17 October 1986 - 19 October 1986

International Problems of Supply and Demand in Agriculture: Feeding the People, Preserving Rural Stuctures and Farming Communities and Ensuring Freedom of Trade

Chair: The Rt Hon the Lord Walston CVO DCL JP

On the weekend 17-19 October the Foundation tackled one of the World's big, current economic issues - International problems of supply and demand in agriculture: feeding the people, preserving rural structures and farming communities and ensuring freedom of trade. The chairman was to have been Lord Soames, but he was unfortunately overtaken by illness at the last moment. Lord Walston very helpfully agreed to take his place. Two or three other participants also had to drop out for various reasons, which somewhat altered the composition of the conference. The US participation was a little below its usual strength; and, disappointingly, it proved impossible to get anyone from France or Germany to accept an invitation. Britain's European partners were represented by participants from the European Commission, the Netherlands and Denmark. Australia's and New Zealand's voices were present to challenge some north American and European assumptions.

Most of those who attended, and all those who were in or connected with government, wanted to talk chiefly about the prospects for including trade in agricultural products, and therefore the whole question of subsidies to agriculture, in the next round of GATT negotiations (General Agreement on Tariffs and Trade). Was progress going to be possible? Were the governments on both sides of the Atlantic finding the costs of agricultural support impossibly burdensome? Did they, like the arms negotiators, need to work out some internationally agreed confidence building measures in order to avoid the risks of still costlier hostilities on the trade front? The conference had a broader agenda, but the GATT round was the reference point to which discussion kept returning.

There was little difficulty for anyone in agreeing that the industrialised countries were suffering the consequences of massive structural over-production in agriculture. The weakness of current demand for agricultural products on world markets was judged to be cyclical rather than structural; but even when there was a fresh upswing in the world economy and demand picked up again, it would not be capable of absorbing current agricultural surpluses. Gross over-production was due to reliance in Europe and the USA on direct and indirect price-support measures at a time of huge increases in productivity due to rapid advances in agricultural science and technology. US speakers claimed that the US was now moving towards a price system closer to world market realities and that the Europeans were the outstanding sinners against good economic sense. The Europeans replied that the Americans had sharpened their trading prices but were still pouring support to their farmers in ways which fostered over-production. The Australian and New Zealand participants called a plague on both sides of the Atlantic, professed total innocence of the sin of subsidy and called for urgent action before their own farmers were irretrievably ruined by very unfair competition.

The conference was invited to consider what would happen to everyone's countryside if the subsidising of agricultural production was reduced. Curiously, the farming experts were hesitant to say that farmers as they now exist were essential to the countryside, or even that there was a political reality behind the apparent power of farming lobbies. They seemed to think that it would not be too difficult to move away from price supports, which made fortunes for rich farmers, towards income supports, which could be tailored to land characteristics and so provide cushions for farmers on poor or marginal land. The countryside would then still be kept in order for the teeming urban population to enjoy when it felt so inclined; but the costs of doing this would be much reduced, world trade would be less grievously distorted, and the transition to some alternative land uses (forestry, national parks, wilderness, various forms of popular amenity, etc.) could be facilitated over time. It was possible to feel that the political difficulties of achieving such an evolution were being underestimated, and the scope for achieving change by focussing on land use was being exaggerated. The addition of French and German voices might have made a difference here. At any rate, an optimistic note was struck about the possibilities of caring for the environmental and social functions of villages and country-dwellers without amassing costly mountains and lakes of agricultural products.

Discussion of third world agriculture bore less directly on the main issue because no one believed that the third world, however favourably its purchasing powers might grow, could redress the imbalances created by the first world. The Soviet Union would probably continue to be a dumping ground for surpluses for the foreseeable future, but other deficiency countries would probably make progress towards sufficiency. As (and if) their living standards rose, so also would their appetites for agricultural products, especially animal feedstuffs and animal products, but not quickly or sharply enough to absorb surpluses of the size which the US and Europe had shown themselves capable of producing. It was agreed that it was right to help the poorer countries towards sufficiency (but not self-sufficiency) for general political and economic reasons. This should be seen as creating, not potential rivals in world agricultural markets, but potential partners in balanced world trade. The discussion of ways and means of helping third-world countries to cope with their agricultural problems was well-informed and illuminating.

