extracted text

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1 July ,

$2,

Dr. Mordeoai Kaekiel*
Deputy Director Tconoialca
division,
F.A,0.
Viale delle Terme di Caraoalla^
E o ma.

Bear dr* Eaekiel»
As ?rof«tinbergen actually enjoys aooM well-earned holidays^
he ia (in this oase fortunately!) not able to answer your letter
on the ?A0 world CMtlook. i^eport of June 24th before July 12.
After careful reading of the section of the Report concerned,
I believey however» there is no essential comment to saake.
If you want to insert on page 7 an explanation of the decreaa*
lïi!, export of buiter» this is directly cotnoented with the increaaing ohiteae exports mentioned. So you could say only ''because there
wae a shift from the production of butter to the siore profitable
one of cheese^ Mainly for this reason the cheese exports .••.'^.
Head Agricultural Divlaloa,

\k
A»W.G. Soppejan.

*

\

; •; >0 4.,( rf :•••

'i'»tt»j|iimij|.|,ii»w»P» ot ttic^
Mil $t. .

^:*^iA•-vV

.(/

*4(<1.#-K#-''^

Telephone 590211 - S^OOll

Cable Address : FOODAGRI, ROME

ORGANISATION DES NATIONS UNIES POUR
L'ALIMENTATION ET L'AGRICULTURE

FOOD AND AGRICULTURE ORGANIZATION
OF THE UNITED NATIONS

Viale delle Terme dl Caracallo

In reply
please quote
EcA-2

fiJiv^

l/Qi

Lo^

^^JUi^ U^

ROME

^ Aiff. 2 4 1952

^

Depr Dr. Tinberger,
I am aga.in v^riting to ask for your comiients in connection iidth another
section of the FAO annual Yforld Outlook Report and the State of Food ajid
Agriculture 1952, to be completed during July.
It would be greatly appreciated if youjr comments on the attached preliminary draft of the regional Review for Europe could reach us in Rome not__
later than July 12» As we indicated in;our previous letter, vre realise that
this is rushing you T^ut if I may rejpe&t,. ?re are working under very tight
deadlines, and our final draft muêt' be in the hands of the printers by July 15With much appreciation for yoior continuec- help, and looking forv/ard
to your advice end critical comments.

Sincerely yours,

Mordecai Ezekiel
Öeputy Director
Economics Division

Dr. J. Tinberger,
Nederlands Economisch Instituut,
p/a Hendelshageschool,
Rotterdam,
Holland.

ii-i'.'i!', /yn

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.S!Mfïte>f«lDA':f;f3-

n;^:i^"^

CHAPTEH III
"
Revievi

Prcilimins ry Drtft
Ste.te of Food & /.griculture
June 10

and Outlook hy Regions

Of the three major food exporting areas in the ^lorld, only fforth America
continues to maintain ••Its high level of production and to increase its exports
to a level of well above pre-war.
food consumption per capita.

At the same time it remains an area of high

On the other hand, Latin America's food, exports

are well below the prev^ar level, about a 43 percent drop by 1951/52.
food exports dropped sharply during the year under review.

Oceania's

The Par East and

the Hear East shifted from being net exporters to net importers.

Only Europe

(excluding Russia) has reduced its net imports, not because of adequate domestic
supplies, but because of difficulties in obtaining additional food exports
arising out of balance of payment problems and other economic factors, outlined
in Chapter II.
The continuing decline in the food/population ratio has resulted in an
intensification of planning activity during the year 1951/52 in the regions
affected, with tho objective of increasing food production.

In all cases the

attainment of this objective hinges'on the ability to obtain capital goods for
agriculture, to increase productivity, on the effectiveness of price policies as
incentive measures, the ability to expand exports of other products, and of
course, on weathero

The countries in the tinderdeveloped regions of the world

have proved to be very sensitive to the fluctuations in economic activity in
the more developed countries of tho world and this instability has tended to
retard the rate of progress in agriculture as well as non-agricultural production.
!

4^

However, even if these plans prove to be highly successful within the next five
years, it appears doubtful whether production will expand sufficiently to meet
the needs of an expanding population and at the sane time raise the level of
consumption per capita.
FAO/52/6/3640

- 2 Basically, "fcliQ problem is one of joint action.

