Food and agricultural outlook

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Title:
Food and agricultural outlook
Physical Description:
2 v. : ill. ; 23 cm.
Language:
English
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United States -- Congress. -- Senate. -- Committee on Agriculture, Nutrition, and Forestry
United States -- Dept. of Agriculture
Conference:
Food and Agricultural Outlook Conference
Food and Agricultural Outlook Conference, 1978
Food and Agricultural Outlook Conference, (1978
Food and Agricultural Outlook Conference
Publisher:
U.S. Govt. Print. Off.
Place of Publication:
Washington
Frequency:
annual
regular

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Subjects / Keywords:
Agriculture and state -- Congresses -- United States   ( lcsh )
Agriculture -- Economic aspects -- Congresses -- United States   ( lcsh )
Food -- Congresses   ( lcsh )
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federal government publication   ( marcgt )

Notes

Bibliography:
Includes bibliographical references.
Dates or Sequential Designation:
1978-1979.
General Note:
"Prepared for the Committee on Agriculture, Nutrition, and Forestry."
General Note:
"Papers presented at the Food and Agricultural Outlook Conference sponsored by the U.S. Department of Agriculture."
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Reuse of record except for individual research requires license from LexisNexis Academic & Library Solutions.
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CIS Microfiche Accession Numbers: CIS 77 S162-14, CIS 78 S162-17
General Note:
"Papers presented at the Food and Agricultural Outlook Conference sponsored by the U.S. Department of Agriculture, held in Washington, D.C., November 13-16, 1978."
General Note:
"Printed for the use of the Committee on Agriculture, Nutrition, and Forestry."
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Prepared for: Committee on Agriculture, Nutrition, and Forestry, United States Senate.
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At head of title: Committee print.
General Note:
Reuse of record except for individual research requires license from Congressional Information Service, Inc.
General Note:
CIS Microfiche Accession Numbers: CIS 77 S162-14 (Y4.Ag8/3:F73/4/978), CIS 78 S162-17 (Y4.Ag8/3:F73/4/979)

Record Information

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University of Florida
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All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 020617934
oclc - 03950604
lccn - 93640284
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lcc - KF49
System ID:
AA00025869:00001

Related Items

Preceded by:
National Agricultural Outlook Conference (U.S.).|U.S. agricultural outlook
Preceded by:
U.S. agricultural outlook
Preceded by:
U.S. agricultural outlook
Succeeded by:
Agricultural outlook
Succeeded by:
Agricultural outlook

Full Text








95th Congress COMMITTEE PRINT
1st Sessionf





1978 FOOD AND AGRICULTURAL OUTLOOK




Papers Presented at the Food and Agricultural Outlook
Conference Sponsored by the U. S. Department of Agriculture-Held in Washington, D.C.,
November 14-17, 1977




PREPARED FOR TIL1E

COMMITTEE ON AGRICULTURE, NUTRITION,

AND FORESTRY

UNITED STATES SENATE




DECEMBER 19', 1977













Printed for -the use of the
Committee on Agriculture, Nutrition, and Forestry


U.S. GOVERNMENT PRINTING OFFICE
98-723 WASHINGTON : 1977






















COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
HERMAN E. TALMADGE, Georgia, Chairman JAMES 0. EA'STLAND, Mississippi ROBERT DOLE, Kansas
GEORGE McGOVERN, South Dakota MILTON R. YOUNG, North Dakota
JAMES B. ALLEN, Alabama CARL T. CURTIS, Nebraska
HUBERT H. HUMPHREY, Minnesota HENRY BELLMON, Oklahoma
WALTER D. HUDDLESTON, Kentucky JESSE HELMS, North Carolina
DICK CLARK, Iowa S. I. HAYAKAWA, California
RICHARD B. STONE, Florida RICHARD G. LUGAR, Indiana
PATRICK J. LEAHY, Vermont EDWARD ZORINSKY, Nebraska JOHN MELCHER, Montana

MICHAEL R. MCLEOD, General Counsel and Staff Director
HENRY J. CASSO, Chief Economist
CARL P. ROSE, Counsel
JAMES W. GILTMIER, Professional Staff Member
WILLIAM A. TAGGART, Professional Staff Member
REIDER J. WHITE, Professional Staff Member
DALE L. STANSBURY, Economist
PHILLIP L. FRAAS, Assistant Counsel
STEPHEN E. STORCH, Assistant Counsel
STUART B. HARDY, Professional Staff Member
KAREN J. SCHUBECK, Budget Officer
DALE SIIERWIN, Professional Staff Member
W. GLENN TUSSEY, Economist
NELSON DENLINGER, Chief Clerk and Press Secretary
E. MORGAN WILLIAMS, Professional Staff Member
BETTY M. MASON, Clerical Assistant HELEN A. MILLER, Clerical Assistant
LAURA D. RICE, Legal Assistant DENISE A. LOVE, Hearing Clerk
MAUREEN T. BURKE, Clerical Assistant
DIANE G. COVINGTON, Finance Secretary
Jo P. MILLER, Clerical Assistant
MARILYN NICKOLOFF, Clerical Assistant
JULIA B. PLATT, Clerical Assistant
DELORES A. FLOWERS, Clerical Assistant
KONI L. GLEASON, Clerical Assistant
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FOREWORD


The annual Outlook Conference, sponsored by the U.S. Department of Agriculture convened in mid--\,rovember under a new title that is appropriate to its expanded program and the broader audience these forums have recently been attracting. The 19 78 Food and Agricultural Outlook Conference was designed to reflect this wider recognition of the agricultural outlook's critical implications for all Americans, both as consumers and as concerned citizens.
The new attention to such subjects as family diets, natural resources, and environmental impacts was matched by efforts to enhance the value of the Conference to those who produce, process, and market our food and fiber products. Special briefings on weather and world agriculture were presented so as to put into perspective the latest analyses of recent developments, emerging trends, and supply and demand prospects for the coming year.
Of course, the recently signed Food and Agriculture Act of 1977 generated particular concern at this year"s Conference because of its implications for producers and consumers. The new concepts of farm program acreage and the acreage allocation factors, combined with prospects for heavy use of USDA price support programs and higher direct payments to farmers under the Act, gave this year's program an unusually high profile.
The usual uncertainties facing producers also demanded special consideration. Even with another year of strong exports and expanding domestic markets, large U.S. supplies of agricultural products will be more than offsetting. While for consumers, this indicates a relatively favorable retail food price picture in coming months, it does not pro-xl-ide a basis for any farmer optimism. Farm prices are expected to continue relatively weak, and farm income may be down from 1977.
In the interest of providing the members of the Senate Committee on Agriculture, Nutrition and Forestry, the Senate, and the general publie with timely information regarding the agricultural setting and outlook in 19781 1 have asked that the papers presented at this year's Food and Agricultural Outlook Conference be published as a committee print. While the views and analyses presented in these papers are those of the authors and not necessarily of the Committee or of USDA, the Committee nonetheless wishes to recognize these Conference speakers as professionals and experts in their respective fields.
HmmANE. TALMADGE, Chaimum (III)





















Digitized by the Internet Archive in 2013















http://archive.org/details/foturall978951 unit












CONTENTS


Page
Foreword -... I
Conference Opening-by John C. White ------------------------------ 1

U.S. FARM AND FOOD POLICY IN THE WORLD OF THE SEVENTIES
U.S. Farm and Food Policy-by Howard W. Hjort---7 Toward A U.S. Food Policy-by Carol Tucker Foreman--------------- 10
U.S. Dietary Goals-by D. Mark Hegsted-_-21 Establishing and Implementing Dietary Goals-by Gilbert A. Leveille 26 The Dietary Goals and Food on the Table-by Betty B. Peterkin -------- 32

U.S. OUTLOOK IN WORLD PERSPECTIVE
The World Food Economy: A Developed Country View-by Geoff Miller-- 57 The U.S. Economic Outlook in World Perspective-by Lyle E. Gramley__ 61 Trends in U.S.S.R. Agriculture-by Dr. Boris A. Runov--------------- 67
World and U.S. Agricultural Outlook-by J. Dawson Ahat_-69 U.S. Agricultural Trade-by Thomas R. Saylor ------------------------83
FOOD-SUPPLIES, DEMAND, AND CONSUMPTION
National Approach to Carcinogens-by David W. Huston for Hon.' Barbara Hackman Franklin----------------------------------- 93
Consumer Concerns About Additives and Residues in Food and Fiberby Dr. Robert Angelotti ------------------------------------------ 97
Additives: Why, When, What for-by Paul F. Hopper----------------- 102
Concerns About Chemicals in Food and Fiber Production-by Walter Wilcox_ -109
The Economic Outlook for Food-by Kenneth R. Farrell ....- 114
AGRICULTURAL INPUTS, FINANCE, AND PRODUCTIVITY
The Weather-What About 1978?-bv Richard E. Felch__- 131
The Winter Outlook and the Limitations of Long-Range Weather Forecasting-by Donald L. Gilman ------------------------------------136
Climate Ch'nges-A Commentary-by William Gasser--140 Outlook for Farm Inputs-by Robert D. Reinsel. 144
Outlook on Costs of Cominodities-by- Ronald D. Krenz ----------------155
Agricultural Finance. Situation and Issues-I)y John E. Lee, Jr- 161 Credit and Finance Outlook-by David Lin--_-171 Farm Finance-Current Developments in Perspective-by Emanuel
Melichar_ -179 Issues Facing the Farm Credit System--by George D. Irwin- 189 Pending Legislation for the Farmers Home Administration-by James E. Thornton ------------------------------------------------------ 193
(V)






VI

COMMODITY OUTLOOK
The International Setting for Sugar and Sweeteners-by Robert N. Page
McConnell- -201 U.S. Sugar and Sweetener Outlook-by Thomas W. Little and Fred Gray. 205 U.S. and World Cotton Outlook-by Russell G. Barlow-------------- 212
Impact of New Legislation: A Farmer's Outlook-by C. Hoke Leggett- __ 227 U.S. Oilseeds and Products Outlook-by George W. Kromer ------------ 230
1978 Outlook for Tobacco-by Robert H. Miller and Richard Hall------ 244 Notes on World Tobacco Outlook-by B. C. Andrews------------------ 252
U.S. Grain Situation-by James J. Naive-256 Outlook for Livestock and Meat-by James E. Nix-.........-270
Cattle Situation and Outlook for 1978-by Bruce A. Ginn-.......-278
Outlook for World Beef Production and U.S. Beef Imports-by John E.
Riesz_--284 Meat Animal Outlook-by Ewen M. Wilson-287 Outlook for Timber Products-by Robert B. Phelps--290 Outlook for Dairy-by Charles N. Shaw ------------------------------298
Outlook for Poultry and Eggs-by William E. Cathcart------------------ 305
Outlook for Fruit and Tree Nuts-by Jules V. Powell- 312
Outlook for Vegetables and Potatoes-by Charles W. Porter------------ 320
FAMILY LIVING
The Outlook for the Labor Force: Implications for Families-by Deborah
Pisetzner Klein---329 Outlook for Metrication-by Michael F. Thompson-------------------- 334
Clothing and Textiles: Supplies, Prices, and Outlook for 1978-by Annette
Polyz.ou_ -340
Energy Extension Service-by Judith M. Liersch-....- 348
In-Home Energy Monitor: A Test of Consumer Response to Energy
Information-by R. Bruce Hutton --------------------------------- 353
Consumer Products Efficiency and Labeling Program-by R. Nelson
DuRant, Jr----357












CONFERENCE OPENING
(By John C. White, Deputy Secretary of Agriculture, U.S. Department of Agriculture)


Fifty-six men, women, and children ate lunch an hour ago because of the hard work and pride of one American farmer. This event occurs three time a day, every day of the year.
Today, less than 4 percent of our population feeds all 215 million Americans and countless millions around the world. This is a startlinrzn achievement! It's unsurpassed any vhere in the world.
But, it is a fact that many Americans take for granted. They seem to think that America's food flows from an eternal spring-that it is unending.
Those of you here in Washington this week to participate in Outlook 1978 share our concern and don't take America's farmers, or the food they produce, for granted.
On belialf of Secretary of Agriculture Bob Bergland, I am pleased to be able to welcome you to this annual conference. I am confident that ypu will be presented with information that will show how vital American agriculture is to our domestic economy and to the peoples of the world. I am also confident that you will share our belief that America's food and fiber system continues to be the United States' number one industry! V
Times have changed in Washington. For the first time in U.S. history an administration has set realistic objectives to guarantee the future of America's producers and the food and agriculture industry. We have put forward a comprehensive national food policy. This policy and other new initiatives are based on hard realities:
We will maintain a healthy rural America with a strong familyfarm oriented system of agriculture by moving aggressively to
strengthen export markets for U.S. farmers.
We are moving as rapidly as possible to develop new energy
resources and promote energy conservation throughout the food
and agriculture industry.
We are committed to a major human nutrition research and
education effort that will provide all people with needed information to eat more nutritious foods and upgrade their diets.
We are making our domestic and foreign food assistance programs responsive to the people they are designed to help.
As President Carter said at Notre Dame earlier this year, "We know that the world cannot long exist one-third rich and two-thirds hungrv.7'
I'm certain that there will be several speakers during this confer en ce who will talk in detail about the current situation facing farmers, so I'm not going to belabor the present serious problems or how we got into these problems.








Those of you here today-particularly farmers-know what has happened in the last 5 years to net farm income, to commodity prices, to the costs of inputs.
When vou look at charts of these, it reminds me of a train going over the Continental Divide. But this administration got on the train as it headed through the valleys on the western slope.
Since 1973, farm income has fallen precipitously. But we think we've bottomed out. It's still a very serious situation, but that doesn't mean we give up. We have to turn poor farm income around and we will.
Harry Truman had a saying that if you can't stand the heat, you should get out of the kitchen. Well, I don't see farmers giving up. I can assure you that Bob Bergland isn't giving up either.
In fact, we're encouraged that the outlook for commodity prices and net farm income is changing.
It's changing because of several events. Look at the world grain situation-'the wet harvest conditions in Canada, the decreased production in the Soviet Union, Poland., and much of the Southern Hemisphere.
We think there will be increased export demand for U.S. wheat, corn, and other feed grains.
Look at cash commodity prices. Since June 13, wheat at Kansas City has increased 58 cents per bushel. That's more than just a seasonal adjustment. Since October 21, corn at Chicago has gone up 36 cents per bushel. Normally, the seasonal low for corn is in November, but it appears to have been on that date. Soybeans at Chicago have increased substantially-88 cents a bushel since October 21.
And, we are hopeful that thero will be even greater increases.
If we look at agricultural exports for the last fiscal year, they increased over $1 billion from fiscal 1976. The value of exports was $24 billion. This was a healthy increase in volume, given the fact that prices. have been depressed.
There is a new realism in Washington and a much stronger commitment to farmers and all participants in the food and agriculture industry.
The President, Secretary Bergland, and I believe that all policies and programs that are adopted during this administration, must meet Ioi crucial tests to be. successful.
They must:
-be good for America's producers and help them make a better
income or our policies will fail;
-be good for consumers and meet their needs for abundant food at
fair prices or our policies will fail;
-meet our international conunitments because food is the foundation for peace in the world; and
-mneet the humanitarian goals of the United States for'our citizens
aind people throughout the world.
We belimve our policies meet these tests, and we're putting these p'i1ciples Io work in the Food and Agriculture Act of 1977.
Ie new law:
--rovld( pnie.e support loans for our major commodities that will
keep the United States competitive in world markets;
-provides the mechanism to support farmers' income through
deficiency payments, that this year alone will total almost $1.2
b million to wheat producers;






3

-establishes a 30-35 million metric ton food and feed grain reserve, primarily farmer owned and controlled. It will help farmers by effectively insulating substantial stocks, from the marketplace, reducing downward price pressure. It will also provide protection to domestic and foreign consumers from bad harvests. It will allow the United States to be a dependable supplier of quality food and feed grains, even when our production declines because of weather.
This reserve will help us avoid needless export controls and embargoes that lead to the loss of foreign markets and crucial sales
for American producers;
-provides set-aside authority to bring production more closely in line with potential demand, so that farmers will produce for markets. We have -announced a 20-percent set-aside on wheat;
tomorrow we will announce our decision on feed grains;
-makes substantial revisions in the foreign food assistance programs. It strengthens our commitment to use Public Law 480 as a major market development tool, not a surplus commodity disposal giveaway;
-broadens the research -missions of the Department of Agriculture.
It grants new authority to search for and develop alternate energy
resources for agriculture;
-mandates research priorities on human nutrition to make certain
that we know as much as possible about the nutritional needs of all
people; and
reforms the food stamp program through the elimination of the
purchase requirement and the tightening of eligibility standards. It makes food stamps more available to our citizens who
need them the most.
In addition to the tools provided in the new law, the administration is moving with greater determination to:
expand market development programs abroad;
liberalize and make more effective use of CCC credit in fore-in
sales;
complete the multilateral trade negotiations in Geneva and advance the interests of farmers; and
-egotiate international -commodity agreements and world food
reserves.
Since February 22, 1,977, this administration has taken 16 separate administrative actions to assist American farmers. These include increasingy commodity loan levels, lowering interest rates charged for commodity and farm facility storage loans, expanding the maximum amount available for farm loans, making commodity loans available on all farm-stored grains, and providing emergency drought and disaster assistance.
To conclude my comments, I want to refer to the latest action by President Carter-the creation of the Cabinet-level Working Group on Food and Agriculture Policy that is headed by USDA.
In his announcement, the President summed up this administration's position on food and agriculture policies. He said:
This administration is determined to develop food and agZriculture policies which help the people who need help the most, both ,in the United States and abroad. Our policy should




4

give producers the greatest possible access to foreign markets, while hielpig poor nations improve their own ability to produce and distribute food.
It would be very easy for me to stand before you this afternoon and say that we have all of the answers to farmers' problems. The fact is that we don't.
Bult, we are strongly convinced that our approach to food and agriculture, our approach to solving low farm income, our approach to providing all consumers with bountiful food supplies, and our approach to meeting our international humanitarian commitments is the most workable.
The~ critical problems plaguing farmers and ranchers today are being solved. It will take time for these new policies and programs to take hold and work. z
I'm convinced that America's farmers are going to have a better income and a brighter future because of our policies based on reality, not rhetoric.



























U.S. FARM AND FOOD POLICY
IN THE WORLD OF THE SEVENTIES















U.S. FARM AND FOOD POLICY
(By Howard W. Hjort, Director of Economics, Policy Analysis and Budget, USDA)


I am going to be quite brief on the topic, "Food and Agricultural Policy in the World of the Seventies," and devote most of the time to discussing the rationale for the policies we now have.
Anyone involved in farm policy has only to think back over the last few years to come to the realization that weather is the major source of year-to-year variability in world production. We tend to think of that variability in terms of grains and our attention often becomes riveted there. But it's also true f or sugar, cotton, oilseeds and all the other crops. Extreme year-to-year swings in production on a world basis must be taken into account in policy formulation. It's a factor that we have no control over, which seems to say in policy terms that we should have prLograms which can accommodate that kind of variability, even though over the longer run, technology is the major determinant for increasing production.
T1hle F~ood and Agriculture Act of 1977 addresses both of these production determinants. The objective that we have been guided by in the development of the legislative program and in the initiatives taken by the adininistr-ation was a rather simple one: to protect producers and consumers at home and abroad from natural and economic (dis aster.
It carries with it a, series of related policies and programs. First it reserves. If we don't have a reserve, we simply cannot be a reliable supplier in the world. The weather factor is just too important. The favorable weather in 1976 led to a significant excess of grain which provided us with the opportunity to remove some of that excess from the market and into ik reserve under rules and regulations for accumulating and releasing it. In late August we committed ourselves to a 30 to 35 million metric ton grain reserve, with nearly half wheat and about half coarse grams. A small amount of rice is also included. That reserve will be in hand prior to the beginning of the 1978-79 marketing year. The commitment to a 17 to 19 million ton feed grain reserve was reaffirmed again late yesterday afternoon in connection with the feed grain setaside announcement.
The reserve, as I said, helps to insure that we will be at reliable world supplier. It is a hedge against export controls and will help prevent extreme fluctuations in prices. And in a long run context, neither extremely high prices nor extremely low prices are advantageous to producers or consumers.
The reserve concept was adopted and approved by Congress in the 1977 act. It is the first time to my knowledge that the Government of the United States has had an explicit reserve policy. We are now part
(7)








,f an international force working toward the adoption of that policy on an international scale. This is one of the major changes in the programs and policies of today compared to those of yesterday.
For the basic farm programs and policies in the Food and Agriculture Act of 1977 are not very different from those of the recent past. They are basically an extension of programs operated since at least the inid-1960's. They continue the concept of setting the relationship of grain price supports in a manner so as to permit market forces to dictate if wheat should be used as a feed grain. We had been in that competitive position from 1964-65 through the fall of 1976. There was a brief aberration of that policy in the fall of 1976 which had to be corrected in this bill and in the policies of this administration. It wasn't a major consequence for that brief period when things were out of line. They are back in line again.
Market price supports are higher in this bill but they are set at levels designed to permit us to continue to be competitive in world markets. We have to export to have a healthy agriculture. We have to export to have a healthy economy. The level is simply a judgment question. It's our judgment that a level of approximately $2 per bushel for corn, our major grain, is a level that permits us to maintain our competitiveness in. international markets. That basic philosophy is the same with respect to cotton, other grains, and other commodities included in the bill.
The Jaw allows us some flexibility if we are wrong, and the U.S. is not competitive at the $2 loan for corn. The market will tell us by pricing close to that loan level. And if that occurs, the Secretary may reduce the particular market support level in any one year by 10 percent and never below $1.75 per bushel. I am hard pressed to find an area in the world or, I'll put it another way, I am hard pressed to believe that the weighted average world cost of production would be less than $1.75.
The target price concept included in the 1973 act was continued in the 1977 act but the basis for tieing it to the cost of production was made more explicit. Congress had previously directed the Department of Agriculture to assess cost of production and that set of studies was used in the development of target price levels. The same components of production costs are used in establishing the target prices for all of the major commodities that were in the bill-cotton, wheat, corn, sorghum, barley and so on. The administration proposed that same concept be used for soybeans, but that was not included in the final bill. This, I think, is the first time that the equity principle, if you will, has been employed on such a broad basis.
TrFIIe is another point. on cost of production and target prices on which I find great confusion. Target prices are based upon cost of production but. target prices do not cover cost of production. In arriving at target prices, 'as I said, the same components of cost will be applied to those coiflmodities. But that is not the same thing as saying that the tovyde protectionn and a guarantee for covering all costs. They do niot. Tlhaif pv: of i!,e philosophy of farm programs and policies is a eoI)titll 1ltin of what we've lad over the years. The farm programs llave no b e(leziLred to provide a g-aranteed income to the producer, hoy' ,e been dleviied to provide protection against economic disaster.





9

here is room for market prices to operate in this program and I don't believe that target prices are going to create any major problem-; in terms of acreage shifts and so on.
A couple of other changes were made with respect to allotments. In the past, what a grower could do depended upon what he had done in
'--'* d. That system provided a rigidity that frequently soine historical perILO
was not to the individual's best interest. So the idea of using the current year as the basis for the program instead of previous years was proposed and was accepted. This provides producers with more flexibility than any other legislation. So it doesn t really make any difference if producers in 1977 shifted to soybeans and cut back on corn because of market indications. They're not penalized for doing so in the 1978 program if market forces and programs are such that he should increase his corn production relative to soybeans. He's free to do so.
There is, in addition, a way a person can guarantee total protection if he so chooses. With respect to USDA's series of other initiatives on an international scale, some of them are in the bill and some of them have been taken by administrative action.
With respect to the bill itself, Mi terms of cost, the major item was the food stamp program, and in terms of pages, the major Item was the research section. Pm, not going to cover those at this time because our panel is going into them in detail.












