CCP 03/7

Table of Contents

I. INTRODUCTION

II. COMMODITY PRICE DEVELOPMENTS

A. BASIC FOOD COMMODITIES
B. HORTICULTURAL PRODUCTS AND SUGAR
C. AGRICULTURAL RAW MATERIALS (COTTON, RUBBER, JUTE, HARD FIBRES AND HIDES AND SKINS)
D. TROPICAL BEVERAGES
E. FALLING AGRICULTURAL PRICES DOUBLE-EDGED SWORD FOR DEVELOPING COUNTRIES

III. CHANGES IN AGRICULTURAL COMMODITY MARKETS

A. TRADE PATTERNS
B. MARKET/TRADE CONCENTRATION
C. EXPANDING TRADE IN VALUE-ADDED COMMODITIES
D. THE NEW TECHNOLOGIES

IV. GROWING IMPORTANCE OF CONSUMER-RELATED CONCERNS

A. FOOD SAFETY
B. ALTERNATIVE PRODUCTION SYSTEMS

V. CONCLUSIONS

I. INTRODUCTION

1. This document reviews some or the major factors that have influenced international agricultural markets during the past few years. Of particular concern has been the general downturn in agricultural prices since the price peaks observed in the 1995-96 period, mainly because of the impact of low prices on the ability of developing countries to earn foreign exchange and income from exports and/or to limit their cost of importing basic food staples.

2. In general, agricultural commodity markets during the second half of the 1990s were influenced mainly by supply response to previously high prices and prices of close substitutes (e.g. synthetics), the Asian financial crisis that undermined economic growth prospects and lowered effective demand in many countries, and the continuing support to production and exports by a number of countries, both developed and developing. Additional factors may have also influenced agricultural markets and/or the potential of these markets to develop in the future: reference is made to observed changes in market structures for some commodities in terms of changing geographical trade patterns, shifts from bulk exports to more valued-added trade and the level of market and trade concentration. Advances in technology, in particular biotechnology, could have a major impact on production, commercialization and international trade flows. Finally, growing consumer awareness and concerns about food safety and the environment are driving changes in some commodity markets and government policies to meet these concerns.

II. COMMODITY PRICE DEVELOPMENTS

3. Overall, agricultural commodity prices peaked in the mid-1990s, then tended downwards during the second half of the decade, although for some commodities prices began to recover during 2001 and 2002.

A. BASIC FOOD COMMODITIES

4. Most international prices of basic food commodities were under downward pressure during the second half of the 1990s. Nominal cereal prices saw sharp declines following their 1995-6 peak. During the 1997-2001 period, annual average cereal prices dropped by around 40 percent from their highs in 1996. The declines appear to have been caused by strong production gains, spurred by previously higher prices and by positive supply support policies especially in major cereal exporting countries, and weak import demand that resulted in accumulation of surpluses. However, cereal stocks have been steadily drawn down since 1998/99, but cereal prices did not begin to respond until 2002, when they rose more than 7 percent. Wheat prices began their increase, however, earlier during the 2000-01 season; while coarse grain prices began to recover in mid-2002 and rice prices started to rise later in the year. The upside potential for grain prices could be limited, however, by the large, and in some cases, the growing availability of surpluses from a number of non-traditional and/or minor exporters; for wheat, these include the Ukraine, the Russian Federation, eastern Europe and India; for maize, China and Brazil; and for rice, India and Myanmar.

5. International prices for most oils and fats were under downward pressure during much of the 1999-2001 period attributed to conditions of over supply, relative to demand, resulting in a build-up of stocks due to an above-average increase in palm and soy oils production. However, the situation was reversed towards the end of the 2000-01 season which continued through the 2001/02 season. Oilcakes and meals prices followed a different path as the sector was largely the price leader for the oilseeds complex. Rising prices during 2000-01 were largely demand driven, especially boosted by the animal disease outbreak in the EU that resulted in a ban on the use of meat and bone meal and the increase in the demand for protein meals in compound feed rations.

6. Meat prices dropped sharply after 1998 in response to animal production cycles (particularly for beef), increasing trade in low-priced meat cuts, and numerous market disruptions, including those related to animal disease outbreaks. The year 2001 marked a period of rising meat prices, particularly for poultry and lamb, in the wake of animal disease outbreaks which closed some meat markets and, in the case of BSE, heightened human health concerns. In 2002, meat prices came under downward pressure from rising supplies from the major exporting countries due to the waning impact of animal disease and drought conditions that induced herd liquidation in some countries.

