of policy are submitted to our Board of Executive Directors on which the United States has a prominent seat. The Bank has financed citrus production in the following countries, none of which is exported to the United States: Iran-$500,000; Israel-$3.6 million; Iraq-$3 million; Morocco-$7.5 million; Turkey-$2.3 million; and Jamaica$900,000. Proposals for agricultural credit projects with a component for citrus production are being considered for: Egypt-$5.4 million; Turkey-$215,000; Jamaica-$700,000; and Colombia-$400,000. One common characteristic of all these projects is that they provide a cash crop to small farmers (whose average income is slightly more than $600 annually and whose land holdings range from 2-10 hectares) allowing them to participate more fully in the market economy. With regard to your inquiry about a further study, the Bank is undertaking a Fruit and Vegetable Study to assess the market outlook in Europe, the Middle East and North Africa. In addition, a survey will be made of existing marketing arrangements and practices in selected EEC countries. I might point out that it is the policy of the Bank to review periodically the world commodity situation. On occasion in the past we have refused to finance the production of certain commodities (e.g. sugar, coffee, tea) at times when there has been a burdensome world surplus. Any future lending for citrus would take such considerations into account. Sincerely, ROBERT S. MCNAMARA. [From the Wall Street Journal, Apr. 7, 1976] IVORY COAST'S OUTPUT OF PALM OIL GAINS; U.S. GIVES AID, IRKING SOYBEAN GROWERS AKAKRO, Ivory Coast-Palm trees, row upon neatly planted row of them, blanket the gently rolling countryside. Their dark-green leaves droop lazily under clear, blue skies, providing welcome relief from the tropical sun. It's an idyllic scene and one the Ivory Coast government has worked hard to achieve. For this is the world's largest oil-palm plantation, part of an effort the country is making to reduce its dependence on coffee and cocoa for its export earnings. Viewed from the U.S. Midwest, though, the same scene is far from pleasing. The product of these and other palm trees is undercutting American soybeans in the lucrative market for the fats and oils that go into frying pans and into margarine-making around the world. Worse, U.S. farm interests say, the foreign competition is being aided with low-interest loans supplied in part by Washington. Such are the risks of development aid. The world's rich countries are committed to help improve the lot of the poor ones, and, along the way, this means creating new competitors. In the long run, economists say, rich nations will benefit from increased purchasing power for their goods, though in the short run some sectors could suffer. One of the more promising new competitors-and therefore one that bears watching is the Ivory Coast. A combination of state and private enterprise has given this West African nation of 6.7 million people an impressive record of agricultural development since its independence from France in 1960. Coffee output has doubled. Cocoa production is up 170%. Cotton and pineapples are up more than 1,000%. HOW IT BEGAN Commercial palm-oil production started from scratch little more than a decade ago. Here, near the Ivory Coast's eastern border with Ghana, 1.5 million palm trees are packed into 44 square miles. They constitute the biggest of nine major plantations belonging to the state-owned Sodepalm Group. Each tree bears bristly bunches of date-size fruits in the clefts between its trunk and main branches. They rather resemble sleeping porcupines. When crushed, the fruits yield an oil that can be refined as bland and as colorless as the refined oils of soybeans, cottonseeds, peanuts or corn. Thus, for most purposes, these products are interchangeable. To one side of the huge state undertaking is the considerably more modest holding of Ido Brahima, onetime chauffeur for embassies in Abidjan (the Ivorian capital) and veteran grower of coffee and cocoa. Nine years ago, Mr. Brahima began adding 30 acres of oil palms to his traditional crops. At first, he concedes, he was skeptical of government suggestions that he try a new crop that requires three years to produce its first fruit. But "you have to try everything," he observes, leaning on the pole of the long-handled cutting tool he uses for harvesting every Sunday. Unlike most trees, which yield but one crop a year, the oil palm bears its 25-pound bunches of fruit continuously. So every Monday a truck from the nearby Sodepalm crushing mill calls at Mr. Brahima's plantation to collect whatever he has cut down the previous day. On the fifth of each month