do not generallyhave enough consumer purchasing power to buyother export products from Oceania;with the excep-tion of wool for which. Japan is a customer. NOVer-theless, .imports of certain cheap sources of animalprotein, such as skim milk powder into manyunderdeveloped areas in Africa and Asia, haverecently increased and if present developmentprograms in those areas are successful an enlargedmarket may develop for such products.

Domestic Consumption Levels, Prices andFuture Prospects

As a result of general:13r favorable economic con-ditions and tire rapid growth of population in theregion, partly due to heavy postwar immigrati.on,the domestic demand for farm products has beenvery str.ong in recent years. Food consumptionlevels have remained high in lcoth countries.

81

Nevertheless in Australia consumption per caput,of some of tire main protective foods, e.g., butter,eggs, beef, mutton and pork has remained some-what below prewar levels since rationing wasend.ed, probably because of consumer resistanceto higher prices. This tends to reduce averagereturns to farmers in some branches of Austra-lian agriculture, e.g., dairying, poultry farm-ing, and dried vine fruits, for which there are priceschemes designe d to raise producers' returns fromdomestic sales above the level ruling in the exportmarkets. In view of the uncertain market out-look for dairy products, tire Australian governmenthas not raised 1953/54 farm price guarantees de-spite ascertained increases in production costs,contrary to tire usual practice. In New Zealand,export returns have remained profitable and domes-tic consumption levels of dairy products, whicha1ready are very high, have shown a rising trendin recent years with an increase in consumer sub-sidies. Farm prices in New Zealand were heldbelow export pm-ices up to the 1953/54 season andby this means tire New Zealandl dairy industryhas been able to build up a large stabilization re-serve (N.Z.L 24.5 million) against any declinein export prices. Conditions fca a further expan-sion of dairy production in New Zealand appearto be favorable.

The rather sharp declines during 1953/54 in tireworld wheat market have caused some concernin Australia, which traditionally exports over halfher wheat crop. Although recent trends in Austra-lian wheat production are clue mainly to fluctua-tions in weather conditions, planted acireagesdeclined stea,dily until 1952/53 but rose somewhatin the 1953/54 season. At the same time, officiallyascertained costs of production have increasedshacply, while tire average farm price has shown.little change. It appears therefore that therelative profitability of wheat p.mduction inAustralia must have declined, especi.ally asfarmers' returns from livestock products have risenover the past five years. Despite tire rising levelof production costs and tire fall in export pricesduring the 1953/54 season, the Bureau of Agri-cultural Economics considers th.at tire Australian'wheat industiy has so far maintained its favorableposition in comparison with North America as atraditional low-cost producer. Moreover, tire recentincrease in tire price of wheat for home consump-tion and SOMO easing in wool and domestic meatprices suggest that tire incentives for wheat pro-duction may have improved, and that tire declinein the Australian wheat acreage may be checked.

TA B LE 29. OGEANIA : PROD UCTION 01' MAJ 0 R FARMPRODUCTS

NeW Zealand 1939, Australia 1936-39.

Producers' returns, in both countries, from wooland meat production, with the possible exceptionof pigmeat, continue at remunerative levels, andthe expected high demand in domestic and over-seas markets in the near future seems likely toencourage a further expansion in the output ofthese products.

TABLE 30. OCEANIA : EXPORTS AND IMPORTS oFMAJOR FARM PRODUCTS

. Thousand metric tons .

Including wheat flour in wheat equivalent.

82

On the whole, therefore, current and prospec-tive market opportunities appear to be favorableto a further expansion in the region's agriculturalproduction. By further utilization of its agTicul-tural resources, concentrating OD the productionof those commodities which, enjoy the greatestcomparative advantage, Oceania may well continueto contribute even more to world export supplies.

THE FAR EAST

The year 1953 witnessed the passing of the acutephase of the postwar food shortage in the FarEast. A larger production of food grains hasmaterially reduced the import demand of a num-ber of countries, and with the recovery of aban-doned rice areas in some of the surplus producingcountries, the sellers' market in rice virtuallydisappeared. But the basic problems of poverty,malnutrition, and unbalanced diet of the greatmajority of Asians remain to be solved.

Problems and Programs of Development

Attention must now be focused on the problemof raising consumption levels and of improvingthe health and efficiency of half the world's popu-lation concentrated in this region. The poten-tialities for economic expansion of this vast andfor the Most part under-developed region aregreat. Equally formidable are the limitingfactors and market forces that condition resourcedevelopment. Most governments in the regionconsider that the vicious circle of low income,poor consumption aun static production can onlybe tackled by state intervention in planning andfinancing agricultural and economic development.

In implementing their first Five Year Plans,India and China, each in its own way, are under-oping economic and social revolutions. Becauseof the fact that these two countries togetheraccount for over two-fifths of the world's popula-tion, their economic progress is of great signifi-cance both to the region and the world. Exceptwh.ere peace and security are threatened or emer-gency conditions prevail, governments of otherFar Eastern countries are also implementing devel-opment programs though on a less comprehensivescale.

In 1953/54 agricultural and economic develop-ment was slow and halting in the countries wherethe national income is heavily dependent on exportearnings of one or two specialized products. Underthe prewar regimes much private capital and int.

. Thousand metric tons .

Australia and New Zea-land

Wool, clean 323 404 466 458Meat 1 575 1 743 1 818 1 926Butter 1377 :338 376 352

AustraliaWheat 4 200 5 381 5 313 5 416Sugar 756 951 967 1 274

Index of all farm products loo 112 121 123

Gross Exports

Australia and New Zea-land

Wool (clean). .

Meat (carcass) .Butter

AustraliaWheat 1Sugar

Gross Imports

New ZealandWheat 1

Index o f all farm products:

Gross Exports .

Gross Imports . .

2

293510240

787430

39

100

100

2

451654222

399399

164

129

155

2

440689221

223246

230

126

150

2

474713201

675742

194

129

157

1934- 1.948-- 'rum 1938

aver-age

1950aver-age

1952 1953

Prem1934-

35aver-

age

1048-50aver-age

19:32/53 1953/5,1(proL)

ported technical skill went into these countries forprofitable production of plantation or exportcrops, while basic food crops were relatively neg-lected. That situation has imparted an imbalanceto agricul.ture and a degree of rigidity to the nation-al economies. How to diversify agriculturalproduction in these countries, or more specifi-cally, how to grow more food for :home consumptionand raise a variety of cash crops for wider exportmarkets are the main problems of development.

National self-sufficiency motivates much of thecurrent development planning. in allocating scarceresources high priority is generally given toagricultura] development and to promotion oftransport, power and other bas.ic facilities withoutwhich industry cannot expand.. Since the natu-ral resources of the region are diverse and its popu-lation density uneven, its economies are largelycomplementary and there is mucht scope for expan-sion of intra-regional trade in food and agriculturalproducts. This is part of the wider question ofthe co-ordination of national economic policiesand development programs which was raised atthe recent Conference at Colombo of the PrimeMinisters of Burma, Ceylon, India, Indonesia andPakistan, although no positive action to that endwas taken.

Excluding China (inainland)Estimated.

Changing Pattern of Agricultural Produc-tion and Trade

'Most countries of the region are passing througha period of transition in which national food andagricultural policies are being readjusted andforeign economic and trade rela,tions re-orientedin consequence of the waning influence of the colo-nial empires, each with its special economic andtrade tics with the metropolitan countries concern-ed. Bu.t although many prewar trade preferenceshave been eliminated, the prewar pattern of eco-nomic relations still influences the foreign tradeof many of the new states. The progress of indus-trialization and general trend toward self-sufficien-cy are beginning to affect the pattern of agricul-tural production and consumption as well as thevolume and direction of foreign trade in food andagricultural products. The region as a wholeremains a large net importer of food, althoughexpenditure of foreign exchange on food importsis tending to shrink.

In all Asian countries food is produced largelyby subsistence farmers on extremely small hold-ings. They are generally influenced more by basicconsumption requirements of their families thanby profit motives to grow more food for the market.

83

Print 1934-38average

1948-50average 1951 11152 1953 1954

(Pre].)

Million met -ic twos

Net Exports

13urina 3.04 1.20 I . 1.25 0.95 1.50Associated States of Laos, Ca

bodia, Viet-Nam 1.78 0.15 0.33 0.19 20. 17 0.15Thailand 1.37 1.16 1.59 1.40 1.32 1.40Others 2.29 0.22 0.36 0.90 2005. 0.10

TOTAL 8.48 2.73 3.55 3.74 2.49 3.15

Net Imports

Ceylon 0.56 0.66 0.69 0.69 0.80 0.80India 1.97 3.02 4.97 3.96 2.07 0.90Japan 1.89 2.26 3.38 3.65 4.10Malaya 0.62 0.64 0.69 0.63 0.72 0.60Others 0.70 1.03 .63 1.92 22.32 1.20

OTAL 5.74 7.61 11.35 10.58 9.56 7.60

Trade Balance Pfg

Net exports 2.74

Net imports 4.88 7 80 6.84 7.07 4.45

TABLE 31. FAR EAST NET TRADE IN CEREALS,

lit Japan, where land and water resources arewell developed, the yield of rice per hectare isamong the highest in the world. The poor aver-age yield in most countries of the region is due togeneral under-development of land and especiallyof water reSOUFCCS. EVell with traditional farm-ing practices, production per hectare and per per-son can be expanded materially, given fuller devel-opment of basic resources. The results of theannual crop competitions organized among smallfarmers by the agricultural authorities in Indiaillustrate the possibilities of ordinary farmingmethods put to optimum use.

Improvement of Supplies of Basic FoodsUnder the pressure of critical postwar shortages

Inlay gJvararneuts initiated fbod production drives,out of which have emerged much of the natiowddevelopment poli.cies and programs in the fieldof agriculture. In the last two years these havecontributed materially to the expansion of foodproduction in the region. Except in Pakistan andJapan, weather conditions have also been gener-ally favorable. Moreover, prices of rice, wheatand other grains have been more remunerativethan non-food products. This has provided addedincentive to food production. Available statistics:which are far from perfect and by no means strictlycomparable suggest that grain production in theregion, excluding China, in 1953/54 was nine milliontons Or about nine percent above the prewar level.The inference that the increase in food productionhas failed to keep pee with the growth of popu-lation is also supported by the continuing highlevel of net cereals imports into the region. How-ever, the 1954 import programs of governmentssuggest a significant improvement in the supplysituation of cereals in the region.

The First Five Year Plan of IndiaAmong the uuder-developed countries India

is unique in the degree to which it has planned anintegrated development of its mixed economyon the basis of self-help and without undue regi-mentation. State control is applied only at stra-tegic points in order to ensure that the patternof development i.s in line with the First Five YearPlan. Essentially the plan envisages publ.ic financ-ing of resource development with high priority forexpanded production of food and fibers in the firstfive years. The policy objective in this period isto restore the prewar level of consumption anddivert any surplus saving from current consumptioninto investment for further economic development.

84

Recent developments in the field of food andagriculture of special significance are the communi-ty development projects and the large-scale irri-gation schemes and the multi-purpose river valleyprojects which are under way and in some casesnearing completion. Community development,which is integrated with agricultural extensionservices, now covers nearly 40 million peopleliving in about one-eighth of India's half a mil-lion villages. The increased tempo of activityin constructing minor dams, iffigation wells andcanals, making of compost, increasing the use ofcommercial fertilizers, introducing better toolsand improved seed will eventually make an impor-tant contribution to the expansion of food and agri-cultural production. The success of last year'sexperiment in adopting the Japanese method ofrice cultivation on 1.4 million hectares is a signif-icant pointer to the possible improvement of smallholders' yields in the years ahead.

TABLE 32. INDIA : AGRIC(TLTURAL PRODUCTIONUNDER TICE FIVE YEAB 'PLAN

Except for food grain for which the relatively good cropYear of 1949/50 has been taken as the base period.

Favorable weather and cl evelopment programshave combined to make the year 1952/53 a turningpoint in Indian agriculture. In this year the pro-duction of food grains was four million tons (tenpercent) above the output of time previous year,and the improvement continued in 1953/54 witha further increase of about eight million tons.As a result, imports of cereals have fallen fromthe postwar peak of 4.7 million tons in 1951 to3.9 in 1952 and 2.0 in 1953. Prices and distri-bution of basic foods are being gradually decon-trolled as the supply situation improves.

Although grain production in 1954 is aboutequal to consumption requirements, India is to

CommoprrYBaseyear

(1950/1951)'

1951/1952

1952/1953

1953 /951

(prel.)

1955/1956

target

Food. grainsCereals. . .

Pulses46.2

8.2

Hinton

43.18.4

mane

47.48.6

55.09.0

tons

52.89.2

. . 54.4 51.5 56.0 64.0 62.0

Sugar (gur) 5.7 6.2 5.3 5.4 6.4Oilseed.8 (5 main

type') 5.3 4.9 4.7 5.6 5.6Cotton 0.53 0.56 0.54 0.68 0.75,fitte 0.60 0.85 0.85 0.57 0.98

import 900,000 tons of rice from Burma in orderto build up a food reserve ; this is about one-thirdof the prewar average of 2.7 million tons of which1.7 carne from Burma and the balance from thegrain surplus areas noiv within Pakistan.

Judging from present production trends the tar-gets for grain production should be reached wellwithin the Plan period. The position of COMIller-eial crops other than cotton and oilseeds is some-what less promising. Strong export dem.andwill, however, influence the production of tea,coffee, tobacco, nuts and spices, important earnersof foreign exchange and for which no targets havebeen set under the Plan.

Development Problems and Policies ofPakistan

Pakistan's economic policy has stressed rapidindustrialization of the country and in recentyears cotton and jute textile industries, for in-stance, have been given higher priority than agri-cultural development.

:Economic conditions in Pakistan deterioratedapidly after the collapse of the Korean " boom.

Sharp declines in foreign demand and exportprices c.)-f its two main cash crops, jute grc.)wn inEast Bengal and cotton produced in West Pakistan,reduced the tempo of agricultural development.The partial failure of the wheat crop for twosuccessive seasons transformed the country's smallfood surplus into a heavy deficit. Further pres-sure was placed on foreign exchange resourcesby the purchase of nearly 700,000 tons of wheatin 1952/53. In 1953/54, however, the -UnitedStates supplied 610,000 tons as a gift, and Calladaand Australia contributed further supplies throughthe Colombo Plan.

With food shortage coinciding with the fall inprices of Pakistan's main export products, theagricultural authorities Were confronted with theproblem of grawing more food at the expense ofcash. crops. Not only were the price suppoit sch.emesfor jute and cotton -withdrawn, but measures werealso taken to cut the jute area drastically andgrow more rice instead. In 1953, jute outputfell to less than half its 1952 level. In 1954production of cereals is expected to be aboutone million tons above the output in. the previousyear. The country is now in a better positionto finance agr.icultural development schemes. Theimmediate objectives of the economic policy ofthe government are to regain self-sufficiency infood as quickly as possible and to push ahead withits industrial programs.

85

Economic Difficulties of Cey/on andMalaya

The economies of (-1 I_eymn. and .Malaya are broad-ly similar in th.at they both have attained arelatively high national income through agricul-tural specialization at the risk of insecurity withregard to basic food, only a fraction of which ishome grown. In recent years the economic sit-uation of both fluctuated widely due to a rapidrise followed by an equally sharp fall in the exportprices of rubber and a similar movement of theirterms of trade. Ceylon has already undertakena number of irrigation and power developmentprojects as well as land reclamation and coloniza-tion schemes to reduce its dependence 011:importedrice and also to diversify itS economy. In orderto finance its development projects of high prioritythe government has reduced the food subsidy,suspended some social services and increased thecharges for public utility services. The Federa-tion of Malaya, a British territory, i.s still facedwith a serious emergency situation, which is draw-ing heavily on the resources of the Colony and theMetropolitan country. Much of the funds avail-able for eco.nomic development is being spent on.improvement of transport and communications,and the share of agliculture is relatively small.

Reduction in Export Incomes of Burmaand Thailand

The relative prosperity of the rice-surplus coun-tries of' South.east Asia, particularly that of Thai-land and Burma, may decline with the emergenceof the buyers' market in rice, unless they canexport more rice or promote trade in other commo-dities, e.g., timber, minerals, etc. In Burma, the ricetrade, a state monopoly, has accounted for three-fourths of the foreign exch.ange earnings since 1951,and has covered the .heavy cost of re-estab/ishinginternal security, rehabilitating the war-devastatedrice industry, and reviving the, forestry, mining andoil enterprises. Thailand, which suffered littlewar damage and has been producing and exportingmore rice than before the war, is also facing a lossof revenue from the state-controlled rice tracio,and with an adverse balance of trade has had tocut non-essential imports.

Transitional Economies of Indonesia andthe Philippines

Both Indonesia and the Philippines are passingthrough a difficult period of transition. Withthe virtual disappearance of her former sugar

trade, two-thirds of Indonesian earnings of foreignexchange come from rtibber, copra, tea, palmoil and tin, commodities for which demand andprices have fluctuated sharply. To save foreignexchange the government is endeavoring to in-crease rice production by 200,000 tons annuallywith the intention of reaching self-sufficiencyin 1956. Progress is reported to have been goodand rice imports fell from the peak of 760,000 tonsin 1952 to less than 300,000 tons in 1953.

The Philippines have already regained their pre-war self-sufficiency in rice, and efforts are beingmade to improve the quality of the diet. Insuf-ficiency of feeding stuffs has hitherto conditionedthe improvement of livestock and increased produc-tion of meat and dairy products. The programsfor the development of the cattle, poultry and pigindustries are likely to be stepped up in thecoming years. But the country is facing economicdifficulties because of its persistent trade deficitand the reduction in direct American aid. Theposition may become more difficult after July1954 when her traditional exports to the UnitedStates are liable to increasing export duties anda diminishing free quota.

Industrial Progress and Improvement ofFood Consumption in Japan

Many of the present day food and agriculturalproblems of Japan arise from postwar territorialchanges, population increases, as well as economicand social readjustments. The rehabilitation ofthe wax-devastated industrial economy has receiv-ed a higher priority in investment than agriculture.Although the Japanese have adopted very effi-cient methods of rice cultivation, yields could beraised still further, for example, through moreeffective control of plant diseases and pests. Therapid expansion of industrial output is reflectedin the improvement of food consumption, which

TABLE 33. JAPAN- : FOOD STYPPIX PER CAPUT

COMMODITY 1934-35Average 1952 1953

SOURCE: The Oriental Eeatondst, Tokyo, January 1954.

86

has surpassed the prewar level. A significantchange in the pattern of diet has also tE.,ken placewith the increasing substitution of other cerealsfor rice and a rise in the consumption of milkproducts and sugar.

Imports of cereals into Japan are now twiceas heavy as before the war. Because of the par-tial crop failure in 1953 imports of 4.15 milliontons of cereals have been programmed for 1954This compares with the total imports of 3.45 mil-lion tons in 1953, 3.66 in 1952 and 1.85 before thewar. Japan is also the largest single marketin the region for such export products as sugar,soybeans, dairy products, rubber and raw cotton.

Economic Development in China

In 1953 the Central People's Government em-barked on its first Five Year Plan for economicdevelopment, which laid special emphasis on indus-trial expansion. This implies increased importsof capital goods, especially heavy engineeringequipment, in exchange for food grains ami otheragricultural products. China has already ceasedto import rice, wheat, wheat flour, tobacco, gunnysacks and raw cotton and for some of these hasbecome an exporter. It has, for instance, enteredinto a five year trade agreement with Ceylonin 1952 under which the latter receives 270,000tons of Chinese rice in exchange for 50,000 tonsof sheet rubber each year.

Grain crops harvested in 1953 are now estimat-ed to have been as good as in the previous year.With the improvement of' inland transport, theoverhaul of the grain collection and distributionsystem, and the availability of substantial surplusesof millets and soybeans in Manchuria, any recur-rence of serious and widespread food shortageseems unlikely. In the last three years agriculturalprices have been stabilized, resources developedand farming methods improved. The extensionof peasant proprietorship after the expropriationof' the landlords is reported to have provided anincentive for increased agricultural production.But because of the dense rural population thefarms are extremely small and much fragmentedand to counter tisis impediment to efficient farm-ing, the authorities are organizing peasants intomutual aid teams. No significant steps haveyet been taken toward organizing farming intoproducers' co-operatives, collective and state farms,although the ultimate policy objective is to estab-lish " fully socialist large-scale mechanize d col-lective farms. "

Grams per day

Rice 360.7 285.1 300.2Wheat 26.3 71.4 63.313arley 12.0 44.4 36.2Peas and beans . . . 15.3 7.9 8.2Milk ancl dairy pro-ducts ..... . . 8.4 21.2 21.3Sugar (refined) . . . 12.9 17.7 25.1Potatoes 11.0 41.6 41.4Sweet potatoes .. 64.7 66.7 66.0

Rice (milled equivalent)WheatOther cereals

TOTAL CEREALS

PulsesSugarVegetable oilsTeaTobaccoCottonJuteRubber


1 India and Pakistan.Excludes Singapore entrepilt trade.

TAI3LE 34. FAR EAST : PRODUCTION OF SELECTED COMMODITIES

1934-38average

65 38812 12826 407

103 923

87

1948-50average

Thousa' d metric tons

64 86111 29324 259

1.00 413

1952/33

67 86410 98727 120

105 971

TABLE 35. FAR EAST : EXPORTS AND IMPORTS OF SFLECTED COMMODITIES

1953/34(prel.)

73 13010 95028 695


1948-50average 1932/53 1953/54

(Prel.)

Gross Exports

Rice 8 94u 2 840 3 350 2 650Thailand (1 388) (1 178) (1 413) (1 342)

Vegetable Oils 1 800 1 260 1 320 1 130Tea 398 391 410 460

India 1(149) (191) (188) (225)Tobacco 110 57 68 50

India 1(21) (38) (42) (39)Cotton 740 270 310 335

Pakistan 1(613) (203) (246) (282)Jute 790 1 780 845 980

Pakistan 1(768) (631) (565) (980)Rubber 965 1 560 1 660 1 584

Malaya2 (420) (680) (580) (578)

Gross Imports

Rice 6 830 2 980 4 000 3 150Wheat 1 750 4 220 5 810 6 250

India 1(50) (1 715) (2 569) (1 578)Cotton 980 510 750 700

Japan (779) (214) (428) (484)

In,dex of all farm, produds

Gross Exports loo 65 71 70

Gross Imports, 100 73 100 91

112 775

9 9647 0444 943

562660958

1 0481 628

108

9 9165 2154 324

500607710

1 4281 574

99

8 0776 5684 403

454793

1 0901 596

983

100

9 8476 8974 547

5626`i8921

2 1221 706

106

NEAR EAST

The rapid expansion of Near East food andagriculture in .recent years has naturally broughtspecial problems along with it. Some of theseproblems are related to the particular structureof th.e region's food and agricultural economyand are of a more permanent nature, while othersare the result of external factors either long-termor transitory, of which current ch.anges in the glob-al supply and demand situation are the mostimportant. The impact of the latter obviouslyvaries with the special agricultural and economiccharacteristics of individual countries ; currently,their effects are m.ost marked in those areas wherelong-range policies and programs for food and agri-cultural development had caused major changesin the volume or in the orientation of production.

The problem.s reviewed here are grouped underthree headings: production, trade and consumption,although cl.early they are closely inter-cormected.A final section summarizes recent adjustmentsmade in existing policies and programs in somemajor countries of th.e region.

Production

The most striking features emerging from ananalysis of recent trends in production in theNear East are, on the one hand, the uneven geo-graphical distribution of the expansion achievedand, on th.e other, the appreciable variations inthe extent to which individual commodities orcommodity groups have contributed to this expan-sion. Progress tends to be concentrated largelyin food surplus countries like Turkey, Syria andIraq. In major deficit countries like Egypt andthe Lebanon, production has developed moreslowly and, on a per caput basis, has thus far failedto recover its prewar level. As to commodities,while all major crops shared to a varying extentin the advance made, the largest expansion hastaken place in grains, the output of 'which in 1953/1954 reached a record level of 32.6 million tons Ormore than one-half and one-third respectivelyover the prewar and postwar average (Table 38).In contrast with the sustained expansion of grains,trends in production of cotton which are largelydetermined by developments in foreign demand,have been more erratic, the sharp increase between

This term is taken to include the countries ¡ruinTurkey in the North to lEthiopia and the Somallands in the South, .froin Libya iii tliel,Nrest to A fgliaii -istan in file East.

88

1951 and 1.952 being More than offset by a declineof about one-fifth during the following year.Relative to the rate of increase of crop production,expansion of livestock products has been Much.slower.

Basically, these trends reflect the rigidity ofthe pattern of Near Eastern agriculture in -whichrather liinited zones of highly intensive production,mostly cultivated under irrigation and frequentlydependent on export markets, alternate with vastareas of extensive grain production and withequally large ateas of nomadic and semi-nomadiclivestock breeding. Efforts to stimulate agricul-tural expansion have not yet substantially modi-fied this basic pattern. Empha,sis has often beenon crops .which are relatively easy to expand,such as grains, and in countries like Turkey,Syria and Iraq for instance, there is still amplescope for further progress toward diversificationof production through the adoption of more inten-sive crop rotations including forage crops and thereduction of fallow (Table 36).

In many countries of the region, however, thereare serious obstacles which stand in the way ofsuch an adaptation of agriculture : weakness ofthe agrarian structure resulting either from anexcessive subdivision of' the land in small uneco-nomic holdings, or from an extreme concentration

36. NEAR EAST : LAND UTILIZATIONrN SELECTED COU.NTRIES

.

Prim Turkey Iraq Syria CypruS

Per !en'

Grain 48 4:2 36 22F11] 10W 27 49 48 26Other arable land . . . 9 3 12 42

Total arable land . . 84 04 96 90

Orchards and vineyards. 8 2 4 10

'Alone! ows S 4

Total cultivated area. 100 100 100 100

Trillion lime:tare,.

Total cultivated area 20.7 5.6 4.2 0.6

Additional grazing lands 33.1 5.6

. . Not available

SOURCES : TUrkey : StatiStliCal ResumeNone, or negligible

No 9 - :Land Uti za-tion 1952

I 952/53 Ag,riculturalIraq : Preliminary :ResultsCensus

of Agriculture andSyri a : Estimates, MinistrYWheat Board

1950.Cyprus : Agricultural Census

in la,rge estates often cultivated under share-cropping arrangements ; poverty of the farmerswhich leaves no surplus for even the most IACCCS-sary investment in fertilizers and other agriculturalimprovements ; pool health conditions and wide-spread malnutrition in rural areas. Much hasalready been achieved by Near East governmentsto improve these conditions, e.g., through measuresto increase the flow of agricultural credit ; dissem-ination of more efficient farming techniquesand improvement of agrarian structures. Furtherprogress may be expected as development programsnow under way begin to bear fruit.

Nevertheless, the transformation of Near East-ern agriculture along more intensive lines is likelyto be a slow process. Realization of the physicalpossibilities of improvement requires considerableamounts of investment which, in much of theNear East, are not readily available. The oil-producing countries of the region form a specialcase. Here, the problem is the direction of spend-ing. While Iraq and Iran are endo-wed with richresources capable of intensive development, otheroil producers are faced with a lack of productiveenterprises on which to spend. In most other partsof the region, however, development has to be finan-ced from local resources and, in many countries,capital is inadequate to meet even minimum invest-ment needs. Regional arrangements of the typeproposed in 1953 at a meeting of the Ministersof Finance and National Economy of the ArabStates to facilitate the movement of funds -withinthe Nea East deserve careful consideration. Alsonoteworthy are the long -term credits recentlygranted by some European countries to TUrkeyand Iran for the purchase of machinery and equip-ment.

Trade

The postwar period has been characterized byimportant shifts both in the volume and compo-sition of the region's foreign trade. The' gradualintensification of development poli cies and pro-grami and the expansion of the oil industry h.avecaused an increasing demand for capital equip-ment, foodstuffs and other consumer goods, andimports have increased rapidly. During 1953,however, the expansion of imports has not beenmaintained. Following the disappearance of theraw materials boom and the subsequent fall inexport proceeds, there was a substantial declinein imports in most countries. The decline wasaccelerated by a sharp contraction in food imports

89

reflecting the expansion of local production andthe effects of programs to attain greater self-sufficiency in basic foods such as had been initiat-ed, for instance, in Egypt in 1952.

Exports of food and agricultural commodities,which in most countries account for a very highproportion of the total (excluding oil and oil pro(l-ucts), averaged some seven percent over the pre-war volume during 1950-52. A sharp increasetook place in 1953 with exports exceeding the pre-war average by more than one-fifth. Prices, how-ever, have generally been lower with the notableexception of coffee exports from Ethiopia.

The relatively slow development of Near Eastfood and agricultural exports since the war hasbeen influenced by several factors, some short-term in character, others more lasting in theireffects. Higher domestic requirements of food-stuffs and raw materials have sometimes resultedin reduced export availabilities. A fundamentaldifficulty, however, is the limited range of NearEastern export commodities, for some of which,such as fresh and dried fruits, nuts, and tobacco,marketing difficulties are considerable, while others,like cotton, are particularly sensitive to fluctua-tions in the level of economic activity in the import-ing countries, or to competition from alternativesources of supply. As shown in Table 37, someprogress has been made in the past two yearstoward a further diversification of the exportstructure. In particular, the growing importanceof grain exports is to be noted.

It is uncertain to what extent th.e cunentlyemerging pattern of Near East exports, with itsincreasing concentration on basic agriculturalcommodities, will be maintained. The appearance

'FABLE 37. NEAR EAST : COMPOSITION 01? EXPORTSOF FOOD AND AGRICULTURAL PRODUCTS

COMMODITY1934-38aver-age

1949-51aver-age

1959 1:153

Per .!ent

Cotton 45 45 42 47

Fruits and vegetables. :18 17 18 15

Grain .1.0 14 16 17

Vegetable oilseeds andoils (inel. oileake) . . 11 5 7 6

Tobacco 4 8 7 7

Other 12 .11 10 8

TOTAL 100 100 100 100

of large surpluses, especially of grain and cottonin North America, and the decline in prices ofraw materials have already caused a sharp fallin the foreign exch.ange receipts of Egypt and theSudan, whose export trade is essentially dependenton cotton. The grain surplus countries like Tur-key, Syria and Iraq are also experiencing market-ing difficulties as exports d.ecrease in either volume,price or both. Resulting policy changes are dis-cussed later.

Consumption

Rapidly increasing populations and the gradualYrowth of incomes associated with economic (level-opment are causing the demand for food to expandsteadily. In the past two or three years, suppliesfrom local production supplemented in some in-stances by imports have on the whole been adequatein relation to effective demand. This does notimply, of course, that food supplies have beensatisfactory in all respects. Progress has beenmai.nly in the intake of energy-producing foodslike grains, and protective foods of higher nutri-tive value such as animal products and pulseshave not shown a correspondingincrease. Improve-ment in the general standards of food consump-tion remains desirable over vast areas where sub-sistence farming is predominant as well as in manyurban centers.

There is evidence that lack of transport anddistribution facilities is becoming a serious ob-stacle to the expansion of consumption, particu-larly in those countries where the improvementof production has been most marked. In someareas of intensive cultivation of fruits and vegeta-bles, marketing difficulties have forced farmersto cut down production. In contrast, where ade-quate processing and marketing facilities haverecently been established, such as milk conser-vation plants in certain cities, local demand forand production of milk are increasing sharply.There are also indications that government poli-cies with respect to retail prices of food, particu-larly livestock products, by imposing maximum:prices in an attempt to reduce the cost of livinghave sometimes discouraged the development ofproduction. It would seem that in many countriesof the region the problem of reconciling adequateincentives to producers to expand productionin a desirable direction with prices to consumersw.hich will not discourage consumption has hardlybeen tackled. A satisfactory solution will involve,in most instances, additional action both to reduce

90

costs of production by raising agricultural produc-tivity and to lower costs of distribution by im-provements in the marketing system.

