813 



the export of foodstuffs and other raw materials. It was also com- 

 pounded by competition from synthetics produced in the industrialized 

 countries, and by the increased supplies of raw materials, including 

 foodstuffs produced in some industrial countries for protected markets 

 at home. 



The competitive position of the LDCs in worid trade is serious for 

 another reason : their increasing burden of debt service. One reason for 

 this increase is the decline in the ratio of grants to loans in the bilateral 

 aid programs of a number of countries. Furthermore, the increased 

 burden of debt service is on harder terms than previously, in both 

 dates of maturity and rates of interest. According to an estimate by 

 the Development Assistance Committee (DAC) of the Organisation 

 for Economic Cooperation and Development (OECD), assuming the 

 present terms and conditions of aid continue until 1975, the total an- 

 nual debt service payable to DAC members will increase threefold 

 from 1967 to 1975.''^ India, Pakistan, and Indonesia have very severe 

 debt-servicing problems, while debt-service payments from other Asian 

 and African countries doubled between 1963 and 1968.'^^ 



The tremendous increases in agricultural production resulting from 

 the introduction of the new seeds and allied technology complicates, 

 rather than simplifies, the problem of the LDC foreign exchange 

 position. For as long as domestic population continues to increase, the 

 additional supplies of home-grown food will have to be used domes- 

 tically to feed the additional mouths. Production levels will have to 

 continue to increase, requiring continued imports of fertilizers, pesti- 

 cides, and agricultural machinery, with continually increasing loreign 

 exchange expenditures to secure these inputs. 



Ironically, if an underdeveloped country is fortunate enough to 

 have a surplus of cereals, the prospects are against any substantial 

 betterment of its foreign exchange position. The market in the devel- 

 oped countries may already be saturated, and even where it is not, the 

 LDC would have to compete with an established supplier from the 

 developed countries. In fact, at prevailing prices, the developed coun- 

 tries currently have an excess agricultural capacity, encouraged by 

 price supports and subsidies that effectively serve to shut out grain 

 imports. A prime example can be found in the European Community 

 (Common Market), where grain prices in the member countries are 

 in many cases double those in world markets, but export subsidies are 

 so large that not only are outsiders excluded from the Market itself, 

 but the EEC countries can undercut other exporting nations in world 

 markets.^^ Many developing countries also support agricultural prices, 

 further compounding the problem. Other types of trade discrimination 

 are practiced, and as previously mentioned there is increasing com- 

 petition from synthetic materials to replace agricultural raw materials 

 like rubber, sisal, abaca, and kapok. 



•" CoTnmlttee for Economic Development. "Asslsfinpr Development In the Low Income 

 Conntries." (New York,^1969), page 44. DAC Secretariat estimate. 



" Orsranlsatlon for Economic Cooperation and Development. "196S Review : Develop- 

 ment ABsiatance." Report prepared by Edward M. Martin. Chairman of the DAC (De- 

 cember 1968), page 135. 



■"Lyle P. S<"hertz. "Food Supplies and Economic Growth in Developinc Countries." 

 Quoted In "The Green Berolutlon : Symposium in Science and Foreign Policy," op. clt, 

 page 81. 