TOWARD A U.S. FOOD POLICY
(By Carol Tucker Foreman,. Assistant Secretary, Food and Consumer Services, U.S. Department of Agriculture)


Through most of history, the human struggle for food has been directed primarily at simply getting enough to eat. This has led to Government food policies that have focused mainly on increased production, better means of food preservation, and improved systems for the transportation and distribution of food.
Now. we are at a point where we have achieved a high degree of success in satisfying our domestic needs for adequate production, preservation, and distribution. Yet out of our very successes, new and troi-ibling issues arise.
Today, production in this country is so large and reliable that we are able to feed ourselves and a large portion of the rest of the world and uve food sales to help balance trade deficits. Yet this has also want thIt we have recurring surpluses and that producers have trouble survivn.
Moreover, although millions of Americans are unable to get enough to eat without assistance, for millions of others nutritional problems are a re-(ult of consuming too much food.
We have been so successful in using chemicals to increase production. retard spoilage and preserve foods that we must now be concerned with the health effects of chemicals themselves.
We have become so dependent upon food processing and upon nationN\ ide food distribution systems that the farm value of production bi,,ears little relationship to final costs of food.
And finally, because domestic population growth is leveling off 1d url),anization has slowed down. the rate of increase in domestic demand for food-which has been growing dramatically for yearslay b)e lowing d(own.
We need to begin giving the most serious consideration to forging 1 new food 1)olicy-a policy that responds to the dilemmas facing us iolav iln a changed world. Whait should such a new policy look like ?
e tary of A gtricuilture Bob Bergland addressed this is< rec ntly.
The Secretary stated:
We think this country must develop a policy around humat1n utritioln, arund which we build a food policy for this ,'ilit [v ajnd as wtich of tlhe1 world as is interested. And in that frtl'i(ewV'k we have to faslion a ore rational farm policy.
\We s' beeu gomfl at it fom tlhe wrong end in the past.
Th goal of tihis new policy sought bv the Secretary would be to i i. ke available n adl f ue0 sp)l)ly) of .safe, nutritious foodat stble, 'un-onhlae price i le irv id in a fair retlurnl onl investment to
(10)




11

farmers, processors, and retailers, and decent wages to workers in the industry. The new policy would also be designed to provide for assistance to those at home and abroad who cannot afford the cost of a nutritious diet.
SI would like to share with you this afternoon my views about what a new food policy, built around the framework established by Secretary Bergland's statement, should look like. To design such a new food policy I believe we will have to consider at least six elements.
First, we must determine what are people's nutritional needs, and what levels and types of production are necessary to meet those needs.
Second, the policy must determine the scope of the role the Nation will choose to play in meeting international needs for food, as well as the means to be used. What portions will be done through trade, or through assistance? How much additional domestic production will be necessary to enable us to meet those needs?
Third, the policy must consider what measures are necessary to stimulate and sustain that level of production.
Fourth, the policy must take into account the need to assure that food is available at a reasonable cost.
Fifth, the policy must include means to assure that the food supply is safe and of high quality.
Sixth, the policy must devise programs to assist those who cannot afford adequate food at market prices.
I would like to discuss each of these elements with you in more detail. But first, I think it's necessary to observe that this new policy would involve change-including change in some of our existing programs and policies. It is important that if such changes are made, the resulting burdens should be spread across the population to the greatest extent possible. It is unreasonable to assume that farmers or processors or any other segment of the population should have to carry all the burden of change. At a minimum, change will probably require provision of adjustment assistance to those who will have to modify their traditional way of doing business. Further. consumer prices may increase as the costs of changes in processing and retailing are passed on. But. in the long run. the costs of a new system should be more than compensated for by increased efficiency and competition, reduced costs for advertising and some processing. more stable prices, a halt to the precipitous decline of modest-sized farms and perhaps most important. reduced health care costs as nutrition improves at home and abroad.
Now. to the six elements of the new policy.
I. TIHE DETERMINATION OF NUTRITIONAL NEEDS
First, a food policy should be based on a detailed assessment of what the nutritional needs of the people are. To even begin to develop a food policy, we must first know what persons in various age. sex. racial and ethnic groups. lifestyles and geographic locations need nutritionally for optimal growth and performance and continued well being. Determining these needs will require a commitment to increased human nutrition research. A small program of nutrition research has been car99-723-77 2





12

ried out in the United States since the 1870's but we still do not have adequate answers to some of the most basic questions.
For example, the recommended daily allowances of various nutrients are widely used, but are often of limited value in helping a person select a proper diet suited to particular stages of life and level of physical or mental activity. For some nutrients-such as some trace minerals-so little reliable data exists that no RDA at all has been established although the nutrients may be essential to good health.
Wle also need research on the relation of diet to disease. It now appears that 6 out of the 10 leading causes of death in the United States may 0e degenerative diseases whose onset may to some degree be related to nutritional factors. Some recent studies have linked various nutritional factors to cancer.
At the same time, we need to learn more about the nutritional consequences of our increasing reliance on convenience foods, processed foods. and eating away from home.
To forge an effective food policy, we will need not only to increase or11 knowledge of nutritional requirements-but also to determine what levels and types of production are necessary to meet these needs. This will require an ability to translate nutritional needs into production terms. We should know, for example, how much wheat and what kinds of wheat should be produced to insure people with adequate levels of B vitamins. It is also important that we know what nutrients are available at consumption after processing. Naturally occurring vitamins change when wheat is milled. We will need to know if the vitamins can be replaced by fortification. These and similar assessments will have to deal with the combinations required to provide the necessary nutrients in diets as consumed, not just as generated in the laboratory.
II. THE U.S. ROLE IN FEEDING THE WORLD
The second element of a national food policy is the role the United States chooses to play in meeting international food and nutrition needs. The Federal Government must determine what portion of this will be done through trade, what portion through assistance, and how much additional production is necessary to meet those needs.
The 1977 Farm Act calls for a domestic grain reserve system. It also encourages the Secretary of Agriculture to "enter negotiations with other nations to develop an international system of food reserves" for humanitarian relief. Participation in an international emerige food reserve is crucial if the United States is, to live up to its international obligations. It can also demonstrate that particip:ation in sulch a system will not ruin domestic farm prices or destroy foreign food markets.
B'ut the complexity of international food issues demands more than a reserve system. Through Public Law 480, amended slightly by the 1977 act, the Federal Government has for 23 years used U.S. farm production as both a means of developing foreign markets for U.S. :oods amnd as a means of providing food aid. A national food policy nlm4 detelmin how to balance the needs of hungry people abroad with the needs of American producers eager to find new markets. We caunot llo,' overemphasis on one to undercut the importance of the






13

other. Nor can we permit political consideration to determine, where we provide decent assistance.
Maintaining good, stable trade relationships is extremely important. It is clear that a vigorous trade program is essential to keeping stability in our balance of payments. In addition, stable relationships protect American farmers-and consumers-from the fluctuations of a speculative market in food exports. lVe must strive to avoid the circumstances that have led in the past to pressures for embargoes on food exports. The embargoes of soybeans in 1974 and wheat in 1975 benefited no one. Trading partners and farmers were hurt. No discernible benefits accrued to consumers. Embargoes are basically an admission of policy failure; and in an economy like, ours, in which food is the keystone, weveannot afford such failures.
One final point: Although America's capacity for food production is unparalleled in the world, we cannot permit the need to sell American food abroad to destroy the incentive for other less developed nations to become more self-reliant in food production. The United States cannot base its entire food economy on exports.
M. STIXUTATION OF ADEQUATE PRODUCTION
The third element of a basic food policy is to stimulate and sustain production adequate to meet domestic and international nutrition needs, and our country's trade needs.
In one sense, this does not represent a major departure from the policies we have followed for a number of years. Government policies bave long encouraged certain kinds of production and marketing, and discouraged others through support prices, research, and regulation. Government production policies have never benefited all producers equally. Livestock growers, for example, are not covered by support programs. Fruit and vegetable producers are only sporadically covered by Federal and State marketing orders. Federal Government actions have always helped some areas of agriculture at the expense of others. Support programs leading to higher feed grain prices, for example, hurt livestock producers.
What a new food policy must do is to reassess which areas of agriculture are supported and promoted. In the future, the basis of such decisions must be to meet nutrition and trade needs. This will necessarily involve a reorientation of production patterns.
Naturally, a new food policy that reorients production p terns and support systems will initially be regarded as threatening by some persons. But the, new policy does not have to be a threat. Changes can be carefully designed to avoid inequities, to make sure that one region of the country or some group of producers are not victimized by new policy goals, and to remedy inequities.
Indeed, any new policy must be constructed so that over the long 1111n, it will cause less dislocation and be less inequitable than the policies of the past. In previous years, Federal policies and the results of federally funded research have caused economic dislocation of farmers (especially small farmers), of farmworkers, and of some processors and retailers-and usually without any compensation.






14

There are, of course, a number of factors that would limit reorientation of production patterns. Among these are geographical factors and farmers' knowledge of new and different crops.
One example of the type of action I am talking about, in shaping production policy to meet nutrition and trade needs, is the creation of a domestic wheat and feed grain reserve. The new reserve system established by the 1977 Food and Agriculture Act is aimed at protecting farmers against low prices in years of surplus, and at providing anll emergency food supply to meet domestic nutrition needs. The creation of the grain reserve provides a floor for farm production and is a basic step toward stable prices for one of our most essential crops. It also will provide the opportunity for Government to prove it can administer a production program equitably. Lanld price problems
One fundamental issue of production policy that was not addressed by the 1977 act is the problem of skyrocketing land costs. Record grain prices in 1972 kicked off a boom in land prices that has not relented. despite the dropping grain prices farmers now face.
Nationally. agricultural land prices have doubled, on the average, since 1971. In the Midwest, prices have tripled. In the mid-Atlantic areo ulrban development pressures have pushed up land prices. In the Midw es speculation based on high farm prices has pushed up costs.
It is estimated that a new farmer needs $500.,000 to buy a farm and enter production. Few individuals have access to the credit necessary to )orrow $0.5 million. This encourages purchase of land by banks, fre n investors and corporations, and it encourages renting rather tIh n f. rmer ownership of land.
Moreover. if land costs continue to inflate as they have, the Nation ,'11 ex)ect ever-Ihigher consumer food prices-wvhich would in turn, if past trends remain true. further inflate land costs. In addition, con1iw11ou sly inflating land eosts will effectively doom the family farm and
-1rio) -lv deplete competition among food producers. Such a result is learl out of line with fostering stable prices.
ThIe FewI ral (Ioveninent should begin an intensive investigation of tih, eva ns for rising land costs and beoin to develop policy recol mnI oidat ions to slow the trend. At the same time the Department of Agiciilt Iare inut continue to develop more satisfactory formulas for dealine wit i laInd( cots it support programs.
Finally a new production policy will have to assure the farmer of :ali iOte suipplies- of the elements of production. The energy crisis of 13. a ld its resulting fuel/fertilizer price spiral, proved how vulner)le ,(
IV. EASONABLE FOOl) COSTS
folhi' ti element of a new food policy must be to assure the availi v f food at reasonable prices.
Ii 1:pst years, fil l)POdltion has 1onet1es )leen touted as the xx r to CO1NS1O1I f}ile 1 })ri(sN. I t I' ill pirodliilo ll O1 tle farll will not,






15

by itself, guarantee moderate retail price levels. One of the most important elements in determining food prices is what happens to food after it leaves the farm.
Marketing costs have risen so sharply during the past few years that they now comprise 60 percent of the total food bill. Indeed, the Economic Research Service observes that the food price inflation of the 1970's has, to a large extent, been attributable to marketing cost increases. Between 1974 and 1976, marketing costs increased about 10 percent annually. According to the ERS, "increased marketing costs will again account for most of the rise in consumer food expenditures in 1977."
It is true that some of the marketing cost increase is atributable to higher energy costs and the general inflationary trend. But if we are to have both reasonable levels of farm income and reasonable prices for consumers, we simply must develop mechanisms to discourage unnecessary costs from being built into the food system between the time food leaves the farmer and the time it reaches the consumer.
This means that the Government must cease any encouragement of industry practices, and halt the issuance of any Government regulations, that add to costs unnecessarily. Government transportation regulations are an obvious area where review and revision could lead to reduced costs. The "back haul" regulations are a case in point.
Other areas that may also lead to unnecessary and inflated costs are inadequate competition, excessive advertising, and excessive packaging.
Inadequate competition is a particularly troublesome area. Recent studies have indicated that economic concentration in food manufacturing and retailing is increasing. According to Russell Parker, former assistant director of economics at the Federal Trade Commission. 20 large grocery- chains accounted for 37 percent of total grocery store sales in the United States in 1975. This represents an increase of more than one-third from the 27 percent controlled by the 20 largest chains in 1948. In a study for the Congressional Joint Economic Committee (JEC) earlier this year, University of Wisconsin researchers found that the 4 largest grocery retailers in 194 metropolitan areas held an average of 52 percent of grocery sales. In one-fourth of those areas, they held 60 percent or more of sales.
Parker believes this leads to higher prices for many consumers. He asserts that FTC data show that "grocery chains use higher markups or gross margins in high market share areas and have lower markups where they have lower market shares."
The study prepared for the JEC reached similar conclusions. It found "stron.r evidence that 'monology overcharges', that is, prices above those in competitive markets, are likely in markets that are dominated by one or two firms and/or where sales are highly concentrated among the largest four firms."
The study estimated that total consumer overcharge due to:economic concentration in 1974 was $662 million. The researchers concluded that overcharges vary from city to city. depending on the extent of concentration. They found that. in 1974. consumers in one city with four firm competition suffered a $1.6 million overcharge, while in another citv with onlv two firms controlling" most of the market consumers experienced an $83 million overcharge.






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Concentration is also increasing among food processors. The number of food manufacturers has declined substantially over the past 30 years. In 1947. there were 44,000 food manufacturers. In 1972, there were only 22,172. This may seem like a large number when compared to domestic automobile or steel manufacturers but several major food lines are highly concentrated.
Four firms control 84 percent of the breakfast cereal market and 95 percent of canned baby foods. Two firms have 58 percent of the soft drink market. There are no meaningful national figures on concentration in the bread baking industry, but on a regional basis, the 4 top firims in 18 different cities accounted for about 60 percent of consumer bread purchases.
Inadequate competition may explain why soft drink prices, presweetened cereal prices and bread prices rose as sugar and wheat prices went up a few years ago, but have not followed the downward spirals of those raw materials.
Many individual areas of food processing do remain competitive and fairly reflective of changes in the prices of basic commodities, but this is an area where public policy has skirted serious problems. The latest data available on food marketing in many cases is from the 1963 studies of the National Commission on Food Marketing. Ten-year-old studies ,ire of a limited value in making food policy, and a first step in this area should be creation of another commission or a specific mandate from Congress to update the food marketing studies. Once the data is available, Government should act to assure adequate competition in the food industry.
Of course, when competition on the basis of price declines, competition based on "product differentiation," and making heavy use of advertising, often increases. Competition among airlines is a classic case in point. Airlines now spend enormous sums to tell us that their planes fly in "friendly skies" or feature attractive hostesses who will "flv us" to our destination.
This same pattern is frequently seen in parts of the food industry. The decline of price competition is replaced by an upsurge in "product differentiation" competition. In the food area.advertising and packaging are key elements of this growing type of competition. While both advertising and packaging have valid market place roles, expenditures for both have grown beyond reason in some product lines. Both tocether have become a significant portion of the increasing food marketin bill and need reexamination by manufacturers and policyii i akers.
A(lvertisincr now accounts for about 3 percent of the food marketing bill. Some of it is price specific but most of it is directed at product differentiation.
Our major concern is the increasingly heavy role of advertising in promoting non-nutritive food items. Government is becoming more concerned with the health implications of food advertising. The FTC has moved to regulate nutritional claims and may act to strictly limit food advertising aimed at children. The FDA Commissioner has made clear his view that advertising is an extension of labeling and should be regulated accordingly.






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There may be other ways Government should encourage food value as measured by price and nutrition. Companies that advertise food on television might be required to give equal time to nutrition messages. Government could make comparative nutritional price information available to consumers in places where people buy food and/or in the electronic or print media.
Government encouragement of advertising through tax deductibility has been attacked by some consumer organizations and this area is one for examination in public policy formation. Any limits on tax deductibility would, however, have to deal with the problem of special provision for advertising by new competitors entering concentrated markets, and for competitors with a small share of concentrated market.
Packaging is another important area. Packaging costs now account for 13 percent of the food marketing bill. Between 1958 and 1974. the consumer prod uc~t cost represented by packaging doubled for items like dairy products, produce, beverages, and candy. The Economic Research Service says that packaging costs are likely to increase 7 percent a year through 1980. The increase will come both from growing costs of materials and from increased use. We don't know how much of these costs are accounted for by unnecessary packaging, nor do we know how much packaging is used solely for product identification purposes or how much packaging is needed for protection in shipping and sales. It is unlikely that Government can make reasonaible decisions about packaging without that knowledge.
It should also be noted that packaging now accounts for 30-40 percent of total municipal solid waste-and expenditures for solid waste disposal amount to about $4 billion a year. Reasonable public policy sho-uld assess whether that is an acceptable cost.
A few final points on food prices and what to do about them should be noted. There are two courses of action that we must resist as posszible cost-cutting measures. One is to cut food costs by cutting farmer income even further. The other is to permit the use of questionable substances in foods or to relax health and safet-y regulations. There are few if any acceptable tradeoffs of safety for savings. A cheap food supply purchased at the expense of health protection is no bargain.

V. SAFE AND HIGH QUALITY FOOD
Given what I've just been saying, it should come as no surprise that the assurance of a safe and high qualit-y food supply is the fifth element of my food policy. Although food safety is virtually unchallenged as an appropriate goal, the means to achieve food safety have been in dispute for over 80 years. The Federal effort to assure food safety dates back to 1906, when the original Pure Food and Drug Act was passed-in large part because of a grave public concern over the use of chemicals in prepared foods. The acceptability of chemicals in food continues to be a hotlycdebated issue today.
There are a number of laws on the books-'such as the Food and Drug Act, the Meat Inspection Act, and-the Poultry Products Inspection Act-that are firm in their rejection of unsafe chemicals. A






is

food policy that has as its first concern the nutritional well-being of the public can ill afford to be less strict than present law. Such a food policy must also include vigilant enforcement of these laws.
This may not be enough, however. Government action to promote food safety may need to enter new areas. Present laws deal with food additives and manufacturing processes. Yet evidence now suggests links between high consumption levels of substances such as salt and fat, and such diseases as Iiiah blood pressure and a variety of cancers. A food policy concerned with food safety should be able to deal with these problems as well. Perhaps we should become as concerned about the fat in a hot dog as we are about the nitrite.
In any event, whenever Government takes action on a food safety issue to protect the health of its citizens-whether the action involved an unsafe chemical or a substance such as fat-there is a potential for adverse economic impact on some companies and individuals. For example, pending Government decisions that could lead to bans on the use of tetracycline in animal feed or the use of sodium nitrite in meat processing may have significant impacts on meat producers and processors.
When Government acts to exclude previously approved products, public policy on food safety should include ways to ease the transition. This would require, at a minimum, collection of adequate data on what the real costs to the industry will be. Present data are almost always the industry's "worst case" assessment of the impact. Policy may also have to include mechanisms for easing the financial burden of smaller firms.
I know some will argue that consumer sovereignty in the market place should permit consumers to purchase anything, no matter what its health effects. But in other areas, the Federal Government does not fall back on that argument as a way out of its responsibilities. The Federal Government regulates dangerous or toxic chemicals. We attempt to control water and air pollution. Government funds the construction of municipal sanitation systems. Federal programs help protect people from disease via vaccination and innoculation campai4ns. Government should play no less responsible role in the food system.
Government policy must also deal with the emerging issue of food (Iiality. Public policy should address more adequately such questions as thle construction and composition of processed foods. Industry is en ga ge I in a constant effort to bring new technology to food processing. Ihe results are sometimes ice cream that is not like what mother used to make, or tissue from ground bone in hot dogs. It is unlikely that l)Idllc policy should exclude the results of new technology from the narketplace but it must find better ways to assure consumers that the q uilit y of new foods-their nutritional value, taste, and app'eariince(are as good or b etter than the previous product. We must also find bet Ifer wayvs to differentiate between products associated with certain btaii lat enials or pr WocessiJi1g methods and those made in laboratories or with new ingredients or methods so that customers will understai what they are purchasing.








V. DOMESTIC FOOD ASSISTANCE
Finally, food policy must also deal with those people who do not have the ability to afford an adequate diet. Present Government policy supports food for such individuals through a variety of programs that approach the problem in various ways. The food stamp program increases food consumption by increasing income and limiting the increase to food purchases. The school breakfast, school lunch, and other child nutrition programs provide meals in an institutional setting. The women, infants, children food program (WIC) provides prescription food packages to vulnerable persons at nutritional risk during the most critical phase of human growth and development.
The President has proposed to eliminate the food stamp program in favor of a general cash assistance program. His proposal assumes there will be no appreciable loss of nutrition as a result. Available studies seem to support that assumption. They show that low-income families tend to allocate their money wisely ainid to get more nutrients per food dollar than the middle income.
In the institutional feeding programs-such as school lunch-the issue of food quality is becoming a growing concern. In the past few .years, some items of questionable nutritional value-such as fortified grain-fruit products and formulated milk products, were allowed into some of these programs. We have moved to prevent their further use.
Plate waste ,and meals that fail to meet portion and nutrition requirements are additional problems of the institutional feeding programs.
These programs must be upgraded by placing greater emphasis on serving healthy, appetizing diets in attractive settings. These programs should be learning laboratories for good nutrition-teaching by example that food can be both nutritious and appetizing.
The women, infant, children feeding program has perhaps the greatest capacity to use good nutrition to improve health and assist in breaking the cycle of poor childhood development that is often associated with poor nutrition. It provides high quality protein. iron, calcium and vitamins A and C to pregnant women, nursing mothers and young children. Because WIC operates through health care programs, it integrates health care, nutrition education and food assistance. It has been shown to result in substantially increased visits to prenatal and neonatal health clinics-as well as in the increased consumption of nutritious foods during a critical growth stage.
CONCLUSION

The food policy I've described-and the questions it raises-may make some people uncomfortable. Consumers worry that changes in the food economy will hurt them by creating higher prices. Farmers are already angry because more of the return from retail food sales doesn't flow to them. They fear that Government intervention in production in the name of health or nutrition will put them in an even more precarious economic situation. Processors and retailers already complain that their profit margins are too low, and that more Government regulation will cause their financial ruin.






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The concern about prices and profits is reasonable. But we cannot icynore our basic responsibilities to safeguard the nutrition and health of our citizens. The cliallenege before us, therefore, is to shape a new food policy that provides healthful food, and does this at reasonable prices with a reasonable return to those who get the food to our tables. This is a big job, but it is one of the most important tasks of public and private policy in our time.