7. Although milk prices increased by 8 percent since the mid-1990s, they began to decrease significantly in late 2001. International prices for dairy products dropped substantially between mid-2001 and mid-2002, with the FAO dairy price index falling by almost 35 percent. The price decline concerned all commodities, with milk powder being the most affected, due to reduced import demand in some key markets and a build-up of uncommitted stocks in the main dairy exporting countries.

B. HORTICULTURAL PRODUCTS AND SUGAR

8. World banana prices tended to decrease since th emid 1990s and reached a low for the decade in 2000, about 23 percent lower than the average for the nineties. They recovered in 2001 and remained firm until the first half of 2002 due to strong import demand, especially in the EU and Japan. However, import prices continue below their levels of 2001 as the fall and winter seasons approach, which may be a precursor of lower prices over the remainder of 2002. In the EU there is supply pressure from internal production and from ACP suppliers in Africa, which is adding to the substantial volumes from Latin America. Prices for fresh citrus and orange juice declined in the late 1990s but recovered in the 2001/2002 season. Orange juice prices were driven down by large orange harvests from the mid-1990s to 2000 in Florida and Brazil, the world's major producing regions. As for the 2002/03 season, Brazilian stocks of frozen concentrated orange juice (FCOJ) should remain relatively low, as world demand is steady, and the orange crop in Florida is forecast to be much smaller than in the previous season. Therefore, world FCOJ stocks are expected to remain relatively low and prices firm in 2002/03. Prices for the major traded tropical fruits (avocado, mango, papaya, pineapple) were also weak in the second half of the 1990s and reached their lowest levels in 2001. The prices of these commodities continued to remain weak in 2002, with the major exception of pineapples which dominate the international trade in tropical fruits. Import prices in the United Kingdom wholesale market increased by about 40 percent between 2001 and 2002 (year to date), supported by reduced supply from Thailand and continued strong demand growth in European markets.

9. Average annual international sugar prices drifted downward after the mid-1990s reaching a low in 1999 at less than one-half of the peak price in 1995. A recovery in 2000 and 2001 appears to have been shortlived. Prices fell back in 2002 on the expectation of increased export availabilities reflecting a large crop in Brazil, and increased output from other major suppliers including the EU. Prices firmed slightly in late 2002 as adverse weather affected US production. Domestic support to sugar production in some countries continues to be a major trade policy issue, with Australia and Brazil beginning complaint procedures against EU sugar subsidies in the WTO.

C. AGRICULTURAL RAW MATERIALS
(COTTON, RUBBER, JUTE, HARD FIBRES AND HIDES AND SKINS)

10. After a short-lived spike in the 1995-96 seasons, prices for many agricultural raw materials touched lows in 2001 or early 2002. The emergence of new low-cost producers, over-expansion of production, weak import demand due to the slowdown of economic growth, continuing competition from synthetics, and cyclical factors associated with high levels of production and an accumulation of stocks have been largely responsible for record low prices for cotton, rubber and jute and lower prices for hides and skins. Prices for hard fibres have also weakened, in particular for sisal and abaca. Partly in response to persistent low prices, world cotton production is expected to decline in the 2001-2 season. On the other hand, increases in the area planted to transgenic cotton have expanded production, contributing to continued depressed prices. Domestic support to US and EU cotton producers continues to be a major trade policy issue, blamed by developing country producers for at least some of the decline in world cotton prices. Rubber prices have seen a sharp increase recently as bad weather temporarily reduced production in early 2002. However, market imbalance is expected to re-emerge with a consequent fall in price. In response to the persistent tendency towards oversupply, the three major producers – Indonesia, Malaysia anf Thailand – have instigated a production and export control agreement.

D. TROPICAL BEVERAGES

11. The sharp fall in the price of coffee has captured most media attention. Significant oversupply on world markets, mainly due to expansion of planted area in Vietnam and the devaluation of the Brazilian real, led to a price fall of 29 percent in 2001, following the 25 percent fall in the previous year. The prolonged period of low prices resulted in supply reductions, and this together with some buying by investment funds, has strengthened recent prices. However, market imbalance persists. An attempt to address this through the Association of Coffee Producing Countries’ export retention scheme failed. Cocoa prices followed a similar declining trend and for the same fundamental reasons, but with a rather stronger recovery in 2001-2 with the entry of investment funds into the market and the uncertainty created by the conflict in Cote d’Ivoire the world’s major producer. Recent prices for tea have been comparatively strong, mainly as a result of sustained demand in the Russian Federation and the Near East , though still on a generally downward trend.

