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I. Introduction

1 Macro-economic conditions and sustainable agriculture and rural development
2. Implications of the Uruguay round agreement on agriculture

Environment and sustainable development issues cut across the whole spectrum of economic activities, and particularly concern agriculture, forestry and fisheries. In spite of their diversity, small island developing States share common constraints that impede their efforts to develop the agriculture, forestry and fisheries sectors, while preserving their environment. Among the constraints are fragile ecosystems, vulnerability to natural hazards, population problems, poor communication facilities, and dependence on external economic factors. They run the added potential risk of rising sea level. On the other hand, most islands have the potential to diversify their economies for export and import substitution, for tourism and for drawing greater benefits from the fisheries resources of their exclusive economic zones. In determining their individual sustainable development objectives, small island developing States can draw great benefit from improved exchange of information with other islands sharing similar problems.

The agriculture, forestry and fisheries sectors have three vital functions:

*• supplying food and raw materials;

* providing employment and income in rural areas; and

* rendering essential environmental services for present and future generations in the maintenance of a large part of the earth's renewable natural resources.

In most countries, these sectors no longer have the capacity to perform all three functions efficiently and simultaneously.

The issues presented in this paper include approaches to sustainable management of the resource base by the agriculture, forestry and fisheries sectors, enhancement of self-reliance through a combination of diversified and intensified primary production from renewable resources, generation of income from the tourist industry, and capacity-building to meet the challenges posed by sustainable agriculture and rural development.

1 Macro-economic conditions and sustainable agriculture and rural development

More than other countries, small island developing States are dependent on the international trading system for their livelihood, which makes them vulnerable to the vagaries of the world market. This characteristic of small island developing States means that the achievement of sustainable agriculture is more complex than for countries which have to rely less on the world market. The relationship of trade policies to sustainable development and the environment is currently the subject of intense debate.

Fitting into the global economy is especially hard for small island developing States, which face a number of drawbacks:

* limited population size making economies of scale and labour specialization impossible;

* out-migration of skilled personnel, resulting in a high degree of dependence on foreign capital, external assistance and expatriate technical assistance which may not always be sensitive to local conditions;

* a small monetized sector with local private investment limited to low-risk activities such as trade and services; a heavy burden on the public sector faced with limited domestic income-generating capacity reliant on sources such as import duties, fishing rights and remittances from nationals working abroad;

* a narrow resource base creating a dependence on imports of consumer and capital goods;

* and exports limited to primary products from agriculture, forestry, fisheries and mining prone to considerable fluctuations in output and price.

Sustainable development, including food security, nutritional well-being, poverty reduction, and rural development require inputs from many technical disciplines and should be addressed holistically in the planning process. This has been stressed in the structural adjustment programmes. In the provision of policy advice and programming assistance, the main challenge is to assist small island developing States to incorporate environmental and sustainable development considerations into the mainstream of agricultural planning and policy, in line with Agenda 21 recommendations.

Sustainable agriculture and rural development (SD) has three essential goals:

* food security through an appropriate and sustainable balance between self-sufficiency and self-reliance;

* employment and income generation in rural areas, particularly to eradicate poverty;

* natural resource conservation and, environmental protection.

"The International Cooperative Programme Framework for Sustainable Agriculture and Rural Development (ICPF/SARD)"

Since 1991, FAO has been streamlining its Special Action Programmes (SAPs) related to sustainable development. SAPs are clusters of projects which correspond to the priority areas indicated in the den Bosch Agenda for Action and subsequently incorporated into the programme areas of UNCED's Agenda 21, Chapter 14 on SARD, with the addition of two specific SAPs on forestry and fisheries as well as a third SAP directly related to the follow-up to the International Conference on Nutrition. The component SAPs of the ICPF/SARD are as follows: SAPs focusing on policy advice and planning assistance: i), Country Policy and Programming Assistance for Food Security and Sustainable Agriculture and Rural Development; ii) Tropical Forests Action Programme; and iii) Responsible and Sustainable -Fisheries; SAPs focusing on people's welfare: i) Nutrition and Food Quality; ii) People's Participation in Rural, Development; and, iii) Sustainable Development of Rural Households; SAPs promoting the sustainable management of the natural resource base: i) Land Conservation and Rehabilitation; ii) Management of Rural Water Resources; iii) Conservation, Development and Use of Plant Genetic Resources; and, iv) Global Programme for Animal Genetic Resources; SAPs dealing with the sound use of agricultural inputs: i) Integrated Plant Nutrition Systems; and ii) Integrated Pest Management. Regional and national projects to implement the ICPF/SARD may be formulated for the small island developing States expressing interest.

It will take several years before the SARD process can demonstrate its environmental, social and economic benefits. During the transition period, heavy investments of labour, capital, technology and research will be required to accomplish SARD's goals.

