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quirements have gone far beyond what the foundations were able to support.

There is now, as was indicated awhile ago, a consultative group bringing together donors from a variety of agencies, international and bilateral, which do support a range of international centers. AID has in effect committed itself to providing 25 percent of the budget of the totality of this range of international institutes, subject to other donors also participating.

Mr. FRASER. The ones we are speaking about.

Mr. BROWN. Yes. The Rice Institute, and the others.

In addition, we and other agencies utilize those institutions and help finance what they call and what we call outreach programs, which take the institutions beyond their basic operations and help finance them to carry on technical assistance in other countries beyond what we are providing for their budgets.

With ÏITA, we are financing 25 percent of their basic operations at their center in Nigeria, but we are also helping to finance the costs of a program which they are now working with the Nigerian Government for improved food production in Nigeria utilizing their work in the research centers. We're doing the same in Liberia and Tanzania.

We do that, the World Bank does it, and the foundations do the

same.

Mr. FRASER. I think probably we have held everyone here long enough. We appreciate very much the time and testimony from all of the witnesses. We have touched on three major areas today, the emergency short term problem, exemplified by West Africa, the role of AID and the foundations in the development of agriculture around the world and the problem of the international system of developing food reserves and having a worldwide system of making sure that food is available to the world community.

What I get out of this is that this is an enormously complicated subject. We wanted to have the preliminary hearings today to get a look at it because it reflects one of the new major areas of acknowledged interdependence that is being thrust on us in so many areas of energy and environment.

I hope that our full committee may be able to follow on with some of these questions so that we can more intelligently legislate here in the House.

Thank you very much for being here. I hope if we do send some questions along, you will be willing to respond to them.

The subcommittees are adjourned.

[Whereupon, at 4:48 p.m., the subcommittees were adjourned.]

APPENDIX

RESPONSE BY JAMES P. GRANT, PRESIDENT, OVERSEAS DEVELOPMENT COUNCIL, TO QUESTIONS SUBMITTED BY CHAIRMAN DIGGS

Hon. CHARLES C. DIGGS, Jr.,

WASHINGTON, D.C., September 7, 1973.

Chairman, Subcommittee on Africa, Committee on Foreign Affairs, House of Representatives, Washington, D.C.

DEAR CONGRESSMAN DIGGS: I am sorry to be so late in responding to your letter of August 14. However, the letter came while I was away on vacation.

Upon reviewing your list of questions, I find that in virtually every case I am not in a position to provide readily the information in the detail you have requested. We would have to obtain the requested facts and history from the relevant government agencies, and since the questions have already been submitted to the government witnesses who appeared at your hearings on world food security, no purpose would be served by a duplication of effort. As to those questions directly related to the potential of agriculture in the poor countries, and concerning the desirability of international food reserves, my viewpoint was already presented in my testimony.

However, if you feel you have any particular questions to which I could provide a useful answer, please feel free to contact me again.

Sincerely,

JAMES P. GRANT, President.

27-781-74—5

(61)

RESPONSE BY THE DEPARTMENT OF AGRICULTURE TO QUESTIONS SUBMITTED BY CHAIRMAN DIGGS

Hon. CHARLES C. DIGGS, Jr.,

U.S. DEPARTMENT OF AGRICULTURE,

FOREIGN AGRICULTURAL SERVICE, Washington, D.C., December 27, 1973.

Chairman, Subcommittee on Africa, Committee on Foreign Affairs, House of Representatives, Washington, D.C.

DEAR MR. DIGGS: I refer to previous correspondence regarding supplemental information for the hearings of the Subcommittee on Africa and the Subcommittee on International Organizations and Movements, most recently our letter of November 15, 1973.

Of the 39 questions included in your original request, Nos. 11, 12, 27, 28, 29, 33 and 34 were referred to the Agency for International Development as falling within their area of responsibility. Preparation of answers to the other 32 questions was undertaken by various agencies of this Department. I am pleased to advise you that this work has now been completed and that the requested materials are enclosed.

We appreciate your patience and understanding of the time and effort required to respond adequately to the many comprehensive subjects included in your survey.

Sincerely,

RICHARD J. GOODMAN,

Acting Administrator.

Question 1. Are there food shortages evident in the following areas?

