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Statements

Curriculum vitae of Dr Jacques Diouf

 


Statement of the Director-General to the Meeting of Trade Ministers of the Least Developed Countries

Agricultural trade and food security issues of concern to Least Developed Countries in the context of globalization

Bangkok, Thailand, 13 February 2000


Mr Chairman,
Excellencies,
Ladies and Gentlemen,

It is an honour and a pleasure for me to be here with you at this important meeting, and I wish to thank you for this opportunity to share with you my views on agricultural and trade issues of concern to the Least Developed Countries in the context of globalization.

We are all aware of the difficult socio-economic challenges facing the least developed countries (LDCs). Most socio-economic indicators clearly differentiate the LDCs from the rest of the developing countries. In relation to the topic which I am addressing today I should like to mention in particular two of these challenges.

First, the LDCs have clearly been marginalized in world trade. Their combined share of agricultural exports declined from almost 5 percent of the total world agricultural exports in the early 1970s to just one percent in 1998. The experience is similar with their total merchandise trade as well. This is obviously very frustrating.

Second, the incidence of food insecurity in the LDCs is unacceptably high. In 1979-81, some 38 percent of their population was estimated to be undernourished. Sixteen years later, the incidence remains the same, while the absolute number of undernourished is estimated to have increased by 74 million. For the rest of the developing countries, by contrast, this incidence fell from 28 to 15 percent between the two periods.

Mr. Chairman, agricultural development holds the key to food security. This may sound trivial &endash; but it is worth stressing. It is a fact of life that most of the food insecure people in the world are rural people and rely on farm and non-farm employment and income, which depend in one way or another on agriculture. Historically, very few countries have experienced economic growth and poverty reduction without agricultural growth, either preceding or accompanying it.

For the LDCs, the record has been disturbing - total agricultural production in per caput terms declined by 0.8 percent during 1980-90 and by 0.2 percent during 1990-97. Per caput food production fell similarly. FAO believes that most of these countries have the potential to reverse the trends and develop their agricultural sector. How to ensure that the on-going process of globalisation makes a positive contribution to realising and strengthening the domestic agricultural productive capacity of these countries is the key challenge facing us today.

Globalization is a complex process and has many components. Keeping within the theme of this presentation, let me speak here of two main aspects: the role of the international regulatory framework governing agricultural production and trade; and the strengthening of the supply capability of the agricultural sector of the LDCs.

The first aspect currently refers to the various WTO Agreements that have consequences for agricultural production and trade, which include not only the Agreement on Agriculture but also SPS/TBT, and the TRIPS Agreements. Given the strong link between agricultural development and food security, the question is how can this framework best contribute to developing the agricultural sector of the LDCs?

Over the past five years, the LDCs themselves, along with many other developing countries, made considerable progress in understanding these complex Agreements and their consequences for their agricultural sector. I am pleased to state that FAO collaborated with many of these countries in this important task. As a result, our understanding of the Agreements and their consequences have improved considerably, as proven by the large number of proposals that the developing countries made in the process of the preparation for the 3rd WTO Ministerial Conference at Seattle. In this context, I should also recall the statement made at that Conference by His Excellency Tofail Ahmed, Minister for Commerce and Industry of Bangladesh, on behalf of the LDC Group, which contained a number of valuable proposals.

Drawing from these and our own analyses, I wish to make a few remarks on how the regulatory framework can contribute to assisting the LDCs in their agriculture and trade.

First, it is essential that the framework take full account of the unique role that agriculture plays in these economies and that it provide, not only enough flexibility for their agricultural policies, but also that it go beyond recognizing specific constraints affecting LDCs and make concrete provisions for dealing with them. The WTO Agreement on Agriculture contains several provisions on special and differential treatment for developing economies. FAO believes that this treatment is even more justified in the case of the LDCs, and needs to be made more effective.

Second, the framework should ensure that there are no negative externalities on others as a result of the action of a few countries - in other words, it should ensure fair trade. The case in point here is that global agricultural markets are distorted by the option available to some countries to pursue excessive subsidization and protection. Much remains to be done in this area.

Third, there is considerable room for further progress to be made in improving the terms of access for agricultural products to the markets of the developed countries, in particular, both in the traditional area of tariff barriers as well as in non-tariff measures. Giving greater trading opportunities to the LDCs is a very sustainable form of assistance for them. Some developed countries have made proposals for sweeping improvements in market access to the LDCs, but the general outcome is yet to be seen.