There was a good deal of invocation of "political will". At Ditchley this usually means that people cannot see confidently how to get round the larger problems but hope that governments will do better. There were enough pragmatists round the table to create a prevailing view that transatlantic or antipodean recrimination would have to be eschewed if progress was to be made, that hard negotiation in the GATT round using some sort of unit of measurement of wrongdoing such as "product subsidy equivalents" was likely to be the best way forward, that the budgetary pressures now being felt by governments gave some hope that they would make a concerted effort to reduce subsidies, and that measures related to land-use considerations would enable countries to look after their rural communities in ways which would reduce pressures for price supports and over-production. Many of those present must have made the mental footnote - 'European Community, please note'; but by the end of the conference they were getting on too well together to say it and, given the composition of the conference, there was no one to whom it seemed necessary to say it.

This Note reflects the Director’s personal impressions of the conference.  No participant is in any way committed to its content or expression.

Conference Chairman: The Rt Hon the Lord Walston CVO DCL JP
Life Peer; Farmer; Vice President, Royal Commonwealth Society


Mr Lindsay P Duthie

Special Trade Representative in Europe, Australian High Commission, London

Mr Graham Avery

Fellow, Center for International Affairs, Harvard University
The Rt Hon the Lord Belstead PC JP
Minister of State, Ministry of Agriculture, Fisheries and Food
Mr R Q Braithwaite CMG
Deputy Under-Secretary of State, Foreign and Commonwealth Office
Mr David Curry MEP
Member (Conservative), European Parliament, Essex North East; Spokesman on budgetary matters for European Democratic Group
Sir Michael Franklin KCB CMG
Permanent Secretary, Ministry of Agriculture, Fisheries and Food
Mr R D Freeman
Chief Economist, Imperial Chemical Industries pic
Mr Brian Gardner
Director, Agra Europe (London) Ltd
Mr Andrew Gowers
Commodities Editor, Financial Times
Professor David Grigg
Professor, Department of Geography, Sheffield University
Mr David Hadley
Under Secretary, Ministry of Agriculture, Fisheries and Food
Mr Michael Heron
Regional Director for United Kingdom and Ireland, Unilever pic
Professor John Marsh
Dean, Faculty of Agriculture and Food, and Head of Department, Department of Agricultural Economics and Management, University of Reading
Mr Hugh Mellor
Director, Dalgety pic
The Rt Hon the Lord Northbourne
Chairman, Betteshanger Farms Ltd; Chief Executive, Kent Salads Ltd; Director, Chillington Corporation pic; Member, House of Lords Select Committee on problems of food and agriculture and the rural community within the EEC
Miss Jane Robins
Business World Section, The Economist
Professor Colin Spedding
Professor of Agriculture Systems, and Director, Centre for Agricultural Strategy, University of Reading
Sir Crispin Tickell KCVO
Permanent Secretary, Overseas Development Administration, Foreign and Commonwealth Office

Mr Poul Ottosen

Deputy Secretary, Ministry of Agriculture, Copenhagen

Dr Helmut Frhr von Verschuer

Deputy Director General, Directorate General for Agriculture, Commission of the European Communities, Brussels

Mr Horacio Percossi

Director of Marketing, Agricultural Products, Dow Chemical Europe, Valbonne, France

Mr A de Zeeuw

Director-General of Agriculture and Food, Ministerie van Landbouw en Visserij (Ministry of Agriculture), The Hague

Mr Neil Walter

Deputy High Commissioner, New Zealand High Commission, London

Mr Orville Bentley

Assistant Secretary, Science and Education Administration, Department of Agriculture, Washington, DC
Mr Mario Castillo
Chief of Staff, House Committee on Agriculture, US House of Representatives, Washington, DC; Commissioner, Washington Commission on the Arts and Humanities
Professor W Ronnie Coffman
Professor of Plant Breeding and International Agriculture, Cornell University
Mr Jerome F Harrington
President and Chairman of the Board of Trustees, IRI Research Institute Inc (which is responsible for planning and administration of agricultural development programs, mainly in tropical areas), Stamford, Connecticut
Dr Lamartine F Hood
Dean, College of Agriculture, Director of the Agricultural Experiment Station, and Director of the Cooperative Extension Service, Pennsylvania State University
Mr Robbin S Johnson
Vice President Public Affairs, Cargill Inc, Minneapolis
Dr John W Mellor
International Food Policy Research Institute, Washington, DC
Dr Charles Oellermann
Chief Economist, US Senate Committee on Agriculture, Nutrition and Forestry
Mr William Reilly
President, The Conservation Foundation, Washington, DC
Dr Ewen M Wilson
Deputy Assistant Secretary for Economics, US Department of Agriculture, Washington, DC