Adjustments in Food and AgriculturalPolicy

The preceding paragraphs have outlined themain difficulties of food and agricultural develop-ment in the Near East. In production, the problemin much of the region is the achievement of furtherprogress toward a more intensive pattern of agri-culture, especially through a closer integration ofcrop ami livestock farming to make possible animprovement in the standards of consumption.Expansion of consumption, moreover, will requirea considerable development of marketing and dis-tribution facilities to permit the absorption of theproducts' of an expanding agriculture. Apartfrom weaknesses inherent in the social structure,the obstacles to progress along these lines are,with the notable e,xeeption of the oil-producingareas, often of a financial character. In manycountries, shortage of capital imposes serious limi-tations on the scope of government action andthis difficulty has been accentuated by thefall in foreign exchange receipts resulting from thedecline in export prices of many products of theregion.

Where policy adjustments are being made in thelight of the changed conditions of supply anddemand, it is generally emphasized that no changein basic policy is intended. The objective remainsa further expansion of agriculture, not only tomeet the requirements of a rapidly growing popu-lation, but also because stagnation in agriculturewoukl be a deterrent to progress in other sectorsof the economy.

The adjustments made vary, of course, withthe particular situation and the problems of eachcountry. Among the grain surplus countries, theimpact of falling world prices has probably beenmost serious in Turkey, where substantial surplus-es, mainly of wheat and barley, have been avail-able for export during the past three years. Sup-plies have moved rather slowly, however, whileaverage export values have steadily declined, inthe case of wheat, for instance, from $111 per tonat the end of 1952 to $76 per ton in December1953. With guaranteed prices paid to farmersvarying from $99 to $106 per ton for the .1953/54season, there is thus a large difference betweenlocal and export prices which is met from govern-ment funds.

In spite of present difficulties, however, it ishoped to maintain a steadily expanding volumeof exports with emphasis on basic agriculturalcommodities like grains and cotton. Speci.al atten-tion is being given to measures to improve the quali-ty of Turkish export products, in particular throughthe development of better grain varieties and theimprovement of gradirrg and standardization.Since failure to meet delivery dates has not infre-quently resulted in loss of sales and has tendedto keep prospective buyers out of the market,programs for the expansion of transportation andstorage facilities have been speeded up. Whilethe system of guaranteed grain prices is to bemaintained, modifications have recently been in-troduced to increase prices of coarse grains rela-tive to wheat and to .provide additional premiums.for certain types of grain like hard wheat for whichdemand prospects are considered favorable. Al-though these changes have come too late to in-fluence this year's production, it is likely that ashift will take place next year toward largeroutput of coarse grains.

With the significant improvement in Turkey'sstandards of living over the past four years, partic-ularly in rural areas, measures have been takentc.) encourage expansion of olitput of livestockproducts to meet demand from high.er incomes.It is expected that part of the coarse grain produc-tion will be absorbed by the livestock industry.Expansion of transportation facilities may alsolead to a widening of th.e market for fruits and.vegetables of the Mediterranean region and forfish, consumption of which has been confinedto the coastal areas and the cities.

While differing in scale, the problems of Syriawith its growing expoit economy are not unlikethose of Turkey and govenimmt action is largely

TABLE 38. NEAR E AST PRODUCTION OF SELECTED COMMODITIES

Including 'ye, oats, maize, millet and sorghum, and rice.

91

on similar lines. High priority is being givento programs for improving transportation facilitiesparticularly with a view to moving supplies morequickly from the newly developed Euphrates andJezireh districts.

With expansion of production expected to con-tinue, the need for quality improvement is increas-ingly being realized. Recent measures includeprovision for wider distribution of improved wheatvarieties through the Wheat Board, while activ-ities of the Cotton Bureau with respect to seeddistribution, ginning and grading continue toincrease.

In the food deficit countries, the problems ofproduction and consumption are particularly press-ing in Egypt. Failure of production over the pastdecades to provide adequate consumption standardsfor a rapidly growing population had caused alarge increase in imports of basic foodstuffs, espe-cially grains. Following the very sharp fall incotton prices during 1951 and 1952, the Egyp-tian Government, faced with serious balance-of-payments difficulties, embarked upon a policyof greater self-sufficiency in food including suchmeasures as the introduction of improved -wheatvarieties and hybrid maize. At the same time,the price of local wheat was greatly increased,a minimum acreage to he sown to wheat estab-lished and the area under cotton restricted. As aresult, production of wheat increased to 1.5 mil-lion tons in 1953, an increase of one-third overthe proceeding year and imports declined by overone-half. The output of cotton fell by 30 percent.

Wh.ether the trend toward greater self-sufficiencywill be maintained in future years is still uncertain.Reviving demand for Egyptian cotton, lower pri-ces of imported wheat and an improved balance-of-payments position have already caused some

COMM° D IT V1934-38average

1948-50average 1952/53 1953/54

(preliminary)

Thousand netric tons

Wheat 9 900 10 200 14 000 15 900Barley 4 300 4 800 6 400 6 900

Total grain 21 500 23 500 29 200 32 600of which Turkey (7200) (7 200) (11 900) (13 900)

Sugar 220 390 500 560Citrus fruit '790 750 960 i 100

of which Israel (403) (267) (331) (400)Cotton (lint) 560 620 800 660

of wl ich EgyptTobacco

(400)85

(391)115

(446)125

(317)160

Index of all farm products 100 115 134 139

TABLE. 39. NEAR EAST : EXPORTS AND IMPORTS OF S:ELECTED COMIWODITIES

including rye, oats, maize, millet and sorghum, and rice.

relaxation in acreage restrictions on cotton anda reduction in the price of' locally grown wheat.It is unlikely that under present conditions, Egyptcan achieve more than an uncertain balance be-tween the alternatives either to raise and sell morecotton and import food or to limit cotton andgrow its OW11. food.

These examples of recent policy developmentsin some major countries of the Near East showthat the adjustments made are largely withinrather narrow limits. In most cases, they havebeen determined by external factors, e.g., trendsin demand for Near Eastern exports and develop-ments in the balance-of-payments situation. Onlyexceptionally has any attempt been made to linkprograms for the expansion of production withspecial measures for a general improvement ofconsumption. 'Where this has been the case,attention has been directed mainly to urban areas.In most of the region, the 'problem of improvingconsumption standards in the subsistence sectorremains virtually untouched.

AFRICA'The problems of agricultural development in

Africa are accentuated rather than changed by

1 Excludes Egypt, Eritrea, Ethiopia, Libya, theSornalilands and.Ihe Sudan.

92

the present world situation. Some areas have al-ready sharply felt the effects of lower prices forcommodities now in more abundant supply, butin such areas, as in those whose prosperity hasnot yet been affected, the basic problems remainthe same as before. Such needs as the diversi-fication of the more precariously based economies,the development of internal markets, the improve-ment (.4' transport and attention to the qualityof production have become more urgent, while theimprovement of food consumption remains themost important problem of all.

Actual surpluses are at present only of localimportance in Africa. Stocks of butter and cheeseare growing in the Union of South Africa, but itis hoped to clear them by a campaign to stimulatehome consumption and by exports to other partsof Africa. The maize surplus in Uganda arisingfrom the unexpectedly heavy 1953/54 crop wassold in Kenya and Tanganyika, where there wereserious shortages, though Uganda producers havebeen asked to limit future production to the terri-tory's requirements. In 1953 Algerian wine outputregained the prewar level with an abrupt rise of50 percent which will necessitate the distillationof a greatly increased quantity.

But surpluses in other parts of the world, espe-cially of oilseeds and cotton, h.ave already hadpronounced effects in some African territories. A

CommonrrY 1934-38average

1948-50average 1952/53 1953/54

preliminary


G7'OSS EXpOrtS

Wheat 240 240 620 750:Barley 360 340 630 810

Total grain, 940 1 020 1 560 1 920Citrus fruit 340 240 240 270

of which Israel (300) (211) (162) (222)Cotton (lint) 470 480 460 590

of -which Egypt (375) (363) (270) (346)Tobacco 35 65 60 75

Gross Imports .Wheat 300 1 240 1 710 1 500

of which Egypt (16) (48:3) (902) (487)Total grain' 470 1 670 1 960 1 720

Sugar 320 510 470 520


G7'OSS Exports 100 97 105 121

Gross Imports 100 185 222 220

fall in cotton prices of nearly 40 percent reducedUganda's favorable balance of trade from E 23million in 1952 to about E 8 million last year.West African territories, and in particular theproducers of palm products, are feeling the effectsof the changed oilseeds situation. During 1953the Nigeria Oil Palm Produce Marketing Boardhad to draw for the first time un its accumulatedfunds to meet guaranteed prices, to the extentof E 3.7 million for palm oil and E 0.7 million forpalm kernels. The price announced for palmoil in 1954, shows a fall but does not completelyreflect the movement in world prices. The sepa-rate Nigerian Boards, established to market indi-vidual products, have recently been reorganizedinto Regional Boards, each responsible for all themajor export crops of the region. Palm productsare produced in both the eastern and westernregions and it is therefore possible that there maybe different regional prices, especially as theeastern region may not, out of its small reserves,be able to continue the stabilization of palm oilprices. Another ne,w development for the BritishWest African territories is that, with the returnof the United Kingdom trade in oilseeds to privatehands, the government's long-term contracts willend in June 1954 instead of 1955.

The Diversification of Economies

Some African economies depend heavily on theexport of one or two agricultural products and arethus sensitive to fluctuations in world markets.The extreme examples are the virtually completedependence of Mauritius and Réunion on theirexports of sugar and of the Gambia on ground-nuts, but some others are almost as striking. Of-

ten a single commodity largely determines thebalance of payments position and the export dutyon it furnishes a major part of budgetary revenue.The sharp effect of lower cotton prices on Uganda'sbalance of payments was cited above ; cottonnormally represents nearly 70 percent of the valueof this territory's exports and the duty on it pro-vides a third of its revenue.

The development of mineral resources and ofprocessing industries and the encouragement ofalternative crops are features of many develop-ment plans. In some territories, however, it willbe a long time before much can be achieved towardreducing the present overwhelming predominanceof one or two crops. Recent changes in worldmarkets emphasize the vulnerability of such econ-omies and should thus tend to accelerate their

93

diversification. In French West Africa, for in-stance, there is already a tendency for producersto transfer from oilseeds to the more profitablebeverage crops. The purchasing power (1938

100) of coffee was estimated at 250 and of cocoa200 in this territory in 1952, as opposed to 117for palm oil and 85 for palm kernels.'

The Development of Internal Markets

Growing domestic demand for agricultural prod-ucts, with increasing populations and the emer-gence of non-agricultural activities, is likely tobring a greater element of stability to Africanagriculture by diminishing dependance on agri-cultural exports. Before the war net exportsof groundnuts and oil were about 60 percent ofthe region's production ; in the 1948-52 periodnet exports represented only about 40 percentof a production which had almost doubled. Overthe same period net exports of sugar fell from 30to 15 percent of production, while productionincrea,sed by nearly 50 percent. With an uncer-tain export situation more producers will findthat production for internal trade may be itselfprofitable and faces a more stable market. How-ever, it cannot, of course, compensate for any se-vere deterioration in the export situation as localdemand itself depends greatly on the incomesderived from exports.

Local processing of some export products hasalso increased. Before the war only about onepercent of African groundnut exports was in theform of oil and the region was in fact a net importerof groundnut oil, but in 1948-52 about 30 percentof exports was in this form, mainly from FrenchWest Africa. About a quarter of the exportsof oil \ vent to other African territories. The region'ssmall consumption of raw cotton increased morethan fourfold between 1938 and 1952, with espe-cially striking rises in the Belgian Congo and theUnion of South Africa. However, per caput con-sumption of all cotton products, still suppliedlargely from imports, appears to have increasedvery little during this period.

The increased production of food for the domes-tic market is an essential basis of further economicexpansion. Efforts are being made to increasefood production in most areas, rice and sugar inparticular being planted on newly irrigated orcleared land. Increased rice production is being

1Maurice Langone : " L'évolution du marchéçais des huiles concrètes dans le cadre mondial,Chroniques d'Outre-Me?, Dec. 1953 - Jan. 1954.

promoted in the French territories, where relianceon export crops is very pronounced. In the devel-opment pian for the Belgian Congo great empha-sis is placed on the internal market.

Any substantial increase in food production in-volves drawing on what is at present the subsist-ence sector. Farmers in the hinterland are oftenalmost completely cut off from the rest of the coun-try, have little incentive to produce for sale andthus make a negligible contribution to the econo-my. If they can be linked with the rest of theeconomy by marketing facilities and by transportand if adequate storage can be provided for theirproduce, their increased incomes will stimulatedemand for all the products of the economy. Theproblem is to turn the subsistence farmer into aspecialist producer of food for the specialist pro-ducers of exports. Increased production in thepresent subsistence sector has its dangers, of course,and close attention must be paid to such technicalfactors as the acceleration of erosion.

The Improvement of TransportThe remarkable expansion of Africa's exports

in the past fifty years has gone hand in hand withthe development of transport, and this is stillthe essential basis for future progress. The accu-mulation of stocks of groundnuts at Kano in Nige-ria is only one instance of the congestion of rail-way and port facilities that is frequent at peakmarketing periods. Most development plans recog-nize this need by allocating the largest proportionof resources to transport, and considerable improve-ments have already been made in Africa's portsand railways, though often at a slower rate thanwas originally hoped.

Transport improvements are also essential forthe integration of the subsistence producer with

COMMODITY

Wheatof which lEren.ch North Africa

Barleyof which French North Africa

Maizeof which -Union. of South Africa

Rice (paddy)Sugar (raw)Groundnuts (oil equivalent)


1934-38average

94

the rest of the economy. The present situationis such that often he can export only his labor.Roads are required to link the hinterland withthe more developed areas based on the export ofagricultural and mineral products, so that it be-comes profitable to produce a surplus of food cropsfor sale. For example, much of the food at pres-ent imported for the Gold Coast cocoa farmerscould, as is recognized in the development plan,be produced in the territory's ONVII hinterland iftransport facilities were provided.

The Quality of Production

Increased competition in world markets makesfurther attention to quality imperative. Muchhas already been achieved by the price policiesof the Marketing Boards in the British administer-ed territories and by co-operative organizationselsewhere. In Nigeria the production of "Special"Grade palm oil increased from one percent of totalmarketings in 1950 to 50 percent in 1953. Never-theless, the yield and quality of the produce ofWest Africa's wild oil palms are still considerablybehind the Far Eastern plantation industry.

Much progress is expected from the distributionof improved varieties of seeds and seedlings inmost territories. In Madagascar, for example,old coffee trees are being replaced by seedlingsof the " robusta " variety distributed free, andgreat increases in yields are expected.

In many cases pests and diseases take immensetoll. In spite of the intensive eradication cam-paign, swollen shoot is still a serious problem inthe Eastern Province of the Gold Coast and someparts of Nigeria. Damage from capsids and blackpod rot also greatly reduces the cocoa harvest.

TABLE 40. AFRICA : PRODUCTION OF SELECTED COMMODITIES

1948-50average 1952/53

Thousand netric twls

1953/5 4(preliminary)

2 500 2 830 3 460 3 420(1 968) (2 042) (2 673) (2 656)2 090 2 490 2 770 2 670

(2 019) (2 335) (2 603) (2 502)4 490 5 670 6 520 6 960

(1 995) (2 444) (3 163) (3 569)1 680 2 370 2 690 2 560

910 1 320 1 480 1 520440 650 800 820

100 124 136 137

Food Consumption and Nutrition

The most important problem is still the improve-ment of food supplies. Very little is known ofthe diet of the African farmer, so much of -whichcomes from plantains and other wild plants thatgo unrecorded, but it is certainly often very pre-carious. Many parts of the region are liableto periodic droughts and famines, entailing, asin Tanganyika last year, the expensive purchaseand transport of supplies by the government. Ifthe harvest is short there is often a hungry gapbefore the spring flush of wild plants, and evenafter a good harvest the same gap often occursbecause of the absence of storage facilities.

In general, per caput food supplies appear tohave increased since before the war. The smallnet export of cereals has decreased although pro-duction increased and in 1952 and 1953 the regionwas actually a net importer. Net exports of sugarhave also fallen. During and since the war there

TABLE 41. AFRICA : EXPORTS AND IMPORTS OF SELECTED COMMODITIES

COMMODITY

Gross ExportsTotal cerealsSugarGroundnuts (oil equivalent)Groundnut oilPalm kernels and oil (oil equivalent) .

Palm oil

CocoaCoffee

Cotton (lint)SisalWool (clean basis)

of which 'Union of South Africa .

Gross Imports

Total cerealsSugar

Index of all farm products:

Gross ExportsGTOSS Imports

1034-38average

1 In this period the gross imports averaged over 40,000 tons.

Thousand 'nark tons

95

have been very rapid increases in per caput sugarconsumption in almost all parts of Africa. Theper caput supply of groundnuts and oil also appearsto have increased considerably.

These improvements in food supplies are, ofcourse, based on a very low prewar level.. Thelarge increases in sugar consumption would nothave been possible but for the extremely low levelsthat prevailed before the war. Much of the improve-ment in food supplies has undoubtedly beenin the more developed Union of South Africa andit is likely that much of the rest has gone to therelatively prosperous producers of cocoa and min-erals. Furthermore, improvements in the qualityof the diet are as urgent as improvements in quan-tity and there is no evidence that much has beenachieved in this direction. Improvement of dietsin Africa faces rnany obstacles, in particular thedifficulties of livestock farming in many partsof the region and the persistence of tribal habitsand prejudices.

1948-50average 1052/53 105:3/54

(preliminary)

1 470 1 240 1 260 1 230660 680 760 770330 270 260 :30013 71 87 150

302 338 338 360243 321 350 370

462 480 468 520114 242 290 290

130 190 220 230158 203 248 24053 54 60 60

(45) (50) (55) (53)

780 1 050 1 350 1 350370 460 630 720

100 116 130 127100 137 172 176

ZJ'. 7iP) OUTLOOK BY CC OSMES

Chapt: IV

WHEAT

Supplies and TradeThe striking advance in wheat production. in

1952/53 was maintained in 1953/54, some declinein the major exporting countries being almostcompletel3r offset by increases in other countries.Owing to the large stocks built up in the previousyear in the four major exporting countries, avail-able supplies in 1953/54 greatly exceeded thereduced import requirements. Stocks in thesecountries on 1 July 1954 were expected to total49 million tons, compared with 34 million tons ayear earlier and an average of 19 million tons inthe years 1948-52.

The increase in stocks has taken place largelyin the United States and Canada and is primarilythe result of their high production in recent yearsand partly of some shift in import demand to non-dollar sources. World wheat shipments in 1952/53,at 26.1 million tons, were smaller by 2.2 milliontons, or eight percent, than in the preceding year,and in 1953/54 declined further by nearly 16 percentbeing tentatively estimated at 22 million tons.Shipments from the United States and Canada,however, were only 13 million tons comparedwith 22 million tons in 1951/52 and their Julystocks increased over these two years by 26 mil-

TABLE 42. WEAT PRODUCTION

Callada, United States, Argentina, Australia.2 1937-41 average for Canada and tire United States as the average production for the years 1934-38 was abnormally low

owing to the effects of the extreme droughts of 1934 and 1936.Austria, Belgium, Denmark, Finland, France, Germany (Western), Greece, Ireland, Italy, Luxembourg, Netherlands, Norway,

Portugal, Spain, Sweden, Switzerland, United Kingdom, Yugoslavia.

99

lion tons. Those in the United States have trebled,while those of Canada have MOTO th.an doubled.

The proportion of the total world importrequirements supplied by the two dollar exportingcountries, which rose to 75 to 80 percent in1951/52 and 1952/53, mainly owing to the reduced.export capacity of Argentina in these years, fellbelow 60 percent in 1953/54, when Argentina'sexports recovered quite substantially. Australiawas unable to maintain its previous relatively highrate of exports in 1953/54. The remaining export-ers have made a steady if slow advance in theirexports which in 1953/54 are provisionally estimat-ed to have reached 4.0 million tons, or 18 percentof the world total. This remains lower in absoluteand relative terms, than in the thirties. In 1951/52and 1952/53, the U.S.S.R. and Eastern Europeancountries as a group were the main suppliers, follow-ed by France, North. Africa and Turkey. In 1953/1954 these, with the addition of Sweden, wereagain the main suppliers among the minorexporters.

Europe, whose import demand has been ratherstable in recent years at about 13 to 14 milliontons, despite continuous improvement in domesticproduction, achieved a sharp advance in its 1953wheat crops and reduced its imports by ten per-cent. Notably good production was obtained in

COUNTRY 1934-38average 1949 1950 1.131 1952 1933

Million metric tons

Four major exporting countries "44.6 51.0 51.1 48.2 67.0 60.0I 8 European countries3 30.6 29.3 30.5 30.1 32.5 35.3Asia (excl. China) 20.5 19.0 21.4 22.4 23.5 25.7Latin America (exel. Argentina). 2.0 2.6 2.9 2.8 3.0 3.2Others 15.8 15.3 16.1 17.0 16.4 16.9

WORLD TOTAL (exel. 15. S. S. R.and China) '113.5 117.2 122.0 120.5 142.4 141.1

Chapter IV - REVIEW A D 01_ TLOOK BY COMMODITIES

Italy, where only a limited import of durum wheatwas necessary, in Yugoslavia (a heavily deficitcountry in the previous year), Greece, the Unit-ed Kingdom and Sweden, the last named ex-porting substantial quantities. Spain alone, owingto a long drought, harvested a significantly small-er crop. Domestic food grain crops in Asia werealso generally better but imports in 1953/54 were

Excluding imports of countries within the Soviet orbit.2 Total Germany.

India and Pakistan.... Not available.

100

JULY-JITNE

The following extraction rates have been used in converting 'flour to wlCanada, 72.6% : United States 71.5% ; other countries 75%.

2 Figures include exports under the various United States foreign aid prograbut exclude exports of flour made from Canadian wheat imported for milling in

Including exports from U.S.S.R. and countiles within the Soviet orbit, bu- None or negligible.

TABLE 44. WHEAT AND WHEAT FLOUR IMPORTS

t equivalent : Argentina and Australia 70 %;

s; and shipments to territories and possessions,mnd.excluding tracio within this group.

only slightly lower than in the previous year, ow-ing to the continuation for part of the year ofPakistan's exceptional imports following its pool1953 crop and to the extra Japanese requirementcreated by reduced wheat and rice crops. India,however, was able to cut clown its imports mate-rially following the improvement in its domesticfood grain crops in the last two seasons.

COUNTRY 1934 /35-1938/39average

1949/50 1950 /51 1954 /52 1952/53195:3/51(pro!.)

Million metric tons, wheat equivalent

Canada 4.8 6.3 6.1 9.4 10.5 7.1-United States2 1.4 8.3 10.1 13.0 8.7 5.8Argentina 3.3 2.4 2.8 0.8 0.8 3.1Australia 2.9 3.1 3.6 2.7 2.8 2.0

'.fotal 4 countries 12.4 20.1 22.6 25.9 22.8 18.0

Others3

of which

5.1 2.2 3.1 2.4 3.3 4.0

French North Africa . 0.5 0.2 0.3 0.3 0.2France 0.6 0.6 1.0 0.4 0.5 1.1Turkey 0.1 - 0.2 0.6 0.8Sweden 0.1 0.1 0.1 0.5U.S.S.R. and Eastern Europe 2.2 1.0 1.2 1.1 0.9

WORLD 'TOTAL 17.5 22.3 25.7 28.3 26.1 22.0

CouNT1 YJuly-June

1931/35-1938/39

1949/50 1950/51 1951/52 1952/53 1953/54(prel.)

Mi lion metric tons, wheat equivalent

EUROPE 1of which

11.9 12.9 12.9 14.4 13.7 12.3

Germany (Western) 20.7 2.4 2.4 2.3 2.3 2.4Italy 0.7 1.2 1.3 1.8 1.2 0.7United Kingdom 5.8 4.7 4.2 4.9 4.7 4.0

AsiA.of which

1.9 5.6 5.2 8.0 5.5

India 30.1 1.7 2.1 4.1 1.4 0.7japaii 0.4 2.0 1.6 1.7 1.2 1.7

OTHER COIN"rINENTS 3.1 4.2 5.7 6.5 6.4of which Brazil 1.0 1.1 1.4 1.4 1.4 1.5

WORLD 'forum, 16.0 22.7 23.8 28.9 25.6 22.0

TABLE 43. WHEAT AND WHEAT FLOUR EXPOR S

TABLE 45. WTHEAT : ESTIMATED STOCKS O'N i JULY INTHE FOUR MAJOR EXPORTING COUNTEIES1

Based on official data, and estimates of the US Depart-ment of Agriculture and FAO. For convenience of com-parison, all estimates relate to 1 July, and cover all sup-plies on hand on 1 July, including domestic requirementsfor the period remaining up to the beginning of the coun-tries' respective crol> years where this is not 1 July (i.e.1 August for Callada and 1 December for Argentina andAustralia).

Prices and Marketing DevelopmentsWith the entry into operation in August 1953

of the renewed International Wheat Agreement(IWA), with increased maximum and minimumprices, sales were initially made at prices higherthan those ruling under the previous contract.But there was a decline in subsequent months andby June 1954, the quotation for Canadian No. 1Northern was equivalent to U.S. $1.75 comparedwith $2.05 in early August 1953, the maximumof the new price range. There was also a steadydecline in the prices of -wheat exported outsidethe Agreement and over most of the year Calladaand Australia were charging identical prices forexport sales within and outside the IWA exceptfor certain grades. Since early December 1953,the United States also has put on sale certainquantities for export outside the Agreement atthe same prices as those for IWA sales. Thegap between the prices of non-dollar, non-IWAwheat (e.g., Argentina) and dollar wheat also di-minished further during 1953 ; during most of1953/54 wheat of different origins was being quo-ted at a fairly uniform level after allowance isrnade for quality differentials. Sales of wh.eatforming part of trade agreements were in someinstances still made at higher levels than ordinarytransactions but some fall also occurred in thesecases.

The decline in prices, as measured by CanadianNo. 1 Northern, by 8 June 1954 was 12 percentcompared with July 1953 and 16 percent compar-ed with July 1952 (non-IWA sales). Argentinesales were being made at prices 18 percent lowerthan in the previous year. Comparable figures

101

for early June 1954 for United States wheat, asmeasured by Chicago quotations for nearest fu-tures, however, were practically the same as ayear earlier, though 15 percent lower than inJune 1952.

On the other hand, domestic prices in generalcontinued to be determined mainly by nationalmarketing arrange/nents and are still largely in-sulated from the forces at -work in export markets.Among the exporting countries, Callada alone oper-ates a marketing scheme under which prices tothe domestic consumer are the same as those forexport and the returns to wheat growers are deter-mined by the receipts from sales, domestic andexport, though the bulk of the wheat is marketedthrough the official marketing agency. In Aus-tralia also, under the recently expired marketingscheme, growers have been receiving the proceedsfrom sales but the price for domestic sales hasbeen fixed by legislation and a deduction madefrom export proceeds for payment into a stabili-zation fund intended to implement a guaranteedminimum in years of low prices. The renewal ofthese arrangements is now under discussion. Inalmost all other countries, however, support pro-grams are practised involving government pay-ments or some form of price maintenance. Inthe United States, the wheat produces may ei-ther market his wheat commercially or disposeof it under the support program to the govern-ment at a rate equivalent to 90 percent of parity.Over the past two years the commercial price hastended to fall below the support price, especiallyin periods of heavy farm marketings and a largequantity has consequently moved into governmentholdings. This has limited the supplies of wheatavailable in commercial markets and tended intime to strengthen the market price. By theend of the 1953/54 season, nearly all the UnitedStates carry-over was held by the Com-modity Credit Corporation (CCC), the govern-ment agency which operates the farm supportprogram. United States prices have consequentlybeen firmer than those in other exportingcountries, though they also weakened at the endwith improving news of the 1954 crop. Themarket prices 1101V ruling are significantly aboveexport levels so that sales made under the IWArequire the provision by the government of asubsidy which by early June amounted to over50 cents per bushel. Sales of CCC holdings out-side the IWA are now made at Agreement pricesto a limited extent, while some special sales againstimporters' currencies are being made under themilitary aid and other programs.

YEAR Canada, UnitedStates

Argen-tina

Austra-lia Total

Million metric tons

1934-38 ay. . 3.9 4.3 2.7 1.8 12.71948 2.9 5.3 3.5 2.9 14.61949 3.7 8.4 3.4 2.8 18.31950 3.8 11.6 2.7 3.5 21.6195] 6.3 10.8 2.5 3.0 22.61952 7.4 7.0 1.2 2.3 17.91953 11.4 15.3 4.8 2.9 34.41954 (piel.) . 17.0 22.5 4.2 4.2 48.9

U.S.S/metric ton120

110

100

90

80

70

60 -

50

110

100

90

80

70

60

110

100

40

FIGURE XII Monthly Average Prices of Grain; July 1952-June 1954

A

A - Canada No. 1 C.W. Amber Durum. B - U.S. HardWinter 2. Kansas City. C - Canada No. 1 Manitoba,ex-IWA.

C - Canada No 1 Man'toba, ex-IWA. E - Canada No. I.Manitoba, IWA. G - U.S. Hard Winter 2, IWA.

Ju y Oct. Jan. Apr. July Oct. Jan. Apr.1952 1953 1954

L - Argentine Barley. M - Canada Barley Feed No. 1.N - Iraq Barley.

Wheat

(Cash prices in U.S.A. and Canada)

U.S.S/metric ton

120

110

100

90

80

70

60

50

Wheat'(c.i.f. prices, Northwestern Europe)

110

100

90

80

70

60

Coarse Grains'

(c.i.f. prices, Northwestern Europe)

110

100

- U.S. Red !Winter 2. Chicago. E - Canada No. 1.Manitoba, IWA. F - IWA Maximum.

- U.S. Hard Winter 2, ex-IWA. I - Australian,1ex-IWA. - Argentine.

Ju y Oct. Jan. Apr. July Oct. Jan. Apr.1952 1953 1954

- Argentine Maize. P - U.S. Maize, No. 2 Yellow.

Canadian wheat cash prices are basis in store at Fort William - Port Arthur. Since che first week of August 1953,cash prices for Class II exports and for IWA sales have been identical. The shaded surfaceindicates US, IWA subsidies, East Coast. Figures for June are based on incomplete data.

Source: Die Weltmärkte wichtger Nahrungsmittel, Bonn.

60

50

40

In Argentina, the price to, producers has re-mained at 50 pesos per quintal, equivalent toUS $100 per ton, considerably more than the re-cent returns on export sales calculated at officialrates of exchange. Export sales by France andTurkey are similarly made at prices below tliosepaid to their producers.

Among importing countries, the outstandingrecent marketing development has been the restora-tion of free trading in grain in the United King-dom and tlie re-opening of the London and Liv-erpool grain markets. Domestic -wheat produ-cers will continue to receive a guaranteed pricefor the wheat they market, deficiency paymentsbeing made to them by the government to WW1'the difference between the open market price andthe standard guaranteed price. Prices to pro-ducers in other European countries are still to alarge extent supported by govermnents and inseveral cases are now above the price of importedwheat.

The International Wheat Agreement now cov-ers a smaller proportion of. world trade. Thetotal guaranteed sales and purchases, owing tothe non-participation of the United Kingdom andthe withdrawal before ratification of Italy andSweden, amounts to only 10.6 million tons com-pared with 15 S million tons in the last year of theprevious Agreement. This quantity is less than halfthe current volume of world trade in wheat butactual transactions under the Agreement are sub-stantially smaller than the full guaranteed amount,sales in the first eleven inontlis of the 1953/54Agreement year totaling only six million tons.

