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Press Release 98/12


Rome, February 24 -- To improve assistance to agricultural commodity producers in developing countries, particularly the least developed countries, the UN Food and Agriculture Organization (FAO) and the Common Fund for Commodities (CFC) have signed a memorandum of understanding to "enhance cooperation at all relevant levels", the two organizations announced today.

FAO and the CFC, according to the memorandum, will "promote synergies and improve coordination so as to use their respective resources more effectively and efficiently."

During the early stages of project formulation, FAO and CFC will hold informal consultations based on short project profiles to minimize the cost of project formulation and speed up the submission of project proposals. The memorandum also says, "FAO and CFC shall undertake joint efforts to mobilize co-financing for projects sponsored by FAO Intergovernmental Groups."

FAO and the CFC have cooperated in past years on technical commodity development measures to improve the structural conditions in commodities markets and enhance the long-term competitiveness and prospects for particular commodities to the benefit of the least developed countries and poorer groups of the population in other developing countries. It is in this area that cooperation can be expected to grow, according to the two organizations.

Commodity prices have been less stable than other prices and tend to fluctuate more than prices of other products, causing difficulties for both producers and consumers. Commodities continue to be the backbone of the economies of most developing countries and this dependence has been aggravated by the adverse trend in commodity prices for the last 30 years. Making matters even worse, for many of these countries, the declining prices for primary commodities were often accompanied by higher prices for inputs in commodity production. The resulting deterioration in the terms of trade has taken a heavy toll on commodities exporters over the years.

Projects to help commodity development in the developing countries are sponsored at the CFC by International Commodities Bodies (ICB). At present, ten of the 23 CFC ICBs are from FAO, nine intergovernmental groups serviced by FAO's Commodities and Trade Division and the sub-Committee on Fish Trade under the Fisheries Department.

FAO's ten ICBs have sponsored some 20 projects accepted by the CFC for financing totaling more than $50 million. To date, the CFC has approved 61 projects with a total financial volume of almost $165 million, covering 22 commodities of importance to developing countries. The CFC attracts co-financing from other sources and institutions for more than half the total project funding. More than one third of all Common Fund financed projects were generated by FAO, and some are implemented by FAO.

In Uganda, a Pilot Meat Processing Plant for meat production development and commercial activities was commissioned in November 1997. The project trains people from the region on how to develop, process and supply meat products compatible with the climatic conditions of the region and consumer tastes. The first training course, completed in December 1997, trained local personnel and the private sector operator of the plant on the use and maintenance of equipment. The project will offer courses for veterinarians, butchers, meat inspectors and meat production managers during 1998 and 1999.

In Kenya and Tanzania, a five-year $5.4 million project, begun in January 1997 is developing and commercializing new applications for hard fibres, such as sisal and henequen, including the use of sisal pulp in paper manufacturing and sisal fibre as reinforcement for recycled paper. The project's activities also focus on the development of new sisal varieties and the improvement of existing cultivation and processing practices and is expected to lead to a revitalized sisal sector that will be a new source of rural employment and export earnings for sisal producing countries.

Another $50 million is in the pipeline for new FAO assisted projects, such as small- scale cassava processing in Africa and prevention of coffee mold in developing countries.

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Contact John Riddle at (396) 5705-3259, or john for further information.





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