U.S. DIETARY GOALS
(By D. Mark Hegsted, Professor of Nutrition, Harvard School of Public Health')


The Dietary Goals for the United States published by the Senate Select Committee on 'Nutrition and Human Needs essentially state that Americans eat too much-they eat too much meat, too much fat, especially saturated fat, too much cholesterol, too much sugar and too much salt. They should eat more fruits, vegetables, grain products, especially whole grain products, and unsaturated fat. It is clear that a statement of this kind is not very useful, even if you agree with the generalities, unless some quantitative estimates are provided. You cannot translate the statement into a dietary pattern without at least suggesting what is meant by too much and what might be a reasonable intake. The report suggests a reduction of fat from the current level estimated to be between 40 and 45 percent of calories to about 30 percent and that one-third of this should be saturated and one-third polyunsaturated fatt-y acids; that the diet should not contain more than 15 percent of cqlories as sugar. These changes would result in an increase of total carbohydrate consumption to 55-60 percent of calories of which 40-4.5 percent would be starchy materials. It is recommended that protein should provide 12 percent of calories; that cholesterol intake should be of the order of 300 mg/day and salt about 3 g/day.
It is important to emphasize that such a diet does not represent an ideal diet. We do not know what an ideal diet is. The Dietary Goals are an attempt to arrive at a more reasonable dietary pattern than the diet of most Americans. I cannot review much of the evidence upon which the Dietary Goals are based, but the major health problems of the United States and other affluent countries are coronary artery disease, stroke, cancer, diabetes, hypertension' and obesity. These are the diseases which kill Americans and extract a tremendous toll in medical costs, disability, and premature death. Treatment of these diseases is ineffective. There must be increasing efforts toward their prevention or amelioration. All of these diseases are clearly associated with the diet we eat and many other countries with less rich diets do not have this disease, pattern. In addition to the epidemiologic evidence there is extensive animal experimentation which supports the proposition that diet is an important causal factor in all of these diseases.
The best experimental evidence is available for coronary heart disease. This disease alone kills something of the order of 600,000 Americans, many of them before age 65 or whatever a suitable retirement age may be. There is sufficient evidence demonstrating a causal rela'The views expressed in this paper are those of the author and not necessarily those of the USDA.
(21)





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tionship) between diet and this disease alone to recommend that Americans change their diet. There are abundant data showing that:

Inappropriate diet-+elevated serum lipids-*atherosclerosis
-->heart attack
It is certain that the dietary factors primarily responsible for this sequence of events are the amount and composition of dietary fat and tlie cholesterol content of the diet. It is important to emphasize that in American men the serum lipid levels rise during the late teens and t went ies, many have extensive atherosclerosis in the twenties yet coronary heart disease begins to become significant in the thirties and forties and progressively more men have heart attacks as they become older. Thus, it is certain that the early atherosclerotic lesion which d(eelops in young men does not induce heart attacks directly. It is also certain that the severe atherosclerotic lesions which occur later are nearly irreversible. It is important to emphasize this since it means that dietary modification in middle-aged atherosclerotic men cannot be expected to have much effect on this process. As many of you are aware, a number of current dietary trials are now underway. These may be worthwhile but they cannot demonstrate the ultimate effect of diet upon coronary heart disease. A truly definitive experiment is beyond our capabilities. It would involve the recruitment of a cohort of teenage boys, feeding them a diet which would prevent the development of Ihypercholesterolemia and determining the disease pattern over the next 20 or 30 years or longer. This is essentially an impossible
tperlngr.Thsisesenial
experiment. Many people have optimistic and unwarranted expectations about what the current studies may or may not show.
F would also emphasize that if we considered the data available and were truly interested in minimizing the occurrence of heart disease, it is certain that the dietary recommendation would be much more severe than that suggested by the Dietary Goals. Populatl,:s hat have very little atherosclerosis, and almost no heart attacks, consumine extremely low fat and otherwise restricted diets by our standIrds. Quite frankly, most of us will probably opt for the heart attack, cancer, diabetes or hylvpertension-which are going to get almost all of us--rather than consume such a diet for a lifetime. Once we are Sik1-s has been emphasized by a recent television report-we may then be willing to submit to such a diet. It is interesting, incidentally. that h e television report indicated, as I have already, that the severe ( it did not appreciably modify the underlying atherosclerotic leion- th e electrocardiogram of the patients did not change. A con-ileratble number of smaller dietary trials have already been reported. 'h'lese have generally shown a modest reduction in heart attacks. More T'OUP ( ietary restriction may produce more favorable results. We
1111HW l owe,r, he lli, lh(, imlprovements are expllained, not by m(odifietaion of the athlleroselerosis process but by other meclhanisms. !osibtl by chianes in b!,loo11 prs1 re and by a reduction in the throin!,0ot i1 pro.es wlih is the terminal event in many heart attacks. VWhatever illwovewment can e obtained, it would seem quite certain tha te )I ier the diiarv change is adhileved, the greater the effect will 1be.






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It is important also to emphasize that our overall objective is probably not to eliminate heart attacks. It is not likely that immortality will be achieved by good dietary practice. Our objective is to have people die Young as late as possible. It would be a tremendous accomplishment if we could delay heart attacks, cancer, stroke, diabetes and hypertension so that they were not prominent causes of death or disability before age 65. Of course, many of us are old enough so that delay to 65 does not seem much of an accomplishment.
What we must search for is some dietary pattern that is "reasonable." Recommendations for dietary changes that are too severe will be ignored by most of us. Some people will establish Goals that are more than we can reasonably expect to achieve--to be President of the company, to make a million, to live to be a hundred, etc. This kind of goal does not mean that we consider that we have accomplished nothing unless we achieve it. Excessive expectation, however, can be discouraging and I believe we are searching for something that we can expect Americans to do.
It is impotLnt to emphasize that the nutrition strategy which has been developed in the United States and elsewhere over the past 50 years has been aimed almost totally at the prevention of nutritional ,deficiency. With the discovery of the vitamins about 75 years ago and the recoanit ion that pellagra, scurvy, xerophthalamia, beriberi and rickets were important causes of death and disability, the primary goal of nutrition became and has been since that time to assure an adequate intake of -all essential nutrients. This was tempered slightly by the recognition that obesity was undesirable but the essential message that we have promoted has been and is "Eat more meat, more milk, more egcs, more fruits and vegetables, more cereal products-more of everything-but don't get fat." This message was developed when we had no idea about the ultimate effects of such a diet and essentially no lmowledge of the relationship between diet and the chronic diseases which now beset affluent societies.
Nutritionists have often pointed out, correctly, that the great advances which flowed from Pasteur's discoveries demonstrating that disease was caused by infective organisms greatly retarded the acceptance of tle fact that disease could also be caused by a deficiency or lack of something in the diet. The theory of infectious disease caused practically everyone to search for a positive causal agent and the associations between poverty, poor hygiene, and deficiency disease made it extremely difficult to eliminate infection as a possible cause of pellagra, for example.
To a considerable degree, nutrition is now faced with a similar problem. We have devoted nearly all of our efforts to assuring an adequate diet-de fined as one which contains enough protein, vitamins and minerals. The proposition that much of our ill health is due to overnutrition-not only simply eating too much but eating too much of specific materials-is not easy to accept. It will require a substantial revision of nutritional thought and the nutritional education messages. I should point out that nutritionists cannot claim very much of the credit or blame for our current situation. What we eat is largely the result of our affluence, the agricultural system and the sum of the effects of the food industry. The message, however, has been the same wherever you heard it.





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No one is suggesting, of course, that it is no longer important to maintain an adequate intake of essential nutrients. Clearly, it is. We do have some undernourished people in the country but, fortunately, the number is small. They must continue to receive appropriate attenlion. The only relatively prevalent deficiency disease that we can identifv is iron deficiency. This is not limited to poverty groups. Severe iron deficiency, however, is not common and generally requires medical attention. Nearly all nutritionists will agree that we should miniinize iron deficiency and we could certainly do it. The problem has been, and continues to be, that we have not been able to convince the medical establishment that it was a sufficient problem to require preventive efforts. It is certainly not in the same league as heart disease and the other killer diseases. It is also certain that we do not have to overeat to avoid iron deficiency.
Most of us have seen a recent report which indicates that deaths from heart disease have declined in the past 10 years or so. This is great. The cause is not clear but it is what we should expect. The American Heart Association has for several years been advising a diet similar to that of the Dietary Goals. The American public has certainly'heard of cholesterol-both dietary and serum cholesterol. Constun ption of eggs and butter is down; consumption of unsaturated margarine is up. Many more people are jogging and exericising in various ways. Treatment of hypertension and diabetes which often cause heart disease is better. A considerable portion of the public has gotten the message about obesity and has done something about it. The severe, hyperlipidemias are now clearly recognized as a health hazard and dietary treatment is prescribed. Both medical and surgical treatment have improved. We should expect an improvement in the situation. But we must also be aware that this improvement leaves a long way to go. There are at least 200,000 permature deaths from heart disease and as we improve the situation our definition of permature will be later and later. We must continue to do what we have been doing but with more vigor at every level.
It has been argued that a dietary pattern such as that suggested by the Dietary Goals is not appropriate for children, pregnant women ;ind others'of the population. There is no nutritional basis for this. The protein intakes of Americans are so high that they greatly exceed all reasonable estimates of requirement. The diet. suggested would not necessarily reduce the intakes of vitam-ins and minerals. Indeed, it may very well increase, the intake of most. It should also be emphasized that in a technological society of the kind we have the provislon of vitamins and minerals is technologically easy. Fortification of foods can be expanded or restricted as we see fit. You simply cannot ijstify a diet which produces chronic disease in order to obtain sufficient vit anins and minerals.
Nobody expects the American diet to change overnight. Nutrition medication, fortunately or unfortunately, whichever way you view it, does not appear to be very effective. But it is clear that the public is demanding better and more explicit information all of the time. As I 1,L"ve already ind cated, whatever you may think, the Dietary Goals I )ro)sed by the IN'cGovern Committee are relatively moderate recomenw1dalltions. What the Dietary Goals mean in terms of food is some-





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thing like this: I&ss meat and leaner me-at and some substitution with poultry and fish. The protein consumption of the American public is now excessively high. It has no nutritional justification and my guess, for what it is worf'h, is that evidence will continue to accumulate to show that the high protein consumption is undesirable in itself and not only because, meat is a primary source of saturated fat. It means less eggs and butterfat. The dairy industry should begin to look at the restrictions it has imposed upon itself that inhibit the production and marketing of low-fat products and modified dairy products. It means less sugar of all kinds. Products are going to have to be labeled with sugar content and saturated fat content. Sugar, whether deserved or not, has caught the public's eye and there is essentially no nutritional defense of products high in sugar. Products will almost certainly have to be labeled with cholesterol and salt content and, again, there is no positive argument for high consumption levels. It means increased consumption of polyunsaturated vegetable, oils in all forms. It means increased consumption.of all kinds of fruits and vegetables. This should mean an expansion of the areas producing these nearer to the consumers. It means increased consumption of breads, cereals, and potatoes. These have been the whipping boys since obesity became a popular subject but unjustifiably so. The calories in bread.- pasta, and Potatoes are not more likely to produce. obesity than other' sources of calories. Indeed, a leaner diet with less fat and sugar is likely to be lie] pful in controlling excessive intake of energy.
Some people have argued, of course, that we do not know enough to recommend a change in the American diet. I believe that we know so much that we cannot afford to ignore what we do know. We are dealing with the most important medical problems of our time. Many Countries now have a better health record than we do. Sweden which has one of the best has already adopted national nutrition goals similar to the ones we are discussing. The issue is not have we proven that a change in diet will be beneficial or can we predict the results of a moderation in the diet. As I have indicated we do not have the technical capability to answer some of the questions we can easily ask. lVe can, however, ask what are the proven benefits of the American diet. There tire no positive arguments for a diet which is high in fat, sugar, and cholesterol and there are a host of arguments against it. The real issue is how soon, by what mechanisms, and how rapidly we move to encourage consumption of a more moderate diet.











ESTABLISHING AND IMPLEMENTING DIETARY GOALS
By Gilbert A. Leveille, Chairman, Department of Food Science and Human
Nutrition, Michigan State University)


The need for dietary goals is obvious. It is clear that the consuming public has a definite need for guidance in making appropriate food selections that will ensure, insofar as possible, the consumption of a diet providing the essential nutrients and ensuring maximal health. The selection of such a diet is not a simple matter and must be based on current scientific information. The public cannot be expected to be conversant with the scientific information and therefore this information must be translated into food terms which the consuming public can understand and use. The need for such goals should be inherent in any national food and nutrition policy. Such a policy, developed by the National Nutrition Consortium, has been incorporated in previous reports from the Senate Select Committee on Nutrition and IHuman Needs. Dietary goals are an important component of any national policy for once established and accepted by the public, they have significant impacts upon food production and processing systems. Any effective national policy must also involve an effective education component which will assist consumers in understanding and adopting the enunciated goals.
Recently the Senate Select Committee on Nutrition and Human Needs has published a set of dietary goals. This effort is laudable. but unfortunately the goals leave a great deal to be desired. In many respects these goals are not based on the contemporary science and if implemented would not be in the public interest. I will attempt to point out that these goals are not based on the whole of the scientific evi d(l ence available, that they fail to recognize significant problems which exist in our society, and unfortunately, fail to recognize the possible negative impacts which their implementation might have.
Ideally dietary goals should take into account those positive aspects of oulr current national diets and should assist in sustaining them. Firtli her. lhey should correct the poor eating habits which can be ident ified. The American diet has been referred to as "pathogenetic" hv i e ld as "disastrous bv others, implying that our diet has ",eteriorathd" in the past 50 to'75 years. I submit that such a conclusion is rrtoneous andl misleading. The American diet today is better t an over before and is one of the best, if not the best, in the world tiOav. There is mlch supporting evidence for this statement. One need merely consider the stature of the current generation of Americans whi 'h is coning closer and closer to the achievement of maximum net~i pOtential. We have virtually eliminated morbidity and mortality from acute nutritional deficiencies. A prime example is pellagra
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resulting from niacin deficiency, which claimed thousands of lives only a few short decades ago but which is virtually unheard of today. The same could be said for rickets which was overcome by the fortification of milk with vitamin D and of goiter which was eradicated by the iodization of salt. We have seen a remarkable increase in the life expectancy of the American population. We have seen many improvemnents in the quality of our food supply as measured by its safety wh0-olesomeness and variet 'y, it is unparalleled in the world today. Takig all of these factors into account, it seems abundantly clear to me that we can put to rest serious concerns about the quality of our diet and any consideration of returning to the diet of days gone by. Any notion that a return to the diet of the past would improve the wellbeing of Americans is nostalgic nonsense. Rather, we should identify existing nutritional problems and attempt to develop solutions to them. This, it seems to me, is the appropriate challenge of today and the challenge of developing appropriate goals for the American population.
The goals developed by the Senate Select Committee imply that we have been a Nation without dietary goals. This is not completely true. Admittedly we have not had a national food and nutrition policy to give visibility to dietary goals but assuredly we have had guideli-nes which have served effectively to direct many food and nutrition programs in this country. The guidelines of which I speak are the Recommended Dietary Allowances (RDA) initially established by the Food and Nutrition Board of the National Research Council in 1941 and periodically revised since then. The RDA's were initially developed as a basis for planning food supplies for the military. They have lprov'en to be equally valuable in planning food supplies for the civilian sector of our population and have served admirably as a basis for a variety of feeding programs within the U.S. Department of Agriculture. The RDA's -have also been the basis for the establishment of guidelines for nutrition labeling by the Food and DrgAdministration. Admittedly the RDA's are considerably different in evolution and purpose from the Senate Select Committee's dietary goals for the United States.
The RDA's differ from the Senate Select Committee's goals in that the former are based on the requirements for known nutrients. The RDA's represent an attempt to establish an allowance that will meet the needs of virtually the entire population. The goals developed by the Senate Select Committee on the other hand really reflect an attempt to provide guidelines for the prevention and/or cure of diseases considered to be public health hazards. Any dietary guideline must have. as a fundamental basis, the objective of meeting essential nutrient needs and, secondarily, must deal with other recommendations that would contribute to ensuring the public health. If such guidelines are to deal with the prevention of specific diseases, there should be a 'sound scientific basis for their establishment and theyshould not put any segment of the population at nutritional risk. Unfortunately, the Senate Select Committee's dietary goals have not provided this assurance and they are not based on the whole of available scientific evidence.
The dietary goals, published. by the'Senate Select Committee, assumme 1) that the diseases of primary concern, namely cardiovascular
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disease and cancer, are of epidemic proportions in the United States, and 2) that appropriate dietary modifications can delay or prevent these disease. I would like to spend a brief time reviewing these two fundamental assumptions. There is little question that the proportion of the U.S. population dying from cardiovascular disease and cancer has increased dramatically over the past 50 years. I submit that this is not surprising and is to be expected. Accompanying the increase in mortality from cardiovascular disease and cancer has been a significant reduction in mortality from infectious diseases. Advances in medical science have greatly reduced mortality from such causes as tuberculosis, pneumonia, etc. The old adage that "death and taxes are assured" remains to be disproven. Consequently, one would expect that the elimination of death from infectious diseases would simply involve some other cause of death becoming primary. Accompanying the improvements in medical care, sanitation and nutrition has been an increase in life expectancy and an increase in that segment of our population above the age of 65. This proportion of our population has increased significantly over the last several decades and continues to grow. The diseases of primary concern to the Senate Select Committee, namely cardiovascular disease and cancer, are chronic diseases. The probability of incurring these diseases grows with advancing age. Thus, with an older population an increase in both of these diseases is predictable. This is obvious when one examines mortality statistics on an age adjusted basis. While the total number of deaths from cardiovascular disease and cancer have increased over the last several decades, the mortality rate expressed on an age adjusted basis has not increased significantly and, in fact, for cardiovascular disease has shown a significant reduction. Thus, the urgency for changes in diet and life style to control the rate of increase of these chronic diseases is not supported by available evidence. This certainly does not imply that we should not direct our attention to further reducing morbidity an( mortality of chronic diseases, for clearly that should be the direction of our research and educational efforts.
I would now like to turn to the scientific basis for the establishment of the Senate Select Committee's dietary goals. It is implied that the high incidence of cardiovascular disease in this country stems directly from an increased consumption of fat, particularly saturated fat, and cholesterol. It is clear that elevated blood cholesterol levels represent a risk factor in the development of cardiovascular disease and that diet can influence circulating cholesterol levels in some individuals. It should also be recognized that diet is not the only factor affecting circulat ino cholesterol levels nor is the blood cholesterol level the only, nor the major, risk factor in cardiovascular disease. The concept that dietary modification will prevent or delay atherosclerosic heart .disease remains a hypothetical and not a demonstrated fact. While it may seemn "prudent'" to modify one's diet on the basis of existing hypotheses, it rdly e svseiusa sufficient basis for the recommendation of major dietary changes for the entire population. There are many other risk fact, rs associated wilh the development of cardiovascular disease. Tho relative importance of each varies from individual to individual and requires a comprehensive evaluation of the relative risk factors for





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each individual. Considerable controversy exists among specialists as to the relative value of dietary. modification.' There is no consensus upon which to establish definitive dietary guidelines for the general population. The Senate Select Committee's report also implies that the intake of sugar contributes to the increased risk of cardiovascular disease in the American population. This conclusion is contrary to the views of most experts in the. field. Such a hypothesis has been put forth but experimental evidence supporting the hypothesis is completely lacking. Furthermore, the recommendation for an increased intake of polyunsaturated fatty acids may represent a risk which has yet to be fully evaluated. On the basis of the totality of available evidence, it seems highly premature to make any major recommendations for dietary change for the prevention of cardiovascular disease. Rather, it would seein far wiser to recommend the establishment of a system for the evaluation of individuals to establish that segment of the population at risk and to make appropriate dietary and other recommendations for these individuals.
The report of the Senate Select Committee proposes that a relationship exists between diet and the incidence of cancer. Evidence for such a relationship is extremely meager. The available evidence.is strictly epidemiological in nature and remains to be verified experimentally. Such ev idence is at best suggestive and cannot be accepted as a reason able basis for recommending dietary changes. The recommendation of the Select Committee that a shift from foods of animal origin to those of plant wigin would protect the population from cancer is unfounded and is not supported by available evidence. Consequently, these recommendations, like those, dealing with cardiovascular disease, are premature and unsound.
The Senate Select Committee has recommended a significant reduction in the intake of salt as a means of reducing the incidence of hypertension. Again, this recommendation is based on a modicum of tenuous information. The available evidence does demonstrate that excessive salt intake can induce hypertension in a segment of the population. There is debate as to the proportion of the population whose blood pressure would be-influenced by salt intake but it is generally agreed that this represents a relatively small proportion of the population. The desirability of reducing the salt intake of the total population must be carefully examined. It may be wiser to establish means of detecting those, individuals at risk and to advise this group of desirable dietary changes. It should also be recognized that not all hypertensives will respond to a reduction in salt intake. Further, virtually all professionals examining the dietary goals of the Select Committee are 'in agreement that the' recommended level of salt intake of three grams per day is excessively low and represents a level which is -not achievable.
There are health problems which exist in this country and which should receive attention'. Dental caries, obesity and iron deficiency anemia have been identified by several surveys as problems warranting attention. There is also Tireliminary evidence suggesting that certain population segments have marginal inta kes-of certain trace elements, particularly zinc, and perhaps chromium. These: Problems deserve Attention.





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The problem of dental caries has been researched to a significant degree, but the need for further research is evident. It is known that sucrose will contribute to dental caries, however the contribution is not so much a quantitative one as a matter of the form in which sugar is consumed. Sugar in the form of sticky candies remains in the oral cavity, in contact with the dental enamel, for significant periods of time and provides an ideal environment for the proliferation of acid producing microorganisms responsible for the initiation of caries.
The problem of obesity is recognized, however the solution to this problem is not as evident. Certainly reduction of body weight to a desirable level involves a reduction in caloric intake. However, the achievement of that reduced intake remains difficult and is an area requiring further research. National dietary goals should certainly recognize the existence of obesity as a problem and provide incentive to reduce caloric intake. In this regard a reduction in dietary fat could be supported, since this is the most calorically dense component of our diets.
The intake of foods with low nutrient content is partially addressed in the Senate Select Committee's report. Unfortunately the report deals only'with the intake of sugar and fails to recognize the fact that other foods, such as alcohol and oils and shortenings can also provide significant calories without providing other nutrients. The Select Committee's report erroneously implies that our intake of sugars and sweeteners has increased dramatically in recent decades. In fact, our intake of sugar on an absolute basis has not increased significantly since 1925. What has changed is the form in which sugar is purchased and utilized. A half century ago most of the sugar was purchased as such and utilized in the home. Today a smaller proportion of sugar is purchased for home use and the greater proportion is consumed in preprepared products, such as baked goods. However, it should be recognized that the proportion of calories derived from sugar has increased, for while the absolute amount of sugar consumed has remained unchanged, our per capita intake of energy has declined. Thus, our consumption of sugar as a percent of calories has increased. There is no evidence that tiis increased proportion of calories from sugar has any detrimental eflet but it should be recognized that sugar is one of those foods having a l()\w nutrient content and from this standpoint a reduction in its COns111lnption m iight be warranted.
()he of the significant concerns regarding the American diet is the fact that due to our sedentary life styles, the consumption of calories is (leclming steadily. If we are to deal successfully with the problem of o)esity, a still greater reduction will be required. The requirement for other nutrients remains essentially unchanged even though caloric intake decreases. Consequently, in order to meet nutrient needs, it comes important to increase the nutrient density of those foods which ane consumiied. This requires an even more careful selection of foods to COII)rise a complete diet, a task which is virtually impossible for some nut rents at very low caloric intakes. For example, it is not unusual for women in t he U.S. to be consuining as few as 1,500 to 1,700 calories per (1ay. On this caloric intake it is virtually impossible to meet the 18 mg RI)A for iron in the premenopausal woman. In such individuals the iron requirement can only be met by increased fortification of certain






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foods or by the use of iron supplements. This appears to be true for other nutrients such as zinc and copper. Consequently,, any recommendation for a change in diet must carefully assess the impact that such changes would have on the intake of essential nutrients. ,To my knowledge this has not been assessed for the changes which the Select Committee has recommended.
It seems that the recommendations for dietary change made by the Select Committee have not been evaluated from the standpoint of other potential, undesirable impacts which they might have if implemented. For example, it is recognized that a significant proportion of the total iron consumption by the U.S. population is derived from meats and meat products. Further, it is recognized that a large proportion of the iron derived from meat is in the form of heme which has a much higher availability than does nonheme iron. If the recommendations of the Select Committee were followed, the likely effect would be a significant reduction in total iron intake and a decreased availability of that iron which was consumed. If this were to occur, the effect on the problem of anemia, which already appears to be widespread, would be disastrous. Thus, the recommended changes cannot be made without recognizing the need for increased iron fortification or somehow increasing the availability of iron from sources other than meat. Similarly the American population derives a significant proportion of its dietary zinc from meat. A reduction in meat intake would result in a significant reduction in zinc consumption. Further, the increased intake of cereal grains would inciease the dietary content of phytic acid which is known to bind zinc and reduce its availability. Thus, there is a high probability that implementation of the Select Committee's goals would result in serious zinc deficiency in some segments of the population.
Careful evaluation of the Select Committee's recom-mendations, demonstrates that they are not based on the available scientific information. Further, there are many inconsistencies and outright errors in the development of the goals. The errors of omission and interpretation are sufficiently great as to cause serious concern if they were taken seriously and applied to any current feeding programs.
There is a need for sound dietary goals to guide feeding programs and to guide individual consumers in their food choices. There is no question, in my opinion, but that the Senate Select Committee's goals are inappropriate and that a totally new effort is required. Such an effort should involve a broad cross-section of expertise from the nutrition, food and medical communities. It should involve consumers and consumer advocates who are knowledgeable about the application of nutrition and food information by consumers. Only in this way can a realistic set of dietary goals be established which will serve the best interests of the U.S. population. I-firmly believe that the Department of Agriculture should be at the forefront of such a development. This would seem particularly appropriate since the application of sound guidelines to the feeding programs administered by the Department would impact upon countless thousands of individuals.












