Foreign Relations of the United States, 1961–1963, Volumes VII, VIII, IX, Arms Control; National Security Policy; Foreign Economic Policy, Microfiche Supplement

374. “Current Economic Developments,” May 9¹

May 9, 1961

CONGRESS ASKED TO EXPAND FOOD-FOR-PEACE PROGRAM

President Kennedy has asked the Congress for a multi-billion dollar authorization for a long-range Food-for-Peace Program. The request is based on the conclusions and recommendations of the President’s Food-for-Peace Director, George McGovern, and is contained in the omnibus farm bill which, among other things, extends and strengthens the core of the Food-for-Peace Program—the Agricultural Trade Development and Assistance Act (PL–480). The President has stated that the revised bill will enable the US to correlate its agricultural programs more efficiently with our foreign aid and permit the US to maximize the rise of our agricultural productivity to further economic development, peace and freedom in the world. The President has also set up an American Food-for-Peace Council composed of prominent citizens to advise the Food-for-Peace Director, develop public information on world hunger, and enlist support for the attack against hunger.

The McGovern recommendations specifically emphasize the need for a vigorous program for the utilization of US surplus agricultural commodities as a part of economic development programs and for improving nutrition in the developing countries. The request to Congress is for authority for a five-year $7.5 billion program for Title I sales as well as other amendments to PL–480. The Secretary of Agriculture would still determine the quantities and commodities which are to be disposed of under PL–480 but the right to determine which countries should get surpluses would be shifted from Agriculture to the President.

Title I According to McGovern’s report to the President, the surplus agricultural disposal program has been hampered by the difficulty of entering into long-term agreements under Title I (sales for local currencies). A particular problem is the fact that total obligations under all agreements must remain within the current total authority, which for 1960 and 1961 is $1.5 billion per year. Authorize to commit funds for this calendar year had been depleted as the commitments for the May 1960 multi-year Indian agreement had to be met. To correct this weakness in the program, the President asked the Congress for increased authority for the remainder of calendar year 1961 and for a long-term extension of PL–480. The House and Senate have already approved the request for $2 billion in additional authority for this year, and the President on May 4 signed the legislation. Committees are holding hearings on his request for extension of Title I until 1966 and for an authorization of $7.5 billion over the next five years, no more than $2.5 billion of which would be committed in any one calendar year. This authorization, the Administration believes, would provide the flexibility needed for long-term agreements, at the same time eliminating the possibility that all funds would be expended in the first year or so of operation. (It might be noted that a $2.2 billion multi-year agreement has already been signed with India and that long-term Food-for-Peace agreements are under consideration for Brazil and Pakistan. These latter agreements would run about four years and provide for the sale of approximately $600 million of commodities to each country.)

The President has also asked the Congress to amend Title I to authorize the building of national food reserves. Under this provision, the President would be authorized to make surplus agricultural commodities available through the CCC for the establishment of such reserves. Agreements with the recipient country would require payment in dollars or local currency depending on the terms of the agreement, but the payment would not be made until the commodities were withdrawn from the reserve. Enactment of this amendment would encourage the creation of badly needed reserves, since many of the underdeveloped countries are susceptible to drought and other natural disasters which cause wide fluctuations in crops. Even those countries which have storage facilities have found it difficult in the past to fill them with US commodities, because they have had problems in financing such purchases.

Another amendment would allow reuse of foreign currencies which represent principle and interest from PL–480 loan repayments. The present bill is silent on the use of such repayments and in the past this has not been a matter of concern because repayments had not yet started to accumulate. Repayments now, however, have started to grow and will continue to do so.

Title IV Amendments Particular emphasis has also been given to long-term dollar sales under Title IV. This Title was added to PL–480 in September 1959 but no agreement under the Title has yet been completed. The Title would be broadened to encourage increased dollar sales through long-term supply agreements and through the extension of credits. Safeguards for usual marketings, the use of private trade channels, etc., would be required as under Title I.

Titles II and III The benefits of emergency feeding programs and their continued use is also emphasized in the McGovern Food-for-Peace report. While these programs have been successful as a visible demonstration of US help to the needy, McGovern believes that they have been too limited in number and volume. In addition, the food that has been offered is limited and generally supplied for a relatively short period of time. He recommended that the Administration encourage new programs of this type and expand old ones. Authority for such programs is contained in Title II (which provides for famine relief and grants) and Title III (which provides for donations of food to voluntary agencies for foreign assistance to the needy.)

