COMMODITIES: UN Coordinates Public-Private Agreement on Jute

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Mar 14 2001 (IPS) - The lethargic global panorama for commodities received a jolt this month when two important agreements were secured, on jute and on cocoa, but the deeper problems of the raw materials sector persist, say international market experts.

A United Nations conference approved the creation of a new mechanism for cooperation among producers and consumers that replaces the International Agreement on Jute and Jute Products, which had been in effect since 1991.

“The jute accord is modest” because it does not change the fundamental problem facing commodities, which consists of a continued price slump, acknowledged Rubens Ricupero, secretary- general of the United Nations Conference on Trade and Development (UNCTAD), Tuesday.

The new organisation, the International Jute Study Group, is to draft “a strategy for the improvement of the world jute economy with particular emphasis on generic promotion of jute and jute products.”

The Study Group is also to define ways “to promote the expansion of international trade in jute… by maintaining existing markets and by developing new markets, including the introduction of new jute products and the development of new end- uses.”

News of the new accord was received with relief among international jute-related circles because it removes the previously impending threat that collaboration between producers and consumers would completely disappear.

Negotiations to renew the International Agreement on Jute had failed and the accord was to reach its final date of existence Oct 11, 2001.

The talks concluded this week in Geneva allowed the conclusion of the “very difficult” transition from being an organisation that was involved even in pricing the product to a new role with more limited functions.

But the International Jute Study Group includes one novelty, which is the presence of the private sector, points out the UNCTAD chief.

This trend of adding new actors to international accords on commodities was also evident in an agreement on cocoa, established Mar 2 in Geneva.

Ransford Smith, of Jamaica, president of the United Nations Cocoa Conference, called attention to “the role of the private sector in supporting a sustainable coca economy and in encouraging the promotion of cocoa consumption.”

In the case of jute, considered a product of the developing South, the new Study Group will receive collaboration from a Private Sector Consultative Board, which will formulate recommendations for the institution’s authorities.

“Jute has traditionally been an important raw material for packaging, storing and transporting a variety of agricultural and industrial commodities in many parts of the world,” according to the UN conference.

But improvements in bulk-handling technology and the advent of synthetics and other substitutes on the market led to a decline in the amount of jute utilised for these purposes.

Nevertheless, approximately 11 million small farmers and peasants in Asian countries continue to grow jute, and the product provides employment for hundreds of thousands of people in the processing, manufacturing, trade and transport phases.

From 1996 to 1999, India produced most of the world’s jute output, 51.8 percent, followed by Bangladesh with 29.9 percent, China with 11.3, and the lesser production of Nepal (0.4 percent), Egypt (0.2 percent) and Indonesia (0.1 percent).

Like the vast majority of raw materials, jute has suffered a dramatic drop in prices. Based on a constant dollar value, a ton of jute reached 969.7 dollars in 1975. In 1996, it barely surpassed 375 dollars.

Ricupero emphasised that the depreciation in commodity prices continues to be a complicated matter, but UNCTAD will take up the issue more extensively during two meeting to be held in the coming weeks.

One of the preparatory meetings for the Third UN Conference on Least Developed Countries is to focus on raw materials. The session is scheduled for Geneva on Mar 22-23.

Another discussion is slated for London on Mar 30, with the participation of directors and secretaries-general of all international forums and accords dealing with commodities, including the attendance of Ricupero himself.

The decline in commodity prices cannot be reduced to questioning the will of an organisation like UNCTAD; it is a question of will of the world’s nations, according to the UN official.

The leading jute exporting countries are Bangladesh (76.6 percent), India (20.9), Nepal and Thailand (1.1), with just 0.3 percent coming from other minor exporters.

Among the importers of jute the standouts include Pakistan (9.3 percent), China (8.8), Belgium-Luxembourg (8.7), Turkey (6.6), United States (6.3), Iran (5.4) and Syria (5.4 percent).