E. FALLING AGRICULTURAL PRICES
DOUBLE-EDGED SWORD FOR DEVELOPING COUNTRIES

12. Lower international prices in recent years have moderated the agricultural import bills of developing countries (Table 2). The import bills for basic food staples fell from a high of US $67 billion in 1996 to an average US $61 billion in during the 1999-2001 period, in spite of significant increases in import volumes. For example, cereal import volumes rose 12 percent during the same period while import bills for developing countries fell from US $33 billion in 1996 to an average US $25.5 billion. The major exceptions were oilseeds and meats which experienced strong growth in import demand resulting in rising import bills during the second half of the 1990s. For the low-income, food-deficit countries (LIFDCs), their basic food import bills have fallen slightly since the price spike in 1996. In both country categories, however, basic food import bills following the mid-1990s averaged above the period preceding the price spike due, in general, to higher volumes of imports and smaller food aid shipments.

13. Falling international prices may have brought temporary relief to countries facing balance-of-payments constraints and to consumers in those countries, provided that lower international prices were transmitted to domestic markets. Since developing countries as a group have become net food importers, and their food deficit is expected to increase, reductions in basic food prices on world markets are clearly beneficial. However, low international prices can also have a negative impact on domestic production in developing countries that might have lingering effects on their food security.

14. While many countries may have benefited from lower prices, others experienced negative effects on their ability to generate export earnings. In particular, lower world prices led to lower earnings for developing country exporters of agricultural raw materials, beverages and other tropical products following the 1995-96 price spike (Table 3). Many of these countries are dependent for a significant share of their export earnings on one or a few agricultural exports, notably in the case of developing country exporters of coffee, cocoa, sugar, bananas and cotton. Forty-three countries, concentrated in Sub-Saharan Africa, Latin America and the Caribbean, earn more than twenty percent of their total merchandise export revenue and more than fifty percent of their total agricultural export revenue from just one agricultural commodity.

15. Of particular importance for food security is that these commodities provide a major source of earnings for LIFDCs. For these countries, exports of cotton, coffee, tea and cocoa provided 20 percent of their earnings from agricultural exports in 2000, with a further 10 commodities bringing this total to 50 percent. Fluctuations in the export earnings from this small group of commodities play an important part in the food security of these countries. Some of the largest banana exporting countries in the world are LIFDCs (Ecuador, Honduras, Guatemala, the Philippines, Cameroon, Cote d'Ivoire and Somalia). Bananas make up a significant share of total export volume and, therefore, banana price movements have a significant impact on their export earning capacity.

16. Overall, the value of these commodities exported from the LIFDCs appears to have recovered by perhaps as much as 20 percent in 2002, after a significant contraction in 2001. Among those commodities which experienced positive export earnings in 2002, some were generated from price and volume increases (cocoa, cotton, rubber), while others gained solely from volume expansion (bananas, tropical fruits); others saw their export values fall due to a mixture of weak prices (sugar, tea) and smaller exported volumes (coffee).

17. Export earnings from the sale of basic food staples by developing countries were also reduced. Overall, the value of these exports fell from US $39 billion in 1998 to US $31 billion in 2000. While not as dependent on exports of basic food staples, the LIFDCs, as a group, had fewer losses due to falling prices following the price spike in the mid-1990s.

III. CHANGES IN AGRICULTURAL COMMODITY MARKETS

18. Developments in international and national commodity markets in recent years have resulted from important changes in the economic, technical, policy and institutional environments in which markets operate. These include: shifts in the balance of competitiveness between countries and the emergence of major new suppliers for certain products which have changed the pattern of trade; the adoption of biotechnologies in plant and animal production; domestic market liberalisation; and the agreement and implementation of international trade rules under the auspices of the WTO.