Outlook

With the enforcement of acreage restrictionsand marketing quotas, the United States wheatcrop of 1954/55 will be smaller than those of re-cent years but the early estimates indicate th.atthese measures may not succeed in reducing out-put to the quantity required to meet domesticneeds and exports at current levels. The carry-over in mid-1955 may thus show a further increase,though not on the scale of the previous two years.Supplies in Canada in 1954/55, despite some fallin the wheat area, are again likely to be veryample, while Argentina and Australia are also ina, position to continue exports at least at theirrecent rate for some time. European productionmay not prove quite as large, as last year's, butimport demand is not likely to show more thana limited increase. With ample reserves from re-

103

cent crops in India, a better stock position inJapan and generally increased rice supplies, Asia'simport requirements are likely to decline. Thuslarge excess supplies will continue to overshadowthe market in 1954/55. Pressure on prices willcontinue and, while the policies of exportingcountries have hitherto prevented the large accu-mulations of stocks from exerting their full ef-fects on markets, the problems of financing andstorage may induce exporting countries to adoptmore competitive selling policies and to makegreater use of special disposal measures, suchas sales against importers' currencies or on otherspecial terms. Such tendencies were becomingmore apparent at the end of the 1953/54 year.Yet, owing to the relatively stable demand forwheat and assuming the maintenance of recentproduction trends in importing countries, thereseems little prospect of increases in commercialimport demand large enough to effect a signifi-cant working down of stocks. The further curtail-ment in acreage to be applied to the 1955 crop inthe United States may check further accumula-tion there and less favorable seasons inay reversethe present increasing trend in stocks. Mean-while, supplies are likely to continue to be veryample for at least the coming two seasons.

COARSE GRAINS

Supplies and Trade

Supplies of coarse grains in 1953/54 were gen-erally adequate with crops again at a high leveland with increased stocks carried over from theprevious year. Trade appears to have been nolarger in volume than in 1952/53 and prices de-clined further. The supplies remaining at theclose of the year were larger than at the opening.

Production in the countries exporting feedgrains was slightly below the high level of thepreceding year, owing to reductions in the UnitedStates maize crop and in th.e Canadian cropsof barley and oats. Total supplies, however,were somewhat larger than those available in1952/53 owing to some increase in opening stocks.The Argentine maize crop (harvested in April/May 1953) was materially larger than the previouscrop and the 1953 productim of barley and oatscompared well with prewar averages even thoughit was below th.e bumper crops of the previous year.

With few exceptions, European countries ob-tained larger crops than in the preceding year.This was due to improved maize crops, especially

Barley, oats, maize, millets and sorghums.2 Canada, United States, Argentina and Australia.

1937-41 average for Canada and United States.

in Yugoslavia and Italy, and an increase in bailey.The latter crop is now grown in larger amounts,mainly as a result of improved yields, the UnitedKingdom, France and Denmark accounting formuch of the increase which, compared with 1934-1938, is equivalent to over 50 percent. Althoughthe production of oats was about the same as in1952/53 the declining tendency of this crop appearsto be continuing.

Imports of coarse grains irito Europe, which inrecent years have accounted for about 70 percentof world trade, were larger in 1953/54 than in thepreceding year, despite the improved indigenousproduction. The increase was due mainly tolarger quantities taken by the United King-dom, in the form of Argentine maize and Cana-dian and Iraqi barley. This increase may be

TABLE 46. COARSE GRA.INS PRODUCTION 1

104

due in part to the purchases rnade by the govern-ment in preparation for the decontrol of trade,partly to the termination of feed rationing andpartly to the trend of increasing livestock popu-lation.

Total exports of coarse grains in 1953/54, pro-visionally estimated at 12.8 million tons, wereabout the same as those of the preceding year.Argentina, after two years of indifferent crops,obtained a larger maize crop and excellent cropsof barley and oats and these increases were re-flected in larger exports. The United States,Canada and the remaining exporters, however,did not export as .much as in the preceding year.

Prices in general continued to decline in 1953,but the decline was less steep than in 1952 andthe final months of 1953 and the early months

Barley, oats, maize, sorghums and millets.Excluding trade between cou Aries in the Soviet orbit execpt for the prewar period.Excluding China.

- None or negligible.

Million metric to ts

Argentina 6.5 7.2 1.2 1.8 0.2 0.5 0.6 1.1 0.6 1.0 1.3 2.8Australia,Canada

0.10.5

0.40.8

0.50.9

0.62.3

0.73.7

0.53.4

-United States 0.8 1.1 2.8 4.1 2.9 5.7 2.0 4.4 3.1 4.1 2.7 3.2

Total 4 countries 7.3 8.9 4.0 7.1 3.1 7.6 2.6 8.4 3.7 9.5 4.0 9.9

Other 2.9 5.5 1.5 4.0 1.2 3.3 2.0 4.3 0.6 3.3 0.7 2.9

WORLD TOTATi2 10.2 14.4 5.5 11.1 4.3 10.9 4.6 12.7 4.3 12.8 4.7 12.8

ITEM 1934-38average 1919 1950 1951 1912 1 953

Million metric 1021S

Four major exporting cmmtries2 . 3107.7 125.0 126.6 120.8 130.7 127.618 European Countries 35.2 32,7 30.4 36.2 33.1 38.5Latin America (excl. Argentina). 10.8 13.6 13.8 14.5 14.0 14.4Asia (excl. China). 31.4 30.1 29.9 30.4 34.1 34.8Others 19.5 40.6 38.4 40.6 40.6 41.0

VVORLD TOTAL (excl. U.S.S.Rand China)

of which

224.5 241.9 239.1 242.5 252.5 256.3

Barley 35.5 36,4 39.3 42.3 46.3 47.1Oats 46.8 46.9 48.8 49.9 49.1 47.6Maize 114.2 129.8 120.0 121.6 127.9 132.3

TABLE 47. COARSE GRAINS EXPORTS 1 (,TULY-JUNE)

COUNTRY

1934/35-1938/30average 1919/10 195( /51 1951/52 1952 /53

1953/54(PI-el.)

MaizeTotal

Coarsegrains

MaizeTotalCoarsegrains

MaizeTotal

Coas-segrains

MaizeTotal

CORI-SOgrain.s

MaizeTotalCoarsegrains

MaizeTotal

Coarsegrains

of 1954 showed some strengthening. The fall wasleast marked in the case of United States maize,No. 2 Yellow at Chicago averaging $1.61 per bu-shel in May 1954 compared with $1.57 in January1954 and $1.63 in May 1953. Argentine maize,which had lost most of its prep-limn over UnitedStates maize by the beginning of 1953, did notdiverge substantially from the latter up to theearly summer of 1954, though forward positionswere being quoted in May at a significant discount.The steady price of United States maize is partlyexplained by the much greater use of the loan pro-gram made by growers in 1953/54. The maizeholdings of the Commodity Credit Corporation on31 March 1954, including both its own inventoryand the quantity pledged for loans, amounted toover 20 million tons against 13 million tons ayear earlier.

United States feed type barley stood at $1.24 inJanuary 1953, fell to $1.02 in July and was $1.04in January 1954, easing slightly in the follow-ing months. Canadia.n barley, on the other hand,was 88 Canadian cents in April 1954 comparedwith $1.19 in January 1953. Argentine anelIraqi barley showed very similar movementsto Canadian but their net decrease was some-what larger. Oats also declined, Canadian No. 2being 73 Canadian cents per bushel in April1954 compared with 81 cents in January 1953.The most striking fall was shown by rye, Cana-dian No. 2 reaching 89 cents per bushel in April1954 compared with $1.62 in January 1953.

Barley; oats, maize, sorghums and millets.2 Excluding imports of countries in the Soviet orbit except for the prewar period_3 Excluding China.... Not available.

105

Outlook

If the 1954 growing season does not prove un-favorable, supplies of coarse grains in 1954/55will be ample. Stocks of feed grains remainingin the United States at the end of the 1953/54year are expected to be substantially larger thana year before, while the output of the 1954crops, taken from a somewhat larger arca de-spite the restrictions applied to the commercialmaize area, will prove larger than that of1953. In Canada, the carry-over of barley andoats will be about the same as in the pre-ceding year, while the area sown in 1954 is a littlelarger th.an in previous years. The maize cropin Argentina harvested in April/May 1954 showeda further improvement, though it was still sub-stantially short of prewar production. Probableimport requirements appear to be adequately co-vered by prospective export supplies, but supplies,though tending to increase slightly, should notdevelop a serious surplus character in the nearfuture, especially if pig production expands inthe United States, as is now anticipated, andlivestock production elsewhere continues to grow.

RICE

The sellers' market for rice, which had prevailedalmost continuously since the end of the war, hasended. Production has again risen noticeably.World trade, however, has contracted sharply

COUNTUY 1934/35-1938/39average 1949/50 1950/51 1951/52 1052/53 1953/54

(prel.)

Million metric tonsL'urope2

of which13elgium

12.0

1.3

8.9

1.0

7.6

0.8

9.8

0.9

7.9

1.0

9.0

Germany (Western) 1.3 1.0 0.8 1.0 0.6NetherlandsUnited Kingdom

1.44.3

1.81.8

1.12.0

2.02.8

1.62.2

1.23.0

Asia8of which

0.7 0.9 1.8 1.7 2.3

India 0.1 0.1 0.9 0.7 0.3Japan 0.3 0.6 0.7 0.6 1.3Others 1.5 1.2 1.3 1.6 2.2

WORLD TOTAL ,, ... 14.2 11.0 10.7 13.1 12.4 12.8

TABLE 48. COARSE GRA IMPORTS 1 (JuLY-JuNE)

mainly owing to the reduced imports of India andIndonesia. Stocks accumulated in South EastAsia and export prices began to be lowered theretowards the end of 1953. Imports will probablyexpand in 1954 but this may prove to be a tempo-rary feature unless price relationships change tomake rice more attractive to CODBUIllerS.

Current SituationMore rice was harvested in 1953/54 than in any

previous year, nearly eight percent more than in1952/53 which had itself been a record year. Avery sharp fall in Japan's crop was outweighed

1936-38 average.2 Unofficial estimate.... Not available.

by the increased quantities reaped in most otherrice-growing countries. Relatively high . prices forrice and various forms of assistance provid.ed bygovernments led to a widespread expansion of thearea sown to rice, and weather conditions weregenerally favorable. As in the previous year, thegreatest increase in production was registered byIndia where a three percent larger acreage yieldeda crop greater by 20 percent. Pakistan also har-vested an excellent crop. Among the export-ing countries Thailand and the United Statesreaped record crops, while Burma's rice pro-duction fell short of that of the previous year.

While more rice Ivas thus grown, less rice wasmoved across frontiers in 1953 than in 1952 andstill less tiran in 1951. This is not due to anylack of supplies available for export, but to some

TABLE 40. Ricx (PADDY) PRODUCTION

106

of the former main importers' lesser willingness tobuy. Larger home-grown supplies were usedpartly to reduce imports, while consumption AWLSstill restricted by rationing in some countries.Furthermore, importers continued to regard theprices of other cereals as more advantageous thanthose of rice. The sharpest falls in rice importsoccurred in India and Indonesia, each of whichbought, in 1953, half a million tons less abroadthan in the preceding year. Amongst exporters,the most a.ffected by these changes was Burma,whose shipments declined by 300,000 tons, i. e. byalmost one-quarter. Other countries which had

rice available for export suffered somewhat less,partly because Brazil and Egypt, which had be-come important exporters in recent years, had onlysufficient rice for home needs as a result of theirrelatively poor 1952/53 crops.

Exports thus contracted, while production ex-panded. As a consequence stocks began to accu-mulate in some countries, particularly where sellerswere show in adapting themselves to the changedmarket conditions. The bulk of these stocks isin South East Asia, where they are estimated tohave been somewhat in excess of one million tons(in terms of milled rice) at the end of 1953, a verysmall quantity in relation to world consumption(about one percent) but significant in proportionto present annual world trade (about one-quarter).

Co U WRY1931-38average 1916 1948-.50

average 1931 1932 1953(prel.)

Million ?nark ions, paa(11/

India 132.3 30.3 33.5 31.6 34.3 41.3Pakistan 111.2 12.8 12.6 11.8 12.4 13.9Japan. 11.5 11.5 12.0 11.3 12.4 10.3Indonesia

Jaya and MaduraOther islands

6.1 4.3 8.4 6.03.2

6.43.2 29.9

Burma 7.0 3.8 5.2 5.5 5.8 5.8Associated States of Laos,

Cambodia and Viet-Nam 6.5 24.3 5.0 5.4 5.5 25.5Thailand 4.4 4.6 6.8 7.3 6.6 8.2Other Asia 12.5 10.0 10.7 10.5 11.6 12.0

Total Asia (excl. China main[and) 94.5 84.6 94.2 92.6 98.1 106.9

Other continent' 6.4 9.4 11.1 11.3 12.3 12.6

WORLD TOTAL (OXBI . EasternEurope, China and U.S.S.R.) 100.9 94.0 105.3 103.9 110.4 119.5

1)31-38(Velare

Total exports are exports of domesti.; rice f bm smplus praltteing countr'es; in addition about 300,000 metric tons ofdomestic rice in prCwar and les thai 50,000 tons in postwar years were ON ported by net inmorting countries. Importsare net figures.

W.ith more rice to sell and fticed by a smallerimport demand, some of the chief exporters, afterlong resistance, reduced their prices during thesecond half of 1953, thus reversing the upwardtendency which had prevailed for over three years.The new record crop of the 'United States startedto sell at 30 percent below old crop prices, butthere was some subsequent recovery to a level -about 25 percent below th.e maximum - which was.maintained from the late autimin of 1953 to thelate spring of 1954, when Zenit h. No. 2 was sellingat $207 per metric ton, f.o.b. NCIV Orleans. Ongovernment to governnient contracts, the Burmeseauthorities agreed to reduce their prices by about20 percent provided buyers committed themselvesfor several years ahead. The basic quality (Small1V1i11. Specials 42 percent brokens) is accordinglypriced on such contracts at i'50 ($140) per tonfor 1954, 08 ($134) for 1955 and £46 ($129) for1956.

Outlook

World trade in rice will probably recover TRIE-iug 1954 from the loW level of 1953 but Irlaynot reach five million tons, the level of 1951

and 1952. 11 is .ren)very would, however, betuainly due to the import demand of two coun-tries, India and japan. In both exceptionalfactors are operating tliis year : iii Japaitthe very pool' rice crops and in India the new finan-cial settlement with BILIma. It -would be risky to

TAIILE 50, WORLIT TITAITE TN A111,1,1,,n RICE

1918-50average

107

1953 pref.): I 951 forecast

assume that either cmintry will import in futureat the expected 1954 rate. There is naturallyplenty of scope for an increase in 'world imports'whi ell in 1953 Were ice I I belOW half the prewaraverage. Per caput consumption of rice is prob-ably still less than it uvas 15 years ago and pop-ulat ion is increasing. The recent levels of riceprices, however, apart from stimulating -widespreadexpansion in the cultivation of rice, have deflect-ed some demand towards other cereals and towardsroot crops. While in prewar days rice constitutedabout fline-tenths of the cereal imports of themain Asian. cereal importing countries, this pro-portion uvas only one-third in 1952 uid fell stillfurther in 1953 (Figure XIII)

A rough comparison oh prewar import valueunits with those in 1953 for SOM.0 of the main im-porting countries of Asia shows that import pi' icesof rice rose almost eight times, -whilst the aver-age for -wheat, -wheat flour and barl.ey rose lessthan :fourfold. Government allocations of resour-ces for the purchase uf different foreign cereals arenot determined solely by relative price movements,and the latter can be measured only very approxi-mately. Nevertheless, some interest may attachto the contrast (Table 51) of the 'rise in therelative price of rice with the fall in its sh.areof total cereal imports.

The ateas outside Asia have also greatly reduc-ed their rice imports. 'Unless this tendency isreversed by TAM inciense in total demand for cereals,or by a shift in price relationships -which will make

('OUNTItEx-

portsim-

portsEx-

ports311)-

1(I> ('t

Ex-ports

im-ports

Ex-ports

Im-ports

Ex-ports

Im-ports

Ex-ports

En-ports

BurmaThailandAssociabs1 States of Laos,

:3 . 1

1 .41.21 .2

1

I .31 .6

fillion efrie /011.5'.

1.3.4

Mill 'd

1 .01.3

11

1.4

Cambodia 0.11(1 Viet -Nam. 1.3 0 .1 0 .3 0 .2 0.2 0.2Fillied Slates (1. I (1.5 0.5 0 .8 0 .7 0.7

a] ti 1).1 o, I 0 .2 0 .3 0 .2 0.2China 0 .7 0 .3 0 0.2 0.3 0 .2India .9 o .7 0 .9 0 .8 0 .2 0 .7Ja pan 1.7 0 .3 ( .S 1 .0 1.1 1.511.a ya (Fe(l.) ... .. o .5 0 .5 0 .1) 0 .4 0 , 5 0.4

0 .3 0.2 0 .4 0 .8 0 .3 0.2Ol her Asia 2.3 I .0 0 .3 0 .8 0 .3 .0 0 .2 0 .8 0 .2 I .0 11.2 0 .9Other arcas o .3 2.2 0 .6 I .0 0 .7 1 .2 0.5 0.9 0.3 0 .9 0.2 (1.9

Wout,o ToTA L1 8.6 8.3 4.0 3 .8 5.0 4.8 4.0 4.7 4.2 4.0 4.6 4.6

1951 1952

FIGURE 'XIII World Imports of Rice andNet Imports of Rice and Other Grainsin Six Far Eastern Countries, 1934-38

Average, 1947-53 Annualmil. MT

YEAR

1934-38 average1950195119521953

['rico ratios=

21001481561852C0

Rice importsas percentageof total cereal

imports

8834293331

Ratio of indices of import unit values (prewar as 100)index for rice divided by average index for wheat, wheatflour and barley.Somewhat differing prewar years for different countries.

108

rice more attractive to importers, those nationswhich have striven to expand the production ofexportable supplies may encounter increasing dif-ficulties in marketing their rice.

SUGAR

There were two major developments of far-reaching significance in the world sugar economyduring 1953. Surpluses developed outside the dol-lar area for the first time in postwar years. Al-though these surpluses were comparatively small,the change from previous years, when Cuba carriedpracticall3r the total world surplus, was importantan.d its effects began to be felt in many countries.Second, an International Sugar Agreement, theprimary objective of which is to stabilize worldsugar prices, was concluded in August 1953.

Production

Since 1934-38, including the war years, worldproduction has increased by an average of 2.75percent a year. The restriction of the Cuban cropby 2.1 million tons in 1952/53 as compared withthe previous year caused a fall in world productionby 1.2 million tons or 3.4 percent. In 1953/54,however, world production rose nine percent to36.8 million tons (centrifugal sugar only, rawvalue) even though the Cuban crop was furtherrestricted.

The most significant production developmentduring the current year was a sharp increase inproduction in net importing countries and in ex-porting countries enjoying preferred positions inimport markets. -Production during 1953/54 innet importing countries was 21 percent higher thanin 1951/52 and 29 percent higher in preferred sup-ply countries. On the other hand, production indollar exporting countries was 19 percent lower,although production was the same as in 1951/52in exporting countries as a whole.

In part, these developments represent a returnto the prewar pattern, when production in dollarcountries figured much less prominently in theworld sugar economy than. during 1946-52. Moreis involved, however. Significant is the greatexpansion in production in British Commonwealthcountries. Western Europe's output of' sevenmillion tons was three million tons higher thanprewar, and almost 400,000 tons above Europe'stotal 1934-38 production. Much of the expansionin importing and Commonwealth countries wasundertaken for the declared object of furthering

1934-38 1947 1948 949 1950 1951 1952 1953

average

A World imports of riceNet imports of other grains into the six Far EasterncountriesNet imports of rice into the six Far Eastern countries

Note : Other grains include wheat and wheat flour, rye,barley, oats, maize and sorghum and millets. The sixAsian countries are Ceylon, India, Indonesia, Japan,Federation of Malaya, and the Philippine Republic.

TABLE 51. RELATIVE IMPORT PRICE MOVEMENTS OFRICE AND OTHER CERBALs COMPARED WITH PROPOR-TIONS OF TOTAL CEREAL IMPORTS IN SELECTED

ASIAN COUNTR.IES

TABLE 52. SUGAR PRODUcTION

the expansion of constunption. Indeed, in netimporting and self-sufficient countries, a close cor-relation has existed in the postwar years be-tween expansion of domestic production and ofconsumption, n.otwithstanding the fact that do-mestically produced sugar is frequently more ex-pensive than imported.

Trade and Prices

International trade in 1953 reached the highestfigure on record, with exports almost 1.8 mil-lion tons higher than in the previous year. Butthe rise in exports took place less to expandcurrent consumption than to build up stocks insome countries, especially in the United Kingdomin preparation for de-rationing. Early in 1954,-United Kingdom stocks were a million tons higherthan in 1953, and total stocks were sufficient forabout nine months unrationed consumption. Therewas a more than usual decline in world exportstoward the end of the year ; during the firstfew months of 1954 exports, especially fromfree market exportingcountries, were substan-tially lower than during the correspondingperiod of the previous year. At its Decembermeeting, the International Sugar Council decidedto reduce basic quotas embodied in the Agree-ment by 15 percent. A further five percentreduction - or the maximum permissible reduc-tion under the Agreement - was made in May1954 and other restrictive measures were also con-sidered. Present indications point to a declineof at least 1.5 million tons, or about 15 percent intotal international trade during 1954, in spite ofthe various trade agreements and especially the

109

Commonwealth Sugar Agreement which will com-pel the United Kingdom and other importingcountries to purchase larger quantities than theirstock position justifies.

Under prewar marketing conditions, supplyconditions such as developed at the end of 1953would have produced a very sharp decline in pri-ces, and a disorganization of -world markets. Thatthis did not happen was due largely to regulationof exports by Cuba and to the International SugarAgreement, which went into effect at the turnof the year. From an immediate market stand-point, the Cuban decree establishing quotas forexports contributed more to stability than theInternational Sugar Agreement, While Cuba'sinitial 1954 quota under the International SugarAgreement was 1,912,500 tons (of which 371,000tons were to be released under Article 8 onlyafter 31 August), a decree, signed by the Presi-dent of Cuba on 10 February 1954, establishedthe " initial world free quota " at 721,000metric tons - plus almost 51,000 metric tons" carried over from the 1953 crop ". On theother hand, it is probably reasonable to assumethat without the International Sugar Agree-ment the Cuban authorities would have found itmuch more difficult, if only for internal political,social and economic reasons, to impose so drastica restriction of the exports quota, and ;might nothave cared to do so for reasons of general sugarprice strategy.

The minimum Agreement "free ma,rket " priceof 3.25 U. S. cents a pound, f.o.b., Cuban port islower than the production cost in all but a fewbeet sugar producing countries, even after thecost of transport of' the raw sugar to local refin-eries is added. Indeed, the minimum price pie-

Pain 1934-1938average 1.950/1951 1951/1952 1952/1953 1953/1954

Indices 1953/51

1934-38- loo

1951/52- loo

Million 11 etric tons, raw vain

WoBLD TOTAL (including U. S. S. R.and China) 24.9 32.8 34.8 33.6 36.8 147 105

Net 'importing countries 5.8 8.0 7.6 7.5 9.2 158 121Net exporting countries (mol. Cuba). . 13.0 17.8 19.3 18.5 19.5 150 101Net exporting countries (excl. Cuba) (10.2) (12.1) (12.1) (13.4) (14.6) (138) (121)

Preferred countries 4.0 5.6 5.1 5.3 6.6 165 129British (2.7) (3.8) (3.5) (3.9) (4.5) (167) (129)French (1.2) (1.7) (1.5) (1.3) (2.0) (167) (133)Portuguese (0.1) (0.1) (0.1) (0.1) (0.1) (138) (106)

Dollar exporting countries 4.7 8.2 9.8 8.0 7.9 168 81

TAIIILE 53. Suc it :1:STIM AT ND CONSUMPTION (IN RAW VALUE)

seats serious difficulties oven to some cane sugarexporting countries signatories to the Agreement.It is possi ble that even Cuba would experience dif-ficulties were it not for the higher price receivedfor sugar exported to the United States. In 1953Cuba received about 5.32 cents a pound on exportsto the United States of 2.5 million tons, as com-pared with the average of 3.41 cents for the 3.0million tons bought by other countries.

Consumption

Consumption of centrifugal sugar has contin-ued to :increase. Rising national income, and insome countries lower prices-, especially in relationto other foods, have stimulated a steady risein demand for refilled sugar. The greatest per-centage increase since 1934-38 has taken placein Africa, South America and Asia. In all theselow consumption ilreas the rise in consumer incomeavailable for expenditure .has been of particularimportance in facilitating increased sugar demand.

Outlook

A fundamental change in the trends either ofthe production, price or consumption seems un-likely. While production in 1954/55 is likely tobe lower than in the previous year, especially inEurope, where the favorable weather conditionsof the previous year are not recurring, the long-term outlook is fiIr a rising production trend,unless agricultural policies of governmentsundergo fundamental chaitges. Increased beetsugar production may occur in Europe and theUnited States. Further production increases are

to be expected in Central and South Am.ericancountries, except Cuba. However, the largestproportionate increase over th.e next decade willprobably be in Asia and in Africa where percaput consumption is still relatively lo-w. Al-though the greatest increases in production arelikely to be in self-sufficient and net importingcountries, which will reduce the percentage contri-bution of imports to total world consumption, itis not likely that international trade will diminishsignificantly from the average of the past fewyears unless general economic conditions deterio-rate greatly.

The postwar trend to higher consumption, as-suming no fundamental change in economic con-ditions, will continue. Much will, however, de-pend OH developm.ents in Asia. In Europe andLatin America further consumption increases arelikely tc.) be at a lower rate than in previous years.Asia and Africa remain the great potential sugarmarkets. Developments in individual African andAsian countries have dem.onstrated that condi-tions are ripe for a major expansion in consump-tion. In the Belgian Congo, for example, con-sumption rose from a yearly average of 2,300 tonsin 1934-38 to 20,500 tons in 1952/53 (per caputfrom 0.2 kg. to 1.2 kg) irt the three British EastAfrican territories consumption in 1952 was 109,000tons as compared with 32,000 prewar - and it isestimated that in 1960 consumption will be about200,000 tons. However, future demand for sugarwill depelld, firstly, on general economic trends,and secondly, on the availability of domestic sup-plies, or from low - cost exporting countries, pur-chases from which do liot create serious exchangeproblems.

11.1:010N i 93 -1-38average 1950 1951 1952 1953

(0101.)

Million inclrie tons

Euro pe 8.7 8.6 9.4 10.2 9 .8 10.4

U. S S E, 1 .9 2.2 2.2 25 2.7 3 .2

North and Central America. 7.1 8.7 9.4 9.1 9 .6 9 .7

South America 1 .4 2.6 2.8 3.0 3 .1 3 .2

Asia 3 .7 3.1 3.5 3.9 4.9 5.2Africa 0.8 I .4 1 .6 1.7 1.8 1 .9

Ocean i a 0 .5 0.6 0.6 07 0.7 0.7

'OTAL 24.] 27.2 29.5 :11.1 326 34.3

LIVESTOCK PRODUCTS

Meat

Meat production in 1953 was substantiallylarger th.an a year before in North America,Oceania ami Western Europe. Near.ly all coun-tries of these areas produced more ; th.e :largestincreases WCI'C in the United States, Australiaand Denmark. In Argentina, production in 1953appears to have been maintained at the 1952level.

TABLE 54. INDEX NUMBEns oF MEAT i 1'.1011),IIC-

TKIN IN SELECTED REGIONS

1950 1951 1952 1953

Beef, veal, pig, meat, inut ((n, lamb and goat tMainly 1931-33 average; in some ea-as 1935-39 average orsimilar period.For New Zealand twelve- month periods endiing 30 Sep-tember of year stated.

The world meat trade, which in the period 194S-1952 liad been on the average six percent less th.anbefore the war, increased sharply in 1953 and theprewar volume (in terms of carcass weight equi-valent) was slightly exceeded. Imports of meat,except canned, into th.e -United Kingdom :in the.past year were 30 percent higher than in thepreceding year, beef accounting fui' l-,he major partof this increase. Compared with prewar, the 1953volume was 323,000 tons less, but this deficit waspartly covered by much greater imports of cannedmeats.

In mid-1953, the U.S.S.R. began to :purchasemeat on world markets and by May 1954 isestimated to ha,ve bought about 70,000 tons ; Ar-gentina, Uruguay, Denmark and France are themain suppliers. In th.e United States, due toreduced production and high prices for pigs, im-ports of pig meat increased heavily, but not suffi-ciently to offset a reduction in beef imports. To-tal imports, including canned meats, therefore, de-clined from the high. 1952 level.. As exports roseby nearly 30 percent, the net im.port balance was

111

45,000 tons against 64,000 tons a year before.Because of larger domestic production, Belgium,France, Italy and Switzerland imported less.

:Livestock prices in the North.ern Hemisphere('omitries in 1953 were gelierally below the 1952figures, major exceptions being tile United King-dom for all livestock, and North. America for pigs.

The most severe decline was th.at of cattle pricesin North America. Average prices received byUnited States farmers for beef cattle in 1953 Wereone-third below 1952, and the governmenr, inorder to assist in the stabilization of the market,purchased a,bout 113,000 tons of meat, represent-ing the equivalent of 865,000 head of,low-gradecattle. The beef th.us acquired teas distributeddomestically to eligrble outlets or exported underthe foreign aid program. Pig prices, on the otherhand, were 20 percent above 1952 levels both inCanada and the -United States. An upward move-ment in pig prices became evident :in the secondhalf of 1953 also in some European countries suciaas Western Germany and Belgium.

Ill th.e Southern Hemisphere, livestock pricescontinued to rise during 1953, but th.e, :increase inmeat prices from Oceania to time United Kingdomfor the 1953/54 season was much. less Hiatt inprevious years, and :no change from 1953 tookplace in the :prices for meat to be shipped fromArgentina to the United Kingdom in tile firsthalf of 1954.

Cold storage holdings of meats in the UnitedStates during the past year WCIle much smallerthan in 1952, mainly because of a heavy declinein stocks of pig meat. The situation remainedunchanged during the first months of 1954 andtotal stocks at the end of April 1954 Were 25 per-cent less than a year before. In Canada and Aus-tralia also, stocks of meats, in the first monthsof this year, were less than they had been in thebeginning of 1953.

Barring unfavorable weather, meat prod:uctionis likely to expand further during the current year,but at a slower rate than in 1953. In NorthAmerica, with cattle numbers at record levels,beef production will again be larger. On theother hand, pig numbers at the beginning of 1954were ten percent less than a year before. Al-though, owing to very favorable pig meat and feedprice ratios, an upward movement in p.ig pro-duction has started this yca]', marketings wili.be smaller than in 1953 until th.e coming fa:11, andthe :increase in total meat production in NorthAmerica will therefore be small. In Oceania theincrease may also be small as larger production inNOW Zealand will be largely offset by a decline

Pre iva 1;1 -- /00

Western :Europe . . . 97 104 111North Americqi .... 136 135 142 152South America . . . 114 114 113 114Oceania 3 112 107 116 123

in Australia. In Europe, production should in-crease in general, although in some countries theexpansion of pig meat production will be checkedby the decline of pig numbers during 1953.

The increased supply and the lower prices offodder grains have not yet been fully reflected inthe supply of pigmeat. This is in part attribut-able to the usual time-lag and to the price supportpolicies for grain in some countries which haveresulted in large stocks of coarse grains. By 1955,the resulting increase in pig and other meat pro-duction should be substantial.

