COMMITTEE ON COMMODITY PROBLEMS
REPORT OF THE TWENTY-EIGHTH SESSION OF THE
Rome, 10 - 12 December 1997
ECONOMIC AND TRADE ISSUES
INTERNATIONAL POLICIES AND COOPERATION IN THE OILSEEDS, OILS AND OILMEALS SECTOR
1. The Twenty-eighth session of the Intergovernmental Group on Oilseeds, Oils and Fats was held from 10 to 12 December 1997 at FAO Headquarters in Rome. It was attended by delegates from the following 49 members: Angola, Argentina, Bangladesh, Belgium, Bolivia, Brazil, Canada, China, Costa Rica, Cyprus, the Czech Republic, Ecuador, Egypt, the European Community (member organization), Finland, France, Germany, Ghana, Guatemala, Honduras, Hungary, India, Indonesia, Italy, Japan, Kenya, Libya, Lithuania, Madagascar, Malaysia, Mexico, Morocco, the Netherlands, Pakistan, Panama, the Philippines, Senegal, the Slovak Republic, the Republic of South Africa, Spain, Sri Lanka, Sudan, Sweden, Tanzania, Thailand, Turkey, Uganda, the United Kingdom and the United States of America. In addition, the following international organizations were present: the Asian and Pacific Coconut Community, the Bureau for the Development of Research on Tropical Perennial Oil Crops, the International Federation of Agricultural Producers, the Organization for Economic Cooperation and Development, the International Feed Industry Federation and the Common Fund for Commodities. The list of participants, including observers, was circulated as document CCP:OF 97/Inf.3 (Revised).
2. The session was opened by Mr. H. De Haen, Assistant Director-General of the Economic and Social Department, who welcomed delegates on behalf of the Director-General of FAO.
3. The Group elected Mr R. Villambrosa (Argentina) as Chairperson. Mr P. Packnett (United States of America) and Mr B.A. Elias (Malaysia) were elected First and Second Vice-chairpersons.
4. The session adopted the agenda as presented. The list of background documents for the session is given in the Appendix.
5. An informal symposium was organized for the session's participants on the possible impact of environmental regulations on the cultivation and processing of annual and perennial crops and their implications for international trade.
6. This item was reviewed on the basis of documents CCP:OF 97/CRS 1, CCP: OF 97/CRS 2, and CCP: OF 97/CRS 3. A number of delegates informed the Group of market developments related to oilseeds, oils and oilmeals in their countries, including institutional changes as well as the implications for their oilseeds economies of their accession to larger market groupings. The Group noted that despite an expected increase in the production of oils, fats and oilmeals in the 1997/98 season, the stock-to-trend utilization ratios for these commodities could decrease further. It also noted that although the prices of oils and meals had been increasing since the end of the 1996/97 season, changing demand and supply conditions could reverse the upward trend in the prices of cakes/meals later in the season.
7. The Group was informed that the Secretariat would continue to monitor the likely effects on the oilseeds sector of the El Niño phenomenon, which was expected to contribute to the uncertainty surrounding the outlook for the rest of the season.
8. The Group reviewed this item with the help of document CCP:OF 97/2. The representatives of several major soybean and oil palm producing and processing countries pointed to the important positive impact that the application of modern techniques and practices in the cultivation and processing of soybeans and oil palm has had for the protection of the environment. They informed the meeting of the pollution control measures and regulations put into force in their countries and of their positive effects on the environment. In this regard, they stressed the negative impact on the environment of governmental subsidies on fertilisers, pesticides and herbicides where this encouraged their over-use. The Group noted that, although pollution control measures currently applied to the cultivation and processing of the major oil crops did not significantly affect their competitiveness, the fuller internalization of environmental protection costs could change that situation in the future.
9. Based on its discussions, the Group requested the Secretariat, within resources available, to undertake a study on the implications of existing environmental regulations for the competitiveness of lauric oils versus petroleum-based products, in the markets of detergents and personal-care products.
10. The Group reviewed this item on the basis of document CCP:OF 97/3, which presented information on SPS measures applied in the EU. The representative of the European Community provided additional information and clarifications on recent developments in Community legislation in the relevant areas. More specifically, he mentioned a draft regulation on maximum aflatoxin content in edible nuts and dried fruit intended for human consumption or as an ingredient in foodstuffs and cereals and cereal products. Several other delegates questioned the scientific justification for the proposed regulation and felt it could constitute a barrier to trade. The EU representative asked if he could refer to the appropriate services in the European Commission for information in this regard. He then provided the Secretariat with a document outlining the scientific justification for the draft regulation and its impact on international trade.
11. In general, the Group emphasized that the various provisions of the WTO Agreement on the Application of SPS Measures should be complied with. In particular, governments were encouraged to make use of international standards. Also, governments in developed countries and donor agencies, including FAO, were encouraged to assist developing nations in overcoming difficulties encountered in complying with SPS measures.
