310. Briefing Memorandum From the Director of the Policy Planning Staff (Lord) to Secretary of State Kissinger 1
US International Food Policy: Where Are We and What Next?
Feuerbach2 may not have been right. However, whether man is what he eats, food is clearly a fundamental need. And, swings from feast to famine—and back—take an increasing international toll.[Page 1066]
Greater global focus on food has thus been central to your call for more cooperation on the agenda made urgent by accelerating interdependence. In an effort to assess at least part of that roster of related global challenges, this memo sets forth:
- —Summary view of the world food situation
- —Status report on your platform at the World Food Conference (Rome–1974)
- —Forward agenda on food
Summary View of World Food Situation
The situation is serious—but not as hopeless as some feared two years ago. There has been an improvement in the global food picture since November 1974. Supplies are up—both in the major exporting countries (US, Canada, and Australia) and in the Third World. There’s even a bumper crop in Bangladesh. Improved Soviet grain production has more than offset the Western European drought. Prices have eased substantially. Pressure is down for concessional food aid. There is, in short, less concern about food security.
Relief at this apparent reprieve from crisis may be short-lived, however. The fundamental problems posed at the World Food Conference (WFC) remain unresolved: the threat of chronic shortages, instability of supply (and, consequently, in prices and trade flows), security of food imports (especially for poor countries), low productivity and attendant poverty among most LDC rural sectors, and chronic malnutrition (afflicting more than half a billion people). Too many of this year’s crop reports are due to good weather and too few to improvements in food production and distribution. Long-term problems lurk behind short-term returns. On the supply side, the world faces a serious difficulty in increasing such basic agricultural resources as land, water, and energy. On the demand side, rising population and affluence (note the new OPEC claimants) are apt to mean more people wanting more and better food.
The likely implication of this demand-supply equation is sobering. USDA studies project a grain deficit for the developing countries of between 16 and 72 million tons by 1985. More recent predictions by the International Food Policy Research Institute (IFPRI) suggest a 96–108 million ton shortfall in ten years—slightly worse than that foreseen by the FAO in 1974. Those projections—questioned by some—still do not take into account a sudden adverse change in weather or the extra food needed to improve diet. No matter whose prediction you believe, all agree that the poor will suffer the most from food deficits since half the shortfall will hit countries with an annual per capita GNP under $200.
Prospects for solving most of the present or impending problems under the current regime, according to a major study done this year [Page 1067]for the State Department, are "slim at best." The reasons: a lack of productive resources and technology available to countries most needing to expand their food supply; disincentives to expanded production in poor countries due to poorly designed government policy and to inadequate financial and organizational infrastructure; inadequate control globally over grain production, stockpiling, trade, and prices; and deficient national policies in nearly every country with respect to nutrition, health, and population resources. The conclusion: continuing need for transnational collaboration on food, with special stress on conscious policy decisions by the major grain exporting countries. Read: US.
Status Report on Your Food Platform
You identified five areas for global action in your address before the Rome Food Conference.3 Most of the twenty-two resolutions adopted by the WFC addressed those five areas and urged establishment of new institutions to expedite follow-up. Results have been uneven: positive in terms of total production and food aid, limited on food and agricultural development, mixed on food quality and changes in international institutions, and disappointing on food security. The following discussion gives the gist of follow-up on your "agenda for the future" and the effectiveness of new institutions dealing with food.
Increasing the Production of Food Exporters
Most food exporters, with the help of good weather, have responded to favorable prices and increased export demand with expanded production. They have thus pushed production levels above those of 1974 from 337 to 358 million tons. Exporters, in accord with commitments made in Rome, met in London (February 1975)4 and, since then in other fora.
Accelerating Food Production in Developing Nations
On the plus side, most LDC’s can now (in contrast to 1974) produce or purchase required amounts of fertilizers and pesticides. Technical assistance programs continue to increase emphasis on food and agricultural programs. AID, for example, has an expanded budget, part of which gives more attention to the small farmer. The Board for International Agricultural Development will become the focal point of an increased US university role in agricultural foreign assistance.[Page 1068]
Financial contributions to agricultural development, bilateral and multilateral, are increasing. Commitments rose by 50 percent in both 1974 and 1975 to an estimated $6 billion. Information available for 1976 suggests a further, though smaller, increase. The belated establishment of the International Fund for Agricultural Development (IFAD)—with its $1 billion earmarked for this effort—could be a major step forward. Contributions for international agricultural research are expected to reach about $80 million in 1977. The total share of World Bank lending going to agriculture has doubled (from 15 to 30 percent) over the past few years. Regional development banks have also shown a dramatic increase in financing agricultural projects.