International trade is not expected to show anysubstantial change from the high level reached in1953. Srnaller exportable supplies in Oceania mayresult in a slight decrease in United Kingdom im-ports. While the volume of exports from Den-mark may remain practically unchanged, a fur-ther increase in shipments from Argentina canbe expected.

In July 1954 meat rationing came to an endin the United Kingdom and private trade inlivestock and meat, both home-produced and im-ported, is now being restored. Only for baconthe Ministry of Food will continue to act as soleimporter. Meat consumption in the United King-dom is still below the prewar level and it remainsto be seen to what extent the end of rationing willaffect future imports. The extent to which theU.S.S.R. continues to import meat is of consider-able importance for world trade.

Prices of livestock in the Northern Hemispheremay be more stable in 1954/55 than in the pastseason, although pig prices and marketings may

TABLE 55. MEAT EXPORTS ; SELECTED COUNTRIES

112

Preliminary.2 Canned bacon and ham included under " All types, except canned."2 Four years average.,1938.

be influenced by the abundance of coarse grains. Asto the Southern Hemisphere, no further increasesof any substantial size are to be expected. Recentnegotiations between the United Kingdom andAustralia concerning the procedure to be adoptedafter the change from bulk purchases to privatetrading resulted in an agreement under which theUnited Kingdom will guarantee, for the 1954/55season, minimum prices which will be 95 percentof present returns for beef and 93 percent for lamband first quality mutton. The minimum pricesfor lower grades of mutton are considerably less.

Dairy Products and EggsThe current situation of dairy products is char-

acterized by generally high levels of productionwhich in many instances are above 1953, and bya considerable accumulation of stocks in somecountries, notably in the United States.

Milk production increased strongly in the pastyear partly because of favorable prices. During1952/53, for instance, producer prices for milkwere the highest in recen.t years in nearly allEuropean countries, and in the United States,high price supports favored milk production.The expansion of production has continued butin some countries producer prices have beenbelow the corresponding 1953 levels.

Milk production in 1953 expanded considerablymore than fluid milk consumption and the majo!'part of the increase went into butter and cheese.Fluid milk consumption, which is the majoroutlet for milk, increased only slightly during1953, and per caput consumption remained

1952 1953 1934-38average 1951 1952 1953

'1'housatirl metric tons

179 1195 70 98 57 15858 53 33 14 11 14

124 256 4 51. 96 70394 333 3 8 16 1440 42 35 4 8 1062 75 5 7 6 11.

249 318 4 47 34 4010 15 2 ' 38 17 1058 74 41 11. 19 1267 65 10 49 52 44

1 241 426 137 327 316 '283

COUNI7ILY 1934-38average

Argentina 496Uruguay 73Australia 2 244New Zealand 267Canada 84-United States 57Denmark. 217France 3:Ireland, Rep. er2 45Netherlands 40

TOTAL 1 526

All types, except cama.d Canned

1951

19475

1472806059

241193962

1 176

more or less unchanged. In some countries,e.g., the United Kingdom, Denmark, the Nether-lands and Sweden, per caput consumption hasdeclined in recent years. While in the majorityof countries, retail prices of fluid milk in 1953remained virtually unchanged, or were even slightlyhigher, they declined four percent in the UnitedStates where the downward trend has continuedin the current year. In many countries increas-ing attention is being given to the possibilitiesof expanding fluid milk consumption..

Among milk products, the greatest increaseswere in butter. Total butter production in themajor producing countries in 1953 was elevenpercent higher than a year earlier but still aboutfive percent below prewar. Trade increased also,and imports into the United Kingdom were ninepercent above 1952, but 200,000 tons less thanthe average in the period 1934-38. The expansionof trade in 1953 was strongly influenced by -U.S.S.R.purchases, which in the second half of 1953 to-taled about 40,000 tons, mainly from the Nether-lands, Denmark, Sweden, New Zealand andArgentina. Owing to high domestic productionimports into Belgium were only half of the 1952volume, and imports into Western Germany andSwitzerland are also declining.

TAI3LE 56. I DEX NUMBERS OF MILK PRODUCTIONIN SELECTED RECIIONS

Mainly 1934-38 average ; in some cases 1935-39 averageor similar period.

2 For the United States production of milk on farms.3 Twelve-month periods ending 30 ,Tune of year stated.

Total cheese production in. 1953 was nearlynine percent above that of the preceding yearand 50 percent above prewar. In some export-ing countries, such as Norway and Sweden, andtoward the end of the year in Denmark also, adownward trend in cheese production becameevident. Cheese trade in 1953, after a decline in1952, was again larger. Particularly marked werethe increases in imports into Western Germanyand Italy. The United Kingdom also importedseven percent more. As, at the saine time, do-mestic production increased by 60 percent, per

113

caput consumption was eight percent above pre-war. The U.S.S.R. purchased 4,000 tons of cheesefrom the Netherlands between last autumn andApril 1954.

In contrast to butter and cheese, less wholemilk was used for manufacture of preserved milk,but much more dried skim milk was produced in1953 than a year before, because of marked in-creases in production in the United States, theUnited Kingdom and the Netherlands. The vol-ume of trade in preserved milk increased onlyslightly.

Because of larger supplies, prices of dairy pro-duce during 1953/54 tended to decline, majorexceptions being the United Kingdom contractprices for butter and cheese from Oceania, andfor butter from Denmark. The 1953 averageprice for butter from Denmark to markets otherthan the -United Kingdom was at the previousyear's level.

In the -United States, the fall of prices waschecked by the prevailing support levels. As pro-duction exceeded demand, the United States Gov-ernment has been buying, under the existingprice support programs, large quantities of butter,cheese and dried skim milk. In spite of effortsto dispose of accumulated stocks, governmentholdings have grown. Inventories of the Com-modity Credit Corporation at the end of March1954 were 150,000 tons of butter, 145,000 tons ofcheese and 259,000 tons of dried skim milk against43,000 tons of butter, 18,000 tons of cheese and56,000 tons of dried skim milk a year before.For the year begirming 1 April 1954, the p3-icesupport level for dairy produce was reduced from90 to 75 percent of parity resulting in a reductionof about 13 percent of the support prices forbutter and cheese. The government carries ona number of operations to dispose of surpluses ofdairy products, such as sales against payment inimporters' currencies (Section 550 of the MutualSecurity Act 1953), sales at concessional prices,free distribution to domestic institutions, spe-cial distribution programs for low-income groupsand donations to welfare agencies for free distri-bution to needy people abroad.

At the beginning of May 1954 the United StatesDepartment of Agriculture announced that itwould sell its surplus butter stocks for export atworld market prices, which are considerably belowthe domestic level, and it sold, domestically duringthe first three weeks of May about two-thirds of itsstocks of dried skim milk for use as livestock feed.

In the Netherlands also, purchases under thep3-ice support program led to a considerable accu-

REGION 1950 1951 1952 1953

Prewar 100

Western Europe . 104 107 106 113North America 2 . 113 112 112 118South America . 146 149 156 159Oceania 3 104 105 99 110

mulation of stocks -which reach.ed its peak lastfall, but since then butter and cheese stocks havebeen disposed of almost entirely and dried skimmilk stocks were reduced by about two-thirds.At the beginning of the current year butter stocksWere large.r than a year before iii 'Western Germanyand Canada, and a considerable increase in cheesestocks occurred in Switzerland. In New Zealandbutter stocks during the current season were lessthan in 1952/53.

European egg production made satisfactoryprogress in 1953. Exports expanded and theNetherlands, :Denmark, and Poland accountedfor nearly the entire increase. Western Ger-many, -which in recent years has been thelargest importer of shell eggs, increased its im-ports in 1953 by more than one-fifth. United King-dom imports of shell eggs were ten percent largerand i.ts imports uf egg products Were more thandoubled, °Wing tO larger receipts from China.:Private imports of shell eggs into the UnitedKingdom from the sterling area were permittedtu January and from ()EEC couittries in April 1954.

In the United. States and Canada egg produc-tion -increased slightly. Australian productionin the current season is estimated to be at aboutthe same level as in the previous one. North_Ain.erica exported less in 1953, the reduction inexports from Canada being nearly 40 percent.

Egg prices in Europe were generally below 1952awing to ample supplies. In the United States

Including milk powder.None or negligible.

... Not available.

114

and Canada, oil. the other hand, prices itere con-siderably above 1952. Cold storage holdings ofeggs in the United States during 1953 and at thebegiruting of the curreta year have been muchsmaller than in 1952.

The dairy industries of the main producing coun-tries may have to face increasing difficulties clutingthe season 1954/55, ezpreinily in high cost areas,if demand (loes not catch up with production.Numbers of ni ilk COWS increased generally du.ring1953 and, in view of steadily gro-wing milk yieldsper cow, milk production in tile current year is ex-pected tu be well above 1953, provided that graz-ing conditions remain normal. As in the past year,production of butter ma:y increase more than thatuf cheese.

Exportable supplies of butter in Oceania maybe somewhat smaller owing mainly to decreasedproduct ion in New Zealand in the current season.Import demand for butter will be reduced tua certain extent because of greater domestic pro-duction in Belgium, France, Western Germanyand Switzerland. The major factors on -whichbutter trade will depend are the developmentsin. the 'United Kingdom alter the end of .rationingof butter and cheese -in May 1954, and the extentto which the U.S.S.R. will continue to purchasebutter on world markets. Owing to the removalof subsidies, butter and cheese prices in the UnitedKingdom have increased. In view of the pricedifference and of the firm position -which margarine

TA.13-1,111 57. EXPORTS OF 1.3t TTT Eli, CHEESE, CONDENSE.D AND EvAronAYED MILK, AND MLLE :POWDER8 ELE ED COUNTRIES

Hotter Cheese 0,111(ii441 1/11dpao h.1 inilk pirwiler

Ciit-s-rit V 193 .1- 11131- 1931- 1931 -1938aver- 1952 1953 1938

P -1952 1953 193 S

aver- 1952 1953 19:1SviI'- 1952 1953

age age ; I g.0 "

it& iisana nu fide tons

1)elynlark 149 117 137 8 54 60 18 46 42 12 II1.`ra /mo 4 I I II 18 17 13 15 415 31 1'01 ud , Ron of 24 1 1 1 6 9 6 3 211alv 1 24 19 17 12 --Net he I larals 50 50 53 60 78 86 162 199 207 17 38 32N11AV'l 2 5 2 1 3 2 11 -- --8 11.1.1 23 13 13 --- 2 5 -- -- 7 4SWii./.01111111 19 20 18 6 4 , 41 /11'111'L 2 33 1 7 9 13 8 2 22 18

StJttes 1 1 2 3 13 37 69 2 46 58rgon1 ina 8 1 14 2 2 3 .

.1[1,411111a 100 35 40 9 24 23 7 33 35 2 21 28No%v Zealand 140 186 161 87 93 103 3 12 11 7 52 53

302 403 424 957 315 348 235 388 398 30 204 206

has gained in the postwar period, it is uncertainwhether butter consumption will rise. Effortsby the -United States to dispose of its butter stockscould influence considerably both the patternand volume of trade. No particular change canbe expected in exports of cheese and preservedmilk.

Larger .h.en munbers, higher yields and nplefeed supplies, combined with good demand, pointto further increases in egg production and tradeduring 1954.

REVIEW OF WORLD FISHERIES

The 1953 warld catch of fish, including crusta-ceans and mcfitusks, is estimated to have remainedat approximately the 1952 level of 26 milliontons. Statistics are not available for a 'large partof the wculcrs fish production but there are statis-tical data covering the production of between17 and 118 million metric tons which. arc sufficientto show the trends. Figures for 1938 and :forthe years since 1947 are given in Annex Table

Major Producers

The annual aggregate iroduction of fish by fivemajor fishing countries :for which statistics areavailable, i.e. Japan., the United States (includingAlaska), Norway, the United Kingdom and Canada(including Newfoundland), has varied between10 and 11 million metric tons during the period1951 to 1953, and accounts ifor about 40 percentof the world's total. In 1953 the output of thesefive countries amounted to about 300,000 tonsless than in 1952, an important contributingfactor being a decline in the Norwegian productionof cod. United States output in 1953 was about300,000 metric tons less than its 1950 total of2.65 million metric tons, mainly because of thecontinued shortage of CalifOrnia pilchards. InCanada, there was a slight increase as a result -of the salmon abundance. The "United Kingdomfisheries remained stabilized at :levels reachedduring the early 1950's. The Japanese catchs

showed a slight drop to 4,577,000 tons from4,649,000 tons in 1952.

For two other major producers, the 'U.S.S.R.and China, statistics are not available but it is

estimated that they each produce over two millionmetric tons a year. Taken together, all sevenmajor producers catch over 15 million metrictons a year or well over half the world total.

115

Medium Producers

'Vweive countries with annual catches of be-tween 300,000 atol 800,000 me) tic tons each areconsidered to fall within the group of medium pro-(111CerS. The aggregate annual production of allthe cormtries in this group has lately been aboutfive million metric tons or about 20 percent uftheworld total. Figures are available for nine ofthese countries, -which between them producedannually between 3.9 and 4.4 mil lion metric tonsduring the period 1951 to 1953.

Production. at 650,000 tons in the Union ofSouth Africa (including South Wes) Afiica)eel at the record level reached in 1952 alter the veryrapid postwar development of the pilchard fish-eries. The Icelandic catch of 415,000 tons hi1953 was a third more than that in 1938 andalso an improventent on 1952, but it was stillbelow the immediate postwar peak. :Denmark(343,000 tons), the Netherlands (343,000 tons),the Philippines (306,000 tons), Portugal (392,000tons), and Spain (640,000 tons) again increasedtheir catches in 1953 and they are now at produc-tion levels well above the 1938 mua 'k. WesternGermany has rehabilitated -it s fislIcries and in1953 the catch approximately equalled that of1938 (779,000 tons). The 1953 French productionof 520,000 tons also is :near the 1938 level, butalthongh the 1953 catch was greater than thatof the preceding year, it was bellow the postwarpeak reached in 1951. No comparable statisticsare available for the other countries in this group-India, Indonesia and Korea.

Selected Smaller ProducersSeventeen smaller producing countries, whose

individual output does not surpass 200,000 tonsper year, have between them an aggregate annualproduction of about 2 million metric tons, account-ing for about eight percent of total world production.Argentina, the Belgian Congo, Finland, Greece,Hong Kong, Malaya, Sweden, Turkey and Thailandhave maintained their postivar iricreases tt f/PO-

dlleti011, which are however mainly of local signi-ficance. Belgicun, the Faeroe 11slands, and Italyhnve also kept up the level of their output exceptfor occasional fluctuations. Important mercaseshave been achieved by Angola, Brazi I, Chileand French Morocco, though in some cases therewas a levelling off in :1953. The Angolan long-term expansion is related to the developmentof the fish meal industry and the French Moroc-can expansion to the sardine canning industry.

Utilization

While available statistics are inadequate todetermine gradual changes in utilization, it seemsthat during 1953 the general postwar trends con-tinued. Particularly in Canada and Newfoundlandduring the period 1951 to 1953 catches of cod,haddock, hake and other fish were divertedfrom salted fish production to the output of freshand frozen fillets. On the other hand the inabilityof Iceland to land fresh fish in the United Kingdomhas tended to encourage a return to cured fishproduction. In Norway the output of salted codwas reduced by lower catches, due to a scarcityof fish on the grounds.

The group of species which includes herring,sardines and anchovies accounts for the sharpincreases in the catches of many countries whosefisheries have developed rapidly during postwaryears. The increased catches in these countrieshave largely been utilized for meal and oil produc-tion and also for canning. The world outputof these products was, however, reduced by asharp drop in California pilchard landings in 1952and 1953. Traditional producers of salted herringshave maintained their output in 1953.

Tuna, mackerel, and bonitos are used largelyfor the production of canned fish. A decline inUnited States catches did not adversely affectthe output of the canneries as they were able toimport their requirements of fresh and frozentuna from Japan.

Herring, Sardines, Anchovies, etc.

About a quarter of total world catches consistof fish of the Clupeiform species. The 1953 herringseason in Norway was extremely good, despitethe late start of winter fishing and unusuallystormy weather. The 1954 winter season, witha catch of 1,060,000 metric tons, set a record.Herring catches in Iceland \vere moderate in 1953,but the Netherlands had increased landings amount-ing to 51,700 metric tons of' fresh herring and107,000 metric tons of salted herring. In West-ern Germany, Denmark, the Faeroes and France,herring landings also increased during 1953. InNorth America, the biennial off-cycle year was re-flected in smaller landings in Maine, but those on theCanadian West Coast increased in spite of a strikeearly in the year. On the whole, the 1953 herringseason was better than that of the preceding year.

The year 1953 proved generally satisfactoryfor fish meal and oil, which are the most importantoutlets for herring and related species. The bulk

116

of the Norwegian herring catch, of the landingson the west coast of North America, of menhadenlandings on the Atlantic seaboard of the UnitedStates, and of pilchards in South Africa is utilizedfor this purpose. In the United Kingdom moreherring are also being used for the manufactureof fish meal and oil because of the difficulties inthe traditional salted herring markets of CentralEurope. Denmark is expanding its productionof meal and oil, principally from increased herringcatches.

Canned herring and sardines are an importantproduct in a number of countries. In France,Portugal and French Morocco canneries have beenin competition for supplies with the fresh fishmarket. The French production for local consump-tion showed an increase in 1953. The Moroccancanneries have stepped up their output duringthe postwar years, but the peak level was notmaintained in 1952 and 1953 because of market-ing difficulties. Increased attention is now beingpaid to by-products and to a reduction in costs.As already mentioned, the California pilchardindustry was almost cornpletely inactive in 1953and, as a result, the United States has importedincreased quantities of canned pilchard productsfrom South Africa and Japan. Exports of saltedh.erring from the Nethedands reached a postwarrecord of 56,000 metric tons in 1953, againstnearly 42,000 in 1952, mainly due to largesales to the U.S.S.R. Netherlands' exports to West-ern Germany and Belgium-Luxembourg remainedat approximately the 1952 level, but those toPoland and Czechoslovakia declined. In 1953salted herring exports from Norway followedapproximately the levels and patterns prevailingin 1952. In the United Kingdom fresh herringand kipper sales appear to have decreased.

Cod, Hake, Haddock, etc.

In 1953 the Norwegian cod fisheries productionfell to 70,000 tons, as compared with 123,000in 1952 and 149,000 in 1951, and in the first half'of 1954 the important Lofoten cod fisheries recordedan even smaller catch then the unsatisfactorylevel of 1953. Improved Norwegian catches ofhake, haddock, bank and fjord cod and Finmarkcod, made it possible, however, to increase the quan-tities processed both for the domestic marketand for the export trade as fresh and frozenproducts and stockfish. The Icelandic catch ofcod showed a slight decrease in 1953. Some of'the catch was diverted to Central European marketsand a higher proportion than previously was used

in the manufacture of stockfish, principally forexport. In Callada, and particularly in New-foundland, the reduced catch of cod reflected areduction in supplies but also lower prices for theend products. The general postwar decline insalted cod production was evident both in Canadaand France in 1953, while in the Faeroe Islandsa strike reduced the landings of cod and a shiftfrom cod to herring fishing late in the year alsocontributed to the reduction. By contrast, theproduction of salted cod in Portugal continuesto increase and to replace imports.

In general, the traditional salted cod marketsof Europe have been importing less of this product,due partly to large carry-overs from the previousseason and partly to higher levels of domesticproduction.

Salmon

Because of an improvement in the four-yearcycle run for sockeye salmon and a favorableyear for pink salmon, the total 1953 catch inCanada (British Columbia) produced the largestpack of canned salmon in recent years. Thesubstantial carry-over from the 1952 salmonpack would have been greater but for increasedsales, particularly to the United Kingdom and theUnited States. More attention is being given tothe Canadian domestic market where, with theassistance of an advertising campaign, there isa good demand.

A succession of poor runs of Alaskan pink salmonis reflected in a decline of the total United Statessalmon catch from about 170,000 metric tons in1952 to 145,000 in 1953, and a reduction of thecanned pack of Alaskan pink to 62,000 metrictons, which is the lowest figure since 1921. Norwas this decline offset by the peak of the pinksalmon biennial run in Puget Sound or by in-creased catches of sockeye. Salmon fishing inAlaska might be restricted for conservation reasons.The year 1954 will also be an off-cycle year forpink salmon in Puget Sound.

There was a slow expansion in the Japanesecanned salmon output by means of mother-shipexpeditions to the Western zone of the NorthPacific, but it is not expected that this develop-me'nt will contribute substantially to world suppliesof canned salmon. Data on the U.S.S.R. outputof salmon are not available, but the goal for 1954is reported to be 180,000 metric tons, of whichabout 60 percent are to be caught around Kam-tchatka. The plan also provides that about 25percent of the total catch is to be canned.

117

Tuna, Bonitos, and MackerelThe United States, a major producer and con-

sumer of tuna, experienced a failure of the alba-core fisheries off the Washington and Oregoncoasts, and the catch of the tuna clippers oper-ating on off-shore grounds of Central and SouthernAmerican countries declined mainly because of badfishing conditions. The total 1953 catch of tunaand bonitos amounted to 142,000 metric tons com-pared with 154,000 metric tons in 1952.

The Californian tuna canning industry, however,increased its pack of calmed tuna by obtainingimports of fresh and frozen tuna from Japanto balance the decline in domestic landings. Im-ports of fresh and frozen tuna into the UnitedStates of America amounted in 1953 to a recordfigure of 43,100 tons compared with 31,300 metrictons in 1952.

Domestic supplies were augmented by an increasein the imports of canned tuna (especially tuna inbrine) which reached a record figure in 1953 of13,600 metric tons. Landings at Californian can-neries, as well as imports to be canned, show anincrease during the early part of 1954. If thistrend continues, the 1954 canned pack mightbe a record.

In Europe the bluefin and albacore landingswere maintained on more or less the average levelsprevailing during previous years, although a slightdrop to 8,000 metric tons was registered in theNorwegian catches of bluefin tuna, which hadgrown to 11,500 metric tons from 1951 to 1952.

FATS, OILS AND OILSEEDS

Excluding the U.S.S.R., world production offats and oils (with butter in terms of fat content)is about 18 percent larger than prewar. Thisincrease is slightly less than the rise in population.However, the deficit in production per personis met, in effect, by a remarkable increase sinceprewar in the production and use of relativelynew substitutes for fat and oil products. Theoutstanding example is synthetic detergents, whichhave displaced large quantities of soap in the'United States and Europe. Levels of consumptionof fats and oils vary greatly in different parts ofthe world. Large increases in consumption overprewar have occurred in many areas where con-sumption levels are relatively low. In the Unit-ed States and Western Europe, which are high-level areas, total consumption per person, includ-ing both food and non-food uses, is slightly lessthan before the war.

Malty countries that were major exportersbefore the war, like India and Argentina, nowconsume substantially more oils and fats thanformerly, and export materially less. Major de-clines in exports from Asia and South Americahave been only partly offset by increases fromthe United States and Africa. World indigenousexports in 1938, including whale oil from theAntarctic, averaged 6.1 million metric tons interms of oil. These exports had fallen to 2.2million metric tons by 1945, but steadily rose to5.7 million tons by 1951. This was the postwarpeak, and it reflected a rush by importing coun-tries to accumulate stocks after the Korean crisisiii rnid-1950. These inventories were reducedin 1952 and exports in that year declined to 5.1million tons. In 1953, world exports recoveredto about 5.4 million tAms (Table 58).

The increase in exports in 1953 was due bothto a recovery in the demand of importing countriesfrom the relatively depressed level of 1952, and

'1.7ABLEi58. IlArrs, OILS AND (hLSEEDS : V\70.111-,1) INIDIGENOIrS ExPOItTS I IN 17.1ilitIVI5 OFGI 10 NS AND 13V rrY1?

ITEM 1938 1950

118

to an abundance of exportable supplies of certainfats and oils, which more than offset a declinein suppli.es of others. Tice largest increase inexports in 1953 was one of about 200,000 metrictons of tallow and greases from the United States.Another large increase resulted from the sale inearly 1953 of substantial stocks of Antarcticwhale oil th.at had been carried over from the1951/52 season. There was a substantial increasein 1953 in Chinese exports of oilseeds and oils,notably soybeans, groundnuts, sesame seed and.their oils, mainly in the first half of 1953. Ar-gentine exports of linseed oil were expandedmaterially by heavy sales from governmentstocks. These increases more than offset declinesin production and exports of copra and coco-nut oil from the Far East and lard from the'United States, and in exports of groundnut oiland other items from India.

"Prices of fats, oils and oilseeds in internationalmarkets declined substantially from spring 1951

1951 1952 1953(prel1nlinar))

'thousand meiric losBi e( ion

Includes only indig,enous oilseeds and oils prodt ced from indigeinous materiaiS. Trade among :Eastern European coun-tries and the 1r.5.5.11 iS included in postwar 'years.Exluding exeept, in 1938.Chifly groundnut, soybean. cottonseed, olive, .apeseed. sunflower nnd sesc Inc OHS, and oil etilliV,lent of groundnuts,soyhemis, eoitcuseed. rapeseed, sunflower and St 501111

eocould, palm ¡col pahnkerinel oils, tallow, greases and oil equivalent I eopra and pitholii k.5 The elli i I,. prodoctlon of whale oil in the Aintarehe is eonnied her,: its an export. i.1perm oils tod ji Ii liv..r oils are not in-chided in Hies, figures. 7(1,91(1) tOlIS have been deducted from 1952 awl added Lo 1953 to allow for LO of Antarctic whaleoil from he 1l151 /52 season that were not sold until 195:',.

6 Chiefly lins.;ed, ,,istor dad tung oils and oil equivahnt and ,Isiorseed.

'Europe 2North AmericaSoutli Allifricil

495157665

1

402003580

1

399130596

1

301079177

1

340240260

A frica 1 087 1 353 1 104 1 294 1 400Asia 2 730 1 501 1 749 1 490 1 400Oceania 396 378 354 410 350Antarctic 566 344 348 301 420

Wosto ToTAt, 6 096 5 561 5 680 5 052 5 410

B y type

Butter, fat content . . . 509 396 350 333 350Lo rd 166 260 351 317 250Liquid edible oils 3 1 797 1 299 1 292 1 077 1 260third oils 4 2 193 2 4.26 2 518 2 490 2 570Whole and fish oils 5 .. 678 519 521 4:36 550Drying and miscellaneous

oils 6 753 661 648 399 430

WosLo l'oTAL 6 096 5 561 5 680 5 052 5 410

FIGURE XIV Monthly Average Prices of Fatsand Oils in International Markets, 1951-1954

U.S. $ per metric ton600

500

400

300

200 .... ..Jan. Jan.

600

500

400

300

200

150

(semi-logarithmic scale)

Jan.

1951

A - Groundnuc oil- Soybean oil

C - Coconut oil- Palm oil

Prices are compiled from The Public Ledger, London, and areconverted co U.S. dollars from other currencies at official ratesof exchange.

Groundnut oil : January 1951 co June 1953, Indian, bulk, c.i.f.European port ; July 1953 onwards, S.African, drums, c.i.f.European port.

Soybean oil : American, crude, bulk, f.o.b. U.S. port.Coconut oil : Straits, 3 bulk, c.i.f. European port.Palm oil : Belgian Congo, bulk, c.i.f. European port.Lard : American, pure, refined, 37 lb. tins, f.o.b. ship New York.Tallow : American, fancy, bulk, f.o.b. ship New York.Linseed oil : Argentina, bulk, c.i.f. European port.

to spring 1952. The general trend was then mod-erately upward until the beginning of 1954. Aweighted average of prices of the seven majoroils and fats charted in Figure XIV rose about 20

119

percent from the low point of April 1952 to .April1953, and an additional six percent to January1954. Price movements of several of the individuaditems, however, were quite different from thegeneral trend, owing to peculiarities of the .respec-tive supply situations.

Prices of liquid edible vegetable oils (soft oils)from non-dollar sources tended to rise m.oder-ately from mid-1953 to spring 1954, largely as aresult of a decline in export supplies. Europeanproduction of rapeseed WaS down sharply, and ex-portable supplies of Far Eastern groundnut oil weremuch smaller than a year earlier. However, largesupplies of soft oils Were available from. th.e'United States. Commercial exports of soybeansfrom the United States in late 1953 and early1954 :reached a .neW peak. In addition, substantialexport sales of cottonseed oil and groundnutswere made by the United States Governmentfrom .its stocks. In early 1954, United Statescottonseed oil vas being sold in internationalmarkets at a materially lower level than usualin .relation to other soft oils.

World production and exportable supplies ofcopra Wel.7e substantially smaller in the first ninemonths of 1953 than a year earlier, and "vicesof coconut oil and copra in international marketswere materially higher. Rising production andexports in late 1953 and early 1954 were reflectedin a'sharp break in prices of coconut oil and coprain March 1954. World pahn oil production and.exports increased moderately in 1953, continuingthe long-term trend. Prices averaged slightlylower than in 1952. Palm oil competes chieflywith coconut oil ann . inedible tallow.

Production of talloAv and greases in the UnitedStates increased substantially in 1953 to a newpeak, while a continuation of the downward trendin use in soap was only slightly more than offsetby an expansion of other uses, notably in mixedanimal feeds. Exports rose by more than 50percent. The p.rice of tallow was exceptionallylow in early 1953, but the heavy exports led todeclining stocks and a marked increase in pricesii1 the latter half of the year. Th.e United Statesis the principal world exporter of inedible tallowand greases.

The price of lard increased materially during1953 and in early 1954 WaS at an exceptionallyhigh level. Reduced 'United States productionof lard, beginning in early spring 1953, and anincrease in .European demand in the latter partof 1953 were the principal reasons for the pricemercase. Prices of linseed oil in internationalmarkets in 1953 and early 1954 continued their

Jan. Jan.1952 1953 1954

- LardF - Tallow

- Linseed oil

Jan. Jan. Jan. Jan.

Jan.Jan. Jan. Jan.

Jan. Jan.

long decline, mainly as a result of heavy exportsales from Argentine and United States govern-ment stocks.

Supplies of fats, oils and oilseeds in internationalmarkets have been larger in 1.954 than in 1953.There have been substantial increases in copraproduction in the Philippines and Indonesia, andthe 1953 crops of West African groundnuts and1VIediterranean olive oil, which reached marketsmainly in 1954, were materially larger than a yearearlier. In addition, large sales for export havebeen made from government stocks of cotton-seed and linseed oil in the United States and lin-seed oil in Argentina. World import demand forfats and oils has remained strong, particularly fromEurope, and most prices in international marketsdeclined only moderately in the first half of 1954despite the relatively heavy export supplies.

Prospects in mid-1954 indicated that exportsupplies would remain ample during the next twelvemonths. Substantial increases in United Statesproduction of soybeans, linseed and lard wereexpected, and it seemed probable that Far East-ern copra production would continue above thelevel of a year earlier. Also, government stocksof linseed and cottonseed oils in the United Stateswere still large. Export policies for these stockswill have an important effect on internationalmarkets. However, on balance, barring unus-ually unfavorable weather in the Northern Hemi-sphere in the summer and fall, or a deteriorationof the international political situation, the out-look in mid-1954 was for a continued downtrendin the general level of prices of fats, oils and oil-seeds in international markets in the latter halfof 1954 and early 1955.

F IL (T IT

TABLE 59. MAJOR FRESH FRUITS : WORLD PRODUCTION AND TRADE

1934-38average

7 honsand Ions

2 Excluding China and U.S.S.R.2 Production data exclud i ng cider fruit.

. Not available.