12. The Group requested the Secretariat to undertake, within resources available, studies describing the SPS requirements and regulations of other selected import markets for oilcrop products. Also, an attempt should be made to develop a methodology for assessing the impact of SPS measures on trade flows.
13. This item was reviewed with the help of document CCP:OF 97/4, prepared in response to a request by the Committee on Commodity Problems to undertake work on the impact of biotechnology developments on trade in commodities on a selective basis.
14. A number of delegates from major producing/exporting countries informed the meeting of the progress made in biotechnology research in their countries and/or of the rapid increase of the share of genetically-modified oilseeds in total domestic output. Concern was expressed regarding the attitude of consumers to Genetically Modified Organisms (GMOs) in some countries. In this connection one delegate noted the importance of appropriate labelling requirements to ensure consumers are adequately informed. Other delegations expressed concern about such measures as potential non-tariff barriers.
15. The Group recognized that biotechnology research to date had focused heavily on agronomic traits. It was pointed out that the impact of progress in biotechnology on increasing the interchangeability of oil crops and oils through the modification of their fatty acid characteristics had so far been rather little. Hence, possible changes in the respective competitive positions of oilcrops as a result of such research would only be felt at a later stage. For the future, attention was drawn to the importance of monitoring factors affecting the direction of biotechnology research.
16. The Group took note of the conclusions of the study summarized in paragraphs 27 to 31 and recommended that the Secretariat should, within resources available, institute a regular monitoring and reporting system on policies and regulations affecting the production, trade and consumption of commodities produced through biotechnology and on major biotechnology developments in the sector of oilcrop-based products.
17. The Group reviewed recent policy developments in the sector based on document CCP:OF 97/5. A number of delegates provided clarifications and additional information on developments in their respective countries. Many delegates stressed that the various commitments made under the Uruguay Round agreement had been fully respected and that, wherever possible, efforts had been made not to distort trade.
18. The Group agreed in general with the findings and conclusions presented in the Secretariat document. A number of suggestions were made regarding the six recommendations contained in paragraph 34 of the document. The Group therefore:
· underlined that the main objective of international cooperation and national policies should be to secure a balanced expansion of production, consumption and trade, within the context of progressive liberalization of domestic markets and international trade, while taking into consideration the need of importing countries to ensure stability in domestic supplies;
· encouraged governments to refrain from using production support measures which have a direct, potentially distorting, effect on markets. Policies should be designed in such a way as to allow producers to respond better to global market signals;
· recommended that governments should strive towards increased market transparency, improved access to markets, and fairer competition in oilseeds, oils and oilmeal markets. In doing so, governments should give special attention to products exported by developing (and, in particular, least developed) countries. All members of the WTO should follow the UR provisions referring to trade policies, in particular with regard to subsidies, the reduction of tariffs and the elimination of non-tariff barriers as well as in the adoption of sanitary and phytosanitary measures, which should be based on scientific principles;
· reminded international aid-giving agencies and all countries in a position to do so that, wherever required and in line with the FAO Principles of Surplus Disposal as well as the relevant provisions of the UR Final Act, adequate volumes of food aid in the form of oils and fats should be made available to developing countries, particularly LIFDCs, on favourable conditions;
· reminded governments of the importance to support consumption of oils and fats when per caput intake of these foodstuffs was low, so as to improve nutritional standards;
· invited governments as well as concerned multilateral agencies to pay special attention to the interests of least developed countries that depend on oilseed products for ensuring food security and for generating export earnings, or that have a particular production and processing potential within the sector.
19. This item was reviewed on the basis of document CCP:OF 97/6. A number of delegates provided detailed comments on the proposed changes to the Guidelines and/or made additional suggestions. The Group concluded that, given the number of revisions proposed and that negotiations on some related issues would be taking place in the WTO, it would need to reconsider this matter at its next session. The Group, therefore, agreed that the Secretariat should compile the various comments provided by delegates during the session, and submit these together with those received previously to all governments for comment and, possibly, further modifications. A report bringing together the various proposals received should be submitted to the Group's next session under a special agenda item.
20. The Group reviewed this agenda item on the basis of documents CCP:OF 97/7 as well as CRS 4, CRS 5 and CRS 6. It noted that three of the projects sponsored by the Group, namely: "Improving the small-scale extraction of coconut oil"; "Conservation, evaluation and dissemination of groundnut germplasm and production and distribution of foundation seed in the West African region"; and "Preservation of wild species of arachis in South America" were under implementation. After having been informed of the progress achieved in each of these projects, of the annual supervision undertaken by the Supervisory Expert Groups and of the participation of a member of the Secretariat in the mid-term evaluation of the first project, the Group endorsed the supervisory work undertaken on its own behalf by the Supervisory Expert Groups with the help of the Secretariat.