THE DIETARY GOALS AND FOOD ON THE TABLE
(By Betty B. Peterkin,* Home Economist, Agricultural Research .Service, USDA)


This fall, Secretary Bergland has repeatedly emphasized the importance of nutrition in setting the direction for food and agriculture policy. As part of the Department's responsibility in this area, the Agricultural Research Service-the agency of the Federal Governinent with primary responsibility for the development of food selection and dietary guidance for the general public-has begun to reexamine its national dietary guidelines.
As one step in that process we have analyzed the goals set forth in the report of the Senate Select Committee on Nutrition and Human Needs-"Dietarv Goals for the United States."' We hope this analysis, made primarily for the use, of USDA, will be useful to others, such as the Select Committee on Nutrition and Human Needs (Committee), nutrition scientists and educators, the food industry, and consumers, in appraising the goals from various perspectives.
The analysis consists of interpretation of the Dietary Goals in terms of the, kinds and amounts of foods that will meet them. It explores diets for individuals as well as the population as a whole. Such interpretation makes possible appraisal of the goals for their sociological and economic, as well as their physiological, implications. Through such interpretation, the meaning of the goals for the consumer, the food producer, the food processor, and food regulatory agencies begins to become apparent.
Today, I will review briefly the changes in dietary levels and in food selection suggested by the committee in its report of the Dietary Goals released February 1977. Then, I will discuss some of the many diets
for men, women, and children that meet the Dietary Goals and certain changes in food selection and/or food production and processing that might contribute toward achieving the goals. Dietary goals and food selection--changes suggested in committee
report
A bar chart in the committee report shows the difference in sources of food energy, such as fat, protein, complex carbohydrate and sugar, for the "current diet" and for the Dietary Goals. The current diet is 1)ased on the nutritive value of the U.S. per capita food supply-the food that disappears into civilian food consumption, some of which may not be eaten.

*The assistance of Richard L. Kerr and Carole J. Shore in the preparation of material j'resented iq gratefully acknowledged.
I Sele(t Committee on Nutrition and Human Needs, U.S. Senate, February 1977. Dietary Coals for the United States. 95th Congress, 1st Session. Committee Print.
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The goals call forA decrease from 42 percent to 30 percent of energy from total
fat;
SA decrease from 16 percent to 10. percent of energy from saturated fatty acids;
No change in the level for protein-to provide 12 percent of
energy;
An increase in total carbohydrate consumption to account for'
55 to 60 percent of energy intake;
A decrease in the consumption of sugar- a major source of carbohydrate. The percents on the chart-24 percent of energy in the current diet and 15 percent of energy as the goal-refer to total sugars, including sugars found naturally in foods such as milk
and fresh fruits; and
A two-fold increase in the energy from complex carbohydrates,
provided in diets mainly by grain products and some vegetables.
Dietary Goals are also specified for cholesterol-about 300 milligrams per day-and for salt, about 3 grams per day. No goal or energy allowance is specified in the report for alcohol, which provides substantial amounts of energy in many U.S. diets. .The committee report gives this advice on how to change food selection to meet the goals:
Eat more fruits and vegetables and whole grains;
Eat less meat and more poultry and fish;
Cut down on foods high in fat and partly substitute polyunsaturated for saturated fat;
Substitute nonfat milk for whole milk;
Cut down on eggs, butterfat, and other high cholesterol sources;
Cut down on sugar and foods high in sugar; and
Cut down on salt and foods high in salt.
These suggestions point the way toward the proposed goals for the averagel consumer in the population. They also present a challenge to food and agricultural researchers, food regulatory agencies, and to food producers and processors to develop and supply the population with foods that are low in fat, especially saturated fat, and that contain less sugar and salt.
Food consumption and dietary goals
The bar chart in the committee report shows that U.S. diets as defined by -the food that disappears into civilian consumption do not meet the -goals. U.S. diets can be appraised with respect to the goals using two other types of dietary data: (1) food used by households in terms of, food brought into the kitchen-as purchased or obtai ned from home gardens or as gift or pay, and (2) food intake or food actually eaten by individuals. These two types of data, were collected 'nationwide in USDA's 1965-66 Household Food Consumption Survey and are again, being collected in our 1977-78 survey. Food intakes of individuals are also obtained in DHEW's Health and Nutrition Examination Survey.
Diets of men, women, and children, in terms of food as purchased, from the 1965-66 survey do not meet the Dietary Goals (table 1). Fat, protein, cholesterol, an sugar -levels are higher and carbohydrate levels are lower on t he, average than -the goals.- Levels of polyunsaturated






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fatty acids, as indicated by linoleic acid, are lower than the goal; and levels of monounsaturateY fatty acids, as indicated by oleic acid, and of saturated fatty acids are higher than the goals. Generally, men's diets deviate most from the goals. Fat and cholesterol levels in their diets are somewhat higher than in diets of women and children. On the other hand, sugar levels are lowest in men's diets-providing only 14 percent of food energy (calories) compared to 16 percent for women and as much as 18 percent for children. Average diets for all of the 14 sex-age categories studied 2 provide the RDA for protein, vitamin A value, thiamin, riboflavin, niacin, and ascorbic acid; but diets for several categories fail to meet the RDA for calcium and iron.
Daily food intakes of 6,000 people from the 1965-66 survey were reviewed with respect to two of the goals-those for total fat and total carbohydrate. Fewer than 3 percent. of the persons reported intakes that met the two goals. Essentially none of the 3 percent reported intakes that also met the 1974 Recommended Dietary Allowances (RDA) 3 for all of the five vitamins and two minerals studied.
M1odifyinq diets to meet the dietary goals
We modified diets to meet the Dietary Goals using the committee's suggestions for change in food selection, listed previously, and average food consumption patterns (diets) for 14 sex-age categories from our 1965-66 food consumption survey as the basis for certain assumptions about food selection. Alternate assumptions incorporate some possible modifications to foods through change in production and processing. Obviously, other assumptions could be used for deriving diets beyond the dozen or more we have developed to date.
The food consumption patterns used consist of average quantities of 17 food groups in terms of food as you buy it.4 Examples of the food groups are milk, cheese, and ice cream; meat, poultry, and fish; eggs: dry legumes and nuts; four groups of vegetables and fruit; four groups of grain products; fats and oils; and sugar and sweets.
Table 2 shows some of the food groups and the nutrient sources of energy they provide compared to the recommended distribution of energy sources of the Dietary Goals. The groups with large percentages of calories from complex carbohydrate are more desirable than those with large percentages from fat for changing diets to meet the goals. lo increase carbohydrate levels in diets, as the goals propose, quantities of vegetables and fruits and cereal and bread in the diet will need to be increased. To reduce fat levels in diets, quantities of fats and oils, lilk, meat, and eggs will need to be reduced. Other alternatives are to change the composition of certain food groups to provide higher pro1)ortions of complex carbohydrate and lower proportions of fat through i)rodIct 0hli ficat ion and/or food selection.
We assumed in modifying diets to meet the goals that the makeup of foods within most of the 17 food groups in the food consumption patterns is the same as the average for households surveyed. For example, the proportion of the citrus fruit and tomatoes group that was reported

S4op tabe 3 for cox-ngo entegorloct.
I National Academy of Sciences. 1974. Recommended dietary allowances. Eighth edition. 4 Food un purchased or brought into the kitchen from garden or farm in terms of 17 food groii-. .the 14 food groups Ishown in table 3 and coffee, tea. and cocoa ; punches, ades. nnd Sft dridi and ( g and leavening agents.






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as fresh oranges by survey households in .1965-66 is assumed in the diets. However, for three groups-meat, poultry, and fish; milk, cheese, and ice cream; and fats and oils-we set up three alternative sets of assumptions (options). concerning the makeup of the group to demonstrate their differing impacts on diets. Option 1, which attempts to follow suggestions for change in: food selection in the committee report, is used primarily in this study for interpreting the goals (tables 3-10). Options 2 and 3, which more closely resemble reported food consumption within the three food groups than Option 1, are described and information about diets incorporating them is given in tables 11 and 12. Alterations to usual consumption in Option 1 are as follows:' For the meat group, drippings and all separable fat from meat are discarded; the quantities of meat, poultry, and fish are adjusted from about three-fourths meat and one-fourth poultry and fish to one-half meat and one-half poultry and fish. These changes reduce the percent of calories from fat in the meat, poultry, and fish group from 62 to 54 percent.
For the milk group, skim milk replaces all milk, cheese, and ice cream. This change, reduces the percent of calories from fat in the milk Group from 49 to 5 percent.
For the fat group, butter and margarine are replaced by soft margarine, and lard and vegetable shortening are replaced by vegetable oils. These substitutions increase the proportion of polyunsaturated fatty acids and decrease the proportion of saturated fatty acids.
A fourth set of assumptions (Option 4) illustrates some changes in food selection with major implications for food production and processing of foods, qs well as for Government regulations, that would contribute toward lower levels of fat and higher levels of complex carbohydrate in diets. Assortments of foods in" food groups assumed in this option tend to be optimum with respect to lowering levels of fat and increasing levels of complex carbohydrate. In Option 4, as in Option 1, milk is in nonfat form and fats and oils are those types with high proportions of polyunsaturated fatty acids. The meat group includes items of low fat content-lean from Good Grade beef and flesh of chicken or meat and poultry products of comparable low fat composition. This group as modified has an average of 6 percent dietary fat by weight, considerably lower than the 30 percent currently allowed in certain processed meats, such as frankfurters. With respect to grain products, Option 4 includes only the kinds of grain with the highest carbohydrate content, such as rice, and eliminates grain products that contain fat and sugar. Option 4 changes would reduce the percent of calories from fat in the meat, poultry, and fish group from 62 to 32 percent. They would increase the percent of calories from carbohydrate in the grain products group to: 89 percent.
The model for developing the USDA family food plans 5 was adapted and used to adjust the food. consumption patterns of each of the 14 sex-age categories to meet the Dietary Goals. The food plan model selects the optimum diet-the quantities of the 17 food groups that represent as little change from the quantities of the food groups in the food consumption pattern as, is necessary, to meet nutritional
SFor additional information on procedures used in developing food -consumption patterns and on the model used to modify patterns, refer to "The Thrifty Food Plan," CFE (Adm.) :326, Consumer and Food Economics -institute, Agricultural Research Service, USDA, Hyattsville, Md. 20782.





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secifications. "Change" is measured in terms of squared weighted deviations from the quantities of food groups in the consumption pattern and total change is minimized. The weights are set to cause deviations to be minimized on the basis of percentage change rather than change in pounds of food groups. The squaring of weighted deviations results in small changes in amounts of several food groups, rather than a large change in one group to meet a specification.
Two sets of nutritional specifications (Goals) based on Dietary Goals were used in diets to be discussed here. The two sets differ only in that one includes specifications for levels of five vitamins--vitamin A value, thiamin, riboflavin, niacin, and ascorbic acid-and two minerals-calcium and iron; and the other does not.
Specific goals used in modifying diets in this study are as follows: 1. Total energy intake for each sex-age category equal to the RDA plus 5 percent. The 5 percent is added to allow for some discard of food and still provide for energy needs.
2. Total fat to provide 30 percent or less of energy.
3. Saturated fat to provide 10 percent or less of energy.
4. Cholesterol in daily amounts of no more than 300 milligrams plus
5 percent.
5.- Sugar other than that found naturally in foods such as milk and fresh fruit to provide 10 percent or less of energy. The 10 percent goal for such sugar, rather than the 15 percent goal for total sugars in the committee report, was used with concurrence of the committee.
6. Protein to provide 14 percent or less of energy. The 14 percent level, rather than the 12 percent shown in the committee report, also is used with the concurrence of the committee.6 The committee's intent in establishing the goal for protein was to maintain the level of protein in the current diet; therefore, 12 percent of energy from protein-the level in the U.S. food supply in recent years-was selected. In the food patterns from the 1965-66 survey of household food consumption used in this study, 14 percent of energy is provided by protein; therefore, a goal of 14 percent is used.
7. Carbohydrate to provide 56 percent or more of energy.
S. Five vitamins and two minerals in amounts of at least the RDA plus 5 percent. (This specification is included in only one of the two sets of goals.)
9. Salt is not included as a specification because of the limited information on the sodium content of foods and on salt added to food. Diets that meet the Goas, Option 1
Changes in diets for all sex-age categories are required to meet the Goals but not necessarily the RDA (tables 3 and 4) and to meet the Goals and the RDA (tables 5 and 6). Diets modified to meet only the Goals also meet the RDA for the man 20-54 years of age and many of the other sex-age categories.
To meet the Goals, the man 20-54 years old, in addition to changing selections from the milk, meat, and fat groups according to Option 1, would need to buy and use on the averageTwo-thirds more grain products;
One-fourth more vegetables and fruit; One-eighth more dry legumes and nuts;
See table 14 for the change in food consumption patterns required to meet the goals with 12 percent of energy from protein.





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One-eighth. more milk-all of it in the form of skim milk;
One-half as many eggs;
One-half as much refined sugar and sweets, such as sirup, and
jellies;
One-sixth less fats and oils; and
One-fifth less meat, poultry, and fish. Taking into account the
adjustment to increase the ratio of poultry and fish to meat, as suggested by the committee and incorporated into Option 1, this decrease of one-fifth for the group translates into a 45 percent decrease for meat and a 45 percent increase for poultry and fish.
However, the suggestion by the committee that meat consumption be -reduced and poultry and fish consumption be increased-a change in the ratio of meat to poultry and fish-is not necessary if the meat eaten is trimmed of all fat, fat drippings from meat are not used, and other measures to control fat in the diet are followed. Reduction in the overall consumption of meat, poultry, and fish is essentially the same when under Option 1 the ratio of meat to poultry and fish is changed (table 6) and, under Option 2, it is
not changed (table 11).
Meeting the Goals for total carbohydrate, sugar, protein, and total fat appears to require the most change in quantities of food groups used for all sex-age categories. The Goals. for saturated fatty acids and for cholesterol, except in the man's diet, are not as difficult to achieve. This is partly because the quantities of meats and eggs are restricted due to their- relatively low-carbohydrate and high-fat composition and because only fats and oils that have high proportions of polyunsaturates and skim milk are used.
The cholesterol goal of 300 milligrams per person per day is more limiting for men than for women and children. It translates into 110 milligrams per 1,000 calories of energy allowance for the man, comnpared with 150 milligrams for the woman and 167 milligrams for the 6-year-old child.
The food sources of the calories from carbohydrate, protein, fat, and sugar in the man's diet and in his diet modified to meet the Goals with Option 1 assumptions are summarized in table 7 and discussed below:
Carbohydrate.-To meet the Goals, the quantity of cereal, pasta, flour, and mixes in the consumption pattern is about doubled; the quantity of bread is increased by two-thirds; and the quantity of other bakery products is increased by over one-third. Such increases in the use of grain products are required to meet the carbohydrate goal. Grain products are required also to provide energy in the modified diet to replace energy provided in the diet by several sources, such as the carbohydrate from larger quantities of sugar, the fat from whole milk and less-well-trimmred meat, and fat and protein from larger quantities of meat and eggs. Increased quantities of vegetables and fruit also help provide the-needed carbohydrate. Calories from sugar, other sweets, and soft drinks are limited by the sugar goal.
Pro tein.-The number of calories from protein in'the man's diet is the same as in his diet modified to meet the Goals, each representing 14 percent of his total calorie needs. However, the food sources of protein differ. The increased quantities of grain products, required to provide the carbohydrate goal, also provide protein. Therefore, the amount of protein from animal products Must be reduced if protein is limited to provide only 14 percent of calories





38

Fat.-The man must reduce his fat consumption by 350 calories per day-from 1.20 calories to 850 calories-to meet the goal of 30 percent of total calories from fat. Changes in the composition of the milk and meat groups under Option 1 and the reduction in quantities of meat and eggs account for a reduction of over 300 calories.
The suggestion that skim milk be used in place of whole milk appears to be unnecessarily restrictive as a means of reducinglevels of fat and saturated fatty acids, especially in children's diets. Children's diets with whole milk, cheese, and ice cream replaced by their calcium equivalent in skim milk and other assumptions in Option 1 and then modified to meet the Goals contain as much as one-half more fats and oils than children ordinarily consume (table 6). Some of the fat from milk has been reintroduced into the diet as fats and oils.
S uar.-Sugar other than that found naturally in foods in the man's diet provides 400 calories and must be reduced by 25 percent to provide 300 calories to meet the goal. To accomplish this, quantities of sugar, sirup, jams, jellies, candies, and soft drinks are decreased to provide 140 fewer calories. The quantity of commercially prepared grain products, increased to help meet the goal for complex carbohydrate, adds over 50 calories from the sugar they contain. Sugar levels in children's diets, somewhat higher than in men's diets, would have to be reduced by as much as 44 percent to meet the goal.
Food as served.-A day's food for the man, as served, illustrates the large quantity of grain products in diets modified to meet the Goals under Option 1 (table 8). His modified diet contains 21/ to 3 bowls of cereal or pasta and 13 slices of bread or equivalent in other bakery )roducts, increased from 11/3 bowls and 8 slices in his usual diet. The woman's modified diet contains 31/ bowls of cereal or pasta and 8 slices of bread or equivalent. The larger amount of cereal in her diet is needed to help provide recommended amounts of iron.
Sample meals for a day for the man meeting the Goals with Option 1 are as follows:
BREAKFAST
Cereal (2 cups) with sugar 7 Margarine 7
Skim milk (1 cup) Juice (1/2 cup)
Toast (3 slices) Coffee or tea, if desired

LUNCH
M acaroni salad (1 cup) Vegetable (1 cup)
(contains macaroni, 1/3 egg, Bread (3 slices)
2 talles)oons kidney beans, Margarine
salad oil) Milk (1/2 cup)

DINNER
Lean meat, poultry, or fish Bread (3 slices)
(5 ounces)8 Margarine
Potato (1, cup) Cake
Ot her veret able or salad Coffee or tea, if desired

About 2 tabl!,,ipoon9 of sugar or other sweets such as sirup, Jams, and jellies and 3/ taihle-pitons of falts awl oils In a day may be added to foods during preparation or at the
Mea it and poultry or fish are served on alternate days.








SNACK
Biscuits (3) Juice (1/2 cup)

For the people who may find large amounts of grain products objectionable, diets were modified to meet the Goals while holding the am-ounts of grain products at levels in the consumption patterns (table 9). Such diets contain large amounts of vegetables and fruits. For example, the man would buy and use each day over 3 pounds of vegetables and fruits and 2%/ ounces of dry legumes and nuts. His usual consumption of dry legumes would be quadrupled; of potatoes, tripled; and of other vegetables and fruit, doubled. His consumption of milk would be increased by 60 percent; and meat, poultry, and fish would be reduced by 50 percent. Obviously, diets could be modified to include some increase for grain products and smaller increases for vegetables and fruits than those above.
The "'average" man 20-54 years old can -meet the Goals and his RDA while continuing to eat the quantity and selection he ordinarily consumes, of any single food group, even the eggs and sugar and sweets groups. H-owever, his resistance to change for a food group will result in changes for certain other food groups that are greater than shown for Option 1 (table 6). For example, he could continue to have quantities of whole milk, cheese, and ice cream he is accustomed to and reduce fat, especially saturated fat, in his diet by other means, such as reducing further the quantities of meat, eggs, and fats and oils in his diet.
Diets that meet the Goals, Option) 4
Option 4 assumptions (page 5) are used to illustrate what diets meeting the Goals might be like if consumers use foods that are p~rimarily unprocessed, low in fat and saturated fatty acids -and refined and processed sugars, and high in complex carbohydrate (table. 13). Generally, the diet contains skim milk; eggs, dry legumes and nuts; lean meat from Good Grade beef and flesh from poultry or other items of comparable low fat composition;- vegetables -and fruit; rice or varieties of oth-Ir grains or flour of comparable high carbohydrate com.position:- soft margarine and vegetable oils; sugar and sweets. Elim,)ination of most of the fat from milk and meats, and the. sugar and f at f rom grain products frees fat and sugar and the calories associated with them for use elsewhere in the diet. Much of the carbohydrate goal is provided efficiently by the 514 cups of cooked riceoreua lent grain or flour, leaving most of the protein goal to be provided by milk and meat. The man can have more identifiable fats and oils and sugar and sweets; however, his diet as a whole, will be less rich in fat, and less sweet than the diet he ordinarily consumes. Food cost
Costs were estimated for the average food consumption patterns and for diets modified to meet the Goals and the IRDA using Option 1 fmd Option 4 assumptions. To estimate these costs, prices paid for food by 1965-66 survey households were updated using the percentage






40

change from the time of the survey to August 1977 in the average retail prices of about 100 foods priced monthly in U.S. cities by the Bureau of Labor Statistics. Costs apply only to diets as described in this study and cannot be used to indicate cost relationships for other diets modified to meet the Goals. These cost estimates, of course, do not allow for major shifts in price levels of foods which would almost certainly occur if demands for certain foods were markedly increased to meet the Goals.
The estimated weekly costs in August 1977 for a four-person family with average food consumption patterns and with diets modified to meet the Goals and the RDA, with Option 1 and Option 4 assumptions 9 are as follows:

Food Diet to meet goals
consumption
pattern Option I Option 4
Child, 6 to 8 yr -------------------------------------------------- $10.47 $10.96 $11.71
Child, 9to I1 yr-------------------------------------------13.02 13.72 14.71
Male, 20 to 54 yr ------------------------------------------------- 15.46 14.88 16.65
Female, 20 to 54 yr ---------------------------------------------- 12.21 11.57 12.40
Total ----------------------------------------------------- 51.16 51.13 55.47

Limitations of interpretation
The consumer could select many combinations of foods to meet the Goals. The few combinations presented here are designed for the least deviation from average food consumption patterns for men, women, and children of different ages required to meet the Goals, taking into account suggestions for food selection made in the committee report and alternative suggestions. Minimum disruption of average consumption patterns to meet nutritional goals is consistent with ARS's approach in developing guidance for food selection for the general public. This approach recognizes that food habits are difficult to change and assumes that food guides that disrupt them the least are most li kely to be followed. Other combinations of foods, arbitrarily selected to meet the Goals, might be more acceptable to some groups of people.
Consumption patterns used in developing the diets are based on data for food used at home in 1965-66, the most recent data on national holisehold food consumption available. Current consumption, which will be understood better from our 1977-78 Nationwide Food Conszllmpt ion Survey now underway, probably differs from that in 196566. Annual USDA estimates of the national per capita food supply (disappearance data) can be used to indicate differences in consumption that may have occurred since 1965.
(ihuges in the food supply between 1965 and 1975 and changes to )(15-15(; consumption patterns required to meet the Goals are shown n I able 10. For this comparison quantities of food groups in consump1ion patterns and in diets modified to meet the Goals for the 14 sexSateres were weighted losing 1975 population estimates: then clai ge for the average person in the population was determined. For
The, Aluis't cw)t f,,r th, four-person family with diets modified to meet the Goals and thm RDA with Option 3 (table 12) is $48.53.