A. TRADE PATTERNS

19. Commodity trade patterns tend to evolve over time, but in recent years there have been significant changes in some commodity markets. Within the cereals sector, changes in trade patterns have emerged in the last two seasons as minor and/or non-traditional exporters are taking a larger share of the world market. Several former net grain importing countries have reversed their position to become large net exporters. For wheat, India, Hungary, Kazakhstan, the Russian Federation and Ukraine increased their average market share from 6 percent in 1999-2000 to 18 percent during the most recent two seasons. Minor coarse grain exporting countries, primarily Brazil, China, the Russian Federation and Ukraine, are expected to take almost 20 percent of the global market in 2002/03, primarily maize. The rice export shares of Myanmar and Egypt have increased markedly, but the most notable development has been the emergence of India, which, assisted by a policy of export subsidies, currently stands behind Thailand as the second largest international supplier of rice. By contrast, China, a traditional rice exporter, has reduced shipments steadily since 2000, a reflection of falling production.

20. Over the last few years, some traditional importers of oilseeds and products – particularly in Asia, lead by China – have raised their importation of oilseeds at the expense of purchases of oils and meals (the products derived from the raw material). This shift was mainly triggered by specific trade policies (non-tariff measures as well as tariff measures, such as tariff escalation) that aimed at providing support to local crushers and/or to stimulate expansion in domestic crushing industries, thereby raising domestic value-added. This development is having an impact on the overall pattern of trade, as some exporting countries have specialized or are specializing in sales of oilseeds or in supplying oils and meals. This applies, for example, to Argentina, a traditional exporter of soy oil and meal, and Brazil, which exports predominantly the raw material, soybeans. In recent years, Malaysia and Indonesia have specialized in the exportation of refined and crude palm oil, respectively.

21. The balance in the world market is shifting from those countries that depend on subsidies to export dairy products (mainly Europe and North America) to those which are able to export without the use of such subsidies (principally Oceania and some South American countries). This trend has been maintained in recent years and is expected to continue. In terms of imports, growing demand in countries without a strong tradition of dairy products consumption – especially South-East Asia and China – has been an important element in the development of world demand.

22. As noted above, much of the imbalance and consequent downward pressure on prices in the world coffee market has been widely attributed to the emergence of Vietnam as the world’s second largest exporter, although the expansion in Brazil’s exports has also played a significant role.

B. MARKET/TRADE CONCENTRATION

23. For some agricultural commodities, market concentration is a growing reality. In the case of cereals, there appears to have been some consolidation among major grain traders in recent years and a shift to vertical integration in some markets. Although state trading enterprises have traditionally played an important role in imports and exports, their role has diminished in recent years as a result of trade liberalization policies. The most recent example is the conversion of the Australian Wheat Board to a private trading company. Large rice volumes are still exchanged under Government-to-Government deals. However, although a number of important countries are in the process of reforming their rice marketing and trading systems, while others have recently abandoned state trading monopolies and allowed private traders to engage in rice trade.

24. The concentration of oilseed export flows in the hands of a limited number of players is continuing. The main reasons for this development include: (i) some countries are pursuing aggressive export promotion campaigns backed by specific government policies and (ii) public funding and high levels of vertical integration, with a limited number of international private firms operating throughout the chain (from oilseeds production through trade to the manufacturing and marketing of consumer products), concentrating on a limited number of countries.

25. As a result of acquisitions and growth, both within and between countries, dairy processing companies are becoming larger; to the extent that, in some countries, for example Uruguay, Israel and Denmark, a single processor accounts for over 50 percent of national processing capacity. The growth in size and reduction in the number of processors is mirrored in many countries in their farm structure, where there is a general trend to fewer, larger farms, and in the structure of their retail distribution sector, where a limited number of companies often dominate the market.

26. Twenty supermarket chains dominate the retail sectors in tropical fruits in Japan, the United States and Europe. These same chains are rapidly expanding elsewhere. Their preferences for dealing with few large suppliers, imposing their own certification and food safety criteria, and eliminating as many middlemen as possible have left some smaller farmers and developing country suppliers struggling, since they do not have the capital to invest in the equipment or pay the certifications needed by the supermarkets. In bananas some supermarkets have taken the process a step further, signing contracts with single multinational suppliers, to the exclusion of competition from smaller exporters. In all three major import markets multinationals have over 80 percent of the market already. The coffee processing industry is similarly concentrated with just five companies buying almost 50 percent of world coffee production each year.

C. EXPANDING TRADE IN VALUE-ADDED COMMODITIES

27. The importance of adding value to exportable agricultural commodities by processing has long been seen as a major area for increasing the earnings potential of developing countries. Some of the commodity groups which most lend themselves to trade in processed products are reviewed briefly below.

