FAO outlines priority areas in Aid for Trade Initiative
Special events focus on agricultural investment and trade assistance
21 November 2007, Rome - The Aid for Trade initiative should focus on five priority areas in agriculture if it is to help poor countries benefit from the changing global trade regime in agricultural products, according to an FAO document prepared for today's special high level event held during the Organization’s governing Conference.
Today's event follows one last night on Financing for Agriculture, which was hosted by FAO Director-General Jacques Diouf. An FAO document on the same subject warned that the share of total aid to agriculture remains stagnant and “by no means reflects the importance of agricultural GDP in developing countries.”
The Aid for Trade Initiative was launched at World Trade Organization’s December 2005 Ministerial Meeting in Hong Kong. The process aims to help poor countries build capacity and infrastructure to take full advantage of a successful Doha deal that would reduce barriers to global trade.
During today’s Aid for Trade event, FAO urged donors to focus special assistance efforts on five areas of trade-related activities to better integrate developing countries into the multilateral trading system so they can benefit from liberalized trade and increased market access in agriculture. These areas are technology transfer, policies for rural infrastructures and lowering marketing margins, policies for water-control, technical standards of products and food safety, and trade negotiations and trade policy analysis.
If Aid for Trade in agriculture is to be effective, FAO says it should begin by focusing resources on the above five most binding constraints on competitiveness, areas where FAO has been working for years to improve the capacity of developing countries in the trade of agricultural, fisheries and forestry products.
Technology transfer and utilization
One major reason for the lack of competitiveness of agriculture in developing countries is low productivity of the main factors used: land and labour. The problem is largely caused because technologies that are mostly already available in these countries are not widely adopted due to the inadequate use of production factors.
FAO’s Special Programme for Food Security (SPFS) and National Programmes for Food Security (NPFS) focus on small-scale interventions that bring about improvements within a short period. Given the enormous opportunities for raising productivity at lower costs and a faster pace, projects and programmes that focus on technology adaptation and adoption should be one priority area for the Aid-for-Trade resources.
Key rural services such as village and community-level agricultural roads, agricultural finance, agricultural insurance, post-harvest facilities, storage including cold storage, fishing ports, physical markets and market information systems are essential to induce the adoption of modern production technologies.
Investment in water management
Water management, particularly small-scale water control, in conjunction with technology diffusion and improved rural infrastructures, offers high payoffs to public and private sector investment in agriculture and the FAO report endorses this as a high-priority for Aid-for-Trade assistance.
Technical standards of products
Improving technical standards of traded products is a natural high-priority area for the Aid-for-Trade initiative, the FAO says, noting that FAO is assisting developing countries in this at the national, regional and international levels. The demand for assistance from member countries in this field is intense compared to available resources and, according to the report, more support through the Aid for-Trade initiative could be readily accommodated within current FAO programmes, allowing the Organization to provide further assistance.
Trade negotiations and trade policy analysis
Saying that most countries are now engaged in trade negotiations at the regional and bilateral levels in addition to the global Doha Round of trade talks, the report warns of the significant burden on those who must negotiate the agreements. It warns of the economic consequences of multi-layered and often over-lapping agreements and says “there is a clear and growing need to strengthen capability among other national stakeholders such as non-governmental organizations and farm and trade associations.”
Special event on financing of agriculture
Last night’s special event on Financing of Agriculture was organized by the FAO Investment Centre to increase awareness of opportunities to reduce hunger and poverty through greater investment in agriculture and rural development.
The study on Financing of Agriculture warned that the agriculture “sector needs to find innovative financing mechanisms and substantially improve its effectiveness in using the resources at its disposal, if it is to secure a share of financing commensurate with its importance in the economies of many developing countries and its role in reducing poverty.”
Participating in the event last night was the Vice President of Zambia, Rupiah B. Banda, the Minister for Agriculture and Fisheries of Iceland Einar K. Guofinnsson, the Deputy Director-General for Agriculture and Rural Development of the European Commission Jerzy B. Plewa and the Vice-President of the Alliance for a Green Revolution in Africa, Akinwumi Adesina.
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