On the minus side, national programs for research and training are developing slowly and unevenly. Lack of LDC political will is often a major bottleneck to better food production and distribution. Inflation nibbles away the real value of increased funds slated for agricultural development. Monies targeted for agriculture sometimes miss the intended mark of increased food production. Moreover, within the Third World itself, less goes to the poorest, on a per capita basis, than to the emerging middle class of LDC’s—a fact economists attribute to the latter’s greater absorptive capacity.
Improving Food Distribution and Financing
Translated, that means food aid in the short-term and greater LDC agricultural production in the long-term. With a US contribution of 6 million tons, the world is close to meeting the goal of 10 million tons set at Rome. Even so, unless LDC food production can grow substantially, food aid and trade must more than double to fill the projected 1985 food gap. It is unlikely that food transfers of that magnitude will be physically possible or politically acceptable within the United States. The hoped-for burden-sharing for MSA’s by the oil exporters has not materialized. Most OPEC food aid has been limited to small bilateral loans and grants for Muslim nations. Further, few LDC’s have accepted or acted on the fact that improved internal distribution of food within each developing country is as important as infusions of external assistance.
Enhancing Food Quality
There have been several steps forward: nutrition surveys underway or completed; projects launched to deal with iron-deficiency anemia and vitamin A blindness; and programs geared for small farmers which, in turn, boost nutrition in rural areas. On the other hand, there has been little follow-up on US proposals for a global nutrition surveillance system (established by WHO, FAO, and UNICEF) or the arrangement, under that tripartite sponsorship, for an internationally coordinated program in applied nutritional research. Nor have the LDC’s themselves exerted the major effort needed to improve the diet of their people.
Insuring Against Food Emergencies
Proposals for global food stocks are dead in the water and not likely to move until 1977—if then. The US proposal to set up a system of nationally-held reserves totaling 30 million tons of wheat and rice is bogged down in technical discussions at the International Wheat Council. The chief difficulty is that most nations do not share US concern about food security. The EC, mainly interested in trade matters and protecting the CAP, has proposed a system for trade stabilization and control involving firm price provisions. The LDC’s are more interested in resource transfers than food security and have proposed a system of two-tier pricing that would oblige the DC’s to subsidize their food imports. The USSR seeks a grain agreement with fixed obligations on prices and supplies that would help state planners project the costs of Soviet food imports. Because Japan can afford high food prices, Tokyo opposes a reserve scheme that might mean paying increased storage costs or financing more food aid to the Third World.
Such different interests play out in disagreement over the following elements of a reserve operation:
- —Trigger mechanism to initiate accumulation or drawdown of reserves (price? production?)
- —Main purpose of reserve system (stabilize prices? stabilize supplies? assure low-cost grain to LDC’s?)
- —Other items of less importance: special concessions or access to reserves for certain countries or situations; formula for deciding each country’s reserve responsibilities; and extent of guarantee for market or supply access (i.e., whether trade concessions would be part of the MTN).
Providing Institutional Follow-up on Food
Follow-up on the new institutions set up to implement the above five-point food platform has been as mixed as follow-through on the program itself. The very proliferation of institutions has sometimes complicated coordination in an increasingly complex area. (An August 1976 GAO Report to the Congress focussed on that problem and the question of politicization—the introduction of such issues as racism and support for liberation movements in specialized food agencies.) A spot check on the new organizations shows:
- —World Food Council: Established to provide a forum for ministerial-level reviews of global food policy, it has fallen short of its sponsors’ expectations, run athwart FAO rivalry, and suffered from the North-South confrontation (since FAO finds more Third World favor). However, better DC coordination and cooperation from more moderate LDC’s cut down polemics and curbed irresponsible proposals at the Council’s second meeting (June 1976), giving some hope for the future.
- —Consultative Group on Food Production and Investment (CGFPI): Although off to a shaky start, this organization—led by Ambassador Edward Martin [Page 1070]—now seems set on a somewhat firmer course. At a third meeting (September 1976), the US agreed to give CGFPI one more year to prove itself with food plans for LDC’s.
- —Global Information and Early-Warning System: Established under FAO aegis, its coverage is far from complete—given the conspicuous absence of the CPR and limited reports from the USSR.
- — IFAD: Congressional approval this year—despite OPEC’s falling short of the promised 50 percent of contributions—will assure one of the most notable achievements for the Rome Conference. Even so, its $1 billion may be a drop in the proverbial bucket of agricultural development.