Production

120

1951-53in per-cent of1934-38

Percent

1934-38average

FRESH FRUIT

Production and 'TradeWorld production (excluding China and U.S.S.R.)

during 1951A3 surpassed the prewar averageby nearly 50 percent for oranges and tanger-ines ; 40 percent for grapefruit ; and about 35percent for other main fruits. The trend is clear-ly upwards due to new plantings in recent yearsand better cultivation practices. In particularmany younger citrus groves have not yet reachedfull productivity and will add heavily to pro-duction over the next five to ten years.

World trade has .not increased for any of themain fruits in the same proportion as production,though 1953 brought a remarkable expansion,mainly for oranges and for grapefruit. The ex-pansion of deciduous fruit production in Europehas led to a higher degree of self-sufficiency andmany countries exporting citrus fruit and bananashave raised domestic consumption proportion-ately more than their exports.

In 1953 Mediterranean countries exported250,000 tons more oranges than in 1952. TheUnited States and the Union of South Africa alsoincreased their exports. Among exporters of'

apples, only European countries raised their ex-ports. The European market, which absorbs thebulk of the exports of all fresh fruit except ba-nanas, increased its imports in 1953 by about20 percent over the previous year and 25 percentabove the prewar average. A notable featureis the increase in imports of oranges and bananas.The three major importers are France, the UnitedKingdom and Western Germany, which togethertook 1.4 million tons of Western Europe's total

Trade

Thousand in etric ton.

1951-53in per-cent of1934-38

Perron t

Bananas 6 000 8 000 8 300 136.0 2 500 2 450 2 700 2 850 106.7Oranges and tangerines 8 600 12 400 13 200 13 000 149.6 1 810 1 940 1 980 2 300 114.5Lemons 1 070 1 390 1 390 470 132.4 280 230 260 280 91.8Grapefruit I 160 1 620 1 560 1 800 143.1 120 120 110 140 102.5

Apples 2 6 340 8 340 8 840 8 150 133.2 720 740 680 780 101.8Pears 2 2 000 2 440 3 090 2 820 139.2 150 175 185 195 123.3

1951 1953 1951 1953

import of 1.9 million tons. Western Gernianyalone increased imports over 1952 by 120,000tons, and the United Kingdom by 100,000 tons.European banana imports increased 135,000 tons,of which 95,000 tons represe:nted increased importsinto the United Kingdom, reflecting the decontrolof banana imports in early 1953. United King-dom imports at 265,000 tons, however, are still40,000 tons below the prewar average.

TABLE 60. ORANGES AND APPLES : EXPORTSBY REGION. '

Trade Policy

All fresh fruit imports in the United Kingdomare now in the hands of private trade. However,imports of apples and pears remained under restric-tion for the first half of 1954 and the licensing ofbananas has been extended until 1 October 1954.The open general licence applies mainly to OEECcountries. Imports from the sterling area haveremained unrestricted and imports from dollarcountries are under special licensing control.Commonwealth suppliers to the British marketare facing sharper competition than in past years.The increase in import duties on various horti-cultural products in the United Kingdom as fromDecember 1953 did not affect the main fruits,which are covered by the GATT tariff schedulesextended until 30 June 1955.

The liberalization of fruit trade among OEECcountries and extension of the same policy tocover, for example, German citrus imports fromSpain, are among the main factors behind therapid increase in European trade. Eastern Eu-rope also is increasing imports, mainly of citrus

121

TABLE 61. FRESH FRUITS : IMPORTSINTO WESTERN EUROPE

fruit from Israel. The United States has contin-ued the export payment program designed toencourage exports of fresh and processed orangesand grapefruit as well as winter pears. Moreover,the United States Government has decided to in-clude fresh oranges and grapefruit and cannedgrapefruit, apricots and peaches in the specialexport program for surplus commodities againstpayment in soft currencies. An allotment of fivemillion dollars has been granted to the UnitedKingdom of which 2.5 million dollars is for citrusfruit. The general export subsidy is also appliedon these exports. Spain and Israel are also con-tinuing their export promotion programs : Spainunder special exchange rates ; Israel under a com-bined system of direct export premiums and spe-cial exchange rates.

Outlook

The upward trend in fresh fruit consumption,together with a more liberal import policy andfurther improvement of the general economic situ-ation in some of the main importing countries,may justify further expansion of production inexporting countries. The wide differences inconsumption levels between countries and incomegroups suggest a large unsatisfied need for freshand processed fruit. The high rate of new plant-ings, particularly in citrus exporting countries,indicates a rapid expansion over the next five to tenyears and any economic recession in importingcountries would cause a great risk to specializedexporters. Failing to reach an agreement withall Mediterranean citrus-growing countries regard-ing new plantings, the Spanish Government re-

lenu p 1934-38average

1952 1.953

Oranges and tangerines .

Grapefruit:Len-ions

. .

1

'Thousand

28179

198

metr

1 61453

185

.e tons .

1 89585

203

TOTAL CITRUS FRurr . 1 558 1 852 2 183

T3ananaS 728 776 911A.pples 621 432 480Pears 121 140 169

TOTAL MAJOR FRUIT. . 3 028 3 200 3 743

rrnm 1934-38average

1952 1953

Thousand metr e tons .

Oranges and tan.gerines .

of which1 810 1 980 2 300

Mediterranean region 1 261 1 501 1 730United States 150 293 367South America . . 160 30 31Union of South Africa 85 108 159

Applesof which

720 680 780

Western Europe.. . . 191 340 485United States 'and Can-

ada. 348 98 64Argentina and Chile 12 68 70Australia and New Zea-

411.0 108 1.01 94

stricted 11.BAV plantings from June 1953. The se-vere frost in February 1954 may, however, havereduced the capacity of the Spanish fruit grovesfor the next few years.

DRIED VINE FRUIT AND WINE

Dried Vine FruitAlthough. the consumption fresh and canned

fruit is increasing in all count vies, the downwardtrend in consumption of dried fruit Avh i wasaleady noticeable during the inter-war periodhas continued.

The total raisin. pack- in 1953 remained practi-cally the same as in 1952, in spite of a (Tecleasein the United States pack from 203,000 tons to202,000 tons. There were substantial increasesin production in Australia, Turkey ttnd Iran.

Export of raisins in 1953 increased slightlyOVer last year as higher exports from Australiaand Greece more than compensated the decreasein United States ad Turkish exports. Therewas au inciense in exports of currants from Greeceand Australia, 1.ntt the volume of exports fromGreece is still below prewar. Compared withexports in 1934-38, raisin exports from the UnitedStates, Australia and Greece show a marked in-crease, whereas Turkisht exports have been sub-stantially below the prewar le vol during the lastthree years. Before the war Turkish exportswere highly dependent on the German market,for which Greece and Iran have been the mainsuppliers in recent years, while Turkey's secondmarket, the United Kingdom, in 1952 and 1953was supplied mainly from the United States andAustralia under the government bulk purchasingprogram. The latter, however, was dicontiimedun 1 'December 1953, and since that date inipmtsinto the 'United Kingdom have been permittedunder open general licence except from the -UnitedStates arid certain other countries mainly in thedollar area. The effects of this decontrol arelikely to become evident only gradually, as theUnited Kingdom, at the beginning (.)f the 1953/54season, had substantial stocks of raiSillS and cur-rants. The size of these stocks is generally esti-mated at around 50,000 tons, -which is equivalentto nearly 50 percent of the-United Kingdom's aver-age annual imports over the past three years.The expectations -which Turkey and Greece, inparticular, had based on the new policy were dis-appointed when the United Kingdom announcedthe purchase of 22,000 tons of California seedlessraisins out of the 1953 crop to be imported in the

122

TABLE 62. DIU ) Viz E Vit i IT Wo nap PRO1AN I-) EN. PORTS

late spring of 1954, i.e., after decontrol. '..Che go vnment purchase of California raisins was ne-

uotiated -with the United States Government asin the previous two to three years when the 'Uni-ted Kingdom took over the greater part of the" surplus pool " of the -United States raisins xvithsubstantial subsidies paid by the United StatesGovernment. IVith the .uncertainty about devel-opments in the United Kingdom market, whichaccounts for at least one-third of total trade inthese commodities, the general marketing situa-tion for raisins and cuiTants is rather unstable.

Other significant developments in 1953 Werethe introduction by Turkey of export subsidiesfor sultana raisins and the extension for another,year of the United Kingdom-Australian agree-ment to cover Australian exports of raisins andcurrants. As in 1952/53, an export payment pro-gralli. is maintained by the -United States Govern-ment fi the 1953/54 pack of raisins to help movethe surplus into export markets.

An important factor which may affect importsof Northern European countries in 1954 is thesubstantial reduction since November 1953 in:freight rates .for dried fruit from the Mediterranean,which may help to stimulate exports of raisinsand dried figs from Greece and r_Curkey. Fordried fruit from these countries, the rates havebeen reduced frorn the equivalent of 20.90 dollarsa ton to 14 dollars a ton. Freight mates from Aus-tralia to the United Kingdom were increased by71>4 percent in early 1954.

Average import unit values for 1953 raisin im-ports into the United Kingdom show the lowestunit value for United States raisins and, com-pared with average import unit values for theprewar years, raisins show a smaller increase thanother fruit fresh or dried.

The Australian Dried Fruit Board has stronglyobjected to the recent decision of the Australian

Thousand ietrie tans. Percent

RaisinsWorld irvoduction . 44 I 426 497 491 106.9World exports. . . 924 154 258 266 100.9

CurrantsWorld production . 181 96 95 98 52.3World exports, . 90 56 56 69 67.0

PrEm11)3.1-1938aver-age

1151 1955 1953

1951-'1953

%age of

1934-38

Agriculture Council to increase the area underdried vine fruits further and the Board has alsoexpressed its concern about the effects of the po-licies of countries subsidizing raisin exports whichmay adversely affect the sale of Australian driedvine fruits in the United Kingdom and NewZealand.

Wine

In wine, in recent years, there has been a lackof balance between production and commercialdemand in some of the principal countries. Franceand Spain are still having marketing difficulties,whereas Italy no longer has a surplus. Italianconsumption has risen steadily during the last fewyears, and stocks at the beginning of the .1953/54season were generally considered lower than de-sirable.

The solution of the wine problem is to be soughtprimarily in the wine producing countries them-selves. International trade opens only a verylimited outlet for wine.

During the war, consumption decreased sharplyfollowing the drop in production, but it has sincegradually regained the prewar level in Italy. How-ever, French consumption, though increasing, islower than before the war. At least until lastyear, consumption in Spain remained below theprewar level and though production was also small-er, stocks have accumulated. Greece, Portugal,Argentina and Chile, on the other hand, have hada higher per caput consumption in recent yearsthan before the war.

Various reasons have been given for the down-ward long-term trend in consumption in the prin-cipal vine-growing countries during the last thirtyyears, including industrialization and structuralchanges in community life (lower consumption incities than in the country, motoring, sports, andlarger supplies of non-alcoholic drinks.)

TABLE 63. WINE PRODUCTION

1931-35 average.

123

World production of wine in 1948-50 was about18 million tons compared with a prewar averageof about 19.5 million tons. Average productionin 1951-53, however, about reached the prewar level.

The supply situation in France (including Al-geria) during 1952/53 and 1953/54 is shown inTable 64. Leaving out of consideration stocks heldby the trade, the supplies are 91.4 million hectoli-ters against 81.5 million in 1952/53. As the totalcommercial outlet, plus producers' normal carry-over to the next season, is only about 75 millionhectoliters, the surplus is approximately 17 millionhectoliters. The government has ordered seven mil-lion hectoliters to be distilled, but prices paid toproducers for these quantities are much lower thanthe minimum price, though the government takesa substantial loss in marketing the alcohol. Tofinance the compulsory storage program, specialcredit facilities llave been granted.

France and Algeria.

In Spain, the 1953 supply is about 27 millionhectoliters (including a carry-over of about fivemillion hectoliters), but consumption is expectedto absorb only 15 million hectoliters and exportsone and a half million hectoliters. Compulsorydistillation is expected to account for three mil-lion hectoliters. The carry-over at the end of theseason will, therefore, as in France, exceed stockscaaried into the 1953/54 season. Among the meas-ures taken to stimulate consumption is an orderto include wine in the price of practically allmenus served in restaurants.

COFFEE

Current SituationCoffee is one of the few agricultural commodities

of which world supplies have been substantiallybelow the effective demand even at the compara-

COUNTRY1934-38ave rage

1948-50average

1951-53average

. Thousand metric tons . . .

France 6 264 5 184 5 406Italy 3 845 4 080 4 640Spain 11 936 1 396 1 841.Prenell North Africa 2 007 1 513 1 637Portugal 789 828 853Other countries . 4 639 5 029 4 923

WORLD TOTAL. . 19 480 18 030 19 300

rl'ABLE 64. FRENCH -WINE SUPPLIES

PrEM 1952/53 1953/54

. . Million tectoliters . .

Stocks'at producers . . 16.8 16.2held- by trade . . 10.3 10.2

Production

in France 52.4 56.9in Algeria 12.3 18.3

TOTAL SUPPLY . 91.8 101.6

BrazilColombia1\lexieo(luittemala11 1 Sal vador

COUNTRY'

ToTAL LATIN AM ERTOA

French AfricaBritish A rviett

ToTAL AFRICA

Indonesia

Woitt,n ToTitr,

r.l7ABLE 65. COFFEE PRODUCTION IN 'MAIN AREAS

tively high prices of 1953. In 1953 world pro-duction was about three percent bel.ow prewar,and only slightly higher than in the previousyear. Prospects for an expanded Brazilian pro-duction in 1954 and 1955 were destroyed by frostin the newly-planted high-yielding coffee areas inParana in July 1953 ; with practically exhaustedstocks and continuing firm demand from importingcountries, these conditions led to a rise in prices.Since the war, production has averaged belowprewar levels despite the larger population andincreasing buying power per caput.

Due to lower yields in Brazil and some othermajor-coffee producing countries in Latin America,the continent's output declined slightly as com-pared with the previous year, notwithstanding theexceptionally good harvest in Colombia. On theother hand, the trend of production appears tobe rising in Asia and Africa, where better cropswere recorded in 1953 than in any postwar year.High prices undoubtedly encouraged thorough andcareful harvesting.

Net imports into the United States were threepercent higher than in 1952. Even so, owing tostock increases and purchases for the armed forces,per caput consumption is estimated to havedeclined by two percent. With the exception ofthe United Kingdom, all major European im-porting countries registered larger imports in 1953part of which may have gone into stocks in an:ticipation of the price rise ; total European netimports were about seven percent higher than in1952. The relative share of the United States and

1934-38average

1948-51average 1959

l'housami metric. tow>

1953(prel.)

124

Europe in total world imports remained unalteredat 62 and 29 percent respectively. Among ex-porting countries, Colombia reached a record figureof nearly 400,000 tons, wh.ereas exports from Brazilwere about two percent lower than those of 1952.Export earnings from coffee rose further.

Prices, which had remained fairly stable around54 cents per lb. (Santos 4, ex dock New York)for two years, began to rise in 1953 on the newsof the Brazilian frost. The steep rise began inNovember when frost damage was found to beheavier than anticipated. Contributing factorswere reductions in stocks in both producing andconsuming countries, a rise in the Brazilian pricesupport and the early disposal of practically allCentral American crops. In the first week ofApri.I 1954, prices for Santos 4 stood 60 percenthigher than at th.e same time a year ago. Retailprices in the main consuming markets have notyet caught up with those of green coffee, and fur-ther increases appear inevitable.

Outlook

The poor prospects for the next Brazilian cropto be harvested from May to September 1954

reveal a serious gap in the world's coffee sup-plies which can hardly be filled by .higher outputfrom other. producing countries. It appears cer-tain that there will be less coffee available in 1954,unless producing countries reduce their domesticconsumption in favor of exports. Prices are likelyto remain comparatively firm, notwithstanding

1 446 1 064 1 125 1 118251 356 344 39056 66 SS 7269 65 60 5664 69 78 52

2 117 1 861 1 936 i 925

35 103 119 12744 66 69 71

140 291 315 331

124 34 36 50

2 420 2 200 2 330 2 350

Prewar Germany.

the fact that consumer resistance to high prices hasbegun to make itself felt. Consumption of coffeesubstitutes, of " extenders " and of soluble coffeeis rising, and can be expected to rise further.

The supply situation is likely to improve in1955/56. Some of Brazil's frost-stricken areaswill have recovered, and the efforts made in cof-fee-growing countries all over the world to take

BrazilColombiaMexicoGuatemalaEl Salvador

TOTAL LATIN AME RIC A

French Africa13ritish AfricaAngola

TOTAL Al' RICA

Indonesia

TOTAL ASIA

WORLD TOTAL

' Preliminary.

COUNTRY OR REGION

FrancoItalyBelgitunGermany (Western)

ToTAr. Eunoler

United StatesCanada

Africa

Asia

WORLD rrOTAL

TABLE 66. CoFeuE : NET IMPORTS INTO SELECTED CO UNTRIES

COUNTRY

1934-38average

TABLE 67. COFFEE : Ex.,onTs PROM MA,IN PRODUCING COUNTRIES

1934-38average

125

918-11average

Thousand m :irk tons

1952

advantage of the profitable prices of the past fewyears will be bearing fruit. On the other hand,population increase will enhance demand. Dataon planting and replanting are too imprecise foran evaluation of the price outlook which willbe influenced not only by the coffee supply anddemand situation, but by income and othergeneral economic factors.

1948-51average 1952

!Thousand metric tons

1053(prol.)

1953

875230364754

1 021

:304

445267

9493025261

67

933398745773

1 398 1 611 1 593 11 700

36 104 130 109

41 60 76 67

16 50 48 72

130 275 315 1320

85 11 19 32

96 14 23 35

1 620 1 900 1 940 12 C6n

1853750

1166

115

5366

29

161

61

51

56

164

675977

695 460 550 590

786 1 219 1 208 1 25017 40 44 49

52 60 52 51

30 25 35

1 610 1 860 1 915 2 030

TEA

Current SituationOwing to adverse weather in 1953, growers in

Northern India did not fully implement their pol-icy of crop restriction ; even so, production re-mained below that of the previous year. Therewas, however, a marked improvement in thequality of tire crop. Output in Southern India,Ceylon and Pakistan increased, offsetting the smallreduction in supplies from Indonesia and EastAfrica. No important changes are recorded inprod.uction elsewhere. Total world output (ex-cluding U.S.S.R. and China) in 1953 is provision-ally estimated at 593,000 tons, or slightly higherthan in 1952 (590,000 tons).

In 1953 both exports and imports were largerthan those of the preceding year. India wasable to increase her exports by 40,000 tons and tosell .lier tea earlier than usual. Exports from Cey-lon rose by 11,000 tons, thus more than offsettingthe lower exports from Indonesia and British EastAfrica. GrOSS imports into the United Kingdom,however, were slightly lower than in 1952, the year ofde-rationing. On the other hand, total disappear-ance, taking stock changes into account, is estimat-ed to have increased by ten percent. Re-exports from London rose in 1953 and reached50 percent of the prewar figure (31,400 tons an-nual average in 1934-38). There was evidence ofrising demand in most overseas markets. Importsinto Egypt, Australia and New Zealand rose aswell as in the United States, where propaganda

1 1936-38 average.Cambodia, Laos, Viet-Nam, Taiwan, Irau, Malaya, Ryukyu, Turkey.Argentina, Brazil, Peru.

None or negligible.

126

efforts and high coffee prices contributed to agreater use of tea. Total world net imports in1953 are estimated to have been about 450,000 tons.

Under the pressure of improving demand, andwith. generally better quality, prices for Indiantea more than doubled during 1953. From ls. 6.5d.per lb. in December 1952, Calcutta export pricesmoved to 3s.1.6d in December 1953 and stood inMarch 1954 at 3s.5.8d. Higher grade tea, wh.ichhad never suffered tire same severe decline, rosecomparatively less ; high grown Ceylon teas werepriced in March 1954 at about 38 percent abovethe December 1952 quotation. Contributing tothese increases were the planned continuation offiner plucking throughout 1954 and tire signa-ture of a Russo-Indian trade agreement which'includes tea. Retail prices followed suit in mostconsuming countries.

In the last two decades, the internal market inproducing countries has become of increasing im-portance and in 1952 when export prices werelow, governments of producing countries becameincreasingly aware of the necessity for expandingtheir home markets. With higher wages and bet-ter living standards, domestic consumption inIndia and Pakistan is steadily rising. Unofficialestimates place it at 80,000 tons and 9,000 tonsrespectively a year, compared with 68,000 tonsin 1944-46 and 41,000 tons in 1937-39 for bothcountries. There appears to be an increasing de-mand for lower grade teas in Indonesia. No ex-pansion of home consumption has been registeredin Ceylon.

COUNTRY OR REGION 1931-38average

1948-51average 1952 1953

(prel.)

Thousand n etrie tons

India 1178.0 271.6 282.0 275.8Ceylon 103.9 142.2 143.7 155.6Indonesia 74.8 30.5 37.0 36.6Jap an 49.3 36.1 57.0 57.0Pakistan 125.6 22.5 24.1 25.3Other Asia 2 23.9 19.4 23.5 23.5

TOTAL ASIA 456 522 568 574

Africa 9 19 20 17

Others a 2 2 2

WORLD TOTAL (excl. China and U. S. S. R.) 465 543 590 593

TABLE 68. TEA PRODUCTION

TABLE 69. TEA : NET TiviroaTs INTO SELECTEDCOUNTRIES

Given favorable weather conditions, productionin 1954 is likel.y to rise in most producing coun-tries in line with changes in demand. In India,social legislation will impose increased financialburdens on the tea industry. Despite the pros-perous year 1953, there is as y-et no reason for com-placency. Replantin.g, fertilizing and maintenancecosts will take their toll of higher profits, loanswill have to be repaid and depleted reserves re-built. Under these circumstances, enough teacan be expected to be forthcoming from Indiangardens to meet the increased requirements ofoverseas markets. In Ceylon, where tea account-ed for more than a half of all export earnings,output is likely to rise further. The outlook forIndonesia is less favorable : disease is widespread,the number of gardens and factories operating isdeclining, and the badly nee,ded replanting ofold gardens is often neglected for lack of govern-ment assistance. Somewhat larger supplies canbe expected in 1954 from East African producingregions which suffered from drought in 1953.

Both in Europe and in the United States, im-ports are likely to rise in 1954. Tea, still thecheapest drink, will benefit from consumer resis-tance to high-priced coffee. Under trade agreementsconcluded with the main producers, the U.S.S.R.and Eastern Europe may enter the wodd marketsto a larger extent than previously. Iran mayagain become an importer once her paymentsdifficulties are settled.

Until the arrival of the new season's tea in thelate summer, prices are not likely to weaken. In-deed, in some countries retail prices may rise

127

somewhat like the rise of replacement costs.However, the favorable outlook for the 1954/55crop indicates th.e possibility of some downwardprice adjustments in subsequent months. 011 thewhole, tea producers who have become increas-ingly cost conscious, will seek to regulate produc-tion to prevent another sharp price decline suchas took place in 1952, and the existence of strongproducers' associations under the auspices of theInternational Tea Committee facilitates mainte-nance of close control on production.

COCOAProduction

World cocoa production in 1953/54 is estimatedat 720,000 tons, as compared with 749,000 tonsin the previous year, and with a 1948-52 averageof 753,000 tons.

The decline in 1953/54 production is due en-tirely. to reductions in both the Gold Coast andNigeria where the current crop is estimated at36,000 tons below that of 1952/53 and 47,000tons below the average for 1948/49 - 1952/53. Con-tinuance of the Brazilian drought would have caus-ed-an extremely difficult situat ion. Weather condi-tions were not favorable in Nigeria and the GoldCoast during the 1953/54 growing season and therewas probably an increase in losses from diseases andpests. However, the basic problem is whetherother factors of a long-term character were alsoat work ; whether the decline represents the begin-ning of a trend which will become accentuated infuture years, possibly from an increase in thepercentage of trees which have passed peak pro-ductivity and, as some observers surmise, long-term climatic changes which will affect the eco-nomic character of the region.

The great increase in world cocoa productionduring the third and fourth decades of th.e centurywas due entirely to the growth of African outputconcentrated overwhelmingly in the Gold Coastand Nigeria. FrOM an annual average of 105,000tons during 1910-19, production rose to 480,000 in1934-38. Africa's percentage contribution to worldsupplies rose during this period from 38 to a peakof 66. The G'old Coast and. Nigeria alone contrib-uted during the last five prewar years almost52 percent of the world total. Since th.en, theirpercentage contribution has been on the decline,falling from an average of 48 in 1948/49-1952/53to 44 in 1953/54. However, it is doubtful wheth-er the scanty and not too reliable data currentlyavailable on age distribution of trees and on re-

. TI ousana metric foes . .

-United Kingdom. 193.6 190.6 214.7 2072.Other Europe 34.4 29.0 25.2 28.2

United States .. 37.7 43.3 42.1 48.8Canaria 17.8 20.0 20.6 20.6'

Egypt 7.1 15..4 16.2 20.2FrenchMorocco . . . 7.9 9.4 12.4 13.5Union of South Africa 6.2 8.9 10.7 11.5

Australia 20.9 24.2 24.0 27.1New Zealand 4.7 7.5 4.5 6.7

WO:RLD TOTAL 396 402 431 450

Outlook

1934- 1918-COUNTRY 1938

aver-age

1031aver-age

1932 1933

Exports.

cent plantings are sufficient proof that productionwill continue to decline in coming years. Wh.atis certain is that in no major producing area i.sthere discernible an upward trend in production.There has been some planting and replanting,especially in the minor cocoa countries, but it isdoubtful whether these changes wiil, at best, morethan compensate for the tendency to lower yields.

Prices and TradeDuring the first ten months of 1953 the price of

cocoa beans fluctuated between 32 and 40 U. S.cents° a pound. In November, however, pricesbegan to 'ise and in the spring of 1954 the priceof current supplies rose to the unprecedentedfigure of 65-68 cents a pound. While the declinein West African crops was responsible for the ini-tial stimulus, it is not sufficient to explain the fullmagnitude of the price rise. True, since the endof the \ var, stocks have been practically non-exist-ent, and consequently there were no reserves tooffset the fall in current production. But the

TABLE 71. COCOA : ABSORPTION IN THE UNITEDSTATES, THE -UNITED KINGDOM AND °THE R

WESTERN EUROPE

15 countries.

TABLE 70. COCOA WORLD PRODUCTION BY CONTINENTS

128

most important factor was the great rise in con-sumption in some European countries, notably inthe United Kingdom and Germany.

The pattern of trade changed substantially in1953/54 from previous years. Europe absorbed asignificant13 larger percentage of world supplies.On a per caput basis, consumption increased sharp-ly in the United Kingdom, Italy, Ireland andGermany. United Kingdom net imports of' cocoa,beans and products (in terms of beans) were 60percent higher in 1953 than the 1934-38 average.

On the other hand, per caput consumption inthe United States has continued the downwardpostwar trend. While imports of cocoa and cocoaproducts were slightly higher in 1953 than in th.eprevious year, they were lower than in 1951 andsubstantially lower than in 1950, although popu-lation had increased by five percent. On a percaput basis, 1953 imports were only 90 percent ofthe 1934-38 average, notwithstanding the greatrise in national income and consumer purchasingpower.

Outlook

Failure of production to respond to the highprices which have prevailed since 1947 suggestsa fundamental weakness in the world cocoa eco-nomy. For all practical purposes land resourcessuitable for cocoa production are almost unlimited.Nor is lack of adequate labor resources a seriousproblem in most of the cocoa countries. The basicdifficulties appear to be economic and, to a lesserextent, political. Since cocoa production requiresa long-term investment (six to eight years to thefirst harvest), confidence in both economic and

CoNTINENT 1034/35-1938/39average

1948/40-1050/51average 1051/52 1052/53 1953/54

(prol.)

Latin Ai nerica 236 259 228

Wmesand metric tons

233 235of which i3rav.il. .... (124) (141) (107) (97) (122)

Asia. 6 4 4 4 4

Africaof which

480 506 460 5(19 474

Gold Coast (283) (267) (214) (251) (213)Nigeria 1(91 ) (108 ) (109 ) (111) (101 )

Oceania 3 4 4 3 4

WaltiLD rfoTAL 725 773 696 749 720

United States . . 241 288 271 260 261

-United Kingdom. . 95 121 116 117 153

Other WesternEurope' . . . . 236 266 224 194 227

COUNTRY 1934-38average 1950 1051 1952 1953(pl.)

Thousa metr e tono

political stability is a prime pre-requisite. Bothhave been lacking in postwar years. Althoughthere has been some planting and re-plantingin many Latin American countries and planta-tions that had been allowed to degenerate duringthe period of low prices have been reconstructed,there have been few instances of major investmentprograms to establish large n.ew production cen-ters. Th.e economic policies of some governments

particularly where the producer has been paidonly a part of the market price have not beenconducive to large-scale capital investment. Insome areas discriminatory taxes and foreign ex-change manipulations have reduced the growers'income from cocoa and coffee production. Confi-dence has been further undermined by politicaland legislative measures against foreign capitaland against large plantations.

In the major consuming countries high pricesfor cocoa have greatly stinmlated scientific researchfor substitutes. So far, however, no satisfactorymethod has been devised to endow other fats withthe melting qualities of cocoa butter and admix-tures of other fats have been possible only to acomparatively small degree. But there are indica-tions that progress has been made. In the UnitedStates, for instance, it has been estimated thatcocoa consumption inay decline by :15-20 percentas a result of the use of substitutes in the manu-facture of chocolate coatings. At the sa,me time,publicity in favor of non-chocolate confectioneryis producing greater public acceptance of the hun-dreds of types of confectionery that have been plac-ed on the market. The proportion of chocolateconfectionery to total sales has been declining stead-ily. Although the price of cocoa beans is a less

United 8tatcqCanadaBrazilCubaIndia'PurkeyGreeceSouth ithoclesia

TooTAL

COUNTRY

Including Pakistan.

1 198

:Prodneti on

129

decisive factor in the European price structure ofmanufactured products, continued high prices, withthe resultant mounting financing problems, arelikely to have similar effects, and research onsubstitutes for cocoa has been expanded duringthe past year also in Europe.

TOBACCO

World production of tobacco in 1953 slightlyexceeded the amount harvested in 1952, in spiteof a decrease in United States leaf production.European production increased substantially, andincreases also occurred in Turkey, Iran, India, ja-pan, Cuba, Brazil and Southern Rhodesia. Thelargest increase was of Oriental and cigar tobaccos,whereas production of flue-cured Virginia and Bur-ley tobaccos was smaller. World trade increasedover the low level of 1952, mainly because of largershipments from the United States in early 1953.

Supplies and Trade

In the United States further surpluse.s accn-rnulated and to promote exports tobacco has beenincluded in the group of commodities which maybe exported against payments in soft currencies.'Under these .provisions sales of the 1953 crop havebeen negotiated with the United Kingdom ($20million) as well as with Western Germany ($10million), France, Finland and Italy.

Total United States stocks as of 1 January 1954reached 2.05 million tons (i.e. only 9,800 tonsmore than the year before) of which 295,000 tonswere under government loans.

TABLE 72. ToBAcco : PRODUCTION A.N.D EXPORTS, MAJOR EXPORTINCI COUNTRIES

590 904 1 05828 58 6993 113 11822 35 34

343 263 20855 83 8957 49 6310 43 45

1 548 1 684

.Exports

1052 1953 1934-38average

1948-50average 1951 1952 I 953

.'housand .tnetric tons

1 022 933 198 212 237 18(1 23563 61 5 9 13 17 13

106 120 31 29 30 30 2439 36 12 12 17 18 16

222 225 ' 21 ' 38 56 39 3188 118 29 59 56 57 6739 62 44 24 32 41 4947 53 9 34 31 40 37

1 626 1 608 349 417 471 422 472

1931-38 1918-50average average

The decrease in flue-cured stocks under loanat the end of 1953 compared with a year earliershows that marketing of this type has been rathersuccessful, partly as a result of the support toexports in the later part of 1953. The furtheraccumulation of burley stocks, in spite of a small-er crop, has led the government to reduce thearea quota for 1954 by eight percent, whereas thequota for flue-cured has been slightly increased.Farmers' intentions to plant in 1954 show a twopercent increase in area of flue-cured, a six toeight percent decrease in burley area, and reduc-tions in flre-cured and dark air-cured area of re-spectively seven and eleven percent compared with1953. Intended area plantings of cigar tobaccoshow a five percent increase.