However, as the balance of

the chapter will show, regions and countries within regions, are trying to solve
the problem in part by isolating themselves, hoping.in this way to solve their
own economic problems.
successful.

This procedure hov/everj is not provijjjg-

to be very

A positive step in this direction is of course, the v/ork under the

T.A. program, the operation of GATT, EPU, MSA and the various colonial development
programs of the metropolitan countries.
\?ESTERI\r EUROPE
The restoration of agriculttiral production in Western Europe during recent
years has been facilitated by the existence of a strong effective dem-and for food
largely duo to increasing industrial activity with full employment in most
countries.

Expansion of industrial production continued during I951/52 but was

on the whole, at a slower rate than in the immediate preceding years. However,
industrial expansion has been progressing at a much faster rate than agriculture
(table 1) and accordingly the relative importance of agriculture in the total
economy of the region was further reduced.

This development, while part of

economic progress, has f£.2hiS»'.aching implications for the. future orientation of the
agricultural sector.

Food supply will have

to satisfy not only a

population growing in number but also the demand for a more diversified diet which
arises with higher real earnings in industry.

Before the war, as urban purchasing

power increased, additional food and feed could be bought from abroad at
favourable prices. Prices of imported agricultural products, however, have now.
become loss favourable and the terms of trade are relativeljr lower than before
World War II. '
FAO/52/6/3640

•••..•

... : .

- 3 -

General Economic Conditions»
activity rilth
year.

As indicated in Chapter II, the' level of econonic

the najor exception of the textile industry, remained high du.ring the

Some slackening occurred in the early months of 1952 and the aggravated

balance of payments difficulties led to increased trade restrictions.

In most

,; -.

countries the cost-of-living rose throughout the period (especially where, as in
Prance, there v/ero strong inflationary tendencies), and food prices generally rose
nore rapidly than those of other goods and services, notably in the United JCingdon,
Dennark, the Netherlands, Yuestern Gernany and Austria.
In nost countries v/ages have risen in line \7ith rising prices from 1950/51 "to
1951/52, hut in sone, such as Austria, a decline in real wages appears to have
taken place.

Denand for the nore expensive kinds of food has developed less strongly

than had been assumed to be likely in the conditions of an expanding econony.
In 1951/52, for the first tine since 1948, there v;as no general increase in
the average per caput consumption of food.

In a number of countries neat

consumption has not yet reached the prev/ar'level, and iii V/estern Europe as a whole,
however, total neat supplies in 1951/52 were nearly 7 percent below prev/ar. Meat
is still rationed in the United Kingdon, and elsewhere high prices generally
restrict purchases.

Present prices paid to farmers suggest, that livestock products

nay no longer retain their high price ratio to other farm products (see table 7)»
Signs of saturation have appeared in the market for liquid milk, and the
availability of relatively cheap margarine, the quality of v;hich has been improved
in previous years, has made inroads into the consumption of butter.

On the

other,hand, demand for cheese has generally been well maintained.
Agricultural Production. Farm production in the region exceeded that of 1950/51
by about one to two percent and represented (not of imported feed) an increase of
10-12 percent above the 1934-38 average.
FAO/52/6/3640

The volume of crops in 1951 '^as

~ 4 - •"

noticc^.hly smaller in the western and northern part coapared with 1950, while
weather conditions particularly favored the Iberian Peninsula. (Table

).

With the disappearance of all compulsory neasures agricultural production has
g:U3rally returned to its prev/ar structure with a few important changes; a
considerable increase in milk production, -^ decrease in most countries of
Continental Europe of the area under bread jrain, and an extension of the area
devoted lip sugar beets and oilseeds.
Gross output of livestock products in I950/5I exceeded the prewar average by 7 percent and was nearly 3 percent above I950/5I, (see table l). During the
year, progress was particularly marked in Western Germany, while some decline in
output occurred in Scandinavian countries.
Milk production exceeded last year's total by only 2 percent and the 1934-38
average by 8 percent.

This v/as c«3 in the main to an increased yield of milk

per COA7 of 10 percent over the prewar average.