41'

sugar and grains an attempt' was made to express quantities on a commodity basis. The change for sugar represents the change when all' sugar, including that in commercially prepared products, is taken into, account; and the change for grain represents the change in the grain equivalent of grain products used. No attempt was made to take the eggs and fats from commercially prepared bakery products into account.
The nutrition messages behind some of the iDietary Goals seem to have been heard and heeded by at least part of the U.S. population. Between 1965 and 1975 changes in food consumption, as indicated by the food supply, of eggs, butter, lard, margarine, vegetable oils, vegetables and fruit, and poultry and fish were in the direction of changes needed to meet the Goals. This implies that consumption has already moved toward meeting the Goals, and the changes for these foods based on 1965-66 food consumption patterns presented in this study with Option 1 may be somewhat exaggerated. On the other hand, for those foods for which the direction of change in the food supply between 1965 and 1975 is different from that. required to meet the Goals-meat, vegetable shortening, sugar and sirup, grains, and milk-changes suggested in the study, with Option 1, may be underestimated.
Gonelu8ion8
1. Few people in the United States consume diets that are as high in carbohydrate and as low in fat and sugar content as specified in the Dietary Goals proposed by the Select Committee on Nutrition and Human Needs.
2 Alternative assumptions regarding food selections within certain food groups (options) are used in modifying diets to meet the Goals and the RDA for five vitamins and two minerals. Dietary changes generally include the use of more grain products, vegetables, fruits, legumes and nuts, and less sugar, meat, and eggs. The magnitude of the changes varies considerably for some foods depending on the option used. For example, to meet the Goals with Option 1, in which assortments of foods in the food groups below are based on average household food consumption in 1965-66 except as noted for milk, fats and oils, and meat, people on the average change the foods they buy and use to includeSixty-nine percent more grain products (grain equivalent
basis) ;
Twe'nty-five percent more vegetables and fruit; Twenty-one percent more dry legumes and nuts:
Ten percent more milk, all in the form of skim milk;
About the same amount of visible fats and oils; however, soft
margarine and -oil replace butter, lard, and vegetable shortening
which are higher in saturated fatty acids;
Fifty-nine percent less visible sugar, sirup, jams, jellies, and
candies;
STwenty-_five percent less meat, poultry, and fish, with none of
the drippings or separable fat from meat being consumed; and
Twenty-four percent. fewer eggs.





42

On the other hand, to meet the Goals with Option 4, in which, through changes in food selection and/or production and processing, foods chosen are primarily unprocessed, low in fat and saturated fatty acids and refined and processed sugars, and high in complex carbohydrates, people on the average would change the foods they buy and use to includeSeventy-four percent more grain products (grain equivalent
basis), all of which is rice or grain of similar composition;
Forty-three percent more fruits and vegetables; Thirty-nine percent more dry legumes and nuts;
Thirty-four percent more milk, all in the form of skim milk; Twenty-two percent more visible fats and oils; however, soft
margarine and oil replace butter, lard, and vegetable shortening
which are higher in saturated fatty acids;
Tenl percent less visible sugar, sirup, jams, jellies, and candies; Six percent less meat, poultry, and fish, which is one-half Good
Grade beef roast with none of the drippings or separable fat consumed and one-half poultry with only the flesh consumed, or meat,
poultry, and fish of similar composition; and
Seven percent fewer eggs.
3. If goals are to be established for carbohydrate, protein, fat, sugar, cholesterol, and salt, such goals probably should be set separately for mlen, women, and children of different ages. Goals that restrict intake to a given amount per person per day of a dietary element, such as cholesterol and salt, result in diets with much more of the element per unit of energy or per kilogram of body weight for children and women than for teenage boys and men, who have greater food energy needs. Some of the Dietary Goals and suggestions for modifying diets to meet them in the committee's report are not appropriate for use by individuals in all sex-age categories. For example, the goal for protein-to provide 12 percent of energy-is so low that the pregnant woman meeting the protein goal and her RDA for energy will not meot her RDA for protein. The suggestion that skim milk be used in place of whole milk may be unnecessarily restrictive as a means of red cin(,m fat levels, especially in children's diets.
4. Goals based on food consumption in terms of food disappearance data are not necessarily appropriate for developing guides for amounts of foods to buyv to meet the nutritional needs of family members or for energy; and in the current diet as defined by the intake of individuals




43

reported in USDA's 1965-66 Survey and in DHEW' s more recent Health and Nutrition Examination Survey, protein provides about 16 percent or more of energy.
TVAere do we go from here
As the basis for developing food selection guides for use of the general public and in administering the food programs, USDA has made and must continue to make decisions about acceptable levels of fat, carbohydrate,, protein, sugar, cholesterol, and other elements in the diet. To help in inking these decisions, the Food and Nutrition Board of the National Academy of Sciences has agreed to make recommendations, even though they may be provisional, as to acceptable levels of 14 dietary elements beyond those for which RDA are established. Levels will be recommended for healthy men, women, and children of different ages. Among the 14 dietary elements are those covered by the Dietary Goals. The Board will include as a part of its considerations the important issues raised by the Select Committee on Nutrition and Human Needs and subsequent statements and studies. We hope to use these recommendations and the RDA*s as the basis for nutritional specifications for revising the USDA food selection guides, after the information on food consumption of households and individuals from the 1977-78 Nationwide Food Consumption Survey is available.
The Dietary Goals report and discussions that it has evoked reemphasize the need for additional research:
1. To determine the nutritive value of foods in the marketplace.
2. To provide imely information on the food selections and nutritional status of people.
3. To provide a firm -basis for dietary goals for healthy men, women, and children of different ages.
4. To explore adjustments in production and processing to provide foods that will be helpful in meeting such goals.
5. To develop strategies and guidance materials for encouraging consumers to change their food behavior as necessary to meet the goals.
TABLE 1,-FOOD ENERGY DISTRIBUTION AND CHOLESTEROL CONTENT OF FOOD CONSUMPTION PATTERNS, 1965-66,
Child, Child, Male, Female,
Dietary 6 to 9 to 20 to 20 to
Item goals 8 yr 11 yr 54 yr 54 yr Person 2
Percentage of food energy from:
Protein ------------------------------------ 12 14 14 14 14 14
Carbohydrate ------------------------------- 5-60 49 49 44 47 47
Sugar . . . . . . . . . . . . . . . . 10 18 18 14 16 16
Fat ---------------------------------------- 30 38 37 42 39 40
Linoleic fatty 410 6 6 7 6 6
Oleic fatty acid ------------------------- 510 15 15 17 16 16
Saturated fatty 10 14 13 14 14 14
Milligrams of cholesterol per 300 312 386 553 374 412
Food as purchased or brought into the kitchen from garden or farm to provide meals and snacks for individuals by sex and age, estimated from 1965-66 household food consumption survey. Amounts of food for each sex-age category were increased or decreased proportionately to provide the 1974 recommended dietary allowance for energy plus 5 percent-to allow for some discard of food and still provide for energy needs. Drippings and one-half of the separable fat from meat are assumed discarded.
2 Food consumption patterns for 14 sex-age categories weighted by the 1975 U.S. population.
3 Sugar other than that found naturalIv in foods, such as milk and fresh fruit.
4 Goal for all polyunsaturated f0tv acids.
a Goal for all monounsaturated fatty acids.

98-723-77---4








44

TABLE 2.-SOURCES OF FOOD ENERGY FROM SELECTED FOOD GROUPS
[In percent]

CarboItem Total hydrate Protein Fat

Dietary goals ----------------------------------------------- 100 58 12 30
Consumption pattern:
Milk, cheese, ice 100 30 21 49
100 2 33 65
Dry beans and peas, nuts -------------------------------- 100 34 is 48
Yeat, poultry, fish 2 . . . . . . . . . . . . . . . . . . 100 2 36 62
Dark-green, deep-yellow vegetables ----------------------- 100 81 14 5
Citrus fruit, tomatoes ------------------------------------ 100 87 8 5
Potatoes ----------------------------------------------- 100 72 9 19
Other vegetables, 100 86 9 5
Cereal, pasta ------------------------------------------- 100 84 11 5
Flour, mixes -------------------------------------------- 100 83 10 7
8 read ------------------------------------------------- 100 77 13 10
Other bakery products ----------------------------------- 100 62 7 31
Fats, Oils ----------------------------------------------- 100 2 ------------ 98
Sugar, sweets ------------------------------------------- 100 94 1 5
Option I assumptions:
Milk, skim 100 56 39 5
Meat, poultry, fish 3_ 100 2 44 54
Option 4 assumptions:
Meat, poultry 4_ 100 0 68 32
Cereal 5 ------------------------------------------------ 100 89 8 3

I Average selections within food groups as used by U.S. households in 1965-66.
2 Drippings and Y2 of separable fat from meat are assumed as discarded.
3 Drippings and all separable fat from meat are discarded and amounts of meat, poultry, and fish are adjusted to Y meat and Y2 poultry and fish.
4 Y2 good grade boned beef rump roast with drippings and all separable fat discarded and X broiler chicken with drippings and skin discarded.
raw brown rice and Y2 white enriched parboiled rice.










45



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50

TABLE 8.-A DAY'S FOOD, AS SERVED, IN DIETS MODIFIED TO MEET THE GOALS BUT NOT NECESSARILY THE RDA,1i AND FURTHER MODIFIED TO MEET THE RDA,2 OPTION 1

Meet goals, not necessarily RDA Meet goals
and RDA:
Child, Child, Male, Female, female,
Food 3and unit 6 to 8yr4 9 to11yr' 2to 54 yr 2to 54yr 20Oto54 yr

Skim milk (cup)---------------------- 2.9 3.3 1.7 1.3 1.2
Eggs (number per week)---------------- 2.8 3.7 3.1 4.3 5.3
NM31ure beans or peas, cooked (tables poon)----------------------------- 1.9 2.1 2.0 1.3 1.8
Meat, boned cooked lean (ounce) ----1.3 1.8 2.7 2.2 1.6
Poultry and fish, cooked boned (ounce)--. 1. 1 1. 5 2. 3 1.9 1. 4
Vegetables and fruit (u)- -------2.0 2.5 2.6 2.3 2.5
Cereal, pasta ounces5) ------------- 2.9 3.4 2.7 2.1 3.5
Bread or equivalent in bakery products
(slices) ---------------------------- 7.8 10.1 12.9 8.6 8.0
Margarine, oil (tablespoon)------- 3.4 4. 1 3.6 2.5 2.9
S u gar, sw eets (ta bles poo n).-------------- 6.0 7.0 6.7 4.7 4.7

IRecommended dietary allowance (RDA) plus 5 percent for energy distributed as 30 percent or less from fat, 14 percent or less from protein, 56 percent or more from carbohydrate, and 10 percent or less from sugar other than that found naturally in foods such as milk and fresh fruit. Saturated fat provides 10 percent or less of energy intake and cholesterol .,itale is limited to no more than 300 mg per day plus 5 percent.
2RDA plus 5 percent for vitamin A value, thiamin, riboflavin, niacin, ascorbic acid, calcium, and iron.
The assortment of meats, vetetables, and other groups of foods is based on food consumption of U.S. households in 1965-66.
4 Diet modified to meet the goals also meets the RDA for the 5 vitamins and 2 minerals studied.
5 1 serving is approximately 1 oz of dry cereal.




TABLE 9.-CHANGE IN FOOD CONSUMPTION PATTERNS'I REQUIRED TO MEET THE GOALS AND THE RDA, 2 OPTION 1, WHEN THE USE OF GRAIN PRODUCTS IS HELD AT LEVELS IN THE PATTERNS

[in percent]

Child, Child, Male, Female,
6 to 8 9 tol11 20 to 54 20 to 54
Food group yrs yrs yrs yrs Person 1

Milk, cheese, ice cem---- --------45 46 61 -10 32
-------------------------------------- -41 -33 -32 36 -8
Dry beans and peas, nuts------------------------ 209 221 320 568 353
Meat, poultry, fish --------------------67 -57 -51 -55 -53
Dark-Rreen, deep-yellow veeals--------98 98 123 273 167
C1t us fruit, tomatoes---------------------------- 90 89 110 ill 104
PutAoes------------------------------------ 163 162 207 112 165
Other vegetables, fruit--------------------------- 93 92 115 147 119
Cereal, pasta ---------------------------------- 0 0 0 0 0
F[,ur. mixes---------------------------------- 0 0 0 0 0
Bread -------------------------------------- 0 0 0 0 0
Other bakery products --------------------------- 0 0 0 0 0
oils --oil----------------------------------- 33 27 -31 -37 -18
Sugar, sweets------------------------------ -56 -59 -44 -62 -54

Irood consumption in terms of food groups defined as option 1. Average selections within food groups as used by U.S. households in 1965 66 are assumed except (1) drippings and all separable fat from meat are discarded, and the amount of meats, poultry, and fish are adjusted to Y2~ meat and Y2 poultry and fish; (2) milk and dlaiy products are replaced by their calcium equivalent in skim milk; (3) butter and margarine are replaced by soft margarine, and lard and vegetable, shorteningp are replaced by vegetable oils.
-Recomme nded dietary allowance plus 5 percent for energy, vitamin A value, thiamin, riboflavin, niacin, ascorbic acid, calcium, and iron. Energy intake is distributed as 30 percent or less from fat, 14 percent or less from protein, 56 percent or more from carbohydrate, and 10 percent or less from sugar other than that found naturally in foods such as milk and freshI fruit. Saturated fat provides 10 percent or less of energy intake and cholesterol intake is limited to no more than 304 mg per day plus 5 percent.
['od coinsumrption patterns and modified diets for 14 sex-age categories weighted by the 1975 U.S. population.









TABLE 10.-CHANGE IN 1965-66 FOOD CONSUMPTION PATTERNS REQUIRED TO MEET THE GOALS AND THE RDA
OPTION I1I AND CHANGE IN THE NATIONAL PER CAPITA FOOD SUPPLY FROM 1965 TO 1975
[In percent

Change in Change in
1965-66 food supply
consumption 1965 to
Food to meet goals 1975

Milk -------------------------------------------------------------------- 10 -8
Eggs ------------------------------------------------------------------- -24 -11
Dry beans and peas, nuts---------------------------------------------------- 21 1
Beef, pork, veal, Iamb------------------------------------------------------ -48 7
Poultry, fish --------------------------------------------------- 40 5
Potatoes----------------------------------------------------------------- 27 5
Other vegetables, fruit ------------------------------------------------------ 24 7
Wheat, corn, oats, rice, and other gan--- -----------------69
Butter--------------------------------------- -------------- 2 100 -25
Lard ------------------------------------------------------------------- 2 100 -53
Magain-------------------------------------52 13
Vegetable shortening ------------------------------------------------------ 2 100 23
Oils -------------------------------------------------------------------- 73 44
Sugar, sirups 3-------------------------------------------------------------------------- -32 3

t The 1965-66 food consumption patterns for men, women, and children were modified to meet the goals and the RDA using assumptions defined as option 1, and weighted by the 1975 population.
2 Replaced by margarine and oils, which are higher in polyunsaturated fatty acids.
3 Includes sugar in commercially prepared foods, such as ready-to-eat cereals, canned fruit sirup, and bakery products




TABLE 11.-CHANGE IN FOOD CONSUMPTION PATTERNS REQUIRED TO MEET THE GOALS AND THE RDA,2 OPTION 2
[In percent

Child, 6 Child, 9 Male, 20 Female, 20
Food group to 8yrs to 11 yrs, to 54 yrs to 54 yrs Person3

Milk, cheese, ice cream ------------------------- -12 -10 4 4 1
Eggs ----------------- -----------18 -18 -64 5 -33
Dry beans and peas, nt--- ---------56 58 17 44 35
Meat, poultry, fish---------------------------- -22 -16 -23 -33 -26
Dark-green, deep-yellow vegetables---------------- 19 18 18 53 31
Citrus fruit, toaos-------------16 15 16 21 17
Potatoes ------------------------------------ 26 24 28 17 22
Other vegetables, fruit--------------------------- 16 15 16 26 19
Cereal, pasta -------------------108 102 116 207 129
Flour, mixes---------------------------------- 81 77 92 79 84
Bread------------------- ------------------- 68 65 73 60 64
Other bakery products-------------------------- 5 5 37 -10 13
Fats, oils ----------------------------------- -39 -38 -49 -34 -42
Sugar, sweets----------------------------- -69 -71 -62 -65 -66

I Food consumption in terms of food groups defined as option 2. Average selections within food groups as used by U.S. households in 1965-66 are assumed except (1) drippings and all separable fat from meat are discarded; (2) milk is replaced by 2 percent fat milk; (3) butter is replaced by margarine, and lard is replaced by vegetable shortening.
21Recommended dietary allowance plus 5 percent for energy, vitamin A value, thiamin, riboflavin, niacin, ascorbic acid, calcium and iron. Energy intake is distributed as 30 percent or less from fat 14 percent or less from protein, 56 percent or more from carbohydrate, and 10 percent or less from sugar other than that found naturally in foods such as milk and fresh fruit. Saturated fat provides 10 percent or less of energy intake and cholesterol intake is limited to no more than 300 mg per day plus 5 percent.
3 Food consumption patterns and modified diets for 14 sex-age categories weighted by the 1975 U.S. population.






52

TABLE 12.-CHANGE IN FOOD CONSUMPTION PATTERNS 1 REQUIRED TO MEET THE GOALS AND THE RDA,2 OPTION 3
[In percent]

Child, Child Male, Female,
6 to 8 yr 9 to 11 yr 20 to 54 yr 20 to 54 yr Person 3

Milk, cheese, ice cream -------------------------- -13 -12 -10 3 -0
-15 -15 -65 0 -31
Dry beans and peas, nuts ------------------------ 71 73 88 60 73
Meat, poultry, -32 -26 -26 -37 -33
Dark-green, deep-yellow vegetables--------------- 16 15 17 55 31
Citrus fruit, tomatoes ---------------------------- 13 13 14 18 15
25 24 27 15 21
Other vegetables, fruit --------------------------- 14 13 14 24 17
Cereal, pasta ----------------------------------- 119 114 124 214 141
Flour, 89 86 96 93 94
Bread ----------------------------------------- 75 72 80 67 72
Other bakery products --------------------------- 17 16 21 -12 8
Fats, oils --------------------------------------- -82 -81 -70 -56 -71
Sugar, -71 -73 -59 -65 -66

I Food consumption in terms of food groups defined as option 3. Average selections within food groups as used by U.S. households in 1965-66 are assumed except drippings and 6 of the separable fat from meat are discarded.. .
avin, niacin, ascorbic
Recommended dietary allowance plus 5 percent for energy, vitamin A value, thiamin, ribofl i
acid, calcium, and iron. Energy intake is distributed as 30 percent or less from fat, 14 percent or less from protein, 56 percent or more from carbohydrate, and 10 percent or less from sugar other than that found naturally in foods such as milk and. fresh fruit. Saturated fat provides 10 percent or less of energy intake and cholesterol intake is limited to no more than 300 mg per day plus 5 percent.
3 food consumption patterns and modified diets for 14 sex-age categories weighted by the 1975 U.S. population.




TABLE 13.-CHANGE IN FOOD CONSUMPTION PATTERNS REQUIRED TO MEETTHEGOALSAND THE RDA,' OPTION 42
fin percent

Child Child, Male, Female,
Food group 6 to 8 yr 9 to 11 yr 20 to 54 yr 20 to 54 yr Person I

Milk, cheese, ice cream -------------------------- 26 27 47 30 34
Eggs ------------------------------------------- 17 21 -51 35 -7
Dry beans and peas, nuts ------------------------ 16 23 19 88 39
Meat, poultry, fish ------------------------------- 7 13 6 -29 -6
Dark-green, deep-yellow vegetables --------------- 31 31 43 92 63
Citrus fruit, tomatoes ---------------------------- 32 31 35 49 40
Potatoes --------------------------------------- 34 34 37 41 35
Other vegetables, fruit --------------------------- 31 31 36 56 44
Grain 4 ----------------------------------------- 45 44 54 138 74
Fats, oils --------------------------------------- 91 81 38 -53 22
Sugar, sweets ----------------------------------- -21 -22 8 -15 -10

I Recommended dietary allowance plus 5 percent for energy, vitamin A value, thiamin, riboflavin, niacin, ascorbic acid, t calcium, and iron. Energy intake is distributed as 30 percent or less from fat, 14 percent or less from protein, 56 percent or more from carbohydrate, and 10 percent or less from sugar other than that found naturally in foods such as milk and fresh fruit. Saturated fat provides 10 percent or less of energy intake and cholesterol intake is limited to no more than 300 mg per day plus 5 percent.
food in terms of food groups defined in option 4. Average selections within food groups as used by U.S. households In 196546 are assumed except (1) amounts of meat, poultry and fish are adjusted to J6 good gradif beef rump roast and JJ chicken broiler and all drippings and separable fat from he roast and drippings and skin from the chicken are discarded,
(Z) milk and dairy products are replaced by their calcium equivalent in skim milk, (3) butter and margarine are replaced by soft. margarine, and lard and vegetable shortening are replaced b vegetable oils; (4) grain products are replaced by their grain equivalent in rice-)J raw brown and A white enriched pargiled rice.
Food consumption patterns and modified diets for 14 sex-age categories weighted bl the 1975 U.S. population.
The amount of cereal in the consumption pattern is the grain equivalent of the grain products food groups. Other ingredients in grain products, such as fat and sugar, are excluded from the consumption pattern.









TABLE 14.-CHANGE IN FOOD CONSUMPTION PATTERNS I REQUIRED TO MEET THE GOALS, WITH 12 PERCENT OF
ENERGY FROM PROTEIN (BASED ON DISAPPEARANCE DATA), AND THE RDA,2 OPTION I
fin percent]

Child, Child, Male, Female,
Food group 6 to 8 yr 9 to 11 yr 20 to 54 yr 20 to 54 yr Person 3

Milk, cheese, ice 5 5 6 -9 3
Eggs ------------------------------------------ -43 -39 -40 6 -27
Dry beans and peas, -38 -34 -25 50 -10
Meat, poultry, fish ------------------------------- -63 -58 -55 -71 -61
Dark-green, deep-yellow vegetables--------------- 24 23 23 72 40
Citrus fruit tomatoes ---------------------------- 26 24 24 32 26
Potatoes --------------------------------------- 36 34 36 28 32
Other vegetables, fruit --------------------------- 25 23 23 40 29
Cereal, 99 95 126 291 157
Flour, 81 78 103 89 92
56 54 74 74 64
i Other bakery products --------------------------- 43 40 48 -11 26
Fats, oils --------------------------------------- 68 59 -1 9 17
Sugar, sweets ----------------------------------- -65 -67 -60 -66 -63

I Food consumption in terms of food groups defined as option 1. Average selections within food groups as used by U.S. households in 1965-66 are assumed except (1) drippings and all separable fat from meat are discarded, and the amounts of meats, poultry, and fish are adjusted to 2 meat and Y2 poultry and fish; (2) milk and dairy products are replaced by their calcium equivalent in skim milk; (3) butter and margarine are replaced by soft margarine, and lard and vegetable shorteni ing are replaced by vegetable oils.
2 Recommended dietary allowance plus 5 percent for energy, vitamin A value, thiamin, riboflavin macin, ascorbic acid, calcium, and iron. Energy intake is distributed as 30 percent or less from fat, 12 percent or less from'protein, 58 percent or more from carbohydrate, and 10 percent or less from sugar other than that found naturally in foods such as milk and fresh fruit Saturated fat provides 10 percent or less of energy intake and cholesterol intake is limited to no more than 300 mg per day plus 5 percent.
3 Food consumption patterns and modified diets for 14 sex-age categories weighted by the 1975 U.S. population.





























