High-Level Round Table on Agricultural Trade Reform
and Food Security

Statement by the Director-General

FAO Headquarters, Rome, 13 April 2005

Mr Chairman,
Excellencies,
Ladies and Gentlemen,

It is a great pleasure to welcome you to this High-Level Round Table on Agricultural Trade Reform and Food Security organized to coincide with the Sixty-fifth Session of the Committee on Commodity Problems and the Nineteenth Session of the Committee on Agriculture.

The 1990s were noted for a general trend towards trade liberalization and economic reform in almost all parts of the world.

However, the impact of these measures on food insecurity and poverty continues to be widely debated, within both the context of ongoing WTO negotiations under the Doha Development Agenda and as part of the challenges that are inherent in meeting the Millennium Development Goals.

Such is the background to this Round Table which will be addressing three major questions.

Part I: The agenda of the High-Level Round Table

The three questions asked

Mr Chairman,

FAO sees the following questions as being particularly relevant as they cover the most controversial aspects of ongoing policy debate.

First, does the liberalization of agricultural trade threaten food security and the alleviation of rural poverty?

This is a recurring question, even in countries committed to and working towards trade liberalization, notably through the WTO process. Although there seems to be broad consensus that trade liberalization fosters efficiency and economic growth, the immediate results for the poor and food insecure seem to me to be mixed. Experience shows that gains and losses and the distribution of winners and losers among individuals and countries are determined by context. In practice, a great deal seems to depend on the existence of complementary factors, including elasticity of supply, distribution of household income, institutions and markets. This suggests that appropriate liberalization policies depend on specific contexts and situations. Hence the need to discuss and share our experiences so that we can identify the successes and the failures and find the reasons for the differences in outcome

Second, under which circumstances can protection of the agricultural sector be justified to ensure food security when, as we know, protectionism runs counter to liberalization? We need to know whether there are circumstances that can justify the protection of agricultural sectors, subsectors or commodities in order to enhance food security. For example, can a country's level of food self-sufficiency reached and maintained through trade protection serve as justification? Or, can a country invoke poverty or low agricultural productivity to justify protection, or at least temporary protection? And to what extent can we ask a country not to protect its agricultural sector when it imports products from countries that subsidize their farmers?

We could also ask whether protection has different roles to play at different levels of economic development, or even whether subsidies to agriculture can be justified by its different roles beyond the supply of food and raw materials.

The third question relates to the most appropriate national policies for ensuring food security during the process of transition towards freer agricultural trade. Even if we agree that the goal is freer agricultural trade, some type of intervention on domestic markets or at borders might be necessary during the transition phase. The question is to determine the policies and the measures. Here again, experience and studies show that these will largely depend on the conditions of each individual country. For example, are there institutions and markets that can support the move towards a market economy but that can also address the needs large farmers and small farmers alike? We could also consider the importance of revenue from customs duty, which market liberalization could erode. After all, many developing countries initially saw no alternative to the taxation of agriculture to earn public revenue. Finally, participation in regional trade agreements could serve as an interim measure before commitment to wider and deeper integration in the global market.

Part II: The state of food insecurity in the world and the important role of agriculture

The state of world food insecurity

The World Food Summit of 1996 committed itself to halving by 2015 the number of undernourished people in the world. The mid-term review of progress will already be taking place next year. In this connection, FAO's latest report on the State of Food Insecurity in the World highlights three observations:

First, an estimated 852 million people were undernourished in 2000-2002. The number of hungry people in the developing countries only dropped by 9 million during the decade following the World Food Summit baseline period of 1990-1992. During the second half of the decade, the number actually increased by almost 4 million each year, wiping out two-thirds of the 27 million reduction recorded during the previous five years.

Next, a large number of countries in all developing regions have shown that success is possible. More than 30 countries, with a total population exceeding 2.2 billion people, have reduced their undernourishment figures by 25 percent, which represents significant progress towards the WFS goal.

Finally, every year without progress costs 5 million and more children their lives and developing countries billions of dollars of lost productivity and earnings.

Each year that hunger persists at current levels will cause deaths and disability in developing countries and related loss of productivity of US$50 billion at present value.

The critical role of agricultural development for food security

The 30 countries that are on track to reach the World Food Summit goal have recorded an average annual increase of agricultural GDP of 3.2 percent, which is almost one full percentage point higher than the developing countries as a whole.

This is not surprising if we consider that the overwhelming majority of the world's poor and hungry live in rural areas in developing countries and depend on agriculture for their livelihood. Agricultural development is vital for poverty alleviation and for access to sufficient food. One of the best options for most of these countries, if they are to improve their food security and nutrition, is therefore to increase agricultural productivity and raise small-farmer income.

The Anti-Hunger Programme that was developed by FAO for the World Food Summit: five years later takes a practical look at the investment that is needed to make agriculture more dynamic and vibrant. It proposes a twin-track approach: first, resource mobilization for agricultural and rural development to create opportunities for the poor and the undernourished to raise their income and enhance their work through competitive production, and; second, measures aimed at meeting the immediate food and nutrition needs of the seriously undernourished.

The approach of the Anti-Hunger Programme should also serve as a model of operation at different levels to achieve the first of the Millennium Development Goals, which is to eradicate poverty and hunger.

This is also the approach of the Special Programme for Food Security (SPFS). Launched by FAO in 1994, this programme is now operational in 110 countries where it seeks to improve farming systems and agricultural productivity through its various complementary components. Most of the first countries to adopt the SPFS are now extending their pilot phase activities to a large-scale expansion phase. Since it was launched, the SPFS has helped to mobilize more than US$700 million, with more than half of this sum committed by the developing countries themselves.

The SPFS also reaches out through the Regional Programmes for Food Security which focus on the development of regional and international trade, and in particular enhanced capacity for quality standards and regulations for the protection of plant and animal health. FAO has helped 17 regional economic organizations throughout the world to prepare their own food security programme.

Mr Chairman,

These then are the questions over which we should share views and exchange information on our respective experiences. Individual experience is in fact fundamental for there are no clear-cut answers to the somewhat controversial issues that these questions raise.

That is the context of the subject that is placed before this Round Table which needs to consider the general food situation in the world but also the pressing need to redouble our efforts if we are to achieve the objectives of the World Food Summit and the Millennium Summit.

I thank you for your attention and wish you a lively and productive exchange of views and experiences.

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