he is paid for it. "Every month I get something," he says happily. "I am practically on salary." Ivorian farmers' enthusiasm for a steady income and their willingness to try something new have helped create a flourishing palm-oil industry. From nothing 10 years ago, Ivory Coast exports of palm oil reached 100,000 tons last year; plans call for them to triple by 1980, when the nation could be the world's second-largest producer, after Malaysia. A CROP-DIVERSIFICATION PROGRAM Plans also call for sharply increasing output of sugarcane, cotton, rice and corn, along with traditional tropical fruits such as bananas, pineapples and coconuts. The aim, as is in many developing countries, is crop diversification. Most Third World nations depend on three or fewer raw materials for the bulk of the export earnings they need to pay for vital imports of fuel, food and machinery. A crop failure or the collapse of one commodity's price in world markets can bring deep trouble. "Simple good sense says diversification gives more insurance to both planters and the state" against unforeseen events, says Abdoulaye Sawadogo, the Ivory Coast's agriculture minister. Mr. Sawadogo has become a familiar figure in negotiations on international commodity agreements. Such pacts, by limiting price movements, add to producers' insurance, he notes. This reasoning isn't appreciated in the U.S. Farm Belt. The National Soybean Processors Association recently complained that "accelerating palm-oil imports have reduced consumption of American vegetable oils and have precipitated substantial losses in U.S. farm sales of soybeans." The association calls for quotas on palm-oil imports and an end to U.S. backing of loans to developing countries for oil-palm production. Last year U.S. palm-oil imports doubled from 1974 to about 400,000 tons, mostly from Malaysia. About 2% of the imports came from the Ivory Coast, whose Sodepalm plantations have been financed partly by the World Bank, a UN agency that the U.S. helps to finance. But if soybean processors are worried about the threat of foreign palm oil, they should take a look at what the Ivorians and other Third World nations are thinking of diversifying into next: soybeans themselves—and with U.S. aid. Soybean oil has by far the largest single share--about 28%--of the competitive world market for edible fats and oils. For years, American farmers have enjoyed the lion's share of the world market for soybeans, a versatile crop that provides cooking oil, animal feed, and cheap, high-protein food for humans. Lately, though, Brazil has vaulted to a respectable second place, with 25% of U.S. soybean production and exports equal to nearly 50% of U.S. foreign sales. Now other developing countries, looking for cheap food as well as new sources of export earnings, are trying to follow Brazil's example. However, growing soybeans in the tropics is easier said than done. The plant is extremely sensitive to daylight. It is so sensitive that different varieties have to be used in northern and southern Illinois, the biggest U.S. producing state. Generally, the plant flourishes in the long summer days of American or southern Brazilian latitudes. Close to the Equator, where all days are 12 hours long, it doesn't reach its full height. It flowers too early and yields poorly. Still, soybeans have been bred to bloom successfully at latitudes as far apart as Louisiana and Manitoba, so researchers think they can come up with suitable tropical hybrids. Here, too, the U.S. is providing help to the Third World. The University of Illinois is running tests on soybean culture in 90 nations, including the Ivory Coast. In cooperation with the various countries involved, Illinois researchers are providing hybrid seeds with the twin aims of developing soybeans as a source of protein for hungry people and learning more about the temperamental crop for the benefit of U.S. farmers, says W. D. Buddemeier, director of the university's international agricultural programs. THE IVORY COAST'S CHANCES Although many nations are tinkering with soybeans, the Ivory Coast is thought to have one of the best chances of carrying the tests into commercial production, considering its success with oil palm and other crops. "Nothing is out of reach of these people in agriculture, given time and expertise," says Robert Smith, the U.S. ambassador to Abidjan and a former senior State Department official for African affairs. Mr. Smith doesn't share the concern that the U.S. may be cutting its own throat by encouraging foreign production of vegetable oils. The Agriculture Department concluded that "world demands for this type of food are such that we didn't see Ivorian production