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Declining commodity export earnings and food import bills
According to SOCO, between 1961 and 2001 the average prices of agricultural commodities sold by LDCs fell by almost 70 percent relative to the price of manufactured goods purchased from developed countries. One recent study cited by the report showed that productivity increased 20 percent faster in agriculture than in manufacturing worldwide, and more than 100 percent faster in developing countries than in developed ones.

SOCO warns that as many as 43 developing countries depend on a single commodity for more than 20 percent of their total revenues from merchandise exports. Most of these countries are in sub-Saharan Africa or Latin America and the Caribbean and depend on exports of sugar, coffee, cotton or bananas. And most suffer from widespread poverty.

More than 50 developing countries, including a majority of the least developed countries, depend on exports of three or fewer agricultural commodities -- typically tropical products -- for between 20 and 90 percent of their foreign exchange earnings.

Thin line between feast and famine

Many poor LDCs are net food importers, spending more than half their export earnings from commodity markets to buy food imports that make up for shortfalls in domestic production. For these countries, trends on international commodity markets may literally make the difference between feast and famine, the FAO report warns.

Paying for food imports can strain the resources of countries where economic growth lags and foreign exchange earnings are limited. In spite of declining prices for their food imports, over the past 30 years the countries most vulnerable to food insecurity have spent, on average, an increasing share of their limited foreign exchange earning to import food, SOCO observes. In the early 1970s, they spent around 43 percent of their export earning on commercial food imports, with other developing countries spending around 36 percent. Since that time, the average share for the LDCs increased to 54 percent, but declined to 24 percent for the other developing countries.
FAO/22511/L. Lizzi

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Declining commodity export earnings and food import bills

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John Riddle
Information Officer, FAO
(+39) 06 570 53259

FAO/G. Bizzarri

Prices drop for tropical fruits and beverages.

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