By Estrella Gutiérrez
CARACAS, Sep 18 1997 (IPS)

The economies of many nations in Latin America and the Caribbean is suffering through an average slide of 31 percent in the prices of primary products, according to financial analysts.

Some two-thirds of the countries in the region obtain more than half of their export earnings from agriculture and mining. An international symposium in Caracas has been examining the development of raw materials in the region under the auspices of the Common Fund for Primary Products and the Latin American Economic System (LAES).

Specialists and representatives from 30 countries are participating in the symposium, which will conclude Friday.

The permanent secretary of LAES, Argentinean Carlos Moneta, says that in the case of countries like Bolivia, Costa Rica, Guyana, Honduras and Nicaragua, between 60 and 80 percent of their export earnings came from primary products.

The Indonesian vice chancellor and president of the Council of Governors of the Common Fund, Soemadi Brotodinigrat, told delegates that between 1990 and 1996, exporters of primary products lost an average of 1.6 percent of economic growth due to the deteriorating terms of trade.

The Fund has been operating since 1992 to promote the development of primary products worldwide, encouraging countries to adapt to the new commercial realities in order to improve their position in key international markets.

The executive director of the Common Fund, Rolf Boehnke of Holland, says that millions of people depend on primary products for their survival. Topping the list were farmers, who must learn the new rules of trade liberalization so that they do not continue to be excluded from the benefits it offers.

Freddy Rojas, Minister of Industry and Commerce of Venezuela, indicated that the fluctuations in the prices of primary products requires linking the different actors in the production process, from the worker in the countryside or the mines, to the manufacturer and the retailer, in order to promote the ability of each to be competitive.

Moneta maintains that in the cybernetic age, the “trend” in the international economic agenda is to concentrate on high-tech products and services, while the primary product sector, which is most important in developing countries in the South, is increasingly marginalized.

The LAES chief says it is disturbing that the region is following this trend without question, and that the primary product sector has been forgotten, despite the fact that it is fundamental to the productive apparatus, the economy and commerce of Latin America and the Caribbean.

He notes that despite the growth and benefits of industrialization and the accelerated development of cutting-edge technologies, products such as coffee, sugar, iron, bananas and oil remain crucial for economic growth and for international commerce.

“This means that these primary products are also crucial for social stability and the harmonious development of the region,” said Moneta.

While the average drop in the prices of primary products over the past 15 years has been 31 percent, for products such as cacao the decrease has been a steep 70 percent and for tin, 40 percent.

While the impact of the drop in the prices of the primary sector is slow and gradual, it is devastating to vulnerable economies that depend on a single primary product, delegates at the sumposium agreed. Paradoxically, it is these new technologies, which have improved the productivity of the primary sector and promoted international competition, that are responsible for the drop in prices.

Minister Rojas, however, insists that improved innovation and diversification coupled with greater efficienc and increased financing of the sector, were the only ways to overcome this paradox.

Moneta believes that, in the long run, the impact of the deterioration on the price of primary products is more serious than the decline the region saw at the end of 1994 due to speculative capital.

The fact that Latin American and Caribbean countries no longer appreciate the value of primary products for their future social and economic development is a serious mistake, Moneta says. In his opinion, “more than we suspect,” these products will recover importance in the national and international agenda.

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