28. A large number of products are derived from oilseeds, often involving substantial value addition, in particular in the case of oils and products. The market share of oilseeds versus that of the two main sub-products, oils and meals, has remained fairly stable over the years and no major shifts are expected to occur in the short to medium term. By contrast, downstream processing of oils and fats depends on a rather dynamic industry which produces the ingredients for a wide range of food and non-food products. In particular the oleo-chemical industry (which produces, inter alia, soaps and detergents) has expanded steadily in recent years and is expected to grow further in the medium term. Today that industry accounts for about 15 percent of the global use of oils and fats, and trade in oleo-chemical products is registering steady growth.

29. Increasing specialisation of meat production and processing, driven by consumer preferences for specific types, cuts, and further processed meat products, is facilitating trade in a broad array of meat products and specialised meat cuts. Increased product differentiation in markets is occurring with exporters moving away from shipments of carcass meats to de-boned and further processed products. The result is the growth in trade of value-added meat products which is likely to accelerate.

30. Milk requires some degree of processing before it can be traded, but also by their nature dairy products are characterised by the adding of value. World trade has changed from being dominated by countries using export subsidies such that the most dynamic elements are now non-subsidising exporters, and consequently the focus has shifted from surplus disposal to market development, with a movement away from simple bulk commodities – such as butter and skimmed milk powder – to more value-added, highly specified dairy products, such as whole milk powders and cheese.

31. While potential oportunities for trade in value-added products are easily identified, capitalising on such opportunities is not easy for developing countries. Market access to major markets has been restricted by tariff escalation which puts higher duties on processed commodities compared to bulk commodity imports. However, elimination of tariff escalation alone is not a sufficient condition for successful vertical diversification. Concentrated international market structures for many major traded commodities as described above can pose significant barriers to entry into processing and exporting.

D. THE NEW TECHNOLOGIES

32. Since the 1960s, technological breakthroughs under the green revolution have been at the forefront of the expansion in production in many developing countries. More generally, mechanical, agronomic and husbandry innovations have led to increased yields in crop and livestock production worldwide. Increasingly, as with integrated pest management, technical innovations have been concerned with environmental impacts and sustainability. Increased yields and production against relatively slow growing demand lie behind the secular decline in real agricultural prices. Those producers with access to the new technologies benefit from the reduced costs associated with them, but those producers without access, located particularly in Africa, are squeezed as their prices decline with no concomitant reductions in their costs.

33. Currently it is biotechnologies which are the focus of public debate. With potential to lower production costs and improve productivity further, as well as promising to offer new means for producing traditional agricultural products and to create new products, these new technologies are already having an impact on production, commercialization and international trade of agricultural products. The development, adaptation and use of genetically modified (GM) organisms have already made significant inroads in some countries, both developed as well as developing: GM soybeans account for almost half of the global area planted, and have virtually replaced conventional varieties in the United States and Argentina; transgenic cotton varieties, bred for insect resistance, herbicide tolerance, improved yield, virus resistance and higher quality of cottons, covered nearly 7 million hectares in 2001, about 20 percent of world cotton area; GM maize accounted for 7 percent of the global area in 2001.

34. However, the issue of consumer acceptance of these crops and derived products still dominates the debate and will play a significant role in determining the extent of the market for them. The presence of GM products has affected trade, both in commercial transactions and in food aid deliveries. Segregated markets are developing for non-GM products to accommodate consumer preferences, with some countries focusing on supplying the markets for non-GM commodities and some major importers sourcing part of their products in countries known to be free of GM varieties. For some non-GM products, non-GM varieties may command a price premium, but farmers in major producing and exporting countries, such as Argentina and the United States, are adopting these new technologies that offer lower cultivation costs and higher average yields.

35. Expansion of the production and trade of GM crops is also being slowed by regulatory measures. An increasing number of countries are subjecting the commercialization of such products to regulations, such as mandatory labelling, testing and identity preservation throughout the entire marketing chain, which, inevitably, has increased handling costs and affected trade flows. In order to prevent the use of such regulations to restrict trade outside of the internationally agreed rules and to facilitate adjustment by the concerned industries, it would seem essential to develop a set of harmonized and widely accepted regulations and standards. With the global markets for the GM products still relatively small and not yet consolidated, future growth will probably depend more on consumer preferences and government policies than on additional benefits to producers. The main exception could be the potential offered to farmers in developing countries who face productivity constraints and marginal land conditions.