Total production however, declined

in Denmark, Sweden and the Motherlands, coapared with last year.

Beef production

is being favored by government policy in the U.K. and Sweden, and because of
three successive good years for green fodder and rou.ghage in these countries.

The reduction of horse numbers by 1 l/'^ million since

and the consequent •

decrease in production of oats and increase in production of barley, has facilitated
the increase in production of pork, poultry and eggs.

Pork production increased,

by 6 percent in I951/52 and exceeded the prewar level, with the greatest increase
in the United Kingdom and Western Germany.

However, because of the deterioration

of the feed/livestock price ratio in Denmark, tho ITetherlands;, and Ireland, _ _.
pig numbers have shown some tendency to decrease, while in Western Germany the
FAO/52/6/3640

- 5-

stock of breeding sows has been reduced.

,

In general, the livestock output per unit of feed^nutrients has increased

• •

compared v;ith prevar and the higher yield per -cow and hon should tend to reduce
the production cost of each unit of milk and eggs in many countries.

: :.

This progress,

together with more efficient utilization'of grassland-and of such by-products
as sugar beet leaves etc., has reduced the dependence of livestock breeding on
imported coarse grain.
Total production of major crops.has slightly surpassed the 1934-38 average,
although the area in these crops has been reduced, but there has been an improvement
in yields per hectare.

The trend is more marked in countries which had already

an intensive type of agricultural production than in others, e.g. in the
Hediterranean area, where yields remain at relatively low levels, and fertilizer
consumption per hectare is about half of the West European average (Table

).

Elsewhere the improvement in crop yields has been largely due to the increase in
fertilizer consumption and mechanization.

Compared with 1938, application of

fertilizer has increased by about 5 percent. (Table

.

) At the same time, with the

general restoration of the herds the quantity of manure available is also about
the same as before the war.
Tractor numbers on farms is about four times as large as in 1938.

In the

Hediterranean area, however, the number of tractors has increased by only 61
percent since 1938.
Trade. Because the total voUime of agricultural production has not kept
pace with the increase in population during the past years.
FAO/52/6/3640

Western Europe has

- 6 -

had to continue being a heavy inporter of foods, Furthernoro, a-s exportable
supplies becane less available in non-dollar areas,, the region has had to continue
aaking heavy purchases in Korth America.

During the past three yea.rs, the

annual average percentage of imports of total food supply into Western Europe
from the rest of the world amounted to 34 percent for breadgrain, 32 percent
for suga.r, and, (if imported grain for feeding is taken into consideration) 21
percent for meat and eggs.

As far as sugar and neat and eggs are•concerned,

the dependence on inports is non less than in prev^ar years.

Expenditures on

agricultural inports (excluding fibers) from outside the region by ten of the
largest countries in 1949j 1950 and 1951 equalled 70j 60 and 55 percent of
their ea,rnings from exports in those years.
In 1951/52 imports of grains and of sugar \7ere greater by

and

percent in the previous year due to a smaller production because many countries
tried to rebuild their stocks of grain from v/hich they had dra.wn in 1950/51 • I^i
both years, some 400,000 tons of sugar were added to stocks.

..

"uiile imports of bread grain and fats and oils have been slightly exceeding
the prev/ar levels imports of sugar, coa-rso grain and oilcake have been considerably
reduced.

Although the reduction in oilca.ke is largely due' to improved methods

of feeding, coar.se grain purchases have been reduced, partly because of high
prices in the markets for v/hich foreign exchange vras available, and partly because
of the decrease in horse numbers vrtiich relea.sed feed for other livestock.
The dependence on the dollar area for imports of essential foodstuffs and
feedstuffs has further increased in I951/52, especially in grains, following,
the curtailment of supplies from the Argentine and Australia (Table
FAO/52/6/3640

).