Exports in 1953 included tobacco held underoption for the United Kingdom from the 1952crop and shipped in March-May 1953. Normallya large portion of these sales would have beenshipped in the fall of 1952. Export figures for1952 (179,200 tons) were therefore abnormallylow. The average for 1948-50 was 212,000 tons.

Canadian production in 1953 at 61,000 tonswas slightly lower than in 1952. The output offlue-cured decreased four percent in spite of a ninepercent increase in the Ontario district, where theMarketing Association had allowed plantings upto 75 percent of the base acreage. Exports (ofwhich flue-cured accounts for 95 percent) decreas-ed from 17,490 tons in 1952 to 12,920 tons in1953. In 1954, however, heavier exports are ex-pected and demand from domestic manufacturersmay be larger. Consequently, growers of flue-cured tobacco have been allowed to plant the fullbase acreage in 1954. Total stocks in Callada asof 1 January 1954 were slightly lower than on thesame date in 1952 and 1953, though stocks offlue-cured showed a slight increase.

TA13LE 73. Comrosrmox OF TO13ACCO IN GOVE -

RENT STOCKS IN THE UNITED STATES

1130

TABLE 74. UNITED STATES TOBACCO EXPORTS, 1952AND 1953

T Y PE

. Thousana metric tons .

In. spite of production regulations under aquota system surpluses have also occurred in Cuba.In 1952, the Cuban Stabilization Fund destroyed13,250 tons of unsaleable tobacco and surplusstocks on hand late in 1953 may equal onlyone-third of a year's export. For the 1953/54crop a quota of 36,740 tons has been established.ProdUction in earl3r 1953 amounted to 38,100tons.

At the end of 1953 Italy also reported surplusstocks of' tobacco, and areas under contracts for1954 have been further reduced. Indian tobaccoexported " on consignment " has been accumulatingia foreign ports and there are also excessivestocks in India of low-grade tobacco. During 1953there was a remarkable development in the pro-duction and marketing of Oriental tobacco.Together Greece and Turkey increased outputby 50,000 tons and exports from the twocountries increased by 22,000 tons. At 49,112tons Greek exports were the largest in postwaryears and near the level of the late 1920's. In1954, Greece expects to export 58,000 tons andin 1956, 70,000 tons. The increase in exports isexplained by the increasing use of Oriental tobaccoin Western Germany and in Eastern Europe, andmore competitive prices in foreign currencies sincethe devaluation of the drachma in early 1953.Moreover, Turkey expects increased outlets inEastern Europe and the U.S.S.R., but is facingsharper competition from Greece. Stocks of Orien-tal tobacco of previous harvests decreased during1953 but some increase in stocks seems likely dur-ing 1954.

Stocks in most importing countries are still con-sidered low in proportion to manufacturers' require-ments. 'United Kingdom stocks at the end of1953 were 206,650 tons, i. e. 17,870 tons largerthan the previous year, but 20,000 tons belowthe stock level at the end of 1951.

TYPE i January1953

january1954

. ThOUSalla ',OHS .

Fl tie-cured 147.4 145.1Burley 66.2 101.6Maryland 3.5 3.5Fire-cured 21.7 22.6Dark air-cured 14.9 16.8Cigar leaf 7.5 5.0

TOTAL 261.2 294.6

144.8 200.712.3 11.39.9 8.82.6 3.73.1 3.47.2 6.4

179.9 234.3

Flue-cured13urleyDark fire-curedMarylandCigar le,afOther types

TOTAL

1952 1953

Prices and ConsumptionPrices during 1953 sales rose generally in th.e

United States. Flue-cured tobacco (Types 11-14)brought on the average $52.50 per 100 lbs. against$50.07 in 1952. Because of poor quality, pricesfor Northern types (11a and 11b) were lower ; butfor types 12-14 they were higher largely becauseof better quality. The minimum price for Can-adian flue-cured tobacco rose slightly in 1953,but at Southern Rhodesia auctions mainly be-cause of lower qual.ity average prices were lower.Average unit value of United Kingdom importsof flue-cured and Oriental tobacco increased in 1953.

During 1953, for the first time since the early1930's, consumption of cigarettes in the UnitedStates showed a slight decline in volume. Theactual quantity of leaf' tobacco used by manufac-turers, however, showed practically no decline asthe percentage of " king size " cigarettes increased.Cigarette prices rose in early 1953 and possiblythe discussion of health aspects of cigarette smok-ing also had some influence on demand. In Can -ada, due to the lower tax level, cigarette con-sumption during the first ten months of 1953 in-creased 15 percent over the same period in 1952.In Western Germany the tax red.uction in Junewas followed by an increase of more than 25 per-cent in cigarette production during the second halfof the year ; for the whole of 1953 production in-creased 18.4 percent. In the -United Kingdomnet clearances from bonded warehouses in 1953totaled 101,660 tons compared with 98,960 tonsduring 1952.

OutlookIndications are that tobacco leaf production in

1954 will be higher than in 1953. For the cropsto be harvested in the first half of 1954 it is expect-ed that production will exceed that of 1953 byseven percent. Consequently, with the increasein flue-cured area in the United States and Canadaand the improved outlook for export of Orientaltobacco, production of these principal types inthe Northern Hemisphere in the fall. of 1954 islikely to exceed, or at least eq.ual last year's pro-duction. The improved balance-of-payments situ-ation in relation to the dollar area has led toliberalization of leaf tobacco imports from the dol-lar area into the Netherlands and Western Ger-many in 1954, and this development, together withthe -United States sales against payment in softcurrencies, has caused a more optimistic view inUnited States trade circles. Furthermore, demandfrom the domestic manufacturers in the United

131

States and Canada is espected to be at least asstrong as in 1953. The desirability of increasingworking stocks in several importing countries alsosupports the favorable outlook for the .tobaccotrade.

It is yet to be seen whether the revival of de-mand for Oriental type tobacco in Western andEastern Europe will be sufficient to justify thecontemplated expansion of production in Greeceand the maintenance of production in Turkey.This may to a great extent depend on the furtherdevelopment of trade with Eastern Europe andth.e U.S.S.R.

COTTON

Current SituationWorld supplies of cotton in the 1953/54 season

were much in excess of consumption requirements.There have been no marked changes in the vol-rime of production or consumption over the pastthree years, but production exceeded consumptionby ten percent in 1951/52, by six percent in 1952/1953 and by eight percent in 1953/54. As a re-sult, stocks of cotton had risen to about 18 mil-lion bales by the end of July 1954 equivalentto nearly eight months' consumption at theelliTellt rate.

A surpl.us position has been developing in theUnited States, where abnormally large (CCC) stockshave accumulated 7.5 million bales in mid-May in the course of price support operations.Supplies in other countries are not believed tohave been excessi.ve at the end of th.e 1953/54season.

With prices down to support levels and stocksrelatively high at planting time, it was part ofofficial pol.icy to discourage or restrict cotton pro-duction in a number of countries ; neverthelessthe world cotton crop is estimated to have increas-ed by about two percent in 1953/54. A smallercrop was recom.mended in the United States, buta moderate reduction in th.e area cultivated wasoffset by an extraordinary jump in the yield, withthe result that production increased by sevenpercent.

There WaS a general decline in production inother major exporting countries, some of' whichhad sizeable stocks at the beginning of the season.In Egypt, limitations on the area available to cot-ton were in force. The acreage planted was re-duced by one-third and the crop. was almost 30percent smaller. in Pakistan also, cotton culti-vation was curtailed and this, together with rela-tively low yields, resulted in a 24 percent drop in

production. 'Turkish and Mexican crops, whichhad expanded rapidly in the postwar era, werealso smaller. The outcome of the Brazilian h.ar-vest is uncertain. There was no price supportfor cotton in 1953/54. Reports suggest that theacreage under cotton was substantially smallerin South Brazil. Weather conditions were un-favorable late in the season.

Cotton crops in the minor exporting countriesof the Middle East, Africa and Latin America weregenerally larger. Those of the major consumingcountries also increased. The acreage in India isreported to have increased by eight percent and thecrop was expected to be ten to fifteen percentlarger as a result of higher yields. Reports onconditions in the Soviet Union and China suggest

COUNTRY

TA:BLE 75. Corr ON WORLD SUPPLY AND :DISTRIBUTION

TABLE 76. CorroN EitootrmiroN

19:31/31-1938/39average

132

1948-50average

Excluding U. S. S. R., Eastern Europe and Chil a.2h:chiding, net exports to U. S. S. R., Eastern Eu 'opc and China, and destroyed cotton, in all 0.7 million tons and 0.6 milliontons for1952/1953 and 1953/51 respectively.

. .. Not available.Soulaa: : International Cotton Advisory Committee, and 'United States Department of Agriculture.

that production last season may have been threeto five percent large,r.

The evidence up to mid-season indicated thatglobal cotton consumption in 1953/54 would besomewhat higher than in the immediately preced-ing season. A decline in textile activity in NorthAmerica reduced cotton consumption by eightpercent, as compared with a year earlier. In La-tin America the volume of consumption changedlittle. In the major cotton importing zones ofWestern Europe and Japan, however, the trendof consumption was strongly upward ; increasesin individual countries ranged up to 30 percent.In India, China and the Soviet Union, where tex-tile industries are largely dependent on domesticcotton crops, the trend was slightly upwards.

lTillion bales

United States 12.39 13.51 15.16 15.17 16.30Me-den 0.30 0.86 1.28 1.25 1.21

1.79 1.51 1.95 1.60 1.35

17urkey 0.24 0.43 0.61 0.70 0.60Egypt 1.85 1.80 1.67 2.06 1.47

PakistanIndia 5.32 2.38 1.32

; 3.161.542.98

1.173.5

1.1.. S. S. ft., China, Eastern Europe 6.24 5.06 7.10 6.98 7.7Other 2.32 2.86 3.44 3.54 3.9

WORLD TOTAL 30.45 29.43 :35.69 35.82 37.2

SounoE : Internati olla! Cotton Advisory Committee.

ITEM1934/35-1938/39average

19.15-50average 1952/13 1953/54

(prel.)1954/55

(forecast)

Millio I bales (217 ter . ne )

Opening stocksof which United States

()CC,

16.5

(3.5)

14.0

(2.5)

13.3

(0.3)

15.5

(2.0)

18.0

(7.5)Private (3.7) (2.6) (2.5) (3.6) (2.5)

Productioil 1 24.2 24.4 28.8 29.5 25of which United States (12.4) (13.5) (15.2) (16.3) (11.5)

Total supply.' 40.7 38.4 42.1 45.0 43

Consumption 2 22.3 25.1 26.6 27.2of which United States (6.5) (9.1) (9.5) (8.6)

TABLE 77. COTTON CONSUMPTION

Excluding U. S. S. R., China and Eastern Europe.So tutCE : International Cotton Advisory Committee.

Alth.ough consumption was already rising inmost importing countries, there was some ten-dency to keep imports relatively close to consump-tion requirements, or even less, in the 1952/53season, in view of the declining trend of prices.International trade in cotton in 1952/53 WRS sub-stantially smaller than in the preceding season.The reduction was concentrated in United Statesand Brazilian shipments, while the supply of othergrowths moved in greater volume and at morecornpetitive prices.

Writh a continuing upward trend in consumptionand a curtailment of supply in prospect, interna-tional trade in cotton expanded in the 1953/54season. As the Egyptian supply had alreadybeen much reduced by the cut in production,exports from tb.at country declined. Unite,d

Excluding :R. and Chin`SouncE : International Cotton Adviso Committee.

133

States shipments stepped up sharply in th.e secondhalf of the sesaon, and rnay be 20 percent greaterin volume compared with the previous year. Ship-ments from most other major exporting countrieswere running at or above th.e previous season'slevel. The recovery in Brazilian exports wasparticularly noteworthy.

United States prices have been autively support-ed through government loan arrangements sincethe beginning of 1953. As large stocks Were accu-mulated by the Commodity Credit Corporation,prices remained rather stable. Official and marketprices of other important growths - Egyptian,Pakistani, Brazilian - had by mi.d-1953 all beenadjusted to levels competitive with United Statescotton. With the United States decision to restrictproduction in 1954, the entire structure of cotton

TI EGIoN

1934/35-1938/39average

1948-50average 1951/52 1952/53 1953/54

(prel.)

,l/ritlionbole,

Per-cent

Millionboles

Per-pent

Millionbales

Per-cent

3Till ionha I e s

Per-cent

Mil/jo nbales

Per-eevi.

North America,

Latin America

Western Europe

Far East and other.

WORLD TOTAL 1

6.7

1.0

7.5

7.1.

30

4

34

32

9.9

2.0

7.1

6.1

39

8

28

25

9.5

2.0

6.8

6.9

38

8

27

27

9.8

1.9

6.6

7.6

38

7

26

29

9.1

2.0

7.2

8.3

34

8

27

31.

22.3 IOC 25.1 100 25.2 100 25.9 10C 26.6 100

COUNTRY

1934/35-1938/39ave age

19 IS-50averm2e 1951/52 1952/5:3

Thosad'bales P CMe'll I

Thousandbales Percent- T It ousand

' bales Percent Tho I ISall (1' " "bates Percen 1

United States 5 018 40.3 4 876 44.6 5 519 49.6 3 048 29.0IN/exico 105 0.8 543 5.0 975 8.8 988 9.4

Brazil 1 065 8.6 751 6.9 350 3.2 153 1.4Peru 337 2.7 276 2.5 347 3.1 371 3.5

Egypt i 744 14.0 1 628 14.9 912 8.2 1 735 16.5A. E. Sudan 257 2.1 344 3.1 :399 3.6 268 2.5r urkey 77 0.6 229 2.1 260 2.3 422 4.0

IndiaPakistan 2 746 22.1 1 203

t( 862

1.97.9

124906

1.18.2

2901 275

2.712.1

Other i 1 088 8.8 I 213 11.1 1 318 11.9 i 995 18.9

WORLD TOTAL 1 12 437 100 10 925 100 11 110 100 10 545 100

TAU LE 78. COTTON EXPORTS

FIGURE XV Monthly Average Prices ofCotton (Including Export Taxes)

U.S. nts per pound60

U.S., middling 15/16 inches 10 market averageMexico, middling 15/16 inches (1 1/32 inches 1953/54), TorreónEgypt, Ashmouni good, AlexandriaBrazil, Silo Paulo type 5 (f.o.b. Santos 1953/54)Pakistan, 289 F Punjab S.G.F., Karachi

prices moved upwards after December 1953. Ad-vances in Pakistanti and Egyptian quotations wererelatively sharp, since a reduction in supply hadalready taken place. Prices of Mexican and Bra-zilian cottons remained in line with United Statesquotations.

Outlook

The 1954/55 season i.s likely to open with acarry-over of cotton outside the U.S.S.R., EasternEurope and China of about 18 million bales, 2.5million larger than a year earlier ; but produc-tion (exclusive of the areas mentioned) will con-tract shauly from 29.5 million bales to possibly25.5 million bales. Total supply may therefore beset at 43 million bales in 1954/55, as against 45million bales in 1953/54.

Allotments in the United States provide for acotton area of 21.4 million acres, which undernormal conditions would produce 11.5 to 12 millionbales, as against 16.3 million bales in 1953/54. Somerecovery in production may take place elsewhereas a result of the higher prices HOW prevailing.Minimum prices in Egypt have recently been rais-ed, but limitations on the cotton area remain inforce, although less stringent. Higher pricesmay also encourage Pakistan to return to itslong-range program of expansion, and some im-provement in Mexican yields and production maybe expected. Such .increases, however, are unlike-ly to outweigh the drastic cut in United Statesproduction.

134

The prospects for consumption and trade aremore uncertain. The " textile trade cycle, " withits investment and dis-investment in textile stocks,is at different stages in different parts of the globe.Assuming no prolonged general recession in theUnited States, an upswing in fiber consumptionmay commence in 1954/55. In Western Europeactivity may be somewhat reduced pending a di-gestion of textile trade stocks. This may not beso quickly achieved in the face of increasing com-petition from the Far Eastern textile industriesin world markets. Under these conditions, worldconsumption of cotton may well be maintainedin 1954/55, but the recent expansion in inter-national trade in cotton may peter out.

Uncertainties as to the future international pricestructure of cotton underline this prospect. Thereis no official plan for an export subsidy on UnitedStates cotton. The United States support pricefor cotton will be slightly higher in 1954/55and the supply basis is contracting, but thesituation further ah.ead will depend on. whether

and to what extent production restric-tions continue in the United States and whetherofficial proposals for a more flexible price policyare acceptable to the United States Congress.Meanwhile, an expansion in man-made fiber ca-pacity continues. Large-scale additions to rayonstaple output are in prospect in the United King-dom and Japan, the major cotton importers.

WOOL

Current Situation

Since the recession from the record 1950 vol-ume, world wool consumption has moved morein line with current production. In 1951 andagain in 1952, consumption was slightly smallerthan the current clip. T.he resulting stock in-creases were, however, not very considerable. In1953 consumption again outstripped cturent pro-duction and absorbed most of the excess of thetwo preceding years held in. exporting countries.

World production of wool in 1953/54 was againon the record level of the previous season. TheAustralian clip, which alone accounts for 30 percentof' the world total on a clean basis, was slightlylower than in 1952/53, when, largely as a measureof the successes achieved in combatting the rab-bit pest, production had expanded as much as20 percent. In the other southern British Domin-ions, wool production continued to increase inthe 1953/54 season. The Argentine clip was

1952/53 1953/54

slightly greater than in the previous season, but asyields were only average, the clean weight wasprobably a little less and, alone among the majorproducers, below the level of the earlier postwarperiod. A further moderate increase in sheepnumbers in 1952 is reported in the Soviet Union,bringing the sheep population to 20 percent abovethe prewar level.

Wool consumption in 1953 rose to little shortof the 1950 level. Recovery from the 1951/52recession was general in Western Europe, and therewas a further increase in consumption in Japan.

th.e United States, on the other hand, the mod-erate increase in .wool consumption which took

REGION

TABLE 79. WOOL : WORLD PRODUCTION

1931/35-1938/39 1918/49-1950/51average average

TABLE 80. WOOL : WORLD CONSUIVIPTION

1934-38average

135

place was practically confined to the carpet sec-tor. In the apparel sector the recovery in con-sumption on civilian account was offset by a fur-ther decline in mi.litary orders. Towards the endof the year, world consumption generally was level-ing off at a rate closely in balance with currentproduction.

'417orld stocks of wool at the beginning of 1954are estimated at a little over seven m.onths' con-sumption. Commercial stocks were probably thesmallest since 1946. Government h.eld stocksincluded the United Kingdom strategic stockpile,equivalent to 21/, months' consumption of woolin the United Kingdom, and United States domes-

1948-50average 1951

' Prewar Germany.SounnE : Mainly based on data supplied by the Commonwealth Economic Committee.

1952 1953

Thousand nt ,tric tons, dear basis

159 298 237 227 235

(116) (195) (178) (161) (165)

(34) (85) (46) (54) (60)

500 571. 479 490 590

(197) (226) (180) (172) (221)

(105) (117) (90) (97) (114)

1(82) (40) (53) (60) (71)

130 120 135 135 145

70 32 50 66 77

(49) (12) (29) (45) (56)

75 135 130 130 130

935 1 160

,

i 035 1 045 1 175

Thousand metric tons, el an baSiti

Australia 230 282 284 340 :330

New Zealand 90 115 124 121 128

U. S. S. R. 50 75 90 95

Argentina 90 1.00 90 95 92

United States 95 58 55 59 60

Union of South Africa . 50 48 52 56 58

Uruguay :30 46 53 59 57

Other countries 300 300 320 320 320

WORLD TOTAL 940 1 020 1 065 1 140 1 140

1951/52 1952/53 1953/51

North Americaof which

U.S.A. apparel woolU.S.A. carpet wool

Western Europeof which

United KingdomFranceGermany (Western)

U. S. S. R. and Eastern Europe

Far Eastof which japan

Other areas

WORLD TOTAL

TABLE 81. WOOL : WORLD STOCKS

1st ,Tuly in preceding 'yen r. if excess of normal e frryfover.' 1st October in preeeding year, excluding mili stocks.

1st Ma re If, including wool wi Lee govermment loan.I including wool :taunt.

Excluding U. 5. S. It., Eastern Europe and China.--- None or negligible.

tic wool acquired by the Commodity Credit Cor-poration under the price support program, equiv-alent to 45 percent of the United States clip andto two months' consumption of apparel wool inthe United States. South American stocks werepractically cleared in the 1952/53 season, but ex-ports have subsequently been lagging and therehas been a renewed accumulation of wool in Argen-tina and Uruguay.

As the carry-over in exporting countries had beensubstantially reduced by the beginning of the sea-son, trade in wool in 1953/54 is likely to be small-er timan in the previous season, possibly by tenpercent or even more, depending on the rate ofshipment frorn South America. Trade in Domin-ion wool will probably be much the same, but

ist January

- Including; joint (irganization oflerings in the UnitedKiagaom.

136

the 1952/53 export volume from South Americacannot be repeated.

Imports of wool into Europe in 1953 were con-siderably larger than in the previous two years,and there was a further rise in imports into Japan..There was, however, no recovery in imports intothe United States, where commercial stocks havebeen very considerably reduced.

Reflecting the close balance between currentconsumption and production, wool prices generallyhave shown considerable stability in the 1953/54season. A moderate movement in buyers' favorhas appeared in the finer grades, but only partof the gradual advance recorded in the 1952/53season has been lost. South American prices are

TABLE 83. Wont.: Woutm ImPowrs

Including II. S. S. I1.

somewhat above th.e world market and this ac-counts for the sl.ow 'ate of exports from this regionin the 1953/54 season.

Outlook

The rise in European wool consumption has nos'levelled off and in the United States little furtherimprovement in COBSumer demand for wooltextiles seems to be in prospect for the time being.Some downturn in world consumption will takeplace in 1954 as supplies are, in any case, less

ample. There are, however, no indications of arecession on the scale of 1951/52.

Time va,st bulk of the wool clip has been movingreadily into trade channels at prices which, if theyare a little lomver timan a year ago, can still be con-sidered favorable. Only in South America andtime United States have some quantities of woolbeen held back from the market ; in the former,because of the reluctance of dealers to accept pri-ces ruling on the world market (expressed in localcurrencies) ; in the latter, because of the require-ments of the price support program. Nearly all

ITEM1952 1953 :1,51

ThOnSafift Metrie (OIS, cleanbasis

E xporting countries131,itish Dmninionsl . 30

South America 2 45 :100 20

.Importing coulttriesGovernment own.ed

United Kingdom . 28 44

United States5 . . 20 28

Commercial .... 530 490 500

WORLD TOTAL 5 .610 640 590

Total stocks in terms ofmontlm's consmnption 5 8.2 7.7 7.2

-United States 61 185 164 167 143

Europe 1... 440 495 345 400 50(1

Japan 49 1:3 35 40 55

WouLD r.rOTAL . 570 715 560 625 720

Total Southern British

Thoas Inet meht"

"tie 10116,sis

Clean

Doininions .. .... :370 1520 467 484

Total S(mt,11 America. . 117 120 50 210

WORLD TOTAL. . 570 700 580 770

TABLE 82. WOOL : WORLD EXPORTS

1934/ 1948/1935- 1919 -1938/ 1950 / 1951/ 1952/

OCTOBER- SPa'TEMB 19:19 1951 1952 1953aver- aver-age age

.1.5N VARY- I) ECEI\ 11111R

1934,-1938aver-age

1918-1951)aver-age

1951 1952 195:1(niel,)

.1'housand 'metric tallti, (*Mt basis. .

the wool acquired by the Commodity Credit Cor-poration, for the greater part from the 1952 pro-gram, remains unsold. It has been officially pro-posed to replace the present methods of price sup-port by direct payments to producers, whichwould cover the difference between their receiptsderived from sales at the market price and thesupport level, thereby avoiding an accumulationof government financed stocks of domestic wool.With present prices for finer grades on a lowerlevel, it is unlikely that much of the wool hithertoaccumulated will be sold for the time being.

It may be noted that synthetic fibers for blendingwith wool or as an alternative to it, are becomingavailable in increasing quantities and in an everNvider range of markets. .Early in 1954 sub-stantial cuts were made in the prices of a numberof fully synthetic staple fibers, both in the UnitedStates and the United Kingdom. These fibersconnot fail to exert a gradually increasing influ-ence on the market for wool goods.

JUTE

Current SituationTo .facilitate the disposal of stocks of jute acquir-

ed in the course of price support operations begunin 1952, the Pakistan Government drastically cutthe acreage licensed for jute in the 1953/54 season.The actual outturn proved to be even less thananticipated by the government and has now beenauthoritatively stated to have been only 31 mil-

TABLE 84. .11Aw JUTE : PRODUCTION- A-ND DISPOSALS

lion bales. At the same time there has been a sharpdrop in Indian production, due to lower prices atplanting time and unfavorable weather conditions.Allowing for 2.6 million bales from the two previouscrops held by the Pakistan Jute Board at the be-ginning of the season, the total supply of jute in1953/54 (excluding stocks in consuming countries)may be estimated at about nine million bales, ascompared with 13 million bales a year earlier.

Activity in the jute manufacturing industrywas maintained at a steady rate in 1953. InCalcutta, an increase in hessian output has com-pensated for a falling off in the production ofsacking. The trend in sales has followed thesame pattern. European mills have been in aless favorable position to underbid Calcutta fiil-lowing a further cut in the Indian hessian ex-port duty in September 1953, and large Argen-tine orders llave contributed to a revival in hes-sian exports from India. Sales of both hessianand sacking have outstripped production, andmill stocks in Calcutta have been worked down.Dundee mills have been very active and orderbooks are well filled. In. continental Europe theoutput of jute goods has been 011 a higher levelthan in 1952.

Consumption of jute manufactures has alsobeen satisfactory. In the United States, the larg-est market, the hessian cut-up last year was thesame as in 1952 ; a moderate increase in commer-cial consumption made u.p for the decline in mili-tary requirements. The yardage of hessian usedis not, however, as great as in prewar years, in

137

Excluding Pakistani mill requirements.2 Provisional governmental estimate.- NOIle or negligible... Not available

SounoE : Directorate of Jute Prices, E. Bengal ; Indian Jute Mills Association.

PERion I Area 'Production Indian MillConsumption

ExportsOverseas

TotalDisposal'

Millionhectares

.lTillionmetrictons bales Jfiliion bales

1934-38 averageIndia (pre-partition) 1.1 1 .9 10.0 6.4 4.1 10.5

1950/51:PakistanIndia

0.70.6

1.!0.6

6.03 .3 5.7

4.2 9.9

1951/52PakistanIndia

0.70,8

1.20.9

6.34,7 6.1

:3.2 9.3

1952/53:PakistanIndia

0.80.7

1 .3O .9

6.84,7 5.5 3.8 9.2

1953/54PakistanIndia

0.30.5

,2 .5-3,53.1 5.2

spite of the large increase in United States re-quirement of bags, as well as the expansion of'the use of hessian cl.oth for other purposes. Inthe United Kingd.om the consumption of jutegoods in 1953 was the highest since the war.

Th.e United Kingdom Government announcedin February 1954 that it liad decided to dis-continue the purchase of raw jute by th.e JuteControl at an early date. Arrangements forturning this trade over to private channels arebeing worked out at the present time in con-sultation with the industry. The question ofresuming pri.vate trading in jute goods is beingdeferred for the time being.

In 1952/53 exports of raw jute from Pakistantotaled 5.3 million bales. Having regard to thereduction in supply and the increasing require-ments of the Pakistani mills, it is 'unlikely thatshipments in the 1953/54 season will be much,.if at all, above this figure. Importing coun-tries may have to draw on their own stocksif they are to maintain recent rates of consumption.There has, however, been soine slowing down in milloperations recently. Indian consumption is about5.2 million bales a year, while the domestic cropis estimated at only 3.1 million bales. The tradeagreement with Pakistan provides for imports of1.8 million bales, but it (loes not now seem likelythat such a quantity will be shipped in the 1953/54season.

With the tightening supply situation, therehas been an increase in jute prices in the inter-national market of about 20 percent in the1953/54 season. Prices received by growers inEast Bengal, which were exceptionally depressedin 1952/53, have risen by 45 percent.

Outlook

Stocks of jute held by the Pakistan Jute Boardhave all been sold and virtually all will be ship-ped or consumed by the end of the 1953/54 season.Supplies of jute in 1954/55 will consequently belimited to the current crop, and to as much leewayas there may be for running down stocks in consum-ing countries. The Pakistan Government has de-cided to limit the acreage licensed for jute inthe coming season to an area sufficient to produceonly 4.2 million bales. It is true that the con-siderably higher jute prices and, incidentally, lowerrice prices at sowing time, should encourage grow-ers to plant a larger proportion of their allottedacreage. This also augurs we.11 for a larger Indiancrop. Yields may, however, vary widely from

138

season to season ; they have .1A0 W been at or aboveaverage for four seasons running. It may be notedthat the crop envisaged by the Pakistan. Govern-ment for 1954/55 i.s no larger than that originallyplanned for the previous season, and that inthe event of the crop again falling short, therewill no longer be a substantial carry-over to aug-ment supplies.

Supply prospects for the 1955/56 season d.ependfor the greater part on whatever decisions maybe taken by the Pakistan authorities. It seemsthat there will have to be a substantial re-expan-sion in production if a reversion to the shortagesof time earlier postwar years is to be avoided.

The relative importance of jute in the baggingindustr3r, .wbich is of overriding importa,nee forthis fiber, shows a downward trend over th.e long-term' period. At the same time, time marketingof agricultural produce hence the demand forbagging material is expanding. There i.s

widening market for jute in a variety ofindustrial uses. Given generally favorable con-ditions the main question affecting demand overthe next few years appears to be 'whether pricesof jute goods can continue to be held down tocompetitive levels in the face of possible fintheradvances in the price of time fiber.

RUBBER

Current Situation

Time excess of natural rubber production overconsumption was further reduced in 1953 to110,000 tons, or by two-thirds as compared withtime preceding year. This resulted both from afurther drop in production of 67,000 tons and are-expansion in consumption of 163,000 tons.Government stocks again apparently absorbedthe bulk of the excOss production in 1953. Otherstocks in consuming countries also increasedsubstantially but there was some reduction instocks afloat.

The decline in output in 1953 took place in allmajor producing countries : Malaya, Indonesiaand Ceylon. For the second successive year itwas concentrated in small holdings ; estate pro-duction in both Malaya and Indonesia increased.The decline in small holdings reflects not only dis-couragement to tapping and evacuation due to thegeneral decline in rubber prices. In Malaya, italso reflects the introduction of a six year pro-gram whereby subsidies are paid to take areasout of production and to replant them either with

higher-yielding rubber trees or with oth.er crops.Similar schemes h.ave recently been introducedin Ceylon and are projected for other areas inSouth-East Asia.