IV. GROWING IMPORTANCE OF CONSUMER-RELATED CONCERNS

36. More and more, consumer concerns, backed by government policies, are influencing commodity production and trade. Two areas, in addition to the issues related to biotechnology, are of special interest, food safety and alternative production systems.

A. FOOD SAFETY

37. In numerous countries, regulations concerning food safety and quality standards have been introduced by both governments and the private sector. This is in line with a general trend that is closely linked to rising consumer concerns about food safety on one hand and environmental issues on the other. The greater attention being given to food safety and consequent proliferation of national standards increases the complexity of global commodity markets and highlights the importance of harmonized measures based on international standards, such as those put into place by the Codex Alimentarius Commission (Codex). The challenge will be to enhance transparency in the system of notification, consultation and resolution of trade disputes and to assist those exporting countries, in particular developing countries, which ultimately face higher costs as a result of the imposition of more demanding international standards. Meat and livestock products present particular difficulties. Notifications related to meat and livestock products account for a large share of the nearly 3 000 SPS notifications submitted to the WTO since the advent of the notification process in 1995. Increased attention on meat production systems and the integrity of the “hoof to plate” approach to food safety and quality increase the risk of proliferating food standards, sanitary assurances, and certification procedures that are difficult to compare, disadvantaging those meat exporting developing countries that face higher costs in adhering to these changing requirements.

B. ALTERNATIVE PRODUCTION SYSTEMS

38. In recent years there has been growing concern among consumers about the environmental and social conditions of agricultural production and processing. Some non-governmental organizations have tried to address these concerns by developing standards, programmes and labels that certify that the products on sale have been produced and traded according to some specific environmental and social criteria. Organic agriculture and “fair trade” are the standards that have received most attention so far. Sales of organic agricultural products have been growing very rapidly, albeit from a small base, fuelled in particular by a series of food scares. World retail sales of organic products were estimated at US$16 billion in 2000 (representing 1- 2 percent of total food sales) and may well have reached US$20 billion in 2001. Certified organic products are mainly consumed in developed countries and are generally sold at higher prices than conventional foods. This market may offer opportunities to developing countries but there are significant obstacles to overcome, including certification. The market for fair trade products is much smaller but has been growing moderately.

V. CONCLUSIONS

39. The previous two years have witnessed significant changes in the markets for several agricultural commodities. Many commodity markets have started to experience an upward turn in international prices following a number of years of steady decline. While some developing countries benefited from the fall in prices since the mid-1990s from lower import bills, others suffered lower export earnings, in particular those countries heavily dependent on one or few agricultural commodity exports, such as coffee, cocoa, sugar, bananas and cotton.

40. Changes in market structures also emerged during the period under review. Examples of changing trade patterns include the non-traditional cereal exporters increasing their market share during the past two seasons and the oilseed trade becoming sharply divided between oilseeds and products as more importing countries are promoting local processing industries. The livestock industries are also moving more towards processed product trade in response to changing consumer preferences. There was also evidence that a number of commodity markets are experiencing more concentration, both at the global level (oilseeds, dairy) and on domestic markets (tropical fruits). The diversification of markets can have positive benefits for global food security by spreading the risks of production shortfalls over several countries rather than a few major exporters. On the other hand, growing market concentration could stifle the ability of potential exporters to enter the market. Expanding trade in value-added commodities holds the promise for developing countries to capture a larger share of the final price, but tariff escalation is still curbing their ability to enter new markets.

41. Developments in recent years in the application and adoption of new technologies have been dramatic in some commodity markets. Production and trade in GM soybeans, maize, canola and cotton have risen sharply since the mid-1990s. At the same time, opposition to GM crops has grown, to the point where some countries have put up effective barriers to entry. This issue is closely tied to consumer and government food safety and environmental concerns, which are setting the future agenda on the debate. These same concerns have also encouraged the production and trade in organic and “fair trade” commodities. Whether these remain niche markets or not will depend largely on consumer perceptions and government policies.

42. In light of the above, the Committee may wish to focus its discussion on those issues affecting developing country commodity markets. In particular, it might wish to address ways in which to improve market access to those countries which are dependent on a few agricultural commodity exports, and the potential to generate additional income by adding product value.

43. The Committee may also wish to examine how to balance the potential benefits of the new biotechnology on crop production for developing country farmers with the concerns expressed by consumers, NGOs and governments.

Table 1 Average International Prices for Agricultural Commodities in 1990-94, 1995-96 and 1997-01

Table 2: Value of Imports of Basic Food Commodities- '000 million $