- 7Tahle

Ifct Food Inports into ïïestern Europe
ITet food Imports
1950/51
million
metric
tons

Breadgrain
Coarse grain
Sugar(refined)a)
Fats and oils h)
Oilcake and meal

percent
ori/^inatinfï
in dollar
area

12.5

80

2.85
• 2.7
3.4 i)

20
17

45
77

let food Imports

Ï95Ï7IR
pillion
metric
tons

14.1
9.1
3.2
n.a.
3.3 e)

a)

out of these quantities about 550 thousand metric tons'were re-exported
to other regions in both years

b)

oil equivalent

c)

from imported seeds and imported as such

d) 1950
e)

1951

Inter-European trade in agricultural products remained on a high level during
1951/52.

Total meat exports from Denmark have been slightly reduced and the

export of butter from Denmark and the ITetherlands .:vas below the previous year
because

but cheese exports from' the Netherlands, Denmark and Italy increased considerably.
Most of these exports v.ent to Western European countries, the main exception being
butter exports from Sweden and Denmark to Czechoslovakia, the U.S.S.R. and
Eastern Germany.
Prance, vvhich had been a net exporter of 550,000 metric tons of bread grain
PAO/52/6/3640

- 8 and I3O5OOO metric tons of sugar in the previous year/had a'net" iriport of
800,000 tons of breadgrain and 30,000 tons of sugar in 195l/52 and also reduced
its net export of neat.

....

......•:•

Imports of cereals fron Eastern Europe and,' in particular, from the U.S.S.R.
showed sone increase over the preceding year, the United Kingdon and Italy being
the main importers of coarse grain and wheat fron the U.S.S.R.

Altogether,

however, these imports remained very limited and far below the prewar average.
In particular, '.Vestern Germany, which before the war relied on eastern countries
for a substantial part of iiss food inports, drew''only'3.4 perooBflt of i±"è.*.t*M?fron this region,

•

Prices and Income.

Prices received by farners for the major crops, such as

cereals and sugar beets improved sonewhat in 1951/52.

In 1949 and even after

the outbreak of hostilities in Korea in 1950? these prices remained relatively
constant in most countries while industrial prices increased considerably.

Prices

for livestock products, particularly for meat, were sustained during 1951/52 but
did not keep pace with the increase in prices of crops.

Italy was the only country

where livestock prices increased more during the year than did prices of the main
crops.

The relation remained the same in S\'7itzerland, Denmark, Norway, but in

France, Germany and the United Kingdom, for instance, prices of the major crops
increased 31 percent, 32 percent and 21 percent respectively, while prices of
livestock products rose by only I8 percent, 8 percent and 8 percent.

The price fixing and control programs have changed little.

The United Kingdom,

Sweden and Norway have price agreements assuring their agricultural industry a
nininun income.
PAO/52/6/3640

Fixed or guaranteed prices for some basic products remain in

"9

-

operation in Franco, the Netherlands, S\7itzerland5 Denmark, Western Germany and
Italy.
Gross farm income in I951/52 has been higher than in previous years in most
countries.

Net farm income may, ho^7ever, have increased less, owing to substan-

tial increases in wages and other costs.

Prices of imported foodstuffs rose

but in the Netherlands, France and Sv^/eden the increase was partly mitigated by
subsidies.

Some farmers found that fertilizer prices increased more than crop

prices, especially in the United Kingdom, where the subsidy on fertilizers was
reduced,
OUTLOOK 1952/53
Demand for farm products v/ill generally remain strong.

Improved availability

of coal, steel and other raw materials indicate high industrial activity.

The

present rate of uneraployraent which has been increasing in some countries (United
Kingdom, the Netherlands) will have little effect on the present average level
of consumption.

Prices nay remain more stable.than in recent years, largely due

to the recent fall in prices.of raw materials and to anti-inflationary measures
taken by various governments.
Crop production can be expected to exceed 1951/52 levels.

The area under

cereals, including Yifheat, shows a slight increase and growing crops are reported
to be in a good condition. The area in sugar beets has been further extended
increase being
by some 5-7 percent^,^ .<'j|fee /most marked in Austria, Finland, Prance, Italy and
Spain; in ^elgiun, Ireland and the United Kingdom a reduction is reported.
Livestock production should benefit from the good condition of pastures, but in
countries depending on imports of feedstuffs, supplies and prices in foreign markets
will influence the rate of expansion of output.
FAO/52/6/3640

The after-effects of foot and mouth

-10-

disoase on the output of livestock products, especially nilk, nay becone- apparent
later,
LONG TER'I OUTLOOK
According to a recent OEEC estimate, total demand for agricultural products
in the OEEC area v>rill increase by 12 to 14 percent \7ithin the nest 5 years.
Although this estimate nay be on the high side, it has to be considered in terns
of whether Europe will be able to obtain increasingly

greater supplies of food and

foodstuffs necessary for a growing population, from other regions.

