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.
