11. Agricultural exports more than double supplementary agricultural imports Supplementary imports consisting of products most nearly like those produced by U.S. agriculture-totaled $1,982 million in fiscal year 1960. The ratio of agricultural exports to supplementary imports was 2.3 to 1. In other words, exports were more than double imports of like commodities (chart No. 5). Excluding cane sugar imports which are classified as supplementary but are under import control, the ratio was 3.1 to 1. Supplementary imports in 1960 were 2 percent less than in 1959, with declines in dutiable cattle and pork more than offsetting gains in beef and veal, hides and skins, fruits, and copra. Other agricultural imports, consisting of complementary items-coffee, natural rubber, cocoa beans, bananas, etc.-which are not produced commercially in the United States, totaled $2,035 million in fiscal year 1960, 3 percent above the 1959 level.

(The chart referred to may be found on facing page.)

12. Food balances in foreign countries studied

A series of bulletins has been prepared giving estimated food balances for some 80 free world countries in or about the year 1958. These balances, summarizing in statistical form the food supply situation, show production, imports, exports, the utilization of domestically consumed supplies, and national consumption, both total and average per capita, of individual foods and food groups. Consumption of all foods, in terms of energy value, averaged about 2,100 calories per person per day in the Far East, some 2,350 calories in western Asia, roughly 2,450 calories in Africa, about 2,650 calories in Latin America, and 2,900 calories in Western Europe. Grain and starchy roots and tubers supplied at least two-thirds of the calories in the Far East, western Asia, and Africa; one-half in Latin America; and less than 40 percent in Western Europe where per capita consumption of animal protein foods, sugar, and fats is substantial in most countries. 13. Competition study of Soviet Union's wheat production, consumption, and trade A team of U.S. wheat and milling specialists, visited the Soviet Union's major wheat producing areas, milling, and storage and export elevators. A technical study is being published which indicates that the Soviets are increasing their production potential, their capability for producing high-quality grain, and expanding their storage capacity, particularly seaport export elevators. Grain officials in the Soviet Union reported an export of over 6 million tons of wheat in 1959 and stated they hope to increase this in the next few years to the prewar level of over 10 million tons. With current capabilities and granting modest success in implementation of production and export plans, the Soviets could be in position to provide serious competition, both in quantity and quality of wheat, in the world markets by the end of the 7-year plan in 1965 and sooner should their political decisions dictate increased exports and decreased domestic consumption and carryover stocks.

14. Soviet grain export outlook

The Soviet Union, after a long period of insignificant exports to the free world, has reemerged as a substantial exporter of grain, mostly wheat to the international market. During the past 3 years, since 1956-57, the Soviet Union has ranked third in world exports of wheat and wheat flour, being surpassed only by the United States and Canada. The future trend of Soviet grain exports and free world imports from the Soviet Union is subject to a number of variables, primarily Soviet production and consumption of grain, and the East-West political climate. It appears at the present time that the Soviet grain production techniques are sufficiently sound to sustain modest annual increases, but the direction and quantity of future Soviet grain movements into international markets are difficult to predict. In view of Soviet political ambitions abroad and their current program of economic competition with the West, the studies conclude that the Soviets will likely continue to offer attractive grain-import opportunities to the countries of the free world, particularly for wheat, for several years to come.

15. Communist countries use food in international relations

Food is an important instrument in the Communist politico-economic offensive and figures significantly in their bilateral trade and payments agreements, in broad programs extending medium and long-term credits, and in their offers of technical aid to newly emerging nations. The nature and role of the use of food in Communist international relations may vary from year to year depending upon the domestic situation, but little change is anticipated in the states Communist objective of using food to promote their political system abroad. The Soviet Embassy in Washington recently released a statement to the U.S. press that, "the successful implementation of the 7-year plan (1959-65) for boosting the economic might of the Soviet Union opens up new prospects for the further broadening of its cooperation with the underdeveloped countries." The U.S.S.R., the main contributor in bloc foreign aid openly stressing competition with the United States, continues to drive for increased domestic production and has served notice that this is relevant to their foreign aid and trade ambitions.

16. Meat production in the Soviet Union analyzed

For the past 3 years the Soviet Government has been conducting a vigorous agricultural campaign to catch up and surpass United States in per capita production of milk and meat. An analysis of Soviet statistics indicates that the Soviets have achieved significant yearly gains in livestock production, and meat output has more than doubled in the past decade. But while the upward trend has been impressive, the outlook for maintaining the trend and achieving their

goals is considerably less impressive. Not only is the livestock industry plagued by the recurring political-economic problem of providing incentive to the private and socialized livestock producers, but the Soviet Government is faced with a host of deficiencies in feed production, breeding and feeding methods, mechanization, transportation, refrigeration, and a need for modernization and expansion of slaughtering facilities.

The Government has some ambitious plans to cope with these problems but it is doubtful that they can be implemented sufficiently within the current framework of Soviet socialized agriculture to reach the high meat output goals of the 7-year plan (1959-65). The Soviet Union is currently the world's second largest meat producer, with a red-meat output about half that of the United States It is estimated that by 1965 Soviet production will be approximately twothirds the U.S. production on a per capital basis.

17. Export crops dominate the agricultural economy of the Congo

A detailed analysis of the agricultural economy of the former Belgian Congo has been published. Coffee, palm produce (palm oil, palm kernels, palm kernel oil, and palm kernel cake), cotton lint and seed, rubber, cassaca flour, cocoa, tea, pyrethrum, peanut oil and cake, bananas, and urena and punga fibers are important export products of this large country of tropical Africa. Most of the Congolese depend on agriculture for a living and domestic production of food is generally adequate to feed the population. Agricultural products exported make up a significant part of total exports from the Congo, though nonfarm products, particularly minerals, usually bring in more foreign exchange.