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Answer. North America-Substantial grain harvests (U.S. corn and soybean output were somewhat below expectations) were recorded in 1972/73 which, together with existing stocks, were the major source of supplies for areas with grain deficits in other parts of the world. Direct human consumption of grains were little affected, but the unusually strong world demand for grains, particularly feed grains, contributed to a very large increase in North American meat prices which, in turn, eventually resulted in some curtailment of meat consumption.

South America-Some production shortfalls were experienced in 1972/73_because of adverse weather-particularly in Mexico, Central America, Argentina and Brazil-but the impact was far greater for export availabilities than for domestic food supplies. For instance, Argentina, a traditional wheat exporter, discovered that she had underestimated the adverse affect of weather on her wheat crop and had overcommitted wheat for export, making some imports necessary to meet domestic requirements later in the marketing year. Chile represents a special case where political and economic disruptions before and during the recent revolution resulted in serious food shortages.

Africa-In West Africa, the sub-Saharan countries of Mauritania, Senegal, Mali, Upper Volta, Niger, and Chad felt the effects of a 5-year drought, the worst of the century. Parts of Nigeria, Cameroon, Guinea, and Gambia were also seriously affected. Famine threatened from the failure of grain crops, but more particularly, from the death of millions of head of livestock. Emergency food imports, to which the United States contributed, became necessary. Most reports indicate major famine was averted, but the relatively light rains in June suggest that large grain imports may again be necessary following the September harvest. The effect of livestock losses will be felt for a long time to come.

Dry weather has also been responsible for reducing output in much of North Africa and the Middle East. Cyprus, Jordan, Syria, and Turkey had particularly bad crops. While no dramatic production changes have been reported for 1973, Egypt remains the largest grain importer in Africa and the Middle East. Drought conditions severely cut South African corn production in 1973 raising the possibility that the country might temporarily shift from the position of exporter to net importer of feed grains.

Asia-Indian coarse grain and rice production shortfalls in 1972/73 were only partly offset by a near-record wheat crop, making larger grain imports necessary. Even then, per capita food grain consumption was estimated to fall 6 percent. Monsoon rains were generally favorable this year giving good prospects for the harvest just beginning. Food shortages reported in past months in some localities appear to result primarily from problems of internal distributionpurchasing and moving grain from surplus to deficit areas-or the timing of imports.

Pakistan experienced the most severe flood in its history in August 1973. One estimate claims that one million tons of stored wheat and 600,000 tons of rice were destroyed. Many other crops were also damaged and the full extent of damage is still not known.

Bangladesh expects a substantial improvement this year over last year's rice and wheat production, but per capita foodgrain production will remain below the relatively high level achieved in 1969. Food production in the area has for many years not kept up with population growth, and the country seems likely to remain a chronic food importer for some time. While foreign exchange earnings now seem adequate to meet major food import needs, the level of food imports is significantly constrained.

While crops in the People's Republic of China are thought to be generally good this year, larger imports may be needed to build up stocks reduced by last year's drought, to supply a population increasing by 15-20 million persons annually, and support an increase in livestock numbers.

Foul weather created an extremely tight rice situation throughout Asia in 1972/73 and a good harvest at the end of this year will bring only partial relief in 1973/74 because of growing demand and a need to rebuild stocks. Acute shortages developed in Indonesia and the Philippines, and to a lesser extent in South Vietnam, South Korea, and Sri Lanka, leading many governments to call for a substitution of other grains in diets. Poor crops in the traditional rice exporting. countries of Burma and Thailand contributed to tight supplies.

Europe Food production and supplies stand at relatively high levels in both Western and Eastern Europe in 1972/73. The USSR is experiencing a generally good agricultural production year in 1973, including an apparent record grain crop, and grain and soybean imports are expected to be down sharply in 1973/74. Oceania-A substantial recovery is expected for Australian wheat and corn in 1973/74 permitting the country to reenter the export market after supplies. were sharply cut by drought in 1972/73.

Question 2. What specific problems have these food shortages generated both in the country of production and with respect to that country's trade with developing countries? What is the effect on health, social concerns, and patterns of exchange (traditional economy)?

Answer. The effect of production shortfalls of food varies according to the cause and degree of scarcity as well as the capacity of individual countries and. groups of people to adjust to scarcity.