In all

trexlitiohally exporting countries outside the dollar area, the trend is towards
an increasing internal demand which is making inroads into the siipplies of some
of the connodities available for exports... . The... dependence on the dollar area ¥/ill
therefore hardly diminish.

At the sane tine, prices from this area are likely to

remain on a high level and foreign exchange difficulties v'ill not easily be
overcome because there is a more marginal need for Europe's exportable goods in
this region,

•'

In the long run, therefor , the necessary food supplies can only be assured
by an increasing European production and a consequent reduction of imports from the
dollar area of such products as cereals, sugar and tobacco.

Since there is little

scope for expanding the agricultural area the stress has to be laid on further
intensification of production to be achieved v/ith the help of a greater application
of means of production and the wider adoption of modern methods.
EASTERN EUROPE AltD THE LygjtC«S<L
Collectivisation in sone of the Eastern European countries has slowed down
during the past year, but the area in State farms continues to expand rapidly,
FAO/52/6/3640

- 11 especially in ":'oland and Eastern Germ.any where m.uch fallov; land abandoned by farmers
has been taken over for cultivation,
in Bulgaria, v/here the process is nearest completion, about half of the total
area of arable land v/as in collective farms by the end of 1951»

Hany of the farms

have been merged, so that the average area of tillable land per collective farm
increased from just under 350 hectares at the beginning of 1950 to just over 800
hectares in December 1951.

In Czechoslovakia, Hungary and Yugoslavia the proportion

accounted for by collective and State farms h.id reached 20 to 30 percent, while
in Poland the figure appears to be about 15 percent.

In Rumania the number of

collective farms at the beginning of 1952 was small in comparison with the
numbers in neighbouring countries.

In Eastern Germany, although the number of

nationally owned machine stations has increasedj no deliberate policy of
collectivisation on the usual pattern appears to have been introduced.
In the Soviet Union, more attention has recently been paid to the transfer of
livestock still in private hands, to collective ownership and towards the
amalgamation of collective farms into still larger farming units.
a change in the policy of collectivisation in Yugoslavia.

There has been

The typo of cooperative

now being encouraged resembles the Danish more than the Soviet model, peasants
combining mainly for buying and selling, the provision of credit and other forms
of mutual assistance,

Hachine tractor stations, which in other countries play a

major role in collectivisation, have been dissolved and their stocks transferred
to cooperative pools of the western type or distributed among the collective farms.
Compulsory State purchase of produce (except wool) has been abolished, free prices
provide, a new incentive for sales off farms, ..and earnings above a level fixed
by reference to the cadastral value of the land Jfcanot now subject to tax.
Increased agricultural mechanization is also a major preoccupation in Eastern
T?
^10/52/6/3640

- 12 -

Europe,

iipart fron Bulgaria and .Albania, which have no tractor industry, all the

countries of Eastern Europe continued in 1951 their efforts to expand the volume
of tractor production.

It is anticipated that Czechoslovakia will produce heavy

tractors for export to Poland, Bulgaria and other countries.

In Czechoslovakia "

.tractors in machine stations increased by 23 percent during 1951, mainly as ,a
result of the increase in caterpillar^ tyves
tractors.

In,Poland the tractor power^^

and the expropri^.tion of private
available to agriculture increased by the

end of 1951 by about 28 percent,compared with I95O.

The increase on State machine

stations was 86 percent partly because tractors were taken over from cooperative
machinery pools.

Ire Bulgaria the scale of agricultural operations carried out .

oechanically by tractor stations was reported to be twice as great in I95I-as in.
1950.

In the Soviet Union the number of tractors^^

1951 was 137,000.

supplied to agriculture during

This is a reduction from the 1949 and I95O totals but combine

harvesters were delivered in greater numbers.