21. The Group noted further that among projects already reviewed by the Consultative Committee of the CFC, one on "Coconut germplasm utilisation and conservation to promote sustainable coconut production" was in the process of being finalized. The Group was further informed that a new project profile on "Integrated coconut pest control or management" had been submitted to the Secretariat by the APCC and had been favourably received by the Common Fund. The representative of the APCC informed the meeting that four new countries (Jamaica, Mexico, Côte d'Ivoire and Tanzania) had agreed to participate in this project, considered of major importance for the development of their coconut smallholding sectors. The delegates of Indonesia and Sri Lanka also supported the project. The Group endorsed the resubmission of a full project document to the January 1998 meeting of the Consultative Committee of the CFC project.
22. Finally, the Group authorised the Secretariat to oversee the formulation or reformulation and finalization of three other projects in the pipe-line, namely the second phase of "Improving small-scale palm oil and palm kernel oil mills"; "Control and reduction of aflatoxin levels in copra cake" and "Research on integrated Spear Rot/Bud Rot complex of oil palm in South America".
23. The Secretariat brought to the attention of the Group that staff inputs required for the monitoring and supervision of on-going projects and for overseeing the formulation of new ones were stretched to their limits, while non-staff expenses related to project supervision often exceeded the US$ 15 000 per year and per project, which the Fund had granted to date. In response, the Group authorized the Secretariat to approach the Common Fund with the request to seek ways of: i) reimbursing supervisory costs in excess of the US$ 15 000 allowed; ii) covering other project servicing expenses of on-going projects from the project budgets; and iii) incorporating both these additional costs in the initial budgets of future projects.
24. After considering the need for the Group to take decisions on CFC-related matters between its formal sessions, the Group endorsed the mechanism proposed by the Secretariat in paragraphs 10 and 11 of document CCP:OF 97/7, consisting in the establishment of a bureau dealing with inter-sessional matters confined exclusively to CFC issues. The bureau would be composed of the Chairperson and the two Vice-chairpersons and its activities would not entail any additional costs to FAO. The Group further approved the submission of the necessary amendments to its Rules of Procedures to the next session of the CCP. The Group agreed to review the operations of this mechanism at its next session.
25. The Group noted with satisfaction that over US$ 18 million had been mobilised to date for commodity development projects in the oilcrops sector, and, should the other sponsored projects be approved, the resources generated would exceed US$ 25 million.
26. Representatives of two intergovernmental organizations, namely the Bureau for Development of Research on Tropical Perennial Oil Crops (BUROTROP) and the Asian and Pacific Coconut Community (APCC), informed the Group of the activities of their organizations and highlighted areas where they were keen to continue cooperation with FAO, in particular with regard to Common Fund related projects. Furthermore, the representative of APCC informed the Group that associate membership to APCC would be expanded to cover countries outside the Asian and Pacific region.
27. Some delegates made reference to the importance of the Biosafety Protocol of the Convention on Biodiversity and they suggested countries should ensure that safety requirements did not restrict or hinder trade in oilseeds or oilseed products.
28. The Group requested the Director-General to determine the date of its next session in consultation with the Chairperson, taking into account the schedule of other FAO meetings, including sessions of other Intergovernmental Groups on related food commodities, and recommendations of the Committee on Commodity Problems.
LIST OF DOCUMENTS
CCP:OF 97/1 Provisional agenda
CCP:OF 97/2 Possible impact of environmental regulations on the cultivation, processing and trade in the two major annual and perennial oil crops
CCP:OF 97/3 Possible implications of sanitary and phytosanitary measures for exporters of oilseed-based products to the European Union
CCP:OF 97/4 Biotechnology developments in the oilseeds sector
CCP:OF 97/5 Guidelines for international cooperation in the oilseeds, oils and oilmeals sector - Review of policies and changes since 1995
CCP:OF 97/6 Revision of the Guidelines for International Cooperation in the oilseeds, oils and oilmeals sector
CCP:OF 97/7 Current status of CFC-financed projects and mechanisms for decision making by the Group between its formal sessions
CCP:OF 97/CRS 1 World market situation and short-term market outlook for oilseeds, oils, fats and oilmeals
CCP:OF 97/CRS 2 Production, trade and stocks of oils/fats and cakes and meals: Estimates for 1996/97 and forecasts for 1997/98
CCP:OF 97/CRS 3 International market price information
CCP:OF 97/CRS 4 CFC financed projects: Supervisory report on project : "Conservation, evaluation and dissemination of groundnut germplasm and foundation seed production and distribution for the West African region"
CCP:OF 97/CRS 5 CFC financed projects: Supervisory report on project: "Improving small-scale extraction of coconut oil"
CCP:OF 97/CRS 6 CFC financed projects: Mid-term evaluation report on project: "Improving small-scale extraction of coconut oil"
CCP:OF 97/INF.1 Proposed timetable and list of documents
CCP:OF 97/INF.2 Statement of competence and voting rights submitted by the European Community and its Member states
CCP:OF 97/INF.3 (Rev) List of delegates and observers.