U.S. OUTLOOK IN
WORLD PERSPECTIVE














THE WORLD FOOD ECONOMY: A DEVELOPED COUNTRY VIEW
(By Geoff Miller, Director, Bureau of Agricultural Economics, Canberra, Australia)


In my remarks to you this evening, I have been asked to take up some of the issues raised in Lynn Daft's paper "From a developed country viewpoint." This is no mean assignment for an Australian. Developed country agriculture is characterized b policies aimed at domestic self-sufficiency in food supplies, and income support for producers. A by-product of these policies is periodic surpluses and deficits. These fluctuations are responsible for much of the instability inworld trade. As a result of unstable markets and access difficulties, many Australian rural industries are contracting despite the abundant supply of resources available for farm productioni.
Even an Australian from an objective and professionally independent an agency as the Bureau of Agricultural Economics, would find it difficult to view the emerging world agricultural situation from "a developed country viewpoint." There are too many conflicts between current practice and economic rationality for me to act as a spokesman for developed country agriculture. But nor would I wish at this Conference to argue a partisan Australian position.
Both the Universal Declaration on the Eradication of Hunger and the recent U.S. Academy of Sciences World Food and Nutrition Study support the proposition that we have the physical resources and knowhow to deal with the world food problem. Many have concluded that all that is needed is the political w ill.
In a sense this conclusion is a correct one. But in a very important sense it is not. In a moment I shall explain this contradiction but let us first break the world food problem up into two parts.
ADEQUACY OF SUPPLIES
One part is the adequacy of world food supplies and the capacity of the world to feed the impoverished and undernourished. The other part, identifiabl-y separate though related, is the question of world foo(f security. rii come back to t6 food securityissue in a moment or two.
The world most certainly has the capacity to feed itself. Malthus was wrong, is -wrong and will remain wrong. Unfortunately his hypothesis will continue to be revisited by pse'u'do intellectual writerspeople seeking a quick way to fame and fortune in the publication world. These people make a brief (even if sometimes intellectually brilliant) stopover in an area too complex to be understood in even an extended and se:riousinvestkyation.
(57)




58

Such writings usually appear at times of temporary food shortage. The unfortunate part about them is that they galvanise public attit tides. so that any increase in the incentive to produce food is seen as a good thing. In fact these periodic surges in food production incentives generate, a few years later, surpluses that disillusion both producers and policyniakers. Thus the seeds for the next shortage are sown.
The 3.8 billion people in the world in 1973 had 21 percent more food per person than the 2.7 billion inhabiting the globe in 1954. During this period food production grew at an average annual rate of 2.8 l)ercent. So we are making progress. The problem with adequacy of food supplies is that if you express these figures on a per capita basis, there was an enormous disparity in the rate of growth in supplies in developed and developing countries. Per capita supplies increased at 1.5 percent in the developed countries, but only 0.4 percent in the developing countries. It is. of course, relevant that most of the difference was attributable to different rates of population growth.
Nevertheless there has been and will continue to be a steady improvement in the overall adequacy of food supplies. The problem is in the distribution of the benefits. This is an extremely important humanitarian problem. It involves not only stimulating the growth in agricultural production in the less developed countries, but stimulating the rate of economic development itself.
(iven the political will to pay, there is no doubt that we could substantially increase the rate of food production growth in the developing.countries. Many of the measures taken in the aftermath of the World Food Conference will certainly assist in dealing with this fundamental long-term problem.
But let us not forget that the problem of human poverty and undernutrition is not just a question of increased food production. It is a process of economic and social transformation of whole nations of people. The political will must indeed be strong.
WORLD FOOD SECURITY
World food security has to do with fluctuations in the availability of sIupl)lies. There I think we are lacking in more than political will. What we have is a world of nation states, or blocs of nation states. each )pursuing its own domestic farmn policies for essentially its own domestic reasons. ZThen the individual surpluses or deficits generated by these policies are left to tlhe world market to accommodate. Countries are like subsistence farmers-they meet their own needs from their own resources until something goes wrong.
I don't think we can legitimately blame individual countries for pursuing the goal of food security through striving for self-sufficiency. Adlequiate food sllp)lies on a reliable basis are something we in the food sirl)lus countriess take for granted. I think the p)remiumthat consumers in ,Western Eirope and Japan pay for food security-basically throughll paying high enough prices to ensure self-sufficiency-is as iu,,ich a measure of failure of the international commodity trading systemti as it is a reflection of the political power of their producers. If consumers in these col entries (could be shown an alternative way to reliable and secure food suil)lpplies, the power of the producer lobby \oIuld he consi(derabl)V weakened.




59

If developed food, deficit countries are not confident that they can obtain food security through trade, small wonder the developing countries feel disillusioned. Countries responsible for abrupt shifts in demand and supply in world markets pay no price for the costs they impose on others. Countries who are, regular and stable suppliers or reliable buyers receive no premium. Indeed, our residual world markets for agricultural products are as good an example of market failure as the failure, of our domestic price mechanisms to charge for the externalities involved *in pollution and environmental degradation.
If mankind is to obtain the enormous benefits potentially available from increased specialisation and trade in agricultural products, new economic institutions will be needed. By that I do not mean new international bureaucracies. Of course, efforts, are currently being made, through the, multilateral trade negotiations, to break down some of the barriers to international trade in farm producers. Efforts are also being made to regulate trade in sugar and grains through the negotiation of international commodity agreements.
My own view is that these, efforts are more an expression of political Will, galvunised by the food crisis of 1973, than of the, realisation of new insights into how to regulate and stabilize trade. The commodity agreements are a worthwhile endeavour, but unfortunately they are doomed to a difficult future. Agreements so far negotiated, or advanced as a basis for negotiation, are characterised by many of the same rigidities that charucterise most countries' domestic farm policies.
Efforts are being made to fix prices, markets shares and stock levels at. arbitrary historically predetermined levels, rather than to provide a frame-%vork within which the dynamic economic forces of the world food economy can express themselves. Even bilateral agreements of this type encounter difficulties, such as those recently experienced in relation to the pipcing provisions of the sugar agreement between Australia and Japan. In u multilateral framework, the difficulties are greatly compounded.
In world commodity markets the individual decisionmaking unit is a country or large multinational corporation. Subject to some qualification, existing market mechanisms work reasonably well in short term (within crop year) pricing. But they work very poorly at the longer term end. What is needed is a dynamic institutional framework within which contracts can be negotiated and prices established with sufficient reliability to encourage major long-term investment in productive capacity and storage.
The longer term price mechanism needs to provide the incentive for appropriate stocks and trade volumes to be established and adjusted by the individual decisionmaking units (producing and consuming countries) rather than set these variables at historical or arbitrary levels. Volumes of trade need to be "normalised" without being straightjacketed. Countries who use the world market as a dumping ground for surpluses generated by too rigid domestic policies, or as a source of supplies to substitute for inadequate local storage, must be given incentives to desist.
Efforts are being made to integrate some dynamic elements into commodity agreements and I have no doubt that emerging agreements

98-723-77-5





60

have the potential to surpass their predecessors. Nevertheless if we are to obtain more permanent good security through these arrangements, many more rigidities are yet to be removed from both the structure of domestic price policies and the format of international inst.itutionala-rrangements.
Let me conclude, Mr. Chairman, by saying that future world food security requires something more than political will, statesmanship and negotiating skills. These things are necessary but not sufficient. A more concerted and fundamental scientific endeavour in the, policy developinent field is also necessary. The issues are, extremely complex and solutions will not be unearthed quickly or simply. However, I believe that we have, now developed some useful ideas on where to begin.
Without underestimating the difficulties, I hope that the work being. embarked upon will yield dividends in the next few years. In the meantime, world food security must remain heavily dependent on selfsufficiency in individual countries; on the stocks accumulated largely as a bv e -1
product of domestic agricultural policies; on the still too rigict fabric of such international regulatory mechanisms as are negotiable; and on a liberal dose of good luck! This is unsatisfactory for hungry people, for efficient farmers in food exporting countries and ultimately for mankind.












THE U.S. ECONOMIC OUTLOOK IN WORLD PERSPECTIVE
(By Lyle E. Gramley, Member, Council of Economic Advisers)

I'm delighted to be here this morning to talk with you briefly about the outlook for economic activity in the United States.
Pd like to begin by reviewing some of the things that have been happening in the U.S. economy during the course of 1977 by way of providing a backdrop for probable developments next year. We got off to a very fa-t start this year in terms of the gTowth rate of econoimc activIty. During the first half, our real gross national product increased at an annual rate of 63 percent. That large increase refleeted, in part, a rise in inventory investment from a very low level at the close of 1976 to approximately a normal level in relation to gross national product by the middle of this year. That source of stimulus is of necessity of a temporary character. Therefore, some slowdown in the pace of growth appeared to ahnost all forecasters inevitable.
The actual slowdown that has occurred, however, has exceeded our expectations in terms of both duration and magnitude. During the third quarter, the real gross national product increased at a rate of only 3.8 percent, a rate of growth approximately in line with our longrun potential. This slowdown in the rate of expansion was reflected in a number of other measures as well. For example, during the 3 months from June to September. industrial production in our country went up at an annual rate of approximately 3 percent. That compares with a rate of increase from December to June of approximately 7 percent. And the unemployment rate has been approximately flat at 7 percent since last April. Our economy has been growing fast enough to keep the unemployment rate from rising and absorb new entrants into the labor force, but not enough to make progress of the kind we want in getting the unemployment rate down.
What, besides the slowdown in inventory investment, explains why our economy has been behaving relatively sluggishly recently? I think there are several elements. First. the pace of consumer spending has been relatively sluggish since the first quarter. In real terms, personal consumption expenditures have gono up much less than disposable income. Or to put it another wav. the rate of personal savings relative to disposable income has risen quite sharply. This would be a worrisome development if it reflected a basic weakening of consumer spending propensities. Fortunately. however, this does not appear to be the case. For example. attitudinal surveys taken by the Michigan Survey Research Center or the Conference Board indicate that consumer attitudes have deteriorated a little during the course of the spring and the summer but indices of confidence are about as high this fall as they were last spring. And the expansion of con(61)







sumer installment credit and the pace of housing and auto sales confirm that consumers are still buying durable goods relatively freely. Thev are still increasing their purchases of homes. They are still expanding their installment debts.
What then accounts for the rise in the personal savings rate and the associated slowdown in consumer spending? It is mainly the fact that during the first 2 years of the recovery the savings rate went down to unusually low levels. It was driven down even further by special factors during the first quarter of this year, such as the cold weather which generated large fuel bills. During that quarter, the rate of personal savings relative to disposable income was just barely over 4 percent, the lowest figure for any quarter since 1951. Some rebound in that savings rate was therefore inevitable. Consumer spending simply had to slow down.
A second factor in the sluggish pace of economic activity has been the response of businesses to the weakening pace of consumer spending. In the past, businesses typically have waited awhile to appraise new (developing trends in consumer spending rather than reacting immediately. Consequently, a reduced pace of consumer spending has typically been reflected in a rise in the rate of inventory investmentwhich has tended to buffer rates of production and the level of employment from the effects of changes in the pace of consumer spending. That did not happen last year when consumer spending slowed. And it did not happen again this year. Businesses are pursuing extremely I cautious inventory policies and they have begun to make their adjustments in production immediately upon perceiving some change in the pace of consumer spending. This has some good aspects and some bad aspects. The bad aspects are that changes in the pace of consumer spending are reflected strongly and quickly in production, and therefore, in employment, in consumer incomes, and in buying power. This tends to magnify the initial response of consumer spending.
The good aspect is that businesses this year, as last, have kept their invent ory-to-sales ratios in good order. An undesired buildup of inventories, has not occurred. Inventories are still relatively lean so that when a pickup in consumer spending begins again, one may anticipate that,, as we saw in the late months of 1976, a prompt rise in production and employment in response to the improved pace of consumer sales.
A fiird factor in the relatively disappointing performance of our econyin the past couple of quarters has been the continuing drag exerted by our foreign trade position. In the third quarter of 1976, we enjoyed a surplus of net exports of goods and services of about $8 billion. By the third quarter of this year, our trade position had switched markedly. Net exports of goods and services, as we measure Ithem, in the gross national product accounts, were in deficit to the extent of about~ $12 billion. That switch from an $8 billion surplus to a $12 billion deficit is a drain of $20 billion of income tbat goes abroad. It acts, in effect, like an increase in taxes of $20 billion in terms of its t fect s on consummer purchasing power.
Ilcreasons for this continued movement towards deficit of our intern-ational trade position are quite well known. A major factor is tliat oil imports are still very large. Another ipratfactor, how( eer h)as been the very slggs pace four exotrfetn the dis





63

appointing recovery abroad. In general, most industrialized countries have experienced even greater disappointment this year with the performance of their economies than we have. In particular, the pace of business investment has been sluggish worldwide and since we tend to be a heavy exporter of capital goods, that has taken its toll on our export position.
A fourth factor in the performance of the economy this year has been some weakening in the rise of business investment. For example, between the second and third quarters, production of business equipment rose at an annual rate of only about 7 percent. That's about half the rate of increase that occurred from the fourth quarter of 1976 to the second quarter of this year.
More worrisome even than the slowdown in the actual pace of business fixed investment has been some evidence that perhaps businesses are planning more cautiously for the future than they were earlier this year. Orders for nondefense capital goods have been behaving erratically in recent months but on balance they were a little lower in the third quarter of this year, in current dollar terms, than they were in the second quarter. In real terms-after adjusting for price changes orders were down significantly. Moreover, private surveys of businesss spending plans for next year suggest that the rise in business fixed investment outlays during 1978 might be somew hat sinaller than it was in 1977.
. Reasons for this hesitancy in the prospective pace of business fixed investment are not fully evident. It may be that businesses are, uncertain because of the delay of congressional passage of the energy program, particularly those businesses whose investments are critically related to the energy package. It maybe, also, that businesses have become more cautious because they fear the recovery could be faltering given the slowdown in the pace of consumer spending. If those two factors are important, one can make a reasonable case that the hesitancy in business fixed investment planning is more likely to reflect delays or postponement of spending programs than cancellations. That would suggest that we are likely to see some renewed strength building up over the course of 1978. C:7
We., at the Council of.Economic Advisers, are still reasonably confident that activity is Loin!T to pick up soon and that a better growth rate of economic activity will emerge in statistics of the fourth quarter, for a number of reasons.
First, the stimulus programs, introduced earlier this year by the administration and passed by the Congress, are gathering strength. They will be building up to peak force in the early part of 1978. They are, gathering momentum now, will be adding to disposable income in the future, and will help to strengthen the growth of employment and consumer purchasing power.
Second, other governmental expenditures are also rising, particularly defense purchases. The advance indicators of defense purchases began to show strength around the middle, of 1976. Actual purchases by the Federal Government began to rise in the, second quarter; they showed another good growth in the third quarter, and we anticipate further expansion in the quarters ahead. The Federal pay raise is also adding sizably to disposable income this fall.





64

Third, the personal saving rate has risen a good deal from its low point at the first of this year. It's now back to a more normal level so that we can reasonably expect that as disposable income rises, personal consumption expenditures will begin to move up again. And with inventories relatively lean, we should see translation of rising consumer spending into increases in production and employment relatively soon.
We can't be sure when the pickup will occur, but recent monthly statistics are consistent with the view that an upturn is fairly close at hand. New orders for durable goods have been rising more strongly recently. The aggregate of hours worked began to move up in September and continued to rise in October. The most heartening sign is that recent figures on retail sales indicate a strengthening trend during the course of the summer months in consumer spending. October retail sales figures were released yesterday. They showed that in the month of October. we had an increase about 13/A percent in total retail sales. From June to October, retail sales rose 12 percent at an annual rate. After allowance for the probable rise of prices, retail sales advanced 5 to 6 percent, a much stronger rate than we have seen since March.
Let me talk just a little bit about price developments thus far in 1977 and then turn to the outlook for 1978. We've had some rather wide variations in the rate of price increase overall this year, but they have been largely due to developments affecting food prices. I would be carrying coals to Newcastle if I tried to tell this group what's been happening to food prices and why, and so I won't try. But let me mention that the food price situation has been extremely important in terms of the overall behavior of the price indexes. For example, the total of consumer prices during the first half of this year rose at an a nnual rate of 9 percent, but during the third quarter, with food prices at retail rising much more moderately, the consumer price index overall rose at an annual rate of only 4 percent. Not all of that improvement was due to food prices, but a good part of it was. We did, fortunately, see some moderation in components of consumer prices other than food-nonfood commodities and. to some degree, services.
Abstracting from the volatile movements of food and energy prices, however, the underlying inflation rate this year is still hanging in the 6 to 61./ percent range. For example, in September consumer prices excluding food and fuel were 6.1 percent above the year earlier figure. And wholesale prices of industrial commodities, excluding energy items, were 5.9 percent higher in October than a year earlier.
Wage rate increases have also remained about where. they were a year ago-at about 7 percent. Nonwage labor costs have been rising somewhat faster than wage rates, so that total compensation per hour worked is rising in the range of 8 to 81/2 percent. That means with long-term growth of productivity around 2 percent, the underlying trond of industrial costs is in the 6 to 61,/. percent range.
That-, of course, is our underlying rate of inflation-6 to 61/, percent. And it has remained there for the past 2 years. There's been no material change in that rate since the middle of 1975. Inability to make progress in reducing the underlying rate of inflation has been a major disappointment. But, at least one can sav that the rate is unlikely to change in the near future. In all probability. 1978 will witness a conti'lmation of an underlying rate of inflation in the range of 6 to 61/2 ieroent.





65

Let me j ust turn briefly to the outlook for 1978. The last official forecast put out by the administration was released in July. 'We will not release another official forecast until the one that accompanies the fiscal 1979 budget in January. But our tentative thinking at the Council of Economic Advisers is that we should be able to achieve a real growth rate of somewhere in the range of 4 / to 5 percent for 1978, measured year over year. Such a growth rate, we believe, could be achieved with no new fiscal stimulants other than what the administration has announced up to this time. That would still mean a sizable increase in Federal spending between fiscal year 1977 and fiscal 19 78. .The current projection of Federal outlays for fiscal 1978 implies a rise in total outlays of between 13 and 14 percent. A large part of that increase reflects the stimulus programs introduced earlier in 19 77", and they will be reaching their maximum potential for stimulating the economy during the first half of calendar 1978. Thereafter, the thrust from those programs will be leveling out.
Our expectations of a 41/2 to 5 percent growth rate also assume a relatively accommodative monetary policy. 'We recognize that shortterm interest rates may rise somewhat further, but we anticipate a relatively moderate rise. And if that moderate rise occurs, long-term interest rates will probably remain relatively stable as long as the rate of inflation stays well behaved.
Let me talk just briefly about some of the major sectors of the economy and, what. we might expect from them during the. course of 1978beginning first with those from which we cannot realistically expect much stimulus.
Consumer spending is, of course, the largest element of our gross national product. Consumers led the recovery for the first 2 years. We can't expect 'that to continue. The savin gs rate, though higher than it -was at the beginning of this year, is still below what one might consider to be a normial rate. It's'at about 51/ percent. A normal rate would be in the range, of 6 percent or so. We, anticipate, therefore, the possibility of some further rise in the saving rate, so that personal consumption expenditures probably will grow a, little less rapidly than disposable income. A rise in real consumer spending in the range of 4 to 41 percent seems reasonable.
The housing industry has also b)een a major source of stimulus during the past~ couple of years. We can't expect that to continue. Single family starts have surpassed earlier peaks, backlogs of demand have been filled. prices of houses are rising very rapidly, interest rates have also moved up somewhat. We. probably will see a moderate further rise in residential construction in the next several quarters, but the thrust from that sector -will dimiinish as 1.978 goes on.
For net exports, fortunately, we do not expect the drag to continue. We do not expect our net export balance to worsen, but we expect it to remain at some-where around the. 1977 level. We'll probably not see much rise in our oil imports next year. 'We don't have to rebuild stocks as we did this year following a~ cold winter. We do have some Alaskan oil production coming in. But, unfortunately, the outlook for our nonagricultural exports is still not very favorable. A number of industrial countries abroad have, announced stimulative actions that jare likely to result in an improvement in activity during 1978 (relative to 197 7). but it will be some time yet before a capital goods boom






66

develops around the industrial world that would give real life to our exports.
The sectors from which we can expect stimulus next year are two in number. First, governmental spending and second, business fixed investment. For governmental spending, as I indicated, the stimulus programs will be building up. Also, State and local government finances are in better shape now than they were a year or two ago. We would anticipate a rise of governmental spending next year somewhere between 5 and 6 percent in real terms.
If we're going to ge the kind of growth we want, however, we've got to have a very strong rise in business fixed investment. Business capital outlays will need to rise somewhere in the range of 7 to 9 percent in real terms in 1978 to achieve the increase of 41/9. to 5 percent in real gross national product that we're looking for.
Until the signs of hesitancy that I -mentioned earlier became evident, a growth rate of 7 to 9 percent in real business fixed investment looked quite feasible. After all, profits had been rising through the recovery, the financial condition of businesses was and still is quite strong, and rates of capacity utilization have now risen to a point where in the past that had signaled to businesses the need to begin expanding their investment planning. A growth rate of 7 to 9 percent still seems realizable if some of the uncertainties we've seen recently begin to disappear, as we think they will. One helpful factor, I believe, will be the fact that the President will announce at some time fairly soon, after the energy program and Social Security programs have gone through Congress, a tax package that will help to strengthen business fixed investment. Whether or not there will be any direct investment incentives in such a package, such as an increase in the investment tax credit or some accelerated depreciation, is not clear. What is clear is that there will be measures that will be helpful in terms of business fixed investment.
Our view of the outlook for 1978 at the Council of Economic Advisers is a fairly positive one. We see no major imbalances in the recovery process to date. We believe that financial markets, though they are somewhat tighter than they were last spring, remain basically conducive to recovery. With inflation not likely to accelerate, some of the fears of a renewed inflationary outbreak have been allayed. We see no bottlenecks or shortage problems likely to develop to inhibit recovery. And so we think recovery should continue at a reasonably good pace next year.
We recognize, however, that others are somewhat less optimistic than we are. In particular, some forecasters are concerned about the possibility that the pace of economic expansion may slow as 1978 unfolds to an unq ceeptably low rate by the end of the year.
The administration is cognizant of this potential problem. Over the next few months, the outlook for 1978 will be reassessed. If it appears that we are not moving up during the fourth quarter with the vigor we anticipate, or that the outlook for capital spending is weaker than we think it will be, additional fiscal actions may be needed to reach our growth objectives for next year. Those actions could be most. readily incorporated into the President's budget for fiscal year 1979.











TRENDS IN U.S.S.R. AGRICULTURE
(By Dr. Boris A. Runov, Vice-Minister of Agriculture, U.S.S.R.)