In I95I ever 60 percent of the

total grain crop was harvested with combines.

.Agricultural Production. The bread gorain harvest in 1951, throughout most of
Eastern Europe, was.reported to be the best since the war.

Yields per hectare were

substantially greater than in .1950, except in Poland, where some crops especially
potatoes had poor yields owing to drought.

In the Soviet Union the total grain

harvest .\Yas slightly less than in I950.

The area undor sugar beet and industrial crops (e.g. oilseeds, flax and tobacco)
is rapidly expanding in several countries.

1) In 15 H.Po Units

-

• '

In Hungary the cotton acreage increased

.

PI0/52/6/3640
«

•

-"13 -

fivefold in I95I and in Bulgaria cotton, hemp, riöe, and sugar heat all showed
a considerahle increase.

In Poland and Czechoslovakia hov/ever, the

planned

increases in sugar "beet and industrial crops were not attained, though there was
some increase in acreage.
The improved crop situation in 1951 l^-a^d not greatly affected •livestock
numbers by the end of the year.
in livestock.

In Bulgaria there was an increase of 7 percent

In Yugoslavia livestock numbers made small increases after the

setbacks caused by drought in 1950, but except for sheep, smaller numbers v/ere
recorded in January 1952 than two years ago.

The cattle population in Czechoslo

vakia and Poland is stated to ha-ve been about the same in 1951 s,s in 1950*

1^

Poland pig breeding was reduced in the earlier part of the year but showed
signs of recovery in the fourth quarter.

Pigs and sheep increased appreciably i

Eastern Germany and in Czechoslovakia,

Throughout most of 1951 "tlie food situation was difficult in many countries
of Eastern Europe.

Shortages of neat and fats were reported in several of the

Eastern European countries.

In Poland, the effects of the drought, combint-ft

probably v/ith the peasant*' reluctance to meet the Government's dena-n<^ led to
reductions in fat stock deliveries from farms, and towards the end of 1951 s
partial rationing of meat and fats v^as introduced.

The problem of feeding

industrial workers in Poland now about double in number'^ compared with prewar,
is of critical importance because of its vital connection with productivity, the
key to the fulfilment of «11 tho Government's planning.

Compulsory delivery of

slaughter animals and some livestock products has recently been introduced, and
to encourage production and delivery of pigs there is a bonus payment for pigs

PA0/52/6/3640

-14 sold under contract over the quota.

Such deliveries also bring some reduction

in land tax and earn the right to purchase certain quantities of coal and
feedingstuffs."
At the-beginning of the year, following the drought of I950 which had given
rise to a shortage of feed, rationing was reimposed in Hungary.

After the good

harvest of I95I food prospects began to improve and in Decem.ber I95I rationing
was ended and bread, flour, butter, milk and sugar were bought and sold freely in
the market at fixed prices l ) . These were set at levels well above the former
prices of rations but wages, social security payments and family allowances were
also increased.

In Czechoslovakia the production of fat stock and milk fell

short of the amount intended, and in reviewing the year's achievements the
Government stated that "serious shortcoming had occurred" in the supply of
agricultural products.
In Bulgaria a change in the system of food prices similar to that in Hungary
t,opk place in May 1952 when food rationing ivas abolished.
a currency reform was announced.

At the same time

Rumania had taken, this step in January 1952?

thereafter, the volume of sales of consumers' goods, including food, increased.
This followed a period of shortage of livestock products.

The Heat Department

.of the Rumanian Ilinistry of Pood is reported to have delivered only 4-2 percent
of the- planned amount of meat for 1951 •

1) Meat and fats were freed from rationing at the end of February 1952.

R\0/52/6/3640

15

In Eastern Germany meat consumption was suhstantially greater than i:^ 1950s ^^"^
still much below the prewar level.' Deliveries from farms v^ere regarded as
unsatisfactory in viev/ of .the ..estimated production..
Trade»

Trade 'within the region has heen intensified and there are growing

restrictions on trade v/ith Western Europe.