To meet this objective, the President has asked the Congress to extend Title II through December 31, 1966 and to continue the present yearly authorization of $300 million in addition to any carry-over. There is no statutory limit of Title III expenditures since such donations are simply treated as losses by the CCC which receives an annual appropriation to cover losses.

The McGovern report stresses quality as well as quantity as a factor in Food-for-Peace aid. It calls for an improvement in the variety of our food package, including the addition of protein and fat which are badly needed. The US has in the past included frozen poultry under Title I programs but only in special cases. The President has, therefore, requested authority to have the CCC make available not only commodities from its surplus stocks but also commodities from private stocks.

In connection with this increased emphasis on nutrition, a special task force was appointed to survey the world’s food needs not only in terms of quantity but in terms of the types of food required to maintain normal physical activity and health. The study reveals that total calories, total proteins, and particularly animal proteins, are on the whole very low for the underdeveloped areas. Initial calculations on these needs, however, are considered a “first approximation” only, which should be followed by a more detailed, thorough, and refined calculation including a fuller account of each country’s special situation.

The McGovern report calls for increased coordination with voluntary agencies to find out if any further changes are required to render Title III more effective. Food-for-Peace help in the development of truly national programs in needy countries is recommended in addition to the establishment of programs in needy areas where no assistance is presently given.

A large expansion of Title II and III grant programs has been recommended. The McGovern report foresees an especially significant role for the Peace Corps in this respect. Peace Corps services should be made available to voluntary agencies as well as to governments.

Certain grant programs are also emphasized. The school lunch program is particularly stressed, whether it be on a government-to-government basis or through voluntary agencies. The US has used surplus agricultural commodities for this purpose in Japan, Italy and Tunisia. Difficulties were encountered, however, when some governments were unable to continue the programs on their own. The McGovern plan would permit US support of school lunches for longer periods of time.

Another unique plan which McGovern desires to expand is the food-for-work-program. Under this program, surplus commodities are used as wages in economic development projects such as small dams, irrigation and drainage canals, wells, cisterns, rural roads, reforestation, and soil protection and restoration. A pilot project has worked very well in Tunisia where for about eighteen months workers have received approximately one-third of their pay in surplus food. On May 4 the US signed a $17.8 million work project agreement with Morocco. Under this program, the largest of its type ever undertaken by the Food-for-Peace program, 200,000 tons of US wheat will be utilized by the Moroccan Government as partial wage payments to 200,000 workers employed in economic developments projects. Negotiations nearing completion will result in additional work programs in Dahomey, Eritrea, Greece, Indonesia, Iran, Republic of China and Tunisia.

Latin American Mission The use of surplus agricultural commodities in connection with agrarian reform and other land projects is an additional program which the McGovern report emphasizes. This is especially significant for Latin America and is closely allied to the President’s “Alliance for Progress.”

Early this year, a special mission was sent to Latin America to determine how US abundance could serve to further programs of social and economic development in these countries. In all of the ten countries visited, the mission found a need for surplus commodities which could be supplied under one or more of the provisions of PL–480. For example, wheat sales for local currency could contribute materially to Brazil’s food and economic development needs, whereas famine relief and private agency grants would do much to help the drought stricken northeast area. Title II aid could play a significant role in Colombia’s school construction effort and rural resettlement projects. Furthermore, the increased use of feedgrains toward the production of hogs and poultry in countries such as Brazil might increase the availability of protein for consumption. As a direct result of the Latin American Food-for-Peace mission, Title I agreements have been signed with Ecuador, Bolivia, and Brazil.

The Latin American mission, however, pointed out that food by and of itself cannot provide an answer to the overall development needs of Latin America. Some of the countries must first develop better ideas of the funds, materials, and technical assistance that will be available to carry out their programs. Even donation programs can be effectively implemented only to the extent that financial and technical problems of preparation, transportation, and distribution can be solved.

Multilateral Programs Multilateral programs do not conflict with the Food-for-Peace program. On the contrary, such programs as UN activities to relieve hunger through multilateral food distributions complement the US effort. At a recent meeting of the FAO Advisory Committee on Surplus Food Utilization, the US took the initiative by proposing a $100 million multilateral food fund and offered to contribute $40 million in commodities. It is hoped that other nations will make similar contributions to help meet the needs of the underdeveloped nations.

1. Expansion of Food for Peace Program. Unclassified. 5 pp. Washington National Records Center, RG 59, E/CBA/REP Files: FRC 72 A 6248. Current Economic Developments.