Let me tell you briefly about the agriculture of the Soviet U nion.
It should be recalled that the agriculture of Tsarist Russia was one of the most backward in Europe. Almost half of all lands were in the hands of a small number of landlords. Thirty percent of all farms had no horses. One-third of the peasant farms did not even have wooden ploughs. The agriculture of prerevolutionary Russia was so backward that starvation was the common phenomenon.
The very day after the victory of the socialist revolution, the decree of the land was accepted. It was the first time in history that Soviet leadership had solved the land problem in the interests of working peasants. As a result of the victory of the great October Revolution, peasants received over 375 million acres of land.
Our country has passed a long and difficult way. Along the way it faced the struggle with foreign invasion. The Soviet people accomplished a great & ed in defeating German fascism in heavy battle.
Over the past 60 years the population of the U.S.S.R. has grown 1.7 times. The gross output of agricultural production has increased
4.4 times.
Now there are about 28,000 collective and about 20,000 state farms. These are large, economical strong farms. Collective and state farms account for about 90 perceift of total commercial production.
The average size of collective farms is 6,500 hectares. The average size of state f arms is 19 000 hectares.
There are over 2.5 million tractors and 1.5 million trucks on the farms. Soviet agriculture now consumes annually 80 billion kilowatt/ hours of electricity, almost twice the amount consumed in the country before 1940.
Our objectives are:
First: To provide the country with a steady supply of food and agricultural raw material and to have sufficient reserves of agricultural products;
Second: To make the everyday social and cultural conditions of village and town more equal to each other.
Our most important objective is to increase grain production. The average annual gross production of grain during the 10th 5-year plan (1976-80) should be increased by 35-40 million tons, compared with the 9th 5-year plan (1971-75).
Meat production is planned to be increased at least up to 17.3 million tong; milk, up to 100 million tons; and er s, up to 67 billion/ year. During the current 5-year plan period our a.ariculture will receive over 170 billion rubles or about 27 percent of total capital investments in the national economy.
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WVhat are the resources for increasing of our agricultural production?
Our main resources are placed in fields: new high-yielding varieties, broad application of fertilizers, using minimum tillage, land reclamation. In animal husbandry: improvement of animal breeding, increasing livestock population, and most importantly, improvements in the quality and quantity of our feeding rations.
In the current 5-year plan. agriculture will receive 1.82 million tractors, 1.35 million trucks, 3S.000 grain harvesters, and 1.5 times more mineral fertilizers than in the previous 5-year period.
The development of specialization and concentration of agricultural production on the basis of interfarm cooperation and agroindustrial integration will play a great role in increasing our efficiency.
You might know that our specialized hog production operations in unit capacity are up to 100,0'00 head. and our milking operations are up to 4,000 cows.
Incomes of collective farmers in 5 years will grow by 24 to 27 percent. There will be considerable growth in funds for public needs, which will be used for medical treatment, education, improvement of professional skills, and pensions.
This year, which is far from being the best or even an average one in terms of weather conditions, the U.S.S.R. produced 194 million tons of grain, about 15 million tons of meat, and 8.4 million tons of cotton.
Making a speech at the Jubilee Meeting on the occasion of the 60th anniversary of the October Revolution. Leonid Brezhnev said that our agrarian policy is oriented not only to current needs but also to the future. We are trying to find the solution to the food problem, to satisfy the growing demands of the country, and we are doing this under conditions when the population and its requirements are increasing, but the acreages are the same.
That is why we are planning accelerated, intensive development of all agricultural sectors in the future.












W ORLD AND U.S. AGRICULTURAL OUTLOOK
(By J. Dawson Ahalt,* Acting Chairman, World Food and Agricultural Outlook and Situation Board, USDA)


Farmers, consumers, businessmen, and policymakers have become Increasingly aware in recent years of the strong interrelationships between tl ited States and global food and agricultural developments. Indeed, these ties were dramatized in the early 1970's. All of us in this room know they have been emphasized again this year.
To improve our understanding of United States and' international developments, the Department. has strengthened and integrated its outlook work in domestic and international areas. A specific te taken this year was the creation of the World Food and Agricultural u and Situation Board to act as the Department's focal point for commodity outlook situation information. In this role the Board reviews and clears all domestic and international economic commodity intelligence produced by the various agencies in the Department relating to the food and agricultural sector. The goal is to help insure that the public is getting the best possible outlook information given the resources available.
This year the scope of the Outlook Conference has been broadened two ways. First, we have tried to integrate domestic and international developments more clearly than in the past. Second, we have structured the program to bring more closely together agricultural and food issues, because they too cannot be viewed independently. We hope this new slant will strengthen our ability to analyze and 'present the outlook.
TH SETMNG
Global supplies of food and other farm products continued abundant for the coming season for the second consecutive year. Big supplies of grains and increased CrUPS of oilseeds, sugar crops, coffee gild cotton have resulted in sharp declines over the past year in world prices of these crops.
Larger food supplies are virNally assured for most areas of the, world, despite the recently announced sharp drop in the 1977 Soviet grain crop estimate and some recent deterioration in crop prospects in Canada and Australia. Although food supplies are generally abundant. they are short in parts of Southeast Asia, Africa's Western Sabel, Afghanistan, and Ethiopia.
Bigger world supplies of grains, oilseed, and meals have, resulted in severely depressed prices and reduced returns to farmers. Yet people. in manv parts of the world have inadequate diets because of limited
*The author appreciates the helpful assistance In preparing this paper from members of the Economic Research Service, the Foreign Agricultural Service, and the World Board.
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70

food supplies and high prices which most potential buyers living in abject poverty cannot afford.
Some of the major issues bearing on the agricultural outlook and prospective returns for U.S. farmers and for farmers in most food e sportingg nations center around the access to and prosperity in foreign markets. Among the developed nations, which include the major exporters as well as major markets for food, trade barriers, and domestic policies affecting trade, prices, and returns to producers effectively limit the flow of world trade in grains, soybean meal, meats, and dairy products. As a result, high and relatively stable prices in some major markets are unable to adjust to changing world supply/demand conditions usually brought on by unpredictable fluctuations in world weather and growing conditions. Since supply variations usually bring sudden and sharp changes in prices and stocks, those markets which remain open in the world must absorb the wide price instability aggravated by the unresponsiveness of some large markets which are essentially insulated by domestic price policies and barriers to trade. Because of this whiplash effect, mainly on the open markets, although other World markets are affected as well, many nations are examining domestic and trade policies designed to counter these effects. Accordingly, there is interest in reducing barriers to trade, development of trade agreements, accumulation of international food reserves. and domestic farm programs that will help to iron out the peaks and valleys in price fluctuations, improve world food security, and at the same.time strengthen returns to farmers.
Equally complex, and perhaps less understood, are efforts to expand economic activity and food production in the developing countries. Both internal programs and external aid financial development activities need to be carefully coordinated with policies in the developed nations in order to generally improve nutrition levels and provide more stability in food and agricultural markets.

THE WORLD PICTURE
F irt~ a look at the demand side for the coming year. Worldwide economic, activity has slowed in recent months. However growth is projectedl to average in the 4 to 41/2 percent, zone for the developed nations. Weakness is also expected in some developing nations in the latter half of 1.978. Although a continued moderate rate of investment in plant and equipment~ is expected into 1978 in the United States, prospective growth in domestic markets in other countries appears to he short of that needed to generate incentives for increased investment spending in early 1.978. The combination of sluggish capital investment, low iew('lq of industrial activity, and rising costs and prices have continued to keep unemployment at high levels as well as constrain growth in consumer demand in many developed countries. Moreover, increases in wVorld trnde could slow in 1978, barring some stimulus, to a rate of perhaps 5 or 6 percent compared with an increase this year of 8.5 percent. However, programs to stimulate activity in developed nations Inay lead to increases in consumer demand and capital investment ag well ,is increase the risks of accelerating inflation. Thus, fear of inflat ion remains a key impediment to expansionary policies.







71

Following last year's record world grain crops and an enormous buildup in stocks, it now appears that global production of wheat and coarse grains in 1977 will likely total some 3 or 4 percent below the 1.1 billion tons estimated for last year. The decline stems mainly from an estimated drop of more than 30 million tons in the U.S.S.R. Smaller declines are indicated for Canada, Australia, Argentina, Thailand, and Brazil. Most of the indicated decline is due to a cut of about 71/ percent in wheat production although the coarse grain crop also is expected to drop around 2 percent below the 1976 crop. However, it is still early in the season, especially for Southern Hemisphere crops, and these estimates should be interpreted with a considerable band of uncertainty about them.


WORLD GRAIN PRODUCTION, CONSUMPTION
AND CARRY-OVER STOCKS10 (Actual values)
HL METRIC TONS
1500

14001Sokamuain


1300


1200- PRODUCTION oStock draw down


1100 CONSUMPTION


100


900


1960/61 65/66 70/71 75/76 80/81
250


200- Wordd
Cayie
Stocks
150.





100



1960/81 65/66 70/71 75/76 80/81
ICLUDES WHEAT. RICE (ROUGH) AND MAJOR M40 MINOR COARSE GRAINS
USDA, NOVEMBER 1977






72

Food use of grains may increase only modestly-around 1 percentbut with big supplies of feed grains as well as relatively low prices and growing livestock output in many developed countries, world feed use will increase. The biggest increase is indicated for North America where feed grain supplies are large. Gains are also expected in areas such as Europe and Japan where grain prices play a less important role in allocating grain supplies.
With modest gains in utilization, global carryover stocks of wheat and coarse grain are now indicated some 4 to 6 million tons below the relatively large 169 million ton carry-in. A small increase is indicated for coarse grain stocks, but it now appears the wheat carryover may run 10 to 15 million tons below the estimated carry-in stocks of 97 million metric tons. Unlike the rest of the world, stocks will continue to buildup in the United States, possibly by around 15 million tons mostly in coarse grains. But stocks in the rest of the world will be smaller perhaps by around 20 to 25 million tons. By the close of the 1977-78 marketing year, U.S. grain (wheat and coarse grain) stocks may approximate 75 million tons or nearly half of the world's carryover. Such stocks would represent about 7 percent of projected world grain utilization, the highest ratio since 1971-72. In 1974-75, U.S. grain stocks were only about 2.7 percent of world use.
Trade estimates for wheat and coarse grain have been lifted in recent days reflecting the indicated drop in the Soviet crop and increased import requirements. U.S. farmers who have the bulk of the world grain available for shipping at this point in the season will supply much of the expected gain in world trade. The estimated gain in world trade will likely come mainly from stepped up movements of wheat.

WORLD GRAIN TRADE WORLD CARRYOVER STOCKS
MILLION
METRIC TONS OF WHEAT AND COARSE GRAIN
L MIL METRIC TONS

1010




i19W61i i1i /64 1970M 97 i i'W67 0 '72M ,
Ul" PIOV 1977 U A NQ 8l 240-,7"

World rice crop prospects in 1977-78 enhance the global grain supply picture by offsetting part of the decline indicated for other grains. A good monsoon over most of the Far East helped to produce a near record rice harvest.
World output of oilseeds is expected to be record large in 1977-78, up 12 percent from last year. World oilseed meal production for 1978 is now forecast at about 78 million tons (soybean meal equivalent), up It percent f rom last season. The expected record U.S. soybean crop is largely responsible (accounting for 43 percent of global output). (ains are also likely for soybeans in Brazil and Arg'entina, rapeseed in Canada, and sunflower seed in the U.S.S.R. and South Africa. Fishmeal supplies in 1978 are uncertain after the precipitous decline indi-






73

cated for 1977. Demand for protein meals is expected to rise in both Western Europe and Japan as feeding of hogs and poultry continues to grow. The U.S.S.R. is projected to take about 1 million tons of U.S. soybeans.

1976 PER CAPITA MEAT CONSUMPTION
IN KILOGRAMS CARCASS BASIS
WORLD PRODUCTION, CONSUMPTION. AND STOCKS KILOGRAMS OF OIL AND FISH MEALS. 1960-1978 120
r-,IL METRIC TONS
900


Go- Stock
PRODUCTrION
so 60 -SHEEP
PORK
4L .--EEF
30 POULTRY
1960 65 70 75 so FISH
94&UMS S3VJ D "%I'.. M ~ CO-CMOIEU M APESE M C1AM PALM -E'* 4S3^ A a,, So7y az-EAP. &LASS

U.S. E.C. U SS.R. JAPAN

Forecasts of world oil production (vegetable, animal, and marine oils and fats) indicate an output of about 53 million tons, 5 million tons above 1976's reduced volume and about 3.5 million above the 1976 record. Production gains are indicated for soybeans, palm, cottonseed, sunflower, rapeseed, and olive oil. the United States will account for about one-third of the increase.
World meat production is projected to increase only moderately in 1977 compared with the sharp increases in recent years. Meat production (red meat and poultry) in the key commercial markets of the world-the United States, Canada, EC. and Japan-is estimated at 46.4 million tons for 1977, up about 1 percent from 1976. Output of red meats in these commercial markets is expected to increase fractionally, while poultry output is projected to increase by 3 percent. For the red meats, a further decline in beef and veal supplies will be more than offset by gains for pork.
The major uncertainty relating to next year's red meat production centers around the cattle cycle. If herd liquidation in the United States and Australia begins to bottom out by mid- to late-1978, the turnaround and some withholding of breeding stock will bring a further decline in beef and veal output in 1978. However, such a decline will likely be offset by increases in production of pork and poultry.
Turning to the current world dairy situation, the surplus continues. Milk production for 1977 in 36 major producing countries will set another record at 395 million metric tons, up 2 percent from 1976. A 1-percent rise in fluid milk consumption was not large enough to absorb the increase in production. This has led to a shift of more milk into manufacturing uses. Cheese and butter production are running much larger, while nonfat dry milk (NFDM) output is expected to hold steady. World consumption of cheese continues to grow more rapidly than butter and NFDM. Hence, global butter stocks by the end of the






74
year are expected to be up 24 percent. While stocks of some manufactured dairy products are expected to decline, stocks of both butter and NFDM are becoming burdensome in most major producing countries.
World sugar stocks have increased greatly as the result of a record sugar crop in 1976-77 that substantially outpaced consumption. Prospects for another record crop are indicated for 1977-78, with production increases in Brazil, Cuba, France, and the U.S.S.R. The Philippines and the United States reduced planted area as well as the outturn. Thus, the near-term outlook is for world raw sugar prices to remain at relatively low levels, although prices could strengthen over the long term.
The U.N. Sugar Conference, in which the United States was a participant, adopted on October 7 on an ad referendum basis, a new International Sugar Agreement which will rely on a combination of export quotas and stock accumulation and release of stocks to defend a 'price ran cre of 11 to 21 cents per pound. The agreement, which is planned to go into force provisionally on January 1, 1978, aims at holding intervention to a minimum when prices are around the middle of the agreed price range.
Current prospects for an increase in world coffee supplies in 1977-78, coupled with a decline in net import demand, should lead to some further decline in coffee prices. Present prices for green coffee of $1.65 to $1.80 a pound, New York, compare with record highs in excess of $3.30 in April. Under the new International Coffee Agreement of 1976 of which the United States is a member, export quotas are the main instrument for stabilizing prices when supplies are in surplus. World prices are likely to remain above export quota trigger levels for at least another year or more, unless the ICO Coune11 revises present price provisions of the agreement.
A modest rise in world demand for cotton in 1977-78 is not expected to offset a 10-percent increase in world cotton output of 63.7 million bales (480 pounds), so that world stocks should rebuild -following 2 successive years of large drawdowns. Cotton acreage may be up about 6 percent, reflecting the response to strong prices early in 1977 by Northern Hemisphere producers; Southern Hemisphere producers may not increase acreage because prices had declined by their later planting time. Cotton prices have become more competitive with manmade fiber prices, which could stimulate cotton consumption in the textile market which continued depressed in early 1977-78.
U.S. SCENE
We have been discussing the world food and acri-icultural outlook. Now let's look at matters at home. The U.S. agricultural plant is huge. This Nation accounts for about a fifth of the globe's food production., We produce a seventh of all the wheat., a fifth of the cotton, a fourth of the feedgrains and well over 40 percent of the soybeans. Keep in mind that only 5 percent of the world's population resides in the United States.
When we, look at world trade we see that U.S. exports dominate many world markets. U.S. wheat exports this year will account for about 40 percent of the world wheat trade. U.S. feedgrain exports will






75

run about 60.percent of the total, while U.S. soybean exports capture about half of world exports. The U.S., share of the world's cotton trade is a bout 25 percent.
The world food and agriculture picture has changed during the past couple of years-crop production has been large and there has been a substantial rebuilding of stocks. This, too, has been the U.S. pattern. Farm output this season is up more than 3 percent from last year and over a 10th from 1974. Output gains reflect expanded acreage, higher yields and an upswing in slaughter of meat animals, dairy products, and poultry and eggs. If weather patterns are favorable U.S. farm output will continue large in 1978. Production of livestock products will likely remain large as relatively low feed costs help encourage expanded production of fed beef, pork, poultry, and milk. Crop output in 1978 however, is difficult to forecast at this early stage. Weather, of course, is always a dominant feature in the crop picture. Price expectations and relationships among crops as well as Government programs are also important. Subsoil moisture has been plentiful in the Midwest this fall and unless weather patterns turn unfavorable, crop output should continue large in 1978.
Expanded farm output this year has brought depressed farm prices. Prices received by farmers will run about 4 or 5 percent lower. Depressed crop prices account for most of this decline. Next year, if export markets hold up, even with continued large crop output and some gain in livestock production, farm prices should hold near 1977 levels--expected lower average crop prices may be nearly offset by higher prices for livestock and products.
*Let's look at some of the major commodity developments for 1978: Crop production is indicated record large in 1977. Timely rains this summer in the Corn Belt offset poor subsoil moisture conditions during the early growing season. However, field crops were hard hit by drought in the' Southeast. But even though yields were mediocre in some areas, large crops are indicated for grains, oilseeds, and cotton.
The feed grain crop is a record in 1977-201 million metric tons, or 5 percent above 1976. The corn crop is breaking a record for the third year in a row. Although domestic use and exports o~f feed grains have been relatively large in recent years, production has gone up faster and stocks have mounted, especially the past two seasons. Wheat acreage in 1978 may drop about 15 percent because of the 20-percent set-aside on 1978 crop wheat. The smaller cut in acreage reflects the fact that some growers will not participate in the program. But in view of the good moisture conditions and barring unfavorable weather developments, the crop. next year probably will be. down considerably less than the reduction in acreage- perhaps around half the set-aside acreage reduction.
Deficienrcy payments to wheat growers will become an ever more important factor in 1978. They will be based on a percentage of 1978 plantings for harvest and the farm program yield.
Hefty crops and -big carryovers, from 1976-77 pushed grain prices down early in the season. However, recent indications of stronger export markets mainly from expected U.S.S.R. buying coupled with. 'higher 1977 loan rates and increased loan activity have given some modest support to prices. The grain reserve program could lend some further strength as the season progresses.
9S-T23-7T-6






76

CORN PRICES SOYBEAN MEAL PRICES,
s$ Ou a* NRo 44% PROTEIN, DECATUR
"w so".* w
3.100= ll PER TON
3.60- i I0
a3oo -nm
300- MAnthe Avwage
2.60 Deat Cash High-Lew
2.00 Jwn shdM 200
too -o nesg 100
1.00 39 A A o.J oJAJOJA -ohowoo J AJAJ
72/73J 74/75 70/77 1972.73 1973/74 1974/75 1975/76 1976/77 1977/78
YEAR BEGINNING OCTOER YEAR BEGINNING OCTOBER 1
us a me e-5R wo a..n

Attractive grain and protein meal prices are encouraging livestock and poultry producers to step up output. Producers are moving cattle into feedlots, ,farrowing more sows, placing more broiler chicks and layers, and feeding more concentrates to dairy cows.
Pork production was up sharply in the first half of 1977, but the severe winter and disease problems limited second half output. Production gains are likely to accelerate next year by as much as a 10th due to better feeding margins.
Cattle placed on feed in 23 States were up 14 percent this summer. Placements should continue large in 1978 boosting fed beef production. However, a cutback in slaughter of nonfed cattle will keep total beef output under a year ago throughout 1978.
Broiler chick placements indicate 3 to 5 percent larger marketings this fall: continue expansion is likely in 1978-running perhaps 5 percent above 1977. Production of milk and eggs is also expected to total above a year ago through mid-197'8-milk by 2 to 3 percent and eggs by 1 to 2 percent.
Despite pressure from large supplies. overall livestock prices this fall are likely to run 5 to 10 percent above the depressed OctoberDecember 1976 level. Prices of hogs will decline from summer levels with largo output. continue above last fall. Broiler and egg prices have strengthened some but large supplies in coming months will keep prices below last fall. Fed cattle price may average in the low forties this winter before rising seasonally next spring. Further price rises are expected in late 1978.
Milk prices may run moderately above a year ago in first half 1978 heaue of higher supports. With increasing output, more milk has Been moving into manufactured products. As a result, USDA pulrchases of dairy products under the price support program have incr wsed substalntiallyv and Government-held stocks are building.
Volume of the 7 major processing vegetables this year is up 18 percent.. with the biggest gains in tomatoes and sweet cprn. Wholesale prices for canned vegetables rose steadily in the spring and summer. With heavier new crop supplies. c-anned vegetable prices may run about the same or only a little higher than a year earlier well into next ve-r. Supplies are tighter for frozen products. Stocks of frozen vegetables are 1 percent smaller than a year earlier. Wholesale frozen vegetables' prices moved up during the summer, and prices will renmain well above a year earlier.









77



PRODUCTION OF LIVESTOCK ANDLIVESTOCK PRODUCTS

BIL LBS. BIL LBS.
70 60EGGS
68 EGGS
TOTAL MEAT *

66,


62

60

50
BIL LBS.
125

123 MILK

121 119 117
115 I40 I 1 1
1972 74 76 78 80

BIL LBS. BIL LBS. BIL LBS.
100- 15- 30BROILERS PORK BEEF
95 14 2890 13 26

85 12 24

.80 11- 22
75 I I 1 I I I l I 10 1 1 1 I I I 20 1 1 1 I f I 1972 74 76 78 80 1972 74 76 78 80 1972 74 76 78 80

INCLUDES BEEF. VEAL. LAMB AND MUTTON. PORK. POULTRY MEAT. USOAIERS NOVEMBER 197?


With another large crop of fall potatoes in prospect-only 1 percent below the 1976 record-grower prices will remain low and close to the year earlier average. With export demand slackening, and only moderate processing activity, markets lack the brisk pace of last year.




POTATOES: U.S. GROWER PRICES TOMATOES: U.S. GROWER PRICES
3~/0T. 3/CNT.

32


6 24






SEPT IS
PuACE

W ~ C Li J OR M OCT m1 JUt OCT m W AL OCTI X an LOCT .. UL OCT .i
1975 1976 1977 1975 1976 1977
is n E 7 f( SSi60?4






78

Th-l first citrus crop forecast of the 1977-78 season was down G, percent from last year's record and 2 percent below 1975-76. The orange crop will be down 9 percent, but Florida's early and midseason crops-big Juice producers-will be down 23 percent. While juice yields will be up, and a larger -pack is in prospect, low carrying stocks. will pull down total supplies. This together with strong demand will keep frozen concentrated orange juice prices at high levels.
The 1977-78 pack of most processed noncitrus f ruit is expected to be up. However-, supplies are still likely to be near last year's level because of smaller carry-in stocks. Supplies of dried and frozen fruit could be slightly above a year ago. Demand is likely to be good hereand abroad with prices of most items expected to remain firm.
The outlook for the 1977-78 cotton season features a larger U.S. carryover next summer. Disappearance may change little as larger U.S. mill use may about offset smaller prospective exports. The quantity of cotton produced in this country next year will depend on the price of cotton relative to competitive crops such as soybeansan grain, sorghum, plus weather and program provisions. Prices for both cotton and competing crops have declined in recent past months with cotton experiencing the sharpest drop. Current price relationships between cotton and competing crops would indicate 10 to 20 percent fewer acres of cotton in 1978.

