PL 480 and the US National and International Food Strategies

  June 16, 2021   Read time 3 min
PL 480 and the US National and International Food Strategies
The main purpose of the US Government in initiating the PL 480 programme was said to be to move into foreign outlets part of its growing stockpile of agricultural products that had accumulated under its price support policy.

Initially, a considerable part of total PL 480 shipments went to the more economically developed countries, such as Italy and Japan, but as time went on the main emphasis was placed on local currency sales and grants to meet food needs as assist economic development in the less developed countries, such as Brazil, India and Pakistan. At the same time, more emphasis was placed on the use of surpluses for the alleviation of hunger in the less well-nourished nations of the world. PL 480 operations were conducted through bilateral agreements between the US and the recipient countries. At the beginning, these agreements were of one year duration. In 1956, a three-year agreement was concluded with Brazil. Subsequently, four-year agreements were signed with India in 1960 and Pakistan in 1961.

These long-term agreements involved the introduction of an element of planning on the part of both the US and the recipient country but contained a clause limiting supplies to commodities in surplus in the US at the time of shipment. These developments intensified interest in the FAO secretariat to establish some form of ‘guiding principles’ to safeguard agricultural production in the developing countries and international trade from the potential adverse effects of large-scale food aid programmes, while seeking to obtain the potential benefits that could be obtained in food-aid recipient countries, and an institutional arrangement to monitor their impact. Two path breaking studies were undertaken to address both these issues. The first study, on the Disposal of Agricultural Surpluses, attempted to list the ‘rather baffling’ variety of methods that had been devised on different occasions for dealing with surplus stocks, under three main headings: holding or segregation of stocks; possible methods for expanding consumption; and restricting new supply.

Concerning stock holding or segregation, the FAO study concluded that liberal and wisely managed governmental stockholdings were important, even essential, elements of a balanced economy. The segregation of surplus stocks into new reserves for special purposes could help in relieving the immediate pressure of supplies but would not provide an enduring solution. It could be of help, however, as a transitional measure facilitating adjustment. The study listed an impressive array of possible methods of expanding consumption the national and international uses of agricultural surpluses grouped under two categories. The first involved measures to expand markets without concessions on prices and sales. The second gave examples of sales on concessional prices or special terms to some identified market sectors, with special safeguards in the interests of competing sellers. Under the first category, examples were given of education or publicity campaigns, the development of new uses, the discouragement or restriction of the use of competing products, the reduction of distribution margins, and measures to raise the general purchasing power through full employment policies, development programmes, credits and income redistribution, and raising importers’ external purchasing power through the provision of loans and the liberalization of exporter’s import policies. Under the second category, sales of special terms to specific market sectors, examples were given of special feeding programmes for children and other vulnerable and low-income groups, emergency relief programmes, export subsidies, sales against importers’ currencies and barter deals. Restricting new supply could be achieved by restricting output or the crop area planted, destruction in growth or unharvested crops, through disincentives by taxation or lower support prices or market quotas, and by creating output variation by other means.

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