The increase in the consumption of naturalrubber was attributable, not only to a rise in thetotal volume of natural and synthetic rubber con-sumption, but also to the :recapture of a largershare of the total rubber market by the naturalproduct. Consumption of total natural and syn-thetic rubber increased by about 150,000 tonsbetween 1952 and 1953, while the consumptionof th.e synthetic product declined by about 15,000tons. Natural rubber's proportion of th.e totalmarket increased from 62 percent to 65 percent.This is notable principally in the United States,where the production of synthetic rubber is con-centrated. This production is in the hands ofthe government and, until mid-1953, legislationguaranteed consumer outlets of 510,000 tons.At that date the minimum consumption require-ment was reduced to about 220,000 tons, andin the latter part of 1953 the production of theGR-S type of synthetic rubber was curtailed.

rrAl3LE 85. NATURAL AN D I-I ET I 0 ii-UILLIE ItCo NS IIM PT To N

Souitum : International Rubbcr Stu0 GrouP

The price of natural rubber, which since thepeak in 1951 liad been declining almost contin-uously, fell decisively below the level of the CO311-petitive syntheti.c type in the second half of 1953,and reached a low point in February 1954, buthas since recovered. The price of the main typeof United States synthetic rubber (GR-S) hasremained unchanged since March 1952.

The question of international price stabilizationmeasures for natural rubber in the form of a

139

FIGURE XVI Rubber Prices in the UnitedStates and Malaya 1951-1954

U.S. cents per lb.

60

50

40

30

20

10

1 'A

t_

aZIPICZ.11.1"7:24. I

EI *8620. =0 tird.014.

buffer stock has been under consideration by theInternational Rubber Study Group, but at itsmeeting in May 1951 no agreement was reachedon this issue. On the other hand, actual andprospective national measures contributing togreater stability of natural rubber prices and great-er efficiency in its production were given specialattention.

Outlook

It is estimated that consumption of total nat-ural and synthetic rubber (excluding Russiansynthetic rubber) will decline by about 100,000tons in 1954, the main reduction taking place in

'TEA' Nat-ural

Syn-thetic '1'n I it I

Per-eellt

natural

World

Thonscna metì in tons Percent

Year : 1952 1 475 9C0 2 375 651953 . .. 1 640 885 2 525 62

United StalesYear : 1952 461 82C 1. 281 36

1953 562 795 1 357 41

Quarter1953- 1. 146 223 369 40

147 225 372 40135 182 317 43

11V. 135 165 299 45

1954 - I . 150 157 307 49

1951 1952 1953 1954A - No. 1 R.S.S. New York

- No. 3 R.S.S. New YorkC - No. 1 R.S.S. Singapore

- No. 3 R.S.S. Singapore- GR-S (synthetic) U.S.A.

80

70

TABLE 86. NATURA I; AND SY VIIIETIO RUBBERESTIMATED SUP I I IT) I.: r. NI) POSITION

IN 1953 ;A.m.) 1951

(-0 II Iii: hiteruational Rubber Study GrouP

the Unitod States. Notwithstanding this, andan anticipated fallin.g-eff in imports into the So-viet Union and Eastern Europe, world consump-tion of natural rubber 1S expected to increase byabout five percent. This improvement contrastswith a prospective sharp contraction in the con-sumption of the synthetic product, particularlyin the United States. Natural rubber is expectedto account for about one-half of the total UnitedStates rubber market, in 1954.

The declitle in natural rubber producti.011e,xpected lo continue in 195,1, but the drop thisyear is expected to be only about 20,000 tons.

.is concentrated in Indonesia, where th.e cost ofliving remains high, and many small-holders haveabandoned rtrbber tapping.

TABLE 87. 1-1Ati0 :Era-lots : WoRT, I) t OD UCTION

140

In conjunct ion with the rise in consumption,the drop in the output of natural rubber may re-duce the excess of production to only 24,000 tons,a smaller volume than in any previous postwaryear. Production of the synthetic product is ex-pected to decline almost in. fine with consum.ptionrequirements. In November 1953, a Commissionwas set up in the 'United States to receive bidsfrom private buyers for the government ownedsynthetic rubber plants. '11.711.e Commission willreport its findings by January 1955.

The long-term demand for rubber, basedon rising standards of living and on the devel-opment of new uses in roadways and upholstery,is favorable. If the present price relationshipbetween the natural and synthetic products ismaintained, natural .rubber will ha-ve the opportu-nity of participating in any expansion in 1955/56.On the other hand, .recent prices have had a dis-couraging effect on higher cost production. Somesupply may therefore have to be drawn from stocksto fulfill reouirements.

HARD FIBERS

Current Situation

Hard fiber production declined in 1953, thoughthe drop in out put (seven percent) was relativelysmall. Production in the Far East (primarilyabaca) was almost as large as in the previousyear. Among the agave fibers, sisal productionin Africa reached a IICAT peak but dropped sharplyin Brazil. The latter, taken together with thedecline in henequen production (principallyin Mexico), accounted for most of the cut of20 percent in Latin American output.

LID) 1953 1951

1"). oducti on

NaturalSynthetic

'rho/Ism/a

1 750951

mrtrie ions .

1 732717

Total 2 701 2 449

Consum.yd ion

Natural. 1 628 1 708Synthetic . .. 884 725

Total 2 522 2 433

./..-ioKroted balance for1,1 (11/ ;on 10 (/0 VII'?)to oleo1n411,1)::ial stacks

N. zit 11267 8

TOT AD 179 16

Print 19.18-19511average 1951 19:52 1953 1951:

(Preliminary)

¡'1)01)1 you/ nte tr'e f ons

Abaca 105 156 :145 142 130of which Philippines (87) (138) (123) (120) (110)

Sisal 280 355 37(1 350 340of which Br. E. Africa (162) (191) (203) (207) (200)

Henequen 123 104 108 95 87of which .1),I,exico (108) (88) (95) (87) (80)

Other fibers 60 55 50 40 30

WORLD TOTAL 570 670 670 625 585

TABLE 88. HARD FIBERS : WORLD IMPORTS

1915-ITEm 1950 1951 1952 1953

ago

Trade in hard fibers was uneven in 1953. Unit-ed Kingdom and Japanese imports increased,offsetting to a considerable extent a sharp con-traction in imports into North America. On theother hand, North America imported a greaterweight of cordage. The total offtake of hardfibers in 1953, including approximately ten per-cent going into the strategic stockpile, has notbeen far out of line with current production.

The improving supply/requirements balancein hard fibers was reflected in. much steadier pri-ces in 1953 than in 1952. The only importantprice reductions occurred in Mexican henequen,in which the bulk of the producers' stocks is 110Wto be found, and in Brazilian sisal, stocks ofwhich, held by the Banco do Brazil, have beennearly all cleared following foreign exchange con-cessions.

OutlookA further moderate decline in production is

expected in 1954. At the same time, the commer-cial demand for hard fibers may very well increase,though stockpile requirements will probably belower, leaving total demand more or less unchang-ed and possibly a little in excess of current produc-tion. In abaca, a major revival in demand byUnited States rope manufacturers could lead toa shortening of supplies, if the requirements ofother areas, now higher than at any time since thewar, are maintained. 'United. States purchases of

1141

sisal last year were, on the whole, rather sluggish,while consumption both of fiber and twine, washeavy. Larger commercial purchases may conse-quently be expected this 3rear, though this increasemay be offset by reduced stockpile buying. The dis-posal of the Mexican h.enequen crop, as well asof existing stocks, which amount to 40 percentof annual production, is mainly dependent onprices being at a sufficient discount to sisal toattract buyers, and possible even low enough toallow sizeable sales to American ,padding manu-facturers.

FARM MACHINERY

No attempt is maae in the following note torefer to world production and export of tractorsduring the year under reViCW, since it has not beenpossible during the past year to collect statisticson production and import figures. The treatmentis confined to certain aspects of farm machineryuse in the newly developing regions where mecha-nization presents special problems.

Near and Far EastAs a general statement, it is true that tractor

numbers used in agriculture increased in the Nearand Far East during 1953/54, but the increase,except in one or two countries, was not large. Manyof the Near and Far Eastern countries, -wheremechanization of agriculture has, during the pastfew years, been pursued with vigor, are nowtending to consolidate the position rather thanto increase imports. This consolidation in mostcases is taking the form of greater attention to allthose matters which experience has shown aremajor factors in the operational costs of mechan-leal farming, land clearing and subsequent soilpreparation prior to colonization of new areas.Breakdowns in the field and early deteriorationof tractors and machines are generally a resultof inexpert use which, in turn, is caused by insuf-ficient training of local operators, field service andrepair men, and all personnel who are directlyconcerned in mechanical cultivatiori programs.

Most countries in these regions have now im-plemented programs to impart knowledge topersonnel who handle modern farming equipment.In a few countries, where such programs havenot yet commenced, plans have been drawn upfor early implementation of this training. Prog-ress in this field is not as rapid as is needed,but governments and farmers have become awarethrough experience of the causes of high opera-

. . . Thousang metric tons . .

North Americaof which

231 316 309 246

Abaea 88 74 56Sisal, other . . 174 228 235 190

Western Europe .of which

185 218 192 210

Abaca 25 41 37 37Sisal, other . 160 173 156 165

Japan0-ir which

30 20 25 36

Abaca 16 17 23 30Sisal, other . . . 14 3 2 6

OIlier areas 25 35 30 25

Wonno TOTAL. . 470 590 560 520

tional costs, and the importance of acceleratingthe provision. of improved technical instruction.

Farm machinery dealers in most countries arenow placing their businesses on sounder founda-tions and are giving users of their equipment bet-ter facilities for traini»g operators, a more C011th111-ous supply of replacement parts, together withafter-sales service.

Those countries that have Leen cautious inadopting powered machinery for agricultural useare now seeking advice from financially disinter-ested authorities with a view to mechanizingtheir operations oil a limited scale in areas thatappear suitable for this method of farming.

Turkey has continued to mechanize at probablythe highest rate of all countries in these areas,and, in fact, is one of the main markets for thewestern world's machinery manufacturers. Never-theless, it has become apparent in this countrythat the mere acquisition of tractors and relatedmachines is not the sole, solution to its farmingproblems, Various training centers are beingestablished which, in turn, will assits in reducingthe high repair bills and the down-time of trac-tors and equipment from which government ma-chinery programs and farmers have not escaped.

The extensive floods in Iraq destroyed manycereal crops and inundated much other arableland. This has led to a reduced demand for theservices of government and privately oWnedtractors, combines and agricultural equipment.It will also probably affect the importation pro-gram of agricultural maehinery, but will providean opportunity for all concerned with mechan-ization in the country to catch up with arrearsin completing adequate repair and service shops,reserves of spares, and recruitment and trainingof competent mechanics and operators.

Some of the Indian States, wh.ere large tractorfleets were built up for the reclamation and till-age of new land prior to settlement, are nowdisposing of surplus tractors and machinery toprivate OWIlerS. 01le of these State governments,through its established workshops, is now ableto offer new owners of agricultural machineryadequate repair services which too often werelacking in the past. The State of Uttar Pradesh,for instance, has for some years .been trainingfarm machinery workshop personnel, as wellas field operators, and the benefits of having areservoir of skilled men to manage, operate andrepair mechanical equipment are //ow being felt.

The Pakistan Government is sponsoring mechan-¡cal cultivation in certain selected areas. In

142

particular, this is occurring under the auspicesof the Thal Development Authority in West Pakis-tan. Private farmers in this country are becomingincreasingly interested in mechanization of theirfarms as better facilities are made available throughlocal dealers representing machinery manufac-turers.

Ceylon is experiencing the usual early difficultiesassociated with the introduction of mechanization,but by its operation through co-operatives andpools, increasingly efficient use is being obtainedfrom the imported equipment. Those who areresponsible for management, operation and repairof the new tractors and related machines are nowgenerally aware of the skill that must be acquiredto keep equipment running efficiently and at eco-nomic operational costs.

Burma has introduced mechanization cautiously,but has now realized that tractors can assist tobring large'areas of previously cultivated land backinto production. Additional shipments of mech-anized equipment have recently been received.The shortage of draft animals also tends toaccelerate the use of powered machinery. Thai-land, Indonesia, and the Philippines have con-tinued to increase their agricultural tractornumbers, to improve methods of operation and toreduce operational costs.

During the period under review an increasingnumber of countries in these regions have paidgreater attention to the improvement of indi-genous farm hand tools and animal drawti equip-ment and to the introduction of selected improvedtypes.

Summarizing the position in the Near and FarEast, it can be said that good progress has beenmade in most countries during 1953/54 in provid-ing facilities and training needed for the effectiveuse and unintenance of mechanized equipmentin agriculture. FAO has rendered major assist-ance in this respect in the following countriesIraq, Iran, Ethiopia, Afghanistan, Pakistan, India,Ceylon, Burma. Additiona/ effective assistancehas also been given under the Colombo Plan.Bilateral agencies have also been active, both insupplying and giving instruction in the manage-ment, use and maintenance of needed agriculturalequipment.

Latin AmericaIn Latin America, although precise statistics

are not available, farm mechanization has evidentlycontinued to expand at a considerable rate inmost countries. The following examples may

serve to illustrate the most important develop-ments. Argentina continued to allocate largeamounts of foreign exchange for imports of farmequipment, mostly tractors. It has been esti-mated that the 1953 exchange allocations will in-crease the country's tractor park by some 17,000units. Making the necessary allowance for write-off, this would represent an increase of nearly50 percent over the tractor park at the end of1952. In Brazil, the Ministry of Agriculture hasobtained several credits from official Brazilianbanks and from foreign farm equipment manufac-turers. Imports permitted to increase thetractor park to some 40,000 units by the end of1953. Chile's tractor imports amounted to ap-proximately, 1650 units, a rate which it is intendedto maintain over the next eight years under thenew Agricultural Development Plan soon to comeinto operation. In Uruguay the number of trac-tors increased to over 18,000, about 2,500 morethan in 1952, and it is considered that the countrywill be able to limit further imports to replace-ments since requirements are satisfied under pres-ent conditions.

Another important development to be recordedis that since 1953 Argentina and Brazil havebecome producers of power equipment. The firstof these countries has established a National Trac-tor Plant which aims to produce 50 percent ofthe yearly requirements by 1958. In Brazil,a European company has established a plantwhich expects to produce 1,000 tractors per year.

Developments to establish mechanization ona sounder basis and to make machinery availableto larger groups of farmers have been compara-tively slow and, as far as is known, limited toa few countries. Some of the larger importers,such as Argentina, Brazil, Chile and Uruguay,

143

have established import limitations as to typesof equipment, so as to ensure that only machinerysuited to local conditions is imported and toavoid an excessive diversification which wouldmake servicing and repairs difficult. In somecountries, mainly Argentina and Brazil, a certainproportion of the exchange allocation must beused for imports of spare parts. Farm machinerypools have been enlarged in Brazil, Chile, Peruand Guatemala. Cuba lias launched a programaiming at the establishment of 125 pools, one ineach municipality, and in 1953 started machineryimports to provide them with equipment. Inmost countries where pools exist, their facilitiesare also used to train tractor drivers and mechanics.

In contrast to the Far and Near East, LatinAmerican countries have sought very little exter-nal technical assistance in connection with agri-cultural mechanization, though the problems ofmaintenance and efficient use are by no meanssolved in most countries.

FOREST PRODUCTS

In 1953 the second world forestry inventory wascarried out by FAO. It showed that the growingstock of world forests in use was some 96,000million cubic meters, of which 57,100 million wereconiferous species and 38,900 million broadleavedspecies. While the distribution of forest resour-ces is rather uneven between regions, the distri-bution of forests in use or accessible is even morestrikingly uneven. Regions possessing vast unex-ploited forest resources are net importers of forestproducts, while others, such as Europe, havingpractically no unexploited forests, are net exportingregions. Economic growth in Europe and North

See also Annex Tables IV and V.

TABLE 89. EsTIMATED DISTRIBUTION OF WORLD'S FORES97S

HEUIONTotal

forestedarea

Accessibility Composition UtilizationForestsas % 01land

area haliMr,

n t,anII-

Forestarea

tlime-

cessibleforests

Ac-eessibleforests

Conifers Noneonife r,,Forests

inuse

Unex-fi)(1)7.,i,tsTs1

EuropeU. S. S. RNorth AmericaLatin Am ricaAfricaAsiaPacific area

WORLD TOTAL .......

136743656927801567

85

3318344584519:30865

13342531234328225920

Million hect

79583463

305

1208

ares

5716019389779644777

13035022090

115205

17

...6

39343683768636268

Percent

28.433.936.141.127.021.09.9

Hectares

0.33.84.15.53.90.46.6

3 915 2 141 1 774 1 288 2 627 I 127 2 788 29.5 1.6

REGION

EuropeU. S. S RNorth AmericaLatin AmericaAfricaAsiaPacific area

WORLD TOTAL

TABLE 90. ESTIMATED GROWING. STOCK IN THE WouLD's Fo ',S1.`S IN TJSE

Area of forests in use

Conifers

75

300170

102

502

6C9

Nonconifers

AÎllion heetai es

55505080113

155

15

518

America has favored intensive sylviculture andthe establishment of highly developed wood con-verting industries. In the less developed regionsof the world conditions for these developmentshave hitherto been lacking, but cultural and eco-nomic progress is now giving rise to higher stan-dards of wood consumption and creating the con-ditions for a fuller use of indigenous forest resour-ces.

The 1953 world forest inventory shows thatthe world's forests are potentially capable of fur-nishing a plentiful flow of forest products for aworld population much higher than that of today.Of 3,900 million hectares of woodlands, less thana third are 110W exploited. Of the immense unex-ploited reserves of standing timber in the worldtoday, over 600 million hectares are accessible atthe present time. The inventory emphasize., onceagain the contrast between the world's exploitedconiferous forests, where growth and drainroughly balance, and the under-exploited broad-leaved forests in use. The three predominantlyconiferous regions, Europe, the -U.S.S.R. andNorth America, comprise a third of the world'spopulation, but less than two-fifths of the world'swoodlands ; yet between them they account for70 percent of the removals from the world's for-ests.

Forests are renewable resources. Given skil-ful management they can yield annual crops inperpetuity. On the other hand, these invalu-able assets can all too easily be destroyed. Ashistory has shown, reckless misuse of the forestsis not simply a matter of depleting the foreEtcapital ; the consequences for the climate, the soiland the water-regime can be catastrophic. Arcasof the world which in former times cradled wholecivilizations today sustain but a primitive levelof life as a result of reckless destruction of forests

Allspecies

144

1303502209011520517

1 127

Estimated growingstock per hectare

Conifers

Cu. m. with bark Mil. cu. in. wit7 bark

80 70 6 000 3 800 9 800100 60 30 000 3 000 33 000

80 60 13 600 3 000 16 600

120 100 1 200 8 000 9 200

40 70 100 7 900 8 000120 SO 6 000 12 400 18 400

75 55 200 800 1 000

Nonconifers Conifers

Total growing stock

Nonconifers

A.11species

in the past, bringing in its train ruined water-regimes and degraded SOITS. An enlightened for-est policy is concerned not only with the world'spresent and future needs of the wealth that growsin the forests ; it is an integral part of a broaderland utilization policy, taking into acccount agri-cultural and stock-raising needs, soil conservation,water-regime and climate.

The exploited forests in the world have for thepast years provided for some 1410 to 1430 millioncubic meters of conifers and broadleaved round-wood for all uses. About 55 precent of the totalvolume of world roundwood production has beenfor industrial uses, the rest being fuelwood. Totalfellings of coniferous and broadleaved roundwoodin reporting countries covering about 92 percentof the world output in 1951 and 1952 appear inTable 92.

Recent Production ChangesChanges in the volume of total fellings in the

world are due primarily to fluctuating productionin Europe and North America. There the chang-ing market situation may cause considerablefluctuations in the volume of output of the mainproducing and exporting countries, not at thetime when the change in the market takes places,but a year or two later. This is the result of thelong time lag between the actual felling operationsand the sale of the final products. Booming marketconditions in one year, as for instance in 1951, ledto a sizeable rise in the volume of fellings. Later,with a declining market in 1952, the volume offellings was heavily reduced at the same time asindustries built up stocks of finished products,drawing largely on their existing supplies of rawmaterials.

In other regions the reasons were somewhat dif-ferent from those in Europe and North America.

95 75 57 100 38 900 96 000

In the U.S.S.R., the program of a steadily increas-ing volume of fellings is making progress and al-though few official data are available, there is rea-son to believe that the fulfillment of the planhas not fallen far behind the set target. In Ja-pan, Asia's largest producer, the ever increasingneeds for wood for industrial purposes has ledto a steady decline in the production of fuelwood.In Latin America, Africa and Oceania, moreextensive and better use of forest resources,together with increasing requirements for mostforest products, is bringing about a steady,although slow, rise in the level of output.

TABLE 91. ACCESSIBLE FORESTS AND TRADE BALANCE

REGION

+ net exports - net imports3 Estimate : less than 500,000.

Roundwood

Production figures for 1953 are not yet avail-able for the main producing regions, but on thebasis of scattered data, a slight rise in the worldroundwood production in this year appears prob-able. In North America, favorable economicconditions throughout the year led to rising pro-

TABLE 92. WORLD TOTAL FELLINGS OF CONIFEROUS AND BROADLEAVED ROUNDWOOD1951 AND 1952

Esti MateSOURCE : FAO Forestry Yearbook.

Accessible forests Net tradein forestproducts(average

1950-52)3

145

duction of sawn wood and pulp and paper, andalso to larger new supplies of industrial round-wood. In Europe, on the other hand, some declinefrom the level in 1952 may have taken. place ;production of sawlogs rose only insignificantly andthat of pulpwod and pitprops declined, notablyin the northern European countries. With thedecline in the European roundwood productionoffsetting partly the rise in North America andslight rises which took place in other regions, worldproduction of roundwood may have risen. in 1953by some 20 million cubic meters.

World trade in roundwood, which already in1952 had felt the downward trend in the forestproducts market and had declined from the highlevel in 1951 by some 3.5 percent, fell further ra-ther sharply in 1953 by some 24 percent from thelevel in 1952. This continuous fall was due pri-marily to reduced trade in pitprops and pulpwoodin Europe and North America which followed theheavy stockpiling in 1951/52 and unfavorablemarket conditions for forest products in generalin 1952.

As to tue development since the end of 1953,Europe's need to replenish stocks of raw materialat the mills simultaneo-usly with a strong currentdemand for most forest products is bringing abouta fair increase in the fellings of the most impor-tant producing countries. In North America, onthe other hand, the temporary slowing down ofdemand and rising stocks of sawn wood and pulpproducts has so far led to a somewhat reducedactivity in the forests. In other regions thereseems to be no change from the rather high levelof activity that prevailed around the end of 1953.The volume of fellings in the world may thereforebe expected to show some further rise in 1954.

REGION

Sawlogs andvenecrlogs

Pulpwoodand pitprops

Other industrialwood Fuelwood Total felling,

1951 1952 1951 1952 1951 1952 1951 1952 1951 1952

Million cubic meters

Europe 85.7 79.5 54.5 58.2 11.0 11.3 94.8 91.0 264.0 240.0U.S.S.R.'. 126.0 143.0 19.0 22.0 40.0 40.0 150.0 160.0 335.0 365.0North and Central Amer. 200.0 202.3 96.0 93.5 18.5 17.0 91.1 84.7 405.6 398.4South America 11.8 12.4 0.6 0.6 1.1 1.2 119.4 119.4 132.9 133.6Africa 3.0 3.9 0.1 0.1 1.6 1.7 63.2 63.3 68.8 69.0Asia 29.0 30.3 8.3 8.8 7.8 7.4 58.3 53.3 103.4 99.8Oceania 10.4 10.5 0.7 0.7 0.2 0.5 9.4 9.4 20.7 21.1

WORLD TOTAL. 466.8 481.9 179.2 183.9 80.2 80.0 586.2 581.1 1 312.4 1 326.9

. .ZIíilliom lactares . .

Mil. cu. 771..roundwood

. . equis. . .

Europe 130 3 +3U. S. S. R 350 75North America . 220 92 6Latin America . 90 253 -2Africa 115 167 -2Asia 205 54 -2Pacific area 17 3 -3

In use exploitedNot

FIGURE XVII Prices of Forest Products (First Quarter 1950 100)

250

200

150

100

80

400

300

250

200

150

100

80

1951 1952 1953

A - Western Germany. B - Sweden. C - United Kingdom.D - Belgium. E - United States of America.

pLywooD - WALLBOARD 300

250

200

1951 1952 1953

B1 - Sweden 1. 82 - Sweden 2. Cl - United Kingdom 1.C2 - United Kingdom 2. G - Finland.

WO OD PULPNOTES:

Sawn woodBelgium : imported ; Sweden : f.o.b. ; U.K. : c.i.f. ; U.S.A.domestic ; W. Germany : domestic.

RoundwoodU.K. : pitprops, c.i.f. ; W. Germany : pitprops, domestic.Finland : pulpwood, f.o.b. ; Austria : sawlogs, domestic.Switzerland : sawlogs, domestic.

Plywood-WallboardSweden, 1 : Sawn softwood, f.o.b. 2i4" x 7" u/s battens.Finland : birch plywood, f.o.b. ; U.K.1 : Finnish birch ply-wood, cit. ; U.K.2 : Other plywood, cit. ; Sweden : 2wallboard 1/8" hard, f.o.b.

Wood PulpU.S. : domestic ; Sweden : bleached sulphite lob. ; Francebleached sulphite, c.i.f. Rouen ; W. Germany : Bavaria, un-bleached sulphite ; station of destination.

1951 1952 1953

A - Western Germany. E - United States of America.G - Finland. J - France.

150

100

80

RO U NDWO OD

I I I

1951 1952 1952

A - Western Germany. C - United Kingdom. F - Austria.G - Finland. H - Switzerland.

PA PER

Pfr"'Nk

1951 1952 1953B - Sweden. El - U.S.A.1. E2 - U.S.A.2. G - Finland.

J - France.

PaperFinland : Newsprint, f.o.b. ; U.S.1 : newsprint ; Francenewsprint, 1/1, 50,52 gr. excluding taxes, stationof departure.Sweden : Kraft, f.o.b. ; U.S.2 : printing.

146

400SAW N WOOD

300300

250250

200200

150150

100100

80 I I I I I I

80

In 1951 the high export and import pricesobtainable in Europe led to domestic prices ofroundwood gradually rising to comparable levels.But when in 1952 international prices fell, domes-tic prices showed little or no change. In 1953they went still higher in some cases. Formerlybuyers in importing countries could even out thehigh cost of roundwood irnports by domesticpurchases at relatively low prices ; 110W there.was no such, possibility and in fact imports werebeing used to control ami bring down domesticprices.

The upward trend in domestic prices for gen-eral roundwood held good for sawn logs too.The rise lagged behind international prices forsawn wood, but wh.en sawn wood prices beganto fall in 1952 as the result of consumers' resistance,sawn log producers still held out for high prices fortheir supplies. Consequently, mills could notafford to lower sawn wood prices furth.er. Thelatter, in fact, have tended to strengthen and areagain close to the level where consumers' resistancein 1951/53 led to the sharp fall in the market.Any further rises may again seriously affect con-sumption. During the past four years sawn woodhas, in each price cycle, lost some ground which.has not been recovered.

TABLE 93. WORLD EXPORTS OF 1ROUNDWOOD

Sawn Wood

.European and North American production ofconiferous and broadleaved SaWll wood accountsfor some 60 to 65 percent of the total world out-put, over 90 percent of the world's total exports,and about 80 to 85 percent of th.e world.'s totalimports. Demand and consumption of sawnwood depend largely on the level of industrial ac-tivity, ancl general economic and social conditions.The market for sawn wood has therefore fluctu-ated more violently during the past years in thoseregions where tire economic standards are highest,

959 1953- (prel.)

147

i.e., North America and Europe. In Europe aboutone-third of tire region's total production ofsawn wood enters international trade. Changingmarket co.nditions in these two regions havetherefore traditionally set the pattern for thewhole world trade in sawn wood.

From 1950 to 1952 trends of the sawn woodmarket in North America and Europe differedat times. The developm.ents in one region partlybalanced those in the other and the world situa-tion therefore showed smaller fluctuations thanthose in these two regi.ons separately.

From the end of 1952 onwards, the stabilizationof post-Korean fluctuations in demand and pri cesand the general progress of industrial activityand construction in most parts of the world ledgraclually to more satisfactory and also more stablemarket conditions for sawn. wood. World outputof sawn wood rose from the 1952 production of255 million cu.m. to 265 million cu.m. in 1953,a new record figure. Trade in sawn wood alsopicked up and was some 27 million cu.m. in 1953as against 23.5 million cu.m. in 1952, remaininghowever slightly below the record volume of 27.9million cu.m. in 1951. In Europe the larger out-put and trade were used primarily to increa.seintra-European trade ; exports to other conti-nents continued to decline. In North Americathe strong expansion of industrial activity to-gether with continuing h.igh 1.evel of building stim-ulated production. The volume of intra-regionaltrade did not change perceptibly and the declinein exports to Europe WO S compensated to someextent by larger exports to oth.er continents.

In the U.S.S.R. the steady rise of output wasused primarily to meet the COUBtr3r'S 01V11 everincreasing needs. In Latin America general eco-nomic and trade difficulties hampered the produc-tion and trade of sawn wood during the first halfof 1953. Towards the end of the year the situa-tion slightly improved, however, and exports bythe main producing countries, notably Brazil,to the neighboring countries and to other conti-nents showed some increase over tire 1952 voluine.The situation in general, however, remained lesssatisfactory than in 1951.

In other regions of tire world, the developmentof' th.e production of SalVn wood in Japan .was spe-cially important. Rapid expansion of' the country'sindustrial production, the heavy backlog of hous-ing requirements and repair, together with stead-il.y growing new housing requirements, put aheavy strain on the Japanese saw milli.ng industry.Although the output was raised by some four

.31illion cu. 'tu. r.

8oftwood logs ..... 1.46 1.43 1.29 1.10Hardwood logs ..... 3.15 4.16 3.58 4.10Pi tprops 2.10 2.53 4.90 2.20Ptilpwood 7.23 11.46 9.12 6.70Poles, posts and pilings. 0.54 0.57 0.56 0.60

\VoRLD TOT 14.48 20.15 19.45 14.70

percent from the level in 1952 and exports of sawnsoftwood forbidden, the shortage of sawn woodof all categories was felt increasingly. Paymentdifficulties rnade any substantial increase in im-ports difficult.

While the world market for sawn wood was thusgenerally favorable, it presented some disquietingaspects. Stability in prices in 1953 does not ap-pear to have succeeded in eliminating the harm-ful effects of the 1950-52 fluctuations in prices anddemand and in restoring the position of sawnwood as raw material. In most of the main con-suming countries the consumption of sawn woodrose much more slowly from the low levels in 1952than the rate.of industrial activity and even thatof house building. Thus, despite the recoveryof the volume and trade of sawn wood in .1953there was no evidence of a commensurate increasein consumption.

The consumption of sawn wood in Europe andNorth America in the years 1950 to 1953 variedconsiderably less than either production or trade,market fluctuations being reflected mainly instock variations. The apparent consumption ofsawn wood in Europe had fallen from 51.5 millioneu.m. in 1950 to 48.5 and 47.7 million cu.m.respectively in the two succeeding years. In1953, despite the high level of industrial and con-struction activities, it recovered only to 48.0 millioncu.m. In North America too, the apparent con-sumption reached its peak in 1950, at 100.5 mil-lion cu.m., to decline in the two succeeding yearsto 92.6 and 92.0 million cu.m. In 1953 it recover-ed to 96.0 million cu.m.

Price oscillations in North America were a gooddeal less marked than in Europe and did notaccentuate the trend towards substitution. The1950 to 1951 fall no doubt exaggerated the declinewhich took place in final consumption since therewas some drawing On consumer stocks. It ispossible that the fall in North American consump-tion over this period was primarily due to thefact that increased industrial activity failed tooffset the effects of a decline in residential building.Nevertheless it seems clear that the subsequentfall and stabilization of prices has not led to therecapture of lost markets. The introduction ofa variety of new substitute materials, most ofwhich now seem firmly established on the market,has gradually reduced the consumption of sawnwood, particularly in economically developedregi 011S .