In West Africa, for instance, the drought has had a terrible effect because of the heavy dependence of the population upon agriculture, and livestock in particular, for its livelihood. Some observers say the drought may have wiped out the nomadic way of life and made a shift to settled cultivation imperative. In implementing the relief effort, the principal problem was not that of obtaining the relatively small quantity of grain required, but of physically delivering the grain using an inadequate transportation system which made air drops necessary to reach the isolated needy population. Similar problems present themselves in other catastrophes, such as the recent floods in Pakistan.

In most cases, however, food scarcity has been expressed in higher prices rather than physical unavailability of food. For a poor country which desires to maintain food consumption levels by imports, high prices can mean a drain on foreign exchange reserves which the country would prefer to use for investment

in development projects. Even here the effect can be complicated. For instance, India, while facing a heavy drain on reserves to finance grain imports, finds that higher prices for her own agricultural exports softens somewhat the effect of higher import prices. Within an individual country, the impact of higher prices affects different segments of the population differently. If income levels are very low, expenditures on other consumption items must be deferred. Even in countries like India, which subsidizes low food prices in "fair price" shops, the internal distribution system may have problems in supplying food under the pressure of high prices. In severe cases, food is only available at prohibitive prices in a black market. In a developed country, like the United States, groups with relatively adequate incomes may actually improve their nutrition by purchasing cheaper substitutes to their normal diets. Such substitutes may be nutritionally superior to their traditional diets (e.g., meat substitutes with lower cholesterol content). But even in the United States, a lower income group may find that higher prices for food cut down the ability to purchase other goods.

Question 3. What constraints/regulations are placed on food distribution through (a) pricing, (b) production, (c) import and (d) export, on the national level and the international level and in bilateral/multilateral agreements and arrangements? Please include the GATT; EEC and IWA.

Answer. Food production in the United States is not limited by government pricing or production quotas, except for peanuts and sugar. Peanuts, which are in surplus, are supported by the Department of Agriculture at 75 percent of parity, which is the minimum permitted by law, and acreage restrictions are in effect, also at the minimum permitted by law. Domestic production of sugar is regulated by the Sugar Act which specifies the shares of the United States sugar market to be provided by domestic and foreign suppliers. Marketing orders are in effect for a number of commodities (mostly perishable) in order to promote orderly marketing, but these do not limit production. The United States is not a party to any international agreement or arrangement for limiting the production of food.

Import quotas are in effect for a limited number of food commodities. As noted above, the Sugar Act specifies quotas for individual countries supplying sugar. This Act also provides for an overall quota on imports of confectionery, but this has not limited trade. Under the formula provided in the Act, the quota is a larger amount than has ever been reached by imports, either before or during the effective period of the import quota. Under Section 22 of the Agricultural Adjustment Act, as amended, import quotas also apply to wheat and wheat products, certain dairy products, and peanuts. Action is currently in progress under the procedures provided by law to suspend the quotas on wheat and wheat products, and on two of the dairy products. The quotas on most of the other restricted dairy products have recently been increased, on a temporary basis, in substantial amounts. The quota on peanuts remains in effect without change.

Authority to limit food exports is contained in the Export Administration Act, administered by the Department of Commerce. Apart from a requirement that export contracts be reported and registered for a limited number of commodities, the powers of this Act are not being exercised with respect to foods. Restrictions under the Act were in effect for certain vegetable oils and oilseeds and related products earlier this year, but are no longer operative.

The International Wheat Agreement does not restrain trade. Among the other international commodity agreements, the quota provisions of those for coffee and cocoa are currently not operative. The International Sugar Agreement (which does not apply to the United States) is being renegotiated, but agreement among the member countries has not been reached. International agreements on whole and skim milk powder are also in effect (the U.S. is not a party to them) but have not resulted in limitations on trade.

The purpose of the GATT is to expand trade through negotiated decreases in tariffs and liberalization of international trade rules. Agreements under the GATT are trade expansionary, not trade limiting.

The EEC, through its Common Agricultural Policy (CAP), regulates imports of many agricultural commodities, including most of the major foods produced in the EEC, through a system of minimum import prices and import levies. These are related to the internal agricultural production and price programs.

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