as a threat," he says, adding: “We are a vastly more efficient producer of soybeans than this country could be for quite some time." "In the longer run we'd receive benefits" from foreign production of soybeans and other new crops, says a U.S. agricultural economist, because proceeds of foreign exports would be spent on American goods. "If you want the guy to buy a meal, you should provide him with the means to make the money to pay for it," this economist says. Besides, other sources say, if the U.S. doesn't provide such aid, other nations will, and that could cost Washington valuable international political points. Thus, they predict the U.S. is likely to lend the Ivory Coast money to develop soybean production, answering a request from the Abidjan government. It was, in fact, a senior U.S. official who put the idea of growing soybeans into Ivorian heads in the first place. When Ivory Coast President Felix Houphouet-Boigny visited the U.S. in 1973, Agriculture Secretary Earl Butz is said to have told him: "Anywhere you can grow peanuts, you can grow soybeans." Now, Mr. Houphouet-Boigny is a major plantation owner himself, and he is very much in charge of the farm-based development of the country he has led for all its 16 independent years. And peanuts do grow here. So, the next year, Agriculture Minister Sawadogo went to the U.S. to study soybeans more closely and to arrange for trials in the Ivory Coast. These were carried out last year, with mixed results. University of Illinois scientists aren't totally satisfied with the rigorousness of the tests, but Ivorians think they have found suitable strains. However, they have had to scale down their production expectations. A COMMITMENT TO AGRICULTURE Whether or not soybean production does take off here, the Ivory Coast is committed to develop its economy through agriculture. "Agriculture is the priority of priorities, the source of our development finance," says Mohamed Diawara, the country's minister of economic planning. Payments to farmers for their crops enable national income to be spread down to the grass roots, officials say. A key element of the farm-production plan is the Ivory Coast stabilization fund, which receives most of the proceeds of sales made by private exporters and guarantees minimum crop prices to farmers. Part of the difference is held against possible future declines in world market prices, but most of it is used to finance government spending. Agricultural promotion has been ignored, however, by other developing nations, often in a rush to cash in on mineral deposits. Nigeria, for example, let its agriculture slide as it became an oil producer. Ghana tried the industrialization route to development without success. Liberia lives off iron ore. The Ivory Coast hasn't developed any mineral resources to speak of. What it does have is a political establishment with a rural base and a president who is a farmer himself, albeit largely an absentee one. All top officials are made to practice what they preach. Mr. Houphouet-Boigny requires his ministers to own at least 12.5 acres of farm-land and members of parliament 7.5 acres. "Everyone is a planter here, to help them better appreciate farming," Agriculture Minister Sawadogo says of his colleagues. [From the Wall Street Journal, July 30, 1976] U.S. TO FIGHT AID ABROAD FOR PALM-OIL EXPORTS WASHINGTON.-Responding to farm-state pressure, the Ford administration said the U.S. won't support loan programs to help developing countries boost palm oil exports. Richard Bell, Assistant Secretary of Agriculture, said the decision reflects the administration's concern that rising palm oil sales are reducing the markets for U.S. soybean oil. Both oils are used to make margarine and other food products. The policy change means the U.S. will oppose loans for palm oil projects by international aid groups including the World Bank, in which the U.S. is a contributing member. The decision won't necessarily end the international loans. The U.S. is only one member in the aid organizations, and it can't dictate lending policy, Mr. Bell said. And, he said, private U.S. lending for palm oil projects in developing countries is likely to continue. The government action had been sought by soybean processors and producers. THE MATERIAL FROM FEDERAL AGENCIES LISTED BELOW AND THAT FOLLOWS WAS REFERRED TO IN THE HEARING RECORD: National Advisory Council: Report prepared by the NAC Working Group on Palm Oil entitled: "Prospects for Oilseeds and Products, with Projections to 1985" International Bank for Reconstruction and Development: Bank Staff Working Paper #193 entitled: "Possible Effects U.S. International Trade Commission: "SHRIMP Report to |