GLOBAL AGRO-INDUSTRIES FORUM
New Delhi, India, 9 April 2008Honourable Shri Sharad Pawar, Minister of Agriculture, Consumer Affairs, Food and Public Distribution,
Dear Colleagues and friends from UNIDO and IFAD, Kandeh Yumkella and Lennart Bage whose leadership allowed us to have this forum,
Your Excellencies,
Mr. Secretaries,
Ladies and Gentlemen,
I should like to begin by expressing my profound gratitude to the Indian Government and to you, Distinguished Minister, for the warm welcome that we have received in New Delhi at the Global Agro-Industries Forum.
Under the Government's guidance, India's economy has gone from strength to strength and there are encouraging signs of revival of agricultural growth and agro-industrial activity.
Today agriculture is forcefully back on the international agenda.
The higher prices of agricultural products on international and domestic markets have propelled agriculture to the centre of global debate. There has been a combination of factors: lower production due to climate change, insufficient stocks, higher consumption of meat and milk in China and India, and development of biofuels. The situation has been exacerbated by the higher cost of energy and therefore of transport. World food prices have risen 45 percent in the last nine months and there are serious shortages of the grain staples: rice, wheat and maize. We, therefore, see food riots in different parts of the world with their social and political consequences.
Urgent measures are needed to make sure the short-term adverse effects of higher food prices do not impact even more alarmingly on the very poor, who are overwhelmingly rural. In India for instance, the rapidly rising food prices are causing inflationary pressure. Wholesale price inflation has reportedly accelerated from 4.5 percent in January to almost 7 percent currently. At global level, the situation would no doubt affect the purchasing power of poor families, who spend over 50 percent of their incomes on food. It is essential in this context to increase agricultural investment in water control and infrastructure and to facilitate small farmer access to inputs, so they can raise their productivity. But such progress will have no real impact on farmers if there are not effective systems of marketing and processing of agricultural products.
The FAO Summit on World Food Security in Rome from 3 to 5 June 2008 will give to Heads of State and Government of the world to adopt the policies strategies and programmes to address these challenges.
Agro-industry helps preserve foodstuffs, add value and reduce post-harvest losses; it enables products to travel longer distances, including to the rapidly expanding cities.
Our Forum will examine how the agro-industrial sector can help meet the challenge of feeding 50 percent more men, women and children by the year 2015.
Urbanization, rising incomes and women joining the labour market in many countries have boosted demand for convenience food. Worldwide, processed food and beverages now account for 80 percent of total food and drink sales. They rose 57 percent between 2001 and 2007.
Partly in response to those trends, there has been a rapid expansion of supermarkets in many countries, notably in Latin America and Southeast Asia.
But small agricultural enterprises face difficulties in some countries, as they cannot provide the quantities and the standards that the supermarket chains require.
Honourable Minister,
Excellencies,
Ladies and Gentlemen,
Since the 1970s, the developing countries' share of the global trade in processed products has barely risen, despite international trade agreements, moving from 13.4 percent in 1980 to 13.7 percent in 2001. Moreover, a handful of countries account for the bulk of exports of processed products from developing and transition countries. Seven countries - China, Argentina, Brazil, Malaysia, Thailand, Indonesia and India - make up 62 percent of South-South trade. Above all, there has been a marked increase in imports of foodstuffs into developing countries, more than two-thirds in the form of processed products.
Customs tariffs, non-tariff barriers, standards and certification requirements, and export volumes demanded constitute major impediments for many small exporters. Good agro-industrial development needs laws that protect assets and settle disputes rapidly, banks that transfer funds efficiently and bureaucracy that is low in profile.
Agencies to promote exports and investment and certification bodies are also required if activity is to be productive and competitive. Agro-industrial clusters foster commercial opportunity.
In January 2007, as part of the ongoing reform of FAO, I proposed the establishment of the Rural Infrastructure and Agro-Industries Division that has helped prepare this Forum. Work in these two areas is clearly interrelated. In rural areas, infrastructure in the form of irrigation, energy, access roads and storage facilities is vital if farmers are to become reliable suppliers of the agro-industrial sector.
For its part, agro-industry generates demand for agricultural products and holds vast potential for off-farm rural employment. It also adds significant value to farm production, whether domestic or export markets.
FAO's Committee on Agriculture has however warned that the benefits of agro-industrial development might not be universally shared. Competitive pressures dictate the supply of large quantities and compliance with standards, particularly sanitary standards. FAO, in partnership with other agencies and NGOs, is working to establish solid links between small farmers and buyers, by grouping and organizing farmers into producer associations and cooperatives.
Excellencies,
Ladies and Gentlemen,
I should like to thank the representatives of the private sector who are with us today. Agro-industrial development cannot take place without a vibrant private sector; and an enabling environment cannot exist without government action.
FAO, UNIDO and IFAD have joined forces to implement agro-industrial processing and added value projects in several countries.
This Forum is a landmark for our organizations and their partners. Your deliberations and conclusions will help make our efforts more effective, which is all the more reason for me to wish you every success in your work.
I thank you for your kind attention.