CCP 03/11


Sixty-fourth Session

Rome, 18 – 21 March 2003


Table of Contents


1.         Much of the information collection and analysis on commodity markets and trade regularly conducted by the Commodities and Trade Division is in pursuit of its role as Secretariat of various Intergovernmental Commodity Groups. However, the Division has also undertaken work on other commodities where developments in commodity markets expose a need for analysis, particularly where those commodities either are not covered by appropriate international organizations, or where FAO’s complementary expertise can make a significant contribution to analyses undertaken jointly with other bodies. In some, but not all, of these cases, studies have been undertaken at the request of member