To be successful, SARD must be perceived as a pivot around which the environmental, social and economic fabric of a country evolves. SARD requires a comprehensive approach where all essential elements are brought together within a single framework. Technical assistance and capacity-building should be pursued with all actors involved in agriculture, who have different but complementary roles. At the national level, sustainable agricultural and rural development would integrate sectoral and cross-sectoral programming assistance in agriculture, forestry, fisheries, poverty alleviation and nutrition; at the community level, people's participation would be enhanced through human resources development and strengthening rural people's organizations; at the household level, all aspects of sustainable management of the resource base, appropriate technology, sound use of inputs and diversification of sources of income would be integrated to increase levels of production.

Economic agents at all levels and in all sectors, including national governments, develop and carry out strategies for sustainable development and management of land, water and biotic resources. This is why all must have access to reliable information and be involved in the formulation and application of national strategies reflecting the recognized congruence of individual and society interest, both short and long-term. The values of conservation and rehabilitation need to be widely publicized and demonstrated, and technical advice and assistance provided to those needing help. Governments can create the conditions and institutions to encourage sustainable production practices by farmers, fisherfolk and other economic agents.

"Agricultural Sector Review in Malta"

In view of assisting the Government in adapting its agricultural policy to the Customs Union and eventual European Union membership, this project (1991-93) reviewed the challenges and opportunities facing the sector. Over the years, Malta has come to depend increasingly on imports of agricultural commodities, mainly from EU countries. This is due to decreasing land resources available for agriculture and rising food demand from the, tourist industry. The, number of factors contributing to trading with EU countries include their proximity but also reduced import tariffs as compared to other countries, the EU policy regarding export subsidies to non-EU countries, the size of the market and facilities for handling and storage of imports. Besides focusing attention on functional improvements of the agricultural support services (notably experimental work, demonstration and extension), particular emphasis was placed on strengthening the capacity of the sector to retain the land base for productive and ecological purposes. The measures recommended include: improvement of public sector management in agriculture and fisheries; improvement in the management of land, fresh water and marine resources; introduction of high-yielding, cost-effective and environmental friendly production techniques; improvement of marketing systems for crop, livestock and fisheries products; a review of the land tenure system; rationalization of trade measures to control imports of agricultural commodities; and a review of price control measures. Financial incentives could be required during the transition period to boost productivity and improve the incomes of full-time farmers.

2. Implications of the Uruguay round agreement on agriculture

The Agreement on Agriculture of the recently concluded Uruguay Round will have wide-ranging implications for the developing countries, including the small island developing States. Its anticipated impact on small island developing States arises both from expected changes in agricultural commodities markets and from limitations on their freedom to implement policies adapted to local conditions. The former are likely to be contingent and temporary, whereas the latter are structural and long-lasting.

Nearly all small island developing States are net food importers. Because of the reduction in agricultural support in the developed countries, the structural surpluses they generated in the past are likely to disappear. As a result, world market prices will likely rise, especially as developed country exporters are committed to reducing export subsidies. Several small island developing States already faced with serious balance-of-payments problems will find it difficult to maintain their food import volumes without sacrificing other essential imports.

The Agreement contains some safeguard provisions concerning the possible negative effects on least-developed and net food-importing countries. These cover areas such as food aid, technical assistance and short-term assistance in financing normal commercial imports. Whether these provisions would constitute adequate coverage against higher import bills is not clear in view of certain conditionalities for eligibility.

On the other hand, the prices of commodities exported by small island developing States are likely at best to rise only marginally as a result of the Agreement. Indeed, there may be a reduction in the export earnings of countries which have benefited in the past from preferential access to developed country markets. These countries may, however, gain from concessions in non-agricultural sectors. Overall, there is no certainty that they will be net gainers from the Uruguay Round.

The most significant implications of the Agreement relate to the policy environment. Policies allowed under the Agreement are those which have at best minimal production or trade distortion effects. Policies that do not meet this basic criterion may be kept but expenditures on them must be reduced. The least developed countries are not expected to cut support. In small island developing States, maintaining or increasing food production in order to reduce dependence on imports is contingent upon substantial price support. The Agreement implies that this type of support will be more limited in the future. This has implications for minimum safeguards that they may want to establish (in the form of food security stocks or funds) to protect themselves against world market volatility.

It is difficult to make even a broad evaluation of the Agreement on SARD. Policies that can help the environment are allowed under the Agreement, but these can only be implemented in a healthy overall economic climate and may be too costly for poor countries.

Substantial international assistance (both technical and financial) may be needed in the future to facilitate adjustment to the changing macro-economic conditions at a time when: the favourable position in development aid is being eroded, preferential arrangements may be dismantled, opportunities for work abroad are becoming scarcer, local market sizes are limited, the resource range is becoming narrower, and increasing environmental problems and proneness to disasters jeopardize production.

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