Eastern Germany and Czechoslovakia

continue to he. supplied with grains in exchange for industrial products .especially
machinery and scientific instruments.
In Eastern Germany the revised five-year plan for production (l95l/55) f^nd
a trade agreement with the Soviet Union suggest that substantial supplies of
"bycoarse grains are expected to arrive from or/way of Russia,

Supplies of neat, sugar, eggs and other foodstuffs have reached Western
1)
Europe from Poland _ ., and a further contract, for coarse grain shipments from
the Soviet Union to the United Kingdom,' similar to that in 1950-51 is in effect,
with the additional provision of 200,000 tons of wheat.

The Soviet Union continues
.

1).

to. export T;heat to Egypt, India and other non-European countries •'

•

LATIIT AIvïERICA.
Currently, Latin America i/placing greater emphasis on

s^gvlGnltnval

expansion than it has during^reoont years, with industry eKpanding more rapidly
than agriculture, and in/some instances agricultural ipKT-estment is being
discouraged by the prio-B policies in effect.

Howeve/, there is a growing

realization that agri/cultural development must renföin in balance vis-a-vis
progress in other Rectors of the economy.
/
l)Some figures might be given later,
FAO/52/6/3640

Foryfiost countries agricultural exports,

- 16

which for the area as a whole have declined during the postwar period,

are

essential for economic development as they constitute at present an irrepja-eabls
source of foreign exchange with which to pay for increased imports of capital
and consumers' goods.

The area planted and harvested in 1951/52 was larger than that in the

•

preceding year, except in Argentina where acreage diropped significantly, and
more farm machinery was in use in many countries.

Ifevertheless, because of a

heavy .sethack in Argentina's production, caused mainly by unfavourable weather,
which offset progress elsewhere, overall farm production in Latin America
during 1951/52 declined about 2 percent from the previous year (see table

).

There was a sharp contraction in production of cereals plus minor declines
in cottons, oilseeds, potatoes, pulses and livestock products, which ^vere only partially offset by a significant increase in sugar.output and less noticeable
gains in coffee, tobacco, bananas, cocoa and wool.

Food supplies in 1951/52 wore however, generally higher than the•year before
because of.declining exports and increasing imports.

Reduction in production

affected levels of export rather than levels of domestic supplies.

In several

countries such as Brazil total.supplies apparently increased by a higher, proportion
than population growth and, therefore, supplies per capita were also higher.

For

Latin America as a whole, however, supplies did not exceed the population increase
and food supplies per capita remained almost unchanged as compared with the
previous year.

PAo/52/6/3640

'^

150

DA

June 2^-

52

TAOS

Dr Mordecai ESBKIEL,

Deputy D i r e c t o r .
Economics Division,
Food and Agriculture
Organization of the
united Nations,
Viale delle Terme di Caracalla,

1^ 0 ME,

_

Dear Dr Ezekiel,
Thank you for sending me the documents entitled
«The Demand Situation in 1951/52" and "The Demand Outlook for
1952/55+". I read them with great interest and have no comments
to make. Actually, the general attitude of the authors is more
or less in conformity with our own feeling in this office. V^at
we tried to do is to estimate total demand for goods and services
in the United States in 1952, basing ourselves upon government
budget estimates and the relation between income and expenditure
of the private sector. If the normal relationship for the expenditures still holds good there would be, according to our figures,
considerable strain on the United States economy.
It appearsj
however, that consumption in 1951 is about 10 billion dollars
below the normal pattern (i.e. what one would expect on the basis
of income figures). If this phenomenon should persist, total
demand would still surpass productive capacity,as far as we are
able to estimate it; only, if,at the same time, defence expenditure
would fall short considerably of the budget figures a more equilibrated situation would be likely to develop. This is why it is our
impression that the reluctant attitude of buyers during the last
few months can only be of a temporary nature. It should, of course,
be recognised that investments may fall short o*" the normal
pattern for a somewhat longer time if there woiad be a saturation
with investment goods, such as the "echo principle" describes it.
The extent of this phenomenon, however, could hardly be such as
to invert the tendencies ^ust indicated. This is why we expect
firm markets for some time ahead.
I would appreciate very much any reactions on this s
train of thought you might be willing to give in reply to this
view.
Yours very sincerely,

(J. Tinbergen)

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