FARM INCOME
F arm income prospects deteriorated sharply this past summer as rapidly falling crop prices took their toll on cash receipts. While prices have generally strengthened recently from their harvest lows, crop receipts from marketings in all of 1977 could be the lowest since 1973. However, higher CCC loan rates under the new legislation are expected to produce greater use of the loan programs and limit further price declines. Total crop receipts for 1977 are expected to total near the 1976 level of over $47 billion. Receipts from net loan activity could run as much as $4 to $5 billion above last year's $1 billion.
Lower feed costs are having their effect on the livestock sector. Feeder animal prices are being bid up, placements of cattle on feed are increasing, and farrowing intentions are up sharply. Recent drops in feed prices have given rise to the most favorable feeding margins in years. The impacts of these developments will be reflected in both livestock producers' incomes and retail food prices later this year and in 1978.
For the current year we expect only moderate gains in livestock and livestock product receipts. With prospective volume up slightly, overall livestock prices will probably average near last year's levels.
Overall cash receipts for 1977 should total roughly near $94 billion for 1976, with the changes in crop and livestock receipts about offsetting.
Tho new farm program will improve the income outlook through
inereaneel direct~ Government payments. These should rise from less than '.; billion for the last several years to about $2 billion in 1977.
Beyond increasing deficiency payments in 1977, the new legislation is boosting this year's cash incomes through higher loans and supports to sugar growers.






79

Taking these factors into consideration, total realized gross income for 1977 is expected to be up from last year. The overall increase in
-production expenses this year has moderated due to smaller increases in costs of production items (especially feed), interest, taxes, and wages. With only modest increases in production expenses, net farm income should remain near the $20 billion level in 1977. However, in constant dollars this could be the lowest level of net incomes since the early thirties.

REAOZED NET FARM INCOME BALANCE SHEET OF THE FARMING SECTOR
S Sd. *BIL
25
,,w Ae" Boo "
20 I
%~ I

.=-

1955 00 6S 70 75 1940 1950 1960 1970 1960


But net farm income doesn't tell the whole story. There are at least two other key factors to consider when attempting to measure the economic well-being of farmers. One is that many farmers earn a considerable portion of their income from nonfarm sources. Historically, the total farm population-when small farms are included-has been earning about as much from nonfarm sources as from their farming operations. In 1977, income from nonfarm sources accounted for 55 to 60 percent of the average income of farm families. Of course, the smallest producers tend to earn the largest share of their incomes off the farm.
Income alone does not tell the whole story of the status of U.S. agriculture. One needs to also consider the farming sector's capital position has to be analyzed-its asset and debt structure. Here we find that, although farmers' current income positions may be under stress temporarily, many farmowners are well off in terms of net worth. By the end of 1977, the value of farm assets is expected to total $730 billion, a gain of $59 billion for the year. The farm debt is forecast to total $119 billion, leaving a net worth of $611 billion, an increase of $43 billion for the year.
As usual, the big mover in farm assets is real estate. Its value is expected to total $547 billion this year, and account for three-fourths the value of all farm assets. Despite heavy pressure on farm prices this year, farmland values are still rising, although reportedly at reduced rates and even declining in scattered areas.
The value of other farm assets advanced in 1977. By January 1, 1978, the value of livestock on farms will be about 7 percent larger than 1 year ago due mostly to improvements in cattle prices. Machinery and motor vehicle values will be up about 4 percent, mainly reflecting higher unit values. The buildup in grain stocks will also help push the asset values up despite lower prices for some commodities.






80

Farmers' financial assets are expected to post a modest gain of about 5 percent in 1977, but most of the increase will be in rather nonliquid investments.
The farm debt is estimated to increase about 15 percent in 1977. A sharper than usual rise in farm real estate debt will be due in large part to more borrowers turning to refinancing burdensome short-term indebtedness into longer term real estate secured loans.
Attempting to estimate farm income levels for 1978 is extremely hazardous at this early stage. Although crop prices should increase seasonally in the first half of 1978, large carryover stocks will be limitinz factors. More importantly, prospects for the 1978 crops will dominate income flows to producers in the second half of 1978. The new farm program will have an even greater impact on incomes to producers in 1978. In addition to the likelihood of large deficiency payments to wheat producers. there will probably also be payments to feed-grain producers in the coming year. In addition, the net income of livestock producers should improve as the new year unfolds. However. production expenses will continue to rise and likely offset any improvement in current dollar net incomes.
Despite lower net farm incomes this year, traditional lenders were willing to finance all but a few farm customers. Although some banks in scattered localities-primarily in cattle and wheat areas-were hard pressed to come up with s ufficient loan funds, in most cases farm borrowers were well served. The average farm debt-to-asset ratio while riin; in 1977 is still 16 percent and has changed little since the midsixties. Experienced lenders are aware of farmers' equity position. Current indications are that lending institutions intend to continue serving the farm sector, even though the price-cost problems exist.

FOOD AND M ARKETING
Despite record large farm output and generally lower prices to U.S. farmers, food prices in grocery stores for all of 1977 will average about 6 percent higher. Higher prices for fish and imported foods, especially coffee, account for about three-fifths of this increase. The remainder is due to higher costs of processing, marketing, and distributing food. Prices for restaurant meals and snacks, which are influenced even more heavily by cost increases after food leaves the farm and which also reflect higher coffee prices, will average nearly 8 percent above last year.
Current conditions suggest large crop harvests this fall along with an anticipated expansion of livestock feeding will hold the average prices of U.S. farm-produced foods about steady through mid-1978. If coffee prices continue to decline as expected, offsetting further increases for other imported foods and fish. average prices for these foods will also show little change. Consequently, relatively moderate increases in retail food prices, in the neighborhood of 1 percent or so each quarter, now appear likely through the first half of 1978. These expected increases primarily reflect continued upward pressure from processing and marketing costs.





81

PROCESS NG AND MARKETING COSTS TAKE THE BIGGEST BITE OUT OF CONSUMER FOOD BUDGETS
Inflationary pressures from rising wages of food processing and marketing employees and costs of various inputs used by food processing and marketing firms, are expected to continue their upward push on retail prices. Recent and prospective wage agreements in food and allied industries, and the pending increase in the minimum wage, will accelerate labor costs in the food industry. In addition, higher prices
-for other goods and services, such as energy, packaging materials, and transportation, can also be expected to contribute to higher retail prices.
In 1978, it appears that processing and marketing costs could average 4 -to 6 percent higher for the year. Increases will vary among products, with cost pressures greater for highly manufactured foods than for more perishable products such as meats, fresh fruits, and vegetables which are more responsible to change in farm gate prices.
LABOR NOW LARGEST COMPONENT OF CONSUMER FOOD EXPENDITURES
Consumers will likely spend around $180 billion for U.S. farm foods this year, up from around $136 billion in 1973. Nearly 90 percent of this rise will result from increased marketing costs. As a matter of fact, since 1974, the farm value of these farm-produced foods has held fairly steady, while processing and marketing continue to push upward. Over 40 percent of the rise in food expenditures since 1973 has been due to increased labor costs.

U.S. FARM FOODS
$ BIL
200


CONSUMER
EXPENDITURES
150




100


FARM VALUE LABOR
SO- OTHER
50 COMPONENTS"

PACKAGING TRANSPORTATION

1973 78 73 78-73 78 73 78 73 78 73 78
1976 Preiwnwy 1977/78 Forecas Compoerws of total makdimng bi
t Re nul ue such coss a utes. fuNei. prmooion. tocal for-hire trwnsportauon ~ ae. Corporate profits






82

In 1977, labor costs involved in processing and marketing food will probably become the largest single component of consumer food expenditures, taking almost a third of the consumer's food dollar. Look for labor costs to exceed the value farmers receive for producing for the first time. Labor costs could top $58 billion this year, while the farm value may hold at about $56 billion.
1977 FOOD CONSUMPTION SLIGHTLY BELOW 1976 RECORD
Per capita food use, which hit a record in 1976,,may be down slightly this year-perhaps about one-half percent-but still the second higi;est, in history. The modest drop will be largely due to a slight decline in crop foods. Per capita use of livestock foods likely will hold about steady with last year's record.
Among the crop foods, consumption will be down for coffee, fruits, and fresh vegetables. These declines reflect short supplies and higher
F rices earlier this year. Consumption of most other crop foods will ,old about even with last year.
Consumption of livestock foods reflects larger supplies of pork and poultry, which will about offset lower consumption of beef, fish, and eollas. Per capita use of dairy products likely will be about the same as last year.












U.S. AGRICULTURAL TRADE
(By Thomas R. Saylor, Associate Administrator, Foreign Agricultural Service USDA)

Your earlier speakers, in discussin g the substantial world grain crop and economic growth prospects, provided the setting for what I1 have to say about the outlook for U.S. agricultural trade.
Let me begin by saying that there probably are more uncertainties involved in trade forecasting at this time than ever before-and that is saying quite a lot, given the nature of trade in the seventies. .In such a context, thie capabilities of the Foreign Agricultural Service to provide timely and adequate forecasting become even more important.
'While I am new to the Foreign Agricultural Service myself, I have in another capacity, observed the reporting and analysis which has been coming out of that agency for several years. Frequently in the face of strong rumor and public, opinion, we are pressed to adjust our forecast. I am pleased that despite significant. pressures, our analysis stood firm in their positions on the soybean and coffee markets earlier this year. FAS has maintained and will continue to maintain a policy of basing forecast on solid analyses. We will attempt to build upon our existing base of resources to strengthen our forecasting capability.
We hope to develop new tools such as LACIE, which can supplement those resources, and we will seek to make better use of existing tools such as our network of attaches, bilateral information exchanges, and, wherever needed, seeking to have specialists visit foreign producing areas to make assessments on the ground during critical periods of the crop season. Only in such a way can we establish and maintain a sense of trust in our analytical and reporting services.
Within the uncertainties I mentioned, the Department of Agriculture is predicting an increase of close to 10 percent in the volume of agricultural exports in fiscal year 1978 to just short of 110 million metric tons. That would be a new record, and that is the good news. FUnfortunately, export prices averaging around 15 percent below those of last year will more than offset the volume increase, ,so we look for a 1978 export value of about $22 billion-$2 billion below the record $24 billion of fiscal 1977.
That was the bad news, but I think the growing world demand for food' and the growing interdependence among countries cited by Dawson Ahalt can make bad export news a short-term proposition if
we take advantage of what we have learned during the years of unprecedented agricultural export growth.
T want to talk about that later, but first I should summarize the prospects for the current fiscal year. As I said, we expect exports of
(83)





84

$22 billion. At the Same tim-e. U .8S. ag ricultural imports are forecast to total about S.13.5 billion, marginally above the record imports of last year. IVhat it adds tip to is the prospect of a decline in the U.S. agricultural trade surplus of about $2 billion from last year's $10.5 billion.
Grain exports and those of -soybeans are expected to increase in volume by about 10 percent. Cotton exports look to be down somewhat in both volume and value, along with shipments of animal fats and vegetable oils.
Amontr the major markets, we expect U.S. exports to Western Europe to decline, perhaps by as much as 15 percent. Good harvests there will result in reduced imports of U.S. feed grains and potatoes. However, a higher grain/oilseed price ratio should stimulate increased shipments of soybeans and meal to this region, and harvest damage to European wheat quality should bring slightly larger imports of U.S. high-quality wheat.
Although we expect increases in volume of both feed grains and soybeans and meal to Japan, lower prices for these commodities are expected to cause a decline in value of our exports to Japan of close to 15 percent. Wheat exports to Japan may increase marginally, and increases are forecast for fruits and animal products.
U.S. agricultural exports to Canada, North Africa, and Wvest Asia are expected to rise, and a sharp gain is forecast in exports to the Soviet Union-from $1.1 billion in fiscal 1977 to $1.6 billion in the current. year. U.S. exports to Eastern Europe are expected to rise by about $120 mill ion to $1.1 billion.
I'should also mention the People's Republic of China (PRC), where this fiscal year will see the first significant U.S. farm exports since 1975. The PRC already has boughlt U.S. cotton and soybean oil for delivery during the year and some added purchases ofU.S. pout seem likely, of- pVult
U.S. agricultural exports to East and Southeast Asia are expected to continue their strong growth of recent years. Volume increases are expected in -wheat, feed grains, soybeans, tobacco and cotton, although total value probably will be little different f rom the $2.47 billion of last year.
The outlook for the major commodlities: The U.S. grain and feeds export, forecast for the yea r is $9.8 billion, off 4 percent from last year. '11iis ulelu(les prospects for substantially higher imports by the U.S.S.R. However, to reach the projected level of imports which is currently e-stimiated at 20-25 million tons from all sources, a substantial pickupl in the rate of actual shipments to the U.S.S.R. will be re(uired in the coming months. West European coarse grain imports f rom all sources will likely decline from last year's level, although the extent of livestock feeding could moderate the expected decline.
Riht now, we are forecasting feed grain exports of 50.4 million tons valued at s.4.8 b)illionI. T1ha~t would be near last year's volume but down somnewh~at in value. It looks like wheat exports will ri'seyaot2 percent in volume. This will be enough to offset the lower price and bring the~ value, of wheat and flour exports to $3.1 billion, slightly more than last year.
We lookl- for a decline of 22 percent in export value of oil seeds and products to $5 billion, despite a significant increase in export volume of soybeans and meal.






Livestock and livestock products exports, which last year hit a new record and exceeded imports of these products for the first time, will decline slightly this year to about $2 billion. Within this category, we expect beef exports to increase and pork exports to decline. There should be a slight rise in poultry exports, and dairy products sh ments may rise slightly.
ome decline is anticipated for cotton and for tobacco, both in volume and value, while exports of fruits and vegetables are expected to continue to rise, thanks in large part to poor fruit crops in Europe.
What it all adds up to is that for the first time in 8 years, U.S. agricultural exports are not expected to show a value increase,
Despite the prospect of a slight decline, we still are expecting U.S. agricultural exports of more than $20 billion for the 5th straight year. And to put this figure into a longer term perspective I should remind you that this is a level over three times greater than the average of the sixties.
Most of us are familiar with the history of that dramatic growt4: Rising world income, crop shortfalls, devaluation, and other factors that triggered an upsurge in export demand to which U.S. farmers responded quickly.
There is more to the story, however-an aspect we tend to overlook. It is that the sharp growth in the seventies came from a solid foreignmarketincy- base tai ; d in the fifties. There was market development work, begun in the fifties; there was a shift toward export marketing in U.S. farm program pricing policies; there were major trade negotiations, includinLy the achievement of a zero-duty binding on soybeans to the European Community, and there -was the growth of U.S. agriculture's reputation as a dependable supplier.
Those elements remain largely intact as we stand on what appears to be a plateau in export growth. The question as we move into the final 2 years of the hectic seventies is how best to use these resources to build for new growth under new conditions.
Things have changed in international agricultural trade since the sixties. Competition has increased, particularly in oilseeds. The European Comi ii unity continues as our traditional and most important market, but its relative importance, has declined as other markets have emerged. While U.S. agricultural exports to the Community were going. U.D by 2.7 times from 1970 --- wt 2 to 1976, to $6.4 billion, exports to the rest of the world went up even faster-by 3.3 times, to $13.8 billion.
Japan, for example, crossed the $1 billion mark as a U.S. agricultural customer in 1970, and last year bought more than $3.5 billion worth as our most important single country market. West Germany and the Netherlands, traditionally near the'top, were second and third last year, but the fourth largest market was the Soviet Union, an indication of the increasing role played by the centrally planned economies in U.S. agricultural export trade.
Between 1970 and 1976 the share of U.S. agricultural trade represented by these, nations grew from 2.5 to 10.5 percent, on a value basis.
The value of U.S. exports to the developing countries has grown by about three times since 1970, but the most siomificant. thing about these shipments is the change in the mix from confessional to commercial sales.







Export commodity components also have been changing. Growth has been most rapid for feed grains and soybeans-products that support the production of livestock products. There have been notable gains in fresh fruits and other higher cost food items. But the center of this growth has been shifting from Western Europe to Japan, and, for feed grains, to the U.S.S.R., Eastern Europe, and, to some extent, to the higher income developing countries such as South Korea and the Republic of China on Taiwan.
Wheat trade patterns also are changing. Wheat trade to the developed countries has grown little in the seventies, but the demand for wheat in the developing world is growing. Since 1974, more than onehalf of world wheat imports have been by developing countries, and recent studies project their food grain import needs to be possibly double the 30 to 45 million tons of 1970-75 by 1985.
The People's Republic of China also appears to be emerging as a regular buyer of large amounts of wheat. You will recall that we sold the Chinese 5.1 million tons of wheat in 1972-74. Then they quit buying from us, but not from others. It is expected that they will import at least 9 million metric tons this year-from Canada, Australia, and Argentina.
What all this suggests to me is that U.S. export strategies for the future must be based on where we can sell a commodity as well as how we can sell it. It suggests that economic development programs in poorer countries can be as important as sales promotion campaigns among the prosperous, that credit facilities and most favored nation treatment can be as potent as the shrewdest trade negotiator in laying the base for solid, sustained growth in U.S. agricultural exports.
It suggests a total approach to U.S. market development that takes account of the three distinct markets that have emerged during the hectic period of the seventies. There are the developing countries, in which poverty keeps the lid on effective demand from a huge and risin, reservoir of food needs. Then there are the centrally planned economies, where States have decreed more meat, milk and eggs for the people, but foreign exchange and weather are the keys to how fast and hnw far the increases will go. Finally, there are the developing countries, where import barriers imposed largelv to support domestic aiQricultural programs serve to restrain the demand for higher priced foods resulting from the economic growth of the sixties and the early seven rties.
The task of export expansion is to put together an approach adapted to each of these markets and to do so with the objective of tapping the demonstrated long-term potential in each.
Perhaps it seemed appropriate for the times. but T think the Tnited States in the past has focused too hard on immediate problems in ,gricultural trnde-the ad hoe "quick fixes" that spawned embargoes, trade wars, and other aberrations from which nobody'gained. In this regard, the problems of steel, shoes, ,and TV sets are. in part, the problems of American agriculture, for the means by which the problems are resolved have profound implications for our own ability to keep export channels open and to seek expanded markets. However, our focus should be on the very evident future growth of world demand for agricultural products and on insuring our share of that. growth.





87

I do not think it is an overstatement to suggest that we have reached
a watershed *in U.S. trade policy. The sluggish world econonky as well i as long-term structured developments in that economy have given rise I to a new pattern of protectionism. And in such a context, we must be
cautious that the policies we take do not contribute to the weakening i of the GATT framework within which world trade has expanded i over the past several decades.
it is easy to find actions on the part of other countries to expand
their trade position *in contravention of established trade rules. We must resist the tendency to emulate such actions both for the interest of our own economy and the expansion of world trade. Otherwise we mav contribute to a snowballing effect where the structure, imperfect as it may be, for the orderly expansion of trade is replaced by efforts of nations to maximize short-term gain regardless of the long-term
effects.
A good case in point is the export subsidy. Through sustained efforts, we have been able to limit its use against our own exports to third markets. But in periods of oversupply we continue to feel domestic, pressures to return to such subsidies ourselves. Yet while a subsidy might provide some cosmetic relief, we have not been able to develop evidence thatthe subsidy can be effectively used to preserve market share over any sustained period. Rather, the only effect we can be sure of is that a subsidy will result in a loss of income on the
part of all producing countries.
I t1link it would also be appropriate at this point to discuss the
question of bilateral trade agreements. The Soviet gTains agreement has been useful in regulariiing our grain trade with the U.S.S.R.
and in providing an avenue of communication with the Soviet Union on their import requirements. However we should recognize that even in the area of information-sharing gains are going to be of an I incremental nature. We feel that the Soviets understand that improved
sharing of information is as important to them as it is to us. I believe they recognize -that extremely disruptive buying patterns could lead to further restrictions on their access to our markets. But I would also hope that this agreement, which was shaped in a time of tight supply, does not become a restriction, in itself, on regular and expanded trade with the Soviet Union,
The case of the Soviet Union is somewhat exceptional. It is one of
an open system selling to a closed gstem and a system which accounts for the major share of variability in world grain trade. I do not, however, see bilateral trade agreements and greater structuring of world trade replacing -the basic principles of trade which have guided its
expansion ovei the past 40vears.
We, have entered into informal agreements with a few other coun
tries but more structured agreements would not be in the interest of our own export trade over the longer term. To structure that pattern of world trade, in our view would not only inhibit agricultural adjustment which might be in our interest but would contribute to greater
instability of world markets.
The race for supply/purchase agreements can be expected to be
limited by the size of the market in an average year. That means there will be a residual market which is subject to accentuated supply and








demand pressures. We feel, therefore, that to encourage the modification of such agreements to structure trade is a risky strategy and one which would undermine the basis upon which we have enjoyed greatly expanded trade through our comparative advantage.
The Department has launched a course of action to implement this policy of stable, sustainable growth in agricultural exports through its market development programs and international negotiations.
As in the case of market development in general, trade negotiations require long-term strategies. We must look to realistic growth potential before spending negotiating chips.
The economic climate for the current round of trade negotiations is not very favorable, but the negotiations must show progress in the rationalization of trade. The alternative is an acceleration of the current tendency to try to solve short-term economic stress and chronic productivity'problems with trade restraints.
We have tabled a tariff plan for industri l goods-a tariff formula that i' intended to be indicative for reductions in agriculture. We have tabled our trade requests of other countries. Proposed codes on subsidies and other trading mechanisms are to be tabled December 15, and offers in response to requests are to go down January 15. Then the hard negotiating can begin.
As to our objectives in the MTN, a top priority, certainly, is to preserve our existing rights in the major markets.
And we will continue to press hard for improved access to markets. But we will do so more selectively, in the context of market potential as well as current buying power, and in terms of what is possible as well as what is desirable. Each chip shoved on the table will be weighed for its contribution to the primary objective of enhancing the longterm global opportunities for stable, sustained U.S. agricultural export growth.
As one aspect of the search for this objective, the United States is participating in discussions regarding the negotiations of an agreement to replace the current International Wheat Agreement. In Octoer, the United States tabled a specific proposal which would provide for greater security of world food supplies, moderation of extreme price fluctuations, the expansion of international trade in wheat, and ass red food aid to developing countries.
While a general consensus seems to be emerging among participating countries along the lines of the U.S. proposal, there continue to be sone differences of view as to how the stabilization of wheat prices is Io be achieved. The next step is a meeting of the Council itself Novem1er 29 to December 2 to review the work of the last two preparatory g''roup meeting. it is likely that a drafting group will meet in early I)om]~ber to revise the Secretariat's draft. Then a special council session maxv be called in early January to consider that diaft and decide wh- ther to convene a negotiating conference in mid-February.
The U.S. view continues to be that an effective wheat agreement is needed to reduce the wide price swings that have disrupted world marot- repeatedly since 1972.
We will not, however, accept an agreement which would require an al (tetion of our marketing system. We will not accept a pricing systern which would make our -ranins less competitive in the world mar-






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ket. In other words, any wheat agreement that we become a party to must permit, our markets to function-so that efficient producers have an opportunity to compete in a world market not bound within rigid price limits.
The United States took an active role in negotiation of the International Sugar Agreement, to become provisionally effective January 1. We believe the agreement will contribute to long-term solution to a very troublesome world sugar instability.
World demand for agricultural products is growing, and it will con'tinue to grow. It will grow in different ways for different commodities, and at different rates. The challenge in export expansion is to encourage the fulfillment of that demand by sustainable, stable growth in world trade, and to insure that U.S. agriculture gets its share.
WVe must, therefore, continue to build the strongest case -we can for the expansion of, not protection against, world trade.
We must make better use of the resources, public and private, to facilitate long-term growth of markets for U.S. farm commodities, not just for stort-term cosmetic stimulation of trade.
And we must maintain our faith in the strength of our traditional marketing system and the principles which have encouraged orderly world trade over the past half a century.





























FOOD-SUPPLIES, DEMAND,
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