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TRADE: Commodities Trade Can Cut Poverty

Stefania Bianchi

BRUSSELS, Apr 1 2006 (IPS) - Agricultural and economic experts will seek to “prioritise and streamline” the commodity development agenda at a meeting in Rome this week.

The Common Fund for Commodities (CFC), an intergovernmental financial institution which aims to enhance the socio-economic development of commodity producers, and the International Commodity Bodies (ICBs) will hold their annual meeting in Rome April 2-5 to evaluate how commodities such as sugar, coffee and cocoa can contribute to the fight against poverty.

Commodity chains have a major impact on the poorest sections of the population and are considered important to development strategies and combating poverty.

The prices of commodities such as sugar, cotton, coffee and cocoa fell by 30 to 60 percent between 1970 and 2000. This has led to a reduction in export earnings, debt repayment capacity, imports, credit availability, government revenue, and provision of basic services such as healthcare and education.

There are about 50 highly commodity dependent developing countries with export revenues based on a maximum of three commodities. These are located mainly in sub-Saharan Africa, but also in the Caribbean and Central America. They are mainly the least developed countries (LDCs), landlocked countries or islands.

Within the framework of the United Nations, the CFC aims to support such countries to improve and diversify commodities production and trade.

The CFC and various ICBs, which include organisations such as the International Cocoa Organisation, the International Coffee Organisation and the International Sugar Organisation, will examine the relationship between commodities and poverty reduction strategies.

Managing director and chief executive of the CFC Ali Mchumo says he hopes the meeting will have a “profound” impact on the poverty agenda.

“Essentially, the deliberations of this meeting represent the foundation of our work and collaboration in the coming years,” he told IPS. “The long-term effectiveness of both organisations and the FAO (Food and Agriculture Organisation) groups is vital if we are going to have a profound impact on the commodities debate, and as we address the issues that are part of our common agenda.”

CFC spokesperson Charles Jama says the meeting – the 13th in a series – will provide an opportunity for the organisation to improve the work of the ICBs.

“CFC is looking to see how we can improve the capacity of the organisations to deliver better results from all the development measures that are hugely important in advancing our agenda for economic development and poverty reduction,” he told IPS.

The meeting will discuss market structure, commodities related national development plans, poverty reduction strategies, and recent policy advances in international cooperation on commodities.

The FAO will host a two-day workshop on ‘Governance, Co-ordination and Distribution along Commodity Value Chains’ alongside the CFC’s main conference.

Jama says the FAO workshop will examine the changing structure of the various commodity chains and will focus on several areas that are crucial to CFC’s role in commodity development advocacy.

“These policies include the implementation of international resolutions for sustained resources for agriculture and commodity development, better market access for commodities, addressing the issue of commodity diversification through value addition mechanisms, technology transfer and dissemination of applied knowledge and technical resources,” he said.

The meeting will also appeal to the international community to address commodity price decline and volatility which can hamper poverty reduction efforts.

The CFC says the timing of this year’s meeting is particularly important given the “failure” of the World Trade Organisation (WTO) meeting in December last year. That meeting resulted in little progress for the developing countries.

“There are a number of issues under review, precisely because this year, given the special focus on commodities following the WTO ministerial in Hong Kong, there is an ongoing objective to prioritise and streamline the commodity development agenda,” he said.

The CFC says many poor countries are suffering as a result of the changing commodities agenda.

“The slow progress and uncertain outcome of trade talks in the international arena is of concern, particularly to the Fund’s core membership of developing and least developed countries,” Jama said.