- —Others: Organizations ante-dating the WFC have stepped up activities. The World Bank has reaffirmed its priority commitment to the agricultural sector in general, and to small farmers in particular. There has been a budgetary boost for the Consultative Group on International Agricultural Research (CGIAR), whose centers can point to solid accomplishment in research. While the US opposed the International Fertilizer Supply Scheme (IFSS), some LDC’s value this source of resource transfers. Other groups may become more effective if the Council and/or FAO (under its new leadership) find ways to respond more imaginatively to world food problems.
Two years may be too soon to take meaningful measure of your Rome food proposals. Most of the WFC resolutions require a longer lead-time for tangible result—particularly since many presuppose fundamental social reform.
Given that longer-term nature of the food problem, it’s not entirely clear how or if we can—to paraphrase the lost traveler—get there from here. Undaunted, as usual, by the long-term, my staff has outlined at least some of the kinds of questions we ought to be asking and approaches we might be pursuing in this area.
—Extent of the Problem: The Malthusians may have cried "crisis" once too often. USDA and UN experts do question the neo-apocalyptic pronouncements of Lester Brown and others of the Worldwatch Institute ilk. The problem may not be so much total production, as distribution, and the ability to pinpoint particular times and places of critical shortage. If so, we may want to follow up on the assertion made by the Overseas Development Council that "the real crisis" is one of income distribution and that the real solution lies in changes of social values and political power.
No matter how one shakes out on that explosive and admittedly amorphous matter, most available evidence does suggest that the global deck is stacked against those who advocate "business as usual." However [Page 1071], since there is still considerable discrepancy in the data, more solid homework needs to be done on this "first question." If we emerge more on the side of concern than of complacency (as seems likely), we should then set about finding ways to manage the global food situation better. A minimalist design for the 1980’s might address the most foreseeable and pressing problem—poor people facing food deficits. A maximalist design could encompass the more sweeping goal of providing adequate nutrition for all.
—Increased LDC Production: No amount of outside aid or exhortation can substitute for action by the LDC’s themselves. More rapid expansion of Third World food production seems essential—given the scant margin between their available food and food needs, their limited reserves of foreign exchange to buy food, and their vulnerability to short-falls in North American food production. The challenge for us in the food area—as in other "new issues" such as population and economic development—will be to get the LDC’s to grasp the enormity of their own problem and their own responsibility to marshal political will.
Very few LDC’s give evidence of having understood that food independence is primarily an internal affair and that agricultural development can provide the foundation for modernizing an entire economy. Few DC’s have recognized that such development, on which both the world’s future food supply and easing of North-South tension depend, calls for sizeable transfers of technology and capital from rich to poor. While our recent record on resource transfer in this area has been impressive, much more needs to be done. The long-run interest of "northern" states is to have "southern" states economically viable and free from hunger. There might thus be less inflationary demand and less resentment, especially among states with important mineral resources. On this basis, serious and tough agreements, neither patronizing nor paternalistic, could be developed.
- —Food Security: To that end, work should
concentrate on means to assure greater world food security and
stability. Components of such a regime could include a mix of the
- • Long-term agreements for commodity management, upgraded to the rough equivalent of limited long-term future markets. Useful for adjusting supply and demand and helping farmers who need a long lead-time to effect changes in production. Could include subsidies to poor countries.
- • Emergency reserve system. A possible replacement or supplement to the international wheat and food aid conventions. Options include a Brookings proposal for an interim approach aimed at establishing reserves against famine in certain key LDC’s, with some stipulation for Soviet and Eastern European participation, to broader plans for a mix of national and international authority, to elaborate schemes for international crop insurance (with provision for intervention à la the IMF [Page 1072]that could address both the problem of foreign exchange crisis in the LDC’s and force domestic change to qualify for loans).
- • Reduction of trade barriers. Work needed in bilateral, GATT, and UNCTAD frameworks to reverse policy disincentives to agricultural production in the LDC’s and remove controls on imports into the US and Europe.
—Breaking the US–EC Deadlock: Progress toward a food security system may hinge on a successful outcome to the Multilateral Trade Negotiations (MTN). That may, in turn, depend on resolution of the US–EC impasse over agricultural trade.
It seems clear that both sides must abandon traditional positions if there is to be an economically significant agricultural agreement in the MTN. Early on in 1977 there should be candid exchanges between the new US Administration and the new EC Commission to design an MTN trade-off that each can sell at home. The key will be an understanding on grains. A possible key to that understanding could be a consultative mechanism on grain reserves premised on US acceptance of a wide price band within which prices for all grains would be stabilized, along with quantitative indicators to trigger stocking and release of reserves. There could be related proposals on export restraints and arrangements for market access (the montant de soutien approach, a concept of production-consumption ratios, etc.—probably understood only in some nether reaches of EB and Berlaymont).