Fourth, there remains an unfinished task in the area of food import difficulties facing these countries. The Uruguay Round recognised the possibility of difficulties in accessing food from the world market, and accordingly the Ministers adopted in Marrakech a Decision on Measures Concerning the Possible Negative Effects of the Reform Process on the Least-Developed and Net Food-Importing Developing Countries. 

Our own analysis has shown that these countries have, in fact, experienced a sharp increase in their cereal import bills during the period 1995-1999. During 1997-999, when prices in world markets fell, import bills continued to remain relatively high as a result of a rise in per unit cost of imported cereals on account of factors such as reduced food aid and concessional exports. These were exactly the types of possible difficulties recognised by the Decision, but, as you all know, very little progress has been made in its implementation. 

I should now turn to the second important aspect I mentioned before, the strengthening of the agricultural supply capability of the LDCs.

Having more flexibility in policy formulation is necessary but not sufficient in itself. It must be complemented with investments to raise the supply-side capability of the agricultural sectors, if the LDCs are to benefit from new trading opportunities. This was also the main conclusion reached by the United Nations' 1999 Least Developed Countries Report. This report makes a detailed analysis in the resource gaps of the LDCs, covering not only export earnings, but also official external assistance, private capital inflow and debt repayment. It concludes that the resource gap in the LDCs continues to be the basic cause of their poor supply response.

If the LDCs want to succeed in fighting hunger and achieve the target set by the World Food Summit, more investment in their own agriculture is needed. This will also require official development assistance (ODA) to the LDCs, which has been falling by as much as 23 percent in real terms since the beginning of the decade of 1990. At the same time, there have been very little offsetting inflows to these economies and to their agriculture through export earnings and private capital inflow. Some expect, but I am doubtful, that private capital will adequately substitute for public investment in areas such as agricultural research and extension, irrigation and infrastructure development. Reversing the trend in the ODA remains a major challenge, bearing in mind that, apart from its direct role, ODA also plays a catalytic role by attracting complementary external and internal private investment.

There are some places in the WTO Agreements where the importance of increased support to the agriculture of developing countries has been recognised. For example, the Marrakech Ministerial Decision mentioned above calls upon WTO Members to give full consideration to requests for increased financial and technical assistance by LDCs and Net Food-Importing Developing Countries to improve their agricultural productivity and infrastructure. However, as you know, there are substantial difficulties in assessing the impact of the Uruguay Round reform programme so as to trigger or justify the implementation of this provision. More efforts to find concrete ways of implementing the Ministerial Decision are needed in the interest of these countries.

Mr Chairman,

The need to assist the LDCs in their efforts to develop their agriculture is obviously immense, and we are conviced that this need has increased, not fallen. In this regard, I wish to highlight three major initiatives of FAO.

First, as a specialised technical organization in the area of food and agriculture, fishery and forestry, the bulk of FAO's activities are concentrated on improving food security through strengthening the productive capacity of the agricultural sector. In this respect, an essential activity is FAO's Special Programme for Food Security, which is now active in 55 low-income food-deficit countries, 29 of which are LDCs, and is under formulation in another 22, including 9 LDCs. This programme aims at assisting countries to improve their food security through rapid increases in productivity and food production. Increasing the competitiveness of agriculture, net income of farmers, rural employment, social equity and gender sensitivity is at the core of the Special Programme. The Special Programme obviously cannot meet the immense needs for investment on agriculture and is not meant to be so - our role is catalytic, to undertake the pilot phase of the work and thus pave the way for expansion.

Second, the Organization is very active in strengthening the trade-related capacity of the developing countries, focussing on the main WTO Agreements directly affecting agriculture and agricultural trade. We anticipate even greater technical assistance needs in this area in the coming years, and we have already begun our work with the implementation of a major training programme, which consists of in-depth courses, held in about 15 sub-regions and benefiting a total of 700 to 800 participants from developing countries and countries in transition. All the LDC members of FAO are invited to participate in this programme.

Third, we are preparing for a substantive contribution to the Third United Nations Conference on LDCs to be held in 2001. The overall objective of our work is to develop the elements of a strategy for focused, sequenced and concerted action by LDCs to exploit their agricultural potential through improved supply capacities and competitiveness in the context of the emerging global trading system. This work will also underpin FAO's contribution to the Integrated Framework for Trade-related Technical Assistance to LDCs, with which the Organization is associated along with other Agencies.

To conclude, Mr. Chairman, I wish to express once again that FAO is fully committed to work with the Governments of the LDCs and with the international community to help to integrate the LDCs and other low-income countries in world trade and economy, in a way that will be beneficial to them, towards the common goal of alleviating food insecurity.

Thank you.

 

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