North American and European production ofsawn wood are now approaching the maximum

148

capacity of the regions' forest resources and thesaw-milling capacity of these regions is far inexcess of the available raw material supplies.Steady progress is being mad.e, however, in lessdeveloped regions to raise the saw-milling po-tential though the progress achieved is laggingbehind planned expansion because of limited finan-cial resources, and labor and raw material diffi-culties. The latter depend on exploitation andtransport problems in many cases not yet solved.

It would be utopian to look for a smooth andsteady evolution of world demand for sawn woodbecause its principal end uses are influenced byvery diverse factors. In recent years, however,demand has been unusually distorted by remainingreconstruction requirements, the Korean War andstockpiling. While demand will continue to rise,it is doubtful whether at present prices consump-tion per unit of output will be maintained. Inall markets, but especially in Europe, price isnow the decisive factor.

Plywood and Fiberboard

Plywood, a sawmill product, and fiberboard,a pulp product, have ranges of use which con-siderably overlap. For many purposes they canreplace each other ; in many end uses they bothcompete with sawn -wood. Since the end of thewar there has been a considerable expansion inthe output of both commodities, comparablewith that of wood pulp. World production ofplywood in 1938 (including that of the U.S.S.R.)amounted to 2.85 million cubic meters ; by 1951i.t had reached 6.65 milion and rose to 7.70 millionin 1953. World output of fiberboards (wallboards)rose from 780 thousand tons in 1938 to 2.5 milliontons in 1951 and 2.7 million tons in 1953 ; worldwallboard capacity today may be estimated ataround three million tons.

The consumption of these commodities hasrisen steadily since the war in most countries,interrupted from time to time by fluctuationsin general economic development. Thus in theUnited States the per caput consumption of ply_wood rose from 10 sq. feet in 1946 to 20 in 1952and 23 in 1953. Both were affected, like all otherforest products, by the events of 1950 to 1952.International trade declined particularly sharply,and not until mid-1953 was there any substantialrecovery. Neither for plywood nor for fiberboard,however, were the price fluctuations of 1951 and1952 as violent as for forest products in general.

In the main exporting countries, a substantialpart of total production is for export. Thus theplywood and wallboard exporting industries hadto wait much longer than exporters of sawn wood,pulp and paper to share in the firmer forest productsmarket in 1953. Even so, plywood and wall-board prices remained very steady, and even bythe late spring of 1954 only fractional increaseshad been recorded.

World wallboard and plywood capacity continuesto expand, two of th.e most significant develop-ments being the increase in United States hard-board and Japanese plywood capacity. In bothcommodities technical progress is diversifyingthe product and rapidly extending the range ofutilization. The future holds immense possibili-ties for both, but especially for wallboard, forwhich raw material requirements are not exactingand for which the establishment of a mill of eco-nomic size does not call for a prohibitive invest-ment. In the long run, therefore, world tradein these products, though it ma,y increase beyondthe present level, will inevitably beccme less impor-tant in relation to total world output. A corollaryof this is that the plywood and wallboard industries,which are primarily directed toward th.e exportmarket, will become increasingly vulnerable tofluctuations in demand.

Early in 1952 consumers reacted sharply tothe unprecedented price ri.ses of 1951; buyingwas curtailed and a serious recession developed.Buying was resumed, however, towards the endof the year and 1953 opened on a note of renewed,if still cautious, optimism. By the spring produc-tion was back to a high leVel in most countriesand had reached record levels in sorne places.TilOre were some exceptions, notably Finland,where there remained tire problem of adjustinginternal costs to the IlOW stabilized level of worldprices.

Pulp and Pulp Prcducts

With general economic conditions continuingfavorable, the year proved to be 01le of a reason-ably high level of activity at fairly stable price6for the world market in pulp and its products.World pulp production rose from 36.5 milliontons in 1952 to 38.S million tons in 1953, exceed-ing the record 1951 figure by 1.6 million. Expan-sion in the United States accounted for rnost ofthe increase, but there were substantial advancesalso in Japan, Canada and several European coun-tries. World trade in pulp also expanded, by about

1.49

800 thousand tons, though the tota. volume fellslightly short of the record 1951 figure. Exportsfrom the three northern European countries,however, which together account for over three-fifths of the world total, were almost exactlyback to the 1951 peak volume. The fact that bothproduction and trade in these countries, whichare particularly sensitive to world mat ket condi-tions, continued to thrive in the early monthsof 1954 suggests that 1954 will prove anothergood year for the pulp and paper industries. Asimilar optimism pervades the North Americanmarket. Elsewhere in the world, the rapid expan-sion of Japanese capacity continues, while slowbut steady progress is being made in raising indi-genous capacity in tire less devel.oped areas ofthe world, especially in Latin America and Africa.Several new mills are expected to come into oper-ation during tire next two years.

TABLE 94. ESTIMATED CONSUMPTION OF FIBERBUILDINGBOARD IN CERTAIN COUNTRIES

The recovery in pulp production in 1953 wasaccompanied by improved output and trade inpaper and board. World newsprint productionrose from 9.7 million tons in 1952 to 10.1 milliontorts in 1953 ; in 1951 output had totalled 9.4million tons. North American production showedlittle change, but most other producing countriesshowed increases, the most striking being thatin Japan, where output l'OSO from 276 thousandtons in 1952 to over 400 thousand tons in 1953.Production of other categories of paper increasedsharply from the low 1952 level, while failing nar-rowly to regain the record 1.951 level. Board out-put, however, registered the biggest advance,reaching a new record level in 1953, the most

COUNTRY 1918 1952/53

Kilograms per capal

Swedep 24.0 20.0Canada 8.0 11.0New Zealand 7.5 9.0United States 8.0 8.0Finland 4.0 8.0United Kingdom 1.3 2.5Union of South Africa 1.0 1.7Argentina 0.6 0.8Japan 0.2 0.3U. S. S. R 0.05 0.8India 0.03 0.04

Wor,LD AVERAGE 0.90 0.95

notable increase being that recorded in the Unit-ed States. Though board production declinedslightly in the early months of 1954, it seemsprobable that the volurne of world output of allcategories of paper and board, taken together,will in 1954 exceed that of any previous year.

World trade in newsprint continued to expand,and exports in 1953 totalled 6.0 million tons against5.85 million tons in the previous year. Paperand board exports rose by 300,000 tons to 2.10million tons ; this was, however, well below the1951 volume of 2.43 million tons. The marketcuatinued to be satisfactory through the springmonths of 1954. Though the rate of influx ofnew orders slackened, paper milis in most countriescontinued to operate at near capacity, to copewith outstanding orders. In North America,the world's largest consumer of paper and board,demand is expected to remain firm in 1954. Thoughpaper and board output in this region is likelyto be near, or perhaps even slightly above lastyear's level, capacity is continuing to rise. Since1949 paper, board and wood pulp capacity in theUnited States have increased by 13, 26 and 39percent respectively. Much of this capacity was,

150

of course, planned in 1950 and 1951, when boomconditions prevailed. Capacity in the UnitedStates may have run somewhat ahead of demandat the present time. How far any excess capacitycan be used to satisfy the rising needs of woodand pulp deficit regions will depend on their abil-ity to pay for imports from the United States.

Thus the long-terrn upward trend in world de-mand for pulp products, a concomitant of risingliteracy, improved welfare and industrial advance,reasserted itself' in 1953. This trend, the domi-nant one in the field of forest products since thewar, is certain to continue, though the possibilityof temporary interruptions will remain. A gen-eral economic recession would naturally distortthe pattern of development, but difficulties couldalso ensue from any serious disparity betweenthe rate at which new capacity is being createdand the rate at which effective demand is rising.

The world's pulp and paper industries have agood year behind them and a good year in pros-pect. The long-term outlook, with many factorsmaking for a progressive rise in demand and tech-nical advances steadily expanding the raw mate-rial basis of the industry, remains favorable.

ANIVE ).0 T A 13 !,. ., S

TABLE I. ESTIMATED ENERGY AND PROTEIN CONTENP OF NATIONAL AviBAoE FOOT) SUPPLIES PER CAPUT

Revised figures.Figures refer to the calendar yoars during which split year begins.

3Including Pakistan.... Not available.

None or negligible.

153

Calories Total Protein Animal Protein1953/ 1953/ 19531

COUNTRY Pre- 79551 1199552.1

1P54:Change Pre- li?,5512I liT552,,

1951Change Pre- 1199551 119çj551

1951Changewar , from

1952/war , from

1952/war , from

1952/1953 1953 195:3

... Number per day .. Percent .. .. Grams ver day Percent ... Grams per day . . . . PercentWestern Europe

Austria '3 000 2 66C 2 730 + 1 88 78 82 39 36 38 + 4BelgmmLuxenabourg. 2 820 2 93C 2 945 + i 84 86 86 34 40 42Denmark 3 420 3 220 3 25C -- 91 91 92 -- 2 57 51 52 4Finland 3 CCC 3 250 ... ... 95 101 ... .. 44 53 ...Franco 2 830 2 75C 2 85C + 03 92 97 39 41 46 2Germany (Western) . 3 070 2 76C 2 839 4- 2 84 76 78 + 1 42 37 38 + 5Greece . 260C 2 490 2 5CC ... 84 77 78 ... 23 17 19 ...Ireland, Rep. of . . . 3 400 3 480 3 50C ... 99 97 95 48 49 47 ...Italy 2 520 2 510 2 580 + 2 82 78 79 + 3 20 21 21 + 5Netherlands. . . . . 2 920 2 890 2 890 87 SO 79 44 40 40 --Norway 13 210 3 060 3 120 + 2 90 96 96 49 54 54Sweden 3 120 3 230 3 000 + 2 95 93 88 1 2Switzerland 3 140 3 180 3 11C ... 96 96 94 ... 54 51 51 ...United Kingdom. . 3 120 3 080 3 060 + 8 83 85 85 46 44 44 + 5

VortI6 Amor/ea

Canada 3 010 3 010 3 130 84 90 96 + 3 48 54 60 + 5United Sta tes

ati97. Amor/ea

3 150 23 085 23 117 1 89 289 290 -f- 1 50 259 261 + 1

Argentina 2 2 730 3 110 2 710 98 98 96 62 63 57Brazi12 ... 2 360 2 350 17 41Chile 2 2 240 2 340 2 490 ... 69 71 77 21 24 26 ...Colombia 1 860 2 400 ... 47 56 ... 20 30 ...Honduras ... 2 030 ... 18 ...Mexico 2 .. . 2 210 2 270 ... 61 65 ... 16 15 ...Peru 2 . . . 2 440 2 290 ... 67 62 ... ... 17 14Uruguay 2 . . . 3 070 2 940 ... 101 99 66 67Venezuela 2

keaniaAustralia 3 310 3 290 ... 103 95 ... 67 63 ...New Zealand 3 260 23 380 23 340 ... ICC 2103 2102 ... 67 269 269 ...

('ar East

Ceylon 11 730 2 140 2 150 1:7,0 50 50 116 12 12India 31 970 1 590 1 640 + 1 56 43 44+ 2 8 6 6,Tapan 2 180 2 130 2 150 ... 64 53 58 ... 10 10 13Philippines 1 920 2 06C 2 080 + 1 45 42 42 11 11 11

/ear EastEgypt 2450 2 360 2340 74 70 68 9 11 10Turkey

l Jr ir a

2 450 2 56C 2 580 -F- 1 79 82 83 + 1 13 15 16 + 2

Union of South Africa 2 300 22 550 ... ... 68 272 23 226 ...Southern Rhodesia,. . ... 2 280 ... 69 ... 17 ...

TABLI II. AMOUNT OF INSTITITTIONAL AGRICULTURAL CREDIT IN USE BY REGIONS AND COUNTRIESDURENC 1951 AND 1952 (IN U.S. $ EQUIVALENT 1)

Figures in national currencies are converted into dollars on the basis of 1952 December rates of exam ge. The originaldata do not always refer to calendar years. Such split-year data are put under the calendar year in which most months of thesplit year fall.

2 Excluding loans guaranteed by CCC.... Not available.

SoURCE : :Replies to FAO Credit Questionnaire.

1.54

REGION AND Corn;Tay

Total amountof loans

advancedduring :


outstandingat end of : ltEntox AND COUNTRY

Total amountof loansadvancedduring:


outstandingat end of

1951 1952 1951 1952 1951 1952 1951 1952

Million US dollars Million US dollars ...... .

Europe Oceania

Austria 40.6 ... 56.6 Australia 581.4 697.6 ... .Belgium 13.3 20.8 82.5 88.9 New Zealand . . . 87.3 100.4 200.5 236.8Finland ... ... 185.7 208.0France ... 1 240.0 964.7 Far Eastae.rmany (Western) ... 179.1 220.2 329.1Italy ... ... 1 220.01 414.2 Ceylon 7.1 7.6 10.4 12.6Norway ... ... 209.4 206.2 India 122.1 62.1 115.0 ...Sweden ... 583.8 588.2 Indonesia, ... 96.1 ... 51.0Yugoslavia . . . . 55.0 79.7 55.4 127.0 JaPan I 266.61 150.9 459.5 600.9

Pakistan 55.2 35.4 9.9 ...Philippines . . . . 79.4 97.3 85.2 141.3Thailand 3.5 6.0 9.8 14.9

Vorth Am,erica

United States 2 . . 3 502.02 851.67 837.08 414.0 Near EastEgypt 34.6 54.7 ... 21.5-Israel ... ... ... 106.4

Latin America TurkPy 232.5 395.4 I 65 .3 42.8

Brazil. ...... 311.9 470.1 386.6 539.6Chile 252.0 ... ... 683.3 AfricaColombia 154.6 208.4 72.5 107.2 Algeria ... 181.4 ... 82.5Cuba ... 16.1 63.2 58.3 Gold Coast . . . . 0.7 1.5 0.2 0.4Dominican Repub. 8.5 14.6 ... 15.3 Nigeria 0.8 0.8 0.3 0.4Ecuador ... 16.7 .. 20.4 Southe,rn Rhodesia 3.6 2.9 3.4 6.6"Mexico ... 315.7 ... 118.2 Tanganyika. . . . 0.4 0.3 6.6 0.8

TABLE, M. TOTAL ANNUAL CATCH OF Fisi,, CllusTAcEnNs AND MOLLUSKS, BY SELECTED COUNTRIES

CO UNTRY

GRAND TOTAT

Ma ,j or prod ticers

Canada (ami Newfoundland).TapanNorwayUnited. Kingdom:United States (and Alaska)

Medium producers

DenmarkFranceGermany, WesternIcelan.dNetherlandsPhilippine-Portugal .SpainUnion of:South Africa .

(and South West Africa)

Selected smaller producers

AngolaArgentinaBelgian CongoBelgiumBrazilChi leFaeroesFinlandFrench MoroccoGreeceHong KongIrelandItalyMala. yaSwedenThailandTurkey

Thousand netrie tans

12 890 11 964 12 884 13 195 14 034 15 584

9 036 7 810 8 548 8 560 9 187 9 876

779 914 977 915 994 9483 562 2 206 2 431 2 642 3 086 3 6661 153 1 195 1 501 1 297 1 466 1 8311 197 1 150 1 206 1 159 989 1 0862 345 2 345 2 433 2 547 2 652 2 345

2 903 2 949 2 983 3 118 3 240 3 909

96 205 226 258 251. 293530 - 476 468 474 454 528779 302 413 513 553 680274 477 465 394 368 418256 295 294 261 258 291270 251 195 238 220 296240 282 275 281 307 307

2408 581 547 571 598 60350 80 100 125 225 490

951 1 205 1 353 1 517 1 602 1 799

26 52 113 131 136 17755 65 71 65 58 78

1 14 18 25 43 3745 87 71 68 59 57

103 140 145 153 153 17032 61 65 77 88 9430 50 60 110 115 9344 46 46 66 66 6631 51 56 93 123 9125 22 34 35 35 43

... ... ... 3512 22 26 18 17 17

181 I 160 154 178 184 185... 119 139 162 185 176129 165 194 182 187 183161 151 161 154 158 187

76 ... ... 110

NOTE : The aggregate catch of these countries is about two-thirds of the estimated world total of 26,000,000 tons which includesan estimated 5,000,000 tons from China and the -U.S.S.R. Data in the live weight equivalent.

Preliminary.2 1934 data.... Not available,

16 893 16 863

10 845 10 523

940 19704 649 4 5771 806 11 5061 106 11 1202 344 12 :350

4 100 4 349

324 343488 520663 1740402 415311 1343313 306334 392612 1640650 650

1 948 1 991

187 22279 18048 15071 74

223 1230119 107

87 '8058 62

122 12843 1464() 3619 119

212 208176 180204 196160 1170100 103

1938 1947 1949 1950 1951 1952 1953

TABLE IV. Woimn PRODUCTION OF FORE ST PllonucTs

*Estimates.Incl. estimate for countries in Eastern Europe.

2 Excl. China mainland.3 Incl. Eastern Germany in 1938.*Planned figure for 1950.5 Inch estimates for China: 50 in 1951, 60 in 1952 and 70 in 1953.o Incl. estimates for China: 120 in 1951, 130 in 1952 and 1,490 in 1953.

156

COUNTRY on REG ON 1938 1951 1952 1953 COUNTRY OR REGION 1938 1951 1952 1953

SAWN WOOD WOOD PULP

Million cu. m. Thousand metric tons

Europe" 56.91 53.59 48.97 50.05 Western Europe. . 1061 4 9430 8520 9080U' S S II,North America . .

34.0067.47

53.80*105.29

58.50*/08.41

63.50*112.45

Finland, Norwtty,Sweden (6071 ) (6647) (5961. ) (6223)

liAtl in America. . . . 4.00 9.32 9.56 9.50* Eastern. Et - . . .. . 1250* 1.300* 1350*\ rrica 1 .(10 2.11 2.28 2.45* II.S.S .R 1163 18C0* 2CCO* 2101*

Near .1L'L't-;1, 0.30 0.48 0.54 0.55* 'United States . . . . 5384 14964 14900 1592911'11. East 2 18.50 17.48 21.95 22.10* Canada 3254 8152 '7970 8150Ocezuda 2.50 4.40 4.37 4.45* La.tin America. . . 25 310 340 400*

Asia 930 1080 1240 1500

A,Vor otal. . . 184.68 246.47 254.58 265.05 Oceania -- 154 210 250

World total. 21370* :37140 36480 38760

PLYWOOD NEWSPRINTThousand Cu. m. Thousand metric tons

Europe 2801 2650 2680 2840EuropeFinlandGermany (Western 3ttaly

1 09:3(244)(443)(70)

1 675(314)(480)(140 )

1 510(233)(419)(14.0)

i 610(244)(484)(140)

Finland No1 ray,'S'111

Unitod Kingdom . .-E0,1., -p-u '- . . ...!,rope

(819)(813). ..

(910)(535)(315)*

(926)(546)(330)*

(950)(605)(360 )*

Sweden (.3.1 ) (57 ) (5°) (55)* C.inada 2625 5045 5161 5200ilThlstern O UI.ope . . .

1.Y.S.S.R(270 )885

(315)*4810

(320)*820*

(325)*830*

Unil eL States. . . .-Latin America. . . .

755.-.

100650

104050

98060*Enited States. . . 575 3 390 3 540 4 200 Asia 5 100* 220 340 470

Canada 46 344 351 461 Oceania, 30 35 50*JapanOther regions . . .

20050*

233340

298340

400360* T.T.S.S.R

...227 400* 440* 480*

World total. . . . 6510* 9400* 9700 1.0080World total. . . . 2 850 6 790 6 870 7 860*

OTHER PAPER AND BOARDThousand netric tons

FIBERBOARDEurope 8292 11900 10650 11890

Thousand metric ton Finland, Norway,Sweden (1017) (1738) (1480) (1700)

Europe 168 900 750 840 Frall GO . . . (1239) (934) (TICO)Finland (23) (117 ) (84) (104) Germany (Western) . 3 (570 ) (1643) (1522) (1767)Germany (Western) 3 (8) (106) (80) (65) 'Unit( (1 Kingdona . . (2958) (2188) (1799) (2070)Italy (2 ) (37) (37) (37) Easi ern Europe . . . (1837) (1360)* (1410)* (1480)*Sw,-)den (93) (324) (227) (270) Cin-ula 484 1341 1202 1340Eastern Europe. . . (-) (65)* (75)* (85)* United States. . . . 9568 21339 19835 21740E.S.S 13,'United States. . . .

3600

130*152

150*1 185

160*1 350

Latiii America. . . .

'Africa735100

710105

780*110*

Canada 42 170 157 217 Asia 6 ' . . . 1:330 1415 1740*tTlp-iii - 15 13 20* Oceania ... 220 180 220*Olio'he regions . . - 100 110 130* II.S S .13, 844 1400* 1560* 1650*

World total. . . . 780 2 470 2 365 2 720 World total. . . . 20800 38360 35720 39470*

COUNTRY OR REGION

i rope 1S `-; 1; 2

NO11- h caOther regions 3

World total.

EuropFietmdU'S 8 lit `2

Other regions . .

World total. . .

EuropeslvodeiiNorth America01Alor regions .

World total.

EurdpeFinlimd, Norway,

SAveilen(i

Wc)rld. To . .

CanadaEuropeFinland, Norway,

SwedenUnited Kingdom .

World total. .

EuropeFinland, Norway,

SwedenNorth America .

World total. .

1933

Million cu. m.12.004.806.500.70

24.00*

386(207)23420

640

22(22)33

55

4 083

(3 738)500

4 700

2 400851

(671)(57)

3 300*

080

(585)200*

1 350*

TABLE V. WORLD TRADE IN FOREST PRODUCTS

1951

13.880.64

11.022.43

27.97

Export

400(278)

79148

627

340(183)

2*

385

(3 763)2 021

6 180

(719)(97)

5 650

1 900

(1 057)533

2 430

1952

10.480.609.902.53

23.51

278(221)

63'144

485

Thousand 'netric tons203(105)

404*

247


(3 029)1 751

5 130

Thousand uiietiio tons

4 638 4 833920 910

(733)(75)

5 850

'Thousand mark, iOnS1 300

(725)487

1 790

1953

SAWN WOOD

13.161.049.862.98

27.04

Thousand cu. In272(215)

34165*

491

3 950 3 190 3 990

PLY WOOD

FIBERBOARD

235(127)

40*5*

280

WooD PuLc

(3 764)1 763

5 900

4 876

NEW SPRINT

990

(741)(127)

5 950

PAPER AND BOARD

1 700

(1 037)385

2 100

COUNTRY OR REGION

Europe 1North America .

Near East ..Other regions 3

World total. . .

EuropeUnited KingdomNorth America .

Other regions . .

World total. .

EuropeUnited KingdomNorth America .

()titer regions . .

W-orld total. .

lEhropeUnited States. . .

Latin America. .

World total. . . .

'United States.EuropeLatin America.Other regions .

World total.

EuropeUnited Kin.gdom .

North America . .

Other regions . . .

World total . .

1938

ilfiltion Cu. tn.18.00 15.36 12.23 14.831.50 6.29 6.27 6.850.90 1.12 0.86 1.073.60 4.71 3.99 4.35

24.00* 27.48 23.35 27.10

Thousand cu. m470 454 355 294

(272) (304) (255) (147)20 47 58 70*

140* 90 70 60*

640 591 483 424

35 210 130 160(27) (131) (54) (67)20 32 35 37

120* 65* 70*

55* 362 230 267

3 008 3 236 2 708 3 1901 550 2 145 I 755 1 960

329 280 330*

4 700* 5 880 4 940 5 750*

2 450 4 500450 380

250370

3 300* 5 510

housand696

(386)200*

1 350*

1951

Import

Thousand itetiic tons ......

Thousan d metric tons

'Thousand metric tons

1 210(663)196754

2 160

1952

4 569530270420

5 800

1953

4 580545280*430*

5 835

netrie tons760 1 000(319) (374)164 240886 890*

810 2 130

* Estimates.Postwar data for Eastern Europe are only for trade with Western Europe.

2 Postwar data are only for export to Western Europe.3 Excluding China mainland.

. . Not available.

157

TIPOGRAFIA FAUSTO FAILLI - ROMA

FOREST PLANTATIONPROTECTION AGAINSTDISEASES AND INSECT PESTS

by J.S. Boyce. 1954, vi + 42 pp. $0.50, 2s.6d.

FISH FARMING AND INLANDFISHERY MANAGEMENTIN RURAL ECONOMY

by W.H. Schuster, G.L. Kesteven, and G.E.P.Collins. 1954, viii + 64 pp., illustrations.

$0.75, 3s.9d.

FOOD COMPOSITION TABLES -MINERALS AND VITAMINS- FORINTERNATIONAL USE

by Charlotte Chatfield. 1954, v + 117 pp.$1.00, 5s.

SCHOOL FEEDING :ITS CONTRIBUTIONTO CHILD NUTRITION

by Marjorie L. Scott. 1953, v + 129 pp.,illustrations. $1.00, 5s.

MANUAL OF FIELD STUDIESON THE HEAT TOLERANCE OFDOMESTIC ANIMALS

by Douglas H.K. Lee. 1953, x + 161 pp.,illustrations. $2.00, 10s.

ZEBU CATTLEOF INDIA AND PAKISTAN

by N.R. Joshi and R.W. Phillips. 1953, vii256 pp., illustrations. $3.00, 15s.

SALES AGENT7 FOR FAO PUBLICATIONS

Argentina: Editoral Sudamericana, S.A., Alsina 500, Buenos Aires. - Australia: H.A. Goddard Pty. Ltd., 255° George Street, Sydney.- Austria: WilhelmFrick Verlag, Graben 27, Vienna 1. - Belgium: Agence et Messageries de la Presse, 14-22 rue du Persil, Brussels. - Brazil: Livraria Agir, Rua Mexico 98-B.Rio de Janeiro. - Burma: ( Wholesale) Orient Longmans Ltd., 17 Chittaranjan Avenue, Calcutta 13, In.lia. - Canada: The Ryerson Press, 299 QueenStreet West, Toronto 2, Ontario; Period;ca, 5112 Ave. Papineau, Montreal 34. - Ceylon: (Wholesale) Orient Longmans Ltd., 17 Chittaranjan Avenue,calcutta 13. India - Chile : Sala y Vila Ltda.. Bandera 140-F, Santiago. - Colombia: " Agricultura Tropical, " Carrera 13, No. 13-17, Bogotá. -Costa Rica : Trejos Hermanos, Apartado 1313, San Jose. - Cuba: René de Smedt, La Casa Belga, O'Reilly 455, Havana. - Crprus : Marcos E. Con-stantinides, P. 0. Box 473, Nicosia. - Denmark : Einar Munksgaard, Norregade 6, Copenhagen K. - Ecuador : " La Hacienda, " Malecón 710-711y Roca, Guayaquil. - Egypt : Librairie de la Renaissance d'Egypte, 9 Sh. Adly Pasha, Cairo. - El Salvador : Manuel Navas y Oa., 1°Avenida Sur 35, San Salvador. - Finland: Akateeminen Kirjakauppa, 2 Keskuskatu, Helsinki. - Franco: Les Editions A. Pedone, 13 rue Soufflot,Paris 5e. - Germany : Paul Parey, Lindenstrasse 44-47, Berlin WS 68. - Greece : " Eleftheroudakis, " Constitution Square. Athens. - Guate-mala : Goubaud y Oa, 5° Avenida Sur No. 28, Guatemala. - Haiti : Max Bouchereau, Librairie " A la Caravelle, " B. P. IIIB, Port-au-Prince. -Iceland : Haildor Jonsson, Mjostraeti 2, Reykjavik; Jonsson & Juliusson, Garöastraeti 2, Reykjavik. - India: Orient Longrnans, Ltd., 17 ChittaranjanAvenue, Calcutta 13; Nicol Road, Ballard Estate, Bombay; 36 A MJunt Road, Madras ; 17 /60 Sanvasiraju Street, Gandhinagar, Vijayawada 2; Kanson House,Delhi-Ajmeri Gate Scheme, New D.-.1hi; Retail agent: Oxford Book and Stationery Co., Scindia House, New Delhi ; 17 Park Street, Calcutta. - Ire-land : The Controller, Stationery Office, Dublin. - Israel: Blumstein's Bookstores Ltd., P. 0. Box 4154, Tel Aviv. - Italy: Libreria Interna-zionale U. Hoepli, Galleria Piazza ColJnna, Rome ; Libreria Internazionale Dr. Romano Romani, Via Meravigli 16, Milan. - Japan : MaruzenCompany Ltd., 6 Tori-Nichome, Nil.or ..iashi, Tokyo. - Lebanon : Librairie Universelle, ave. des Franeais, Beirut. - Mexico t Manuel GómezPezuela e Hijo, Donceles 12, Mexico, D.F. - Netherlands: N.V. Martinus Nijhoff, Lange Voorhout 9, The Hague. - New Zealand t Whitcombe &Tombs Ltd., Auckland, Wellington, Hamilton, Christchurch, Dunedin, Invercargill, Timaru. - Norway: Johan Grundt Tanum Forlag, Kr. Augustsgt, 7°Oslo. - Pakistan, East : Farcos Publications, 2 Inglis Road, P.O. Box 13, Ramna, Dacca ; Pakistan, West : Ferozsons, 60 The Mall, Labore. - Peru sLibrerfa Internacional del Perú, S. A., Casilla 1417, Lima. - Philippines a D. P. Pérez Co-npany, 169 Riverside, San Juan, Rizal. - Portugal :Livraria Bertrand, S.A.R.L., Rua Garrett 73-75, Lisbon. - Spain : Aguilar, S. A. Ediciones, Juan Bravo 38, Madrid ; José Bosch Librero, RondaUniversidad 11, Barcelona . - Sweden : C. E. Fritze, Fredsgatan 2, Stockholm 16 ; Gumperts A B, Gateborg ; Henrik Lindstahls Bokhandel,Odengatan 22, Stockholm. - Switzerland : Librairie Payot, S. A,, Lausanne and Geneva ; Hans Raunhaedt, Kirchgasse 17, Zurich 1. -Syria : Librairie Universelle, ave. Fouad 1er, B. P. 336, Damascus. - Taiwan : The World Book Company Ltd., 99 Chungking South Road,Section 1 Taipei. - Thailand : Requests for FAO publications should be addressed to : FAO Regional Office for Asia and the Far East, MaliwanMansion, Bangkok. - Turkey : Librairie Hachette, 469 Istiklal Caddesi, Beyoglu, Istanbul. - Union of South Africa : Van Schaik's Book Store, Pty.,Ltd., P. O. Box 724, Pretoria. - United Kingdom : H. M. Stationery Office, P. O. Box 569, London S. E. 1. - United States of America : ColumbiaUniversity Press, International Documents Service. 2960 Broadway, New York 27, N. Y. - Uruguay : Hector d'Elia, Oficina de Representación deEditoriales, 18 de Julio 1333, Montevideo. - Venezuela : Suma, S. A., Sabana Grande 102,' El Recreo," Caracas. - Yugoslavia Drzavno Preduzece,Jugoslovenska Kruiga, Belgrade. - Other Countries : Requests from countries where sales agents have not yet been appointed may be sent toDocuments Sales Serviee, Food and Agriculture Organization of the United Nations, Viale delle Terme di Caracalla Rome. Italy.

nublicatinn, are °Heed In U.S dolla,s sed pounds sterling. Payment rn PAO sales agents may be made In local currencies.

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The state of food and agriculture, 1954 · Economic Difficulties of Ceylon and Malaya 85 ... Salmon...

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Transcript of The state of food and agriculture, 1954 · Economic Difficulties of Ceylon and Malaya 85 ... Salmon...