However the USG proceeds in this complicated area of food policy there will be tough political prices to pay. For example, a negotiated commitment to maintain minimum prices for grain exports will be hard to sell to major US farm groups and parts of the Congress.
- —Improvement of Diet: Entails general long-term halt to population growth and promotion of specific approaches to complement above initiatives on food security such as: even more support for small-scale agriculture (some talk of a Special Rural Development Fund), acceleration of international nutrition programs already underway (perhaps with new emphasis on direct income supplements for the very poor and community feeding programs), etc.
—Application of Science and Technology: There, horizons are both limiting and limitless. On the one hand, many DC’s may be nearing at least a temporary peak in payoff from scientific advances in food production. The yield increases from new techniques are becoming smaller. Costs to farmers (and, of course consumers) will go up considerably if more marginal lands are brought into production.
On the other hand, the potential for yield increases in tropical and sub-tropical areas may be enormous. Large areas of the Tropics are neither farmed nor grazed. Knowledgeable agricultural economists estimate that southern Sudan alone might produce as much food as the entire world now produces—if its potential were tapped.[Page 1073]
There are two ways to attain the level of increased grain output needed to close the food gap projected for 1985: expansion of farming to land not now cultivated and intensification of production on land already being farmed. Science and technology could be the key—witness the eight-fold increase in Israeli agricultural production in 25 years. It could also come into play in the controversial and still relatively unknown area of climatology. Exploration here could reap rich reward in food projections and productivity. There, too, we may find that more of the world’s food supply will have to be produced in more tropical climates. Hence, a high priority area for future work should include more attention to world crop forecasting and economic analysis and expansion of international research networks.
- —Institutional Leadership: Your doubts, expressed in 1974, about "a central body to fuse our efforts and provide leadership" and your endorsement of "a unified, concerted, and comprehensive approach" remain well-taken. If the World Food Council—now mandated to assume leadership on food within the UN system—is to succeed, the US itself will be critical. We will need to demonstrate a consistent view from the USG to both the FAO and the Council and a unified view among the developing nations. Further, we will have to defuse radical LDC pressures on the Council and encourage more responsible Third World nations to use it to gain acceptance for realistic global food policies. Finally, without belaboring the details and tradeoffs, suffice it to say that the political hurdles against a regime providing food security and better nutrition are high. The US will thus be hard pressed to make progress on either objective or make sense of the current inchoate set of global institutions needed to address them.
- —Coordination of US Policy: Before we can address any of the above, we must sort out priorities in the United States itself. The problem, in short, begins at home. One of the perennial challenges before the State Department is to help assure a balance between domestic and diplomatic interests in the formulation of US food policy.
- —Resource Transfer: Finally, the question pervading this piece has been whether the US (and other nations) are ready to put up or shut up on "the food problem." The cost of harnessing the agricultural capacity of the Indus–Bangladesh–Brahmaputra plain alone could exceed $50 billion by the year 2000. On the other hand, those river basins, if developed, could alone meet world food needs for the next 14 years, even allowing for a 4.5 percent annual increase in demand.
The point, then, is not so much the simple one of investment return but rather whether we can afford not to follow-up more vigorously on your Rome food platform. As you well know, political leaders everywhere most often focus on immediate concerns, whereas progress here demands long-range vision. Available evidence suggests [Page 1074]that there will be plenty of food for all if both developed and developing nations commit themselves to the expensive and long-term development of the world’s untapped farm resources.
The final returns on your Rome initiative thus depend, not on the gods or the weather, but on men and the marshalling of their political will and foresight. On that, even my staff is loath to make predictions.
- Source: Library of Congress, Manuscript Division, Kissinger Papers, Box CL 336, Department of State, Economic Affairs, Oct.–Dec. 1976. Confidential; Stadis. Drafted on December 13 by Policy Planning Staff member Sandra Vogelgesang. Lord sent this memorandum to Kissinger under a covering memorandum of December 15 that summarizes it. Kissinger wrote on the covering memorandum: "Put into personal folder also."↩
- German philosopher Ludwig Feuerbach (1804–1872) is often credited with the phrase "you are what you eat."↩
- See Document 272.↩
- Telegram 2044 from London, February 10, 1975, reports on the February 8 meeting of the Exporters Planning Group in London. (National Archives, RG 59, Central Foreign Policy Files)↩