Third grade boys think farts are funny. Trust me, I have been through that phase. Recently. I don't think there is a problem with him telling fart jokes, and I don't think it's a problem that he got a disgusting joke book for Christmas.
The key to this is that they need to teach him that there are some places where those jokes are funny, and some places where they are not. On the playground at recess? fine. Goofing off with your friends in the neighborhood? Also fine. Hanigng out with Dad who also loves these jokes? Noooo Problem! At dinner? Not okay. Visiting grandma? Probably not (though that would depend on Grandma...). In polite company? Absolutely not. etc...
My guess is that if the parents aren't automatically doing this, then they don't REALIZE that these jokes aren't always appropriate, which seems like a much bigger problem to me. I think I'd just make a face and say something like "Oh, that's gross. I really don't want to hear about farts while I'm eating/having drinks/visiting/whatever. Why don't you save those jokes for your friends?" You can even follow up with "Oh, you'll love THIS joke!" and follow it up with a more appropriate one, if the situation suits.