Under the leadership of the Belgians, farm produce of the area was carefully processed and graded so that it was readily accepted in world markets. The United States is a good customer for the area's farm products. The area is a cash market for U.S. wheat flour, tobacco, and other agricultural products. A major problem in the advancement of the Congo's agriculture is difficult, highcost transportation. But the outlook for agriculture in the country is excellentland resources are good; rainfall is ample in most areas; terrain is generally suited for mechanization; and there is an active world demand for most of the export crops raised. This bright future is, of course, contingent upon restoration of political stability in the Congo.

18. Agricultural exports from Africa total $3.4 billion annually

An analysis of the trade of 27 countries (1958 alinement) of Africa disclosed that the continent's leading agricultural exports during a recent 4-year period were: Cotton, $577 million annually; coffee, $406 million; and cocoa, $327 miltion. Among the exporting countries of Africa, the Union of South Africa is the leader by exporting agricultural products valued at an average of $424 million annually. The United Arab Republic southern region (Egypt), with an average of $373 million, was second. On the other hand, Africa's agricultural imports amount to about $1 billion annually. Grains, including grain products, valued at $202 million constituted the major agricultural import. Algeria was the ranking importer of agricultural commodities-$178 million annually. Egypt was second and the Union of South Africa, $101 million, was third. 19. Appraisal of agricultural developments in Eastern Europe

To help fill the gap in the available information on agricultural developments in Eastern Europe, a series of basic studies of the agricultural economies of seven countries in this area has been undertaken. Both Hungary and Yugoslavia have given first priority to industry to the detriment of agriculture. In Hungary, since the 1956 upheaval, incentives to farmers have been increased, but the favorable results of the incentives have been offset by forced collectivization. Since output per capita remains below the prewar level, it has been possible to maintain food consumption levels only by keeping exports below the prewar level and importing substantial amounts of grain in some years.

In Yugoslavia, where forced collectivization was abandoned in 1951, production per iapita has exceeded the prewar level twice in recent years. While favorable weather played the major role, increased incentives to farmers and increased investments in agriculture were also important factors. Wheat import requirements, supplied mostly by the United States during the 1950's, have become negligible and Yugoslavia is exporting substantial quantities of corn. 20. China's trade with non-Communist countries reaches new high in 1958

China's exports to the non-Communist countries grew from $426 million in 1949 to $751 million in 1958. Agricultural exports during 1958 increased 22 per

cent over the previous year. A few of the commodities exported showed large gains over the preceding year. These were rice increasing about 2.8 times; live animals and meat up about 45 percent; tea up 25 percent; and eggs up about 20 percent. Currently, the largest proportion of China's agricultural exports are going to the Communist bloc to pay for the economic assistance it receives. Therefore, these shipments presently limit the amounts available for sale to the non-Communist bloc and hence limit the competition for U.S. commodities.

21. Opportunity for expanding agricultural trade with the Philippines

A study of the Philippine agricultural economy indicates an opportunity for expanding U.S. exports of three commodities-cotton, nonfat dry milk, and wheat. Philippine raw cotton imports have increased as a result of development of the textile industry; production of filled milk has created a demand for dry milk solids; and establishment of wheat flour mills has caused a need for imports of wheat. The study shows that the Philippine economy is heavily dependent upon agriculture. It supports approximately two-thirds of the population, contributes about 40 percent of the national income, and supplies more than 70 percent of all exports by value.

22. Central American Common Market

A comprehensive analysis was made of the agricultural economy and trade of the six Central American Republics that have formed a Common Market or are expected to join it. The report covers resource potential, agricultural production, trade, consumption, and the probable effect of the development of the common market on trade in agricultural commodities. The early years of integration may see an intensification of import restrictions. But if integration results in the expected rise in living standards, demand will go up rapidly and the United States should be able to share in this growing market for farm products. Also helpful in appraising the effects of the economic integration program is a basic study of the agricultural economy of Nicaragua, the second in a series of studies on Central American Republics.

23. Effort for relaxation of restrictions against U.S. agricultural exports continues

The increased trend in liberalizing nontariff trade barriers which began several years ago continued through 1960. During the past year a number of countries took important steps to eliminate discrimination against imports of U.S. farm products and reduced the use of quantitative import controls. Countries which relaxed import controls on one or more agricultural commodities during 1960 include the United Kingdom, France, the Netherlands, Sweden, Denmark, Norway, Germany, Italy, Austria, Spain, Portugal, Australia, New Zealand, Malaya, Japan, Peru, and Uruguay. Agricultural commodities which are receiving better treatment as a result of these recent liberalization moves include beef pork, eggs, edible meats, oilseeds, apples and pears, tobacco, canned poultry, fresh oranges and lemons, honey, and certain canned fruits.

The much improved economic activity and foreign exchange holdings were contributing factors in this stepped-up trend to eliminate or minimize nontariff trade barriers, both discriminatory and nondiscriminatory (chart No. 6). At the same time the U.S. Government, through representations to foreign governments at high diplomatic levels and in international organizations such as the General Agreement on Tariffs and Trade and the International Monetary Fund, has pressed and continues to press for complete elimination of discrimination against the dollar area and a rapid removal of quantitative import restrictions. Representatives from the Foreign Agricultural Service, including the agricultural attachés, actively participated in these various efforts to gain more favorable treatment for our agricultural products in foreign markets. The growing significance of this work for the year ahead is reflected in the President's directive on the balance-of-payments situation issued November 7, 1960, which singled out the need for further progress in trade liberalization as related especially to U.S. agricultural products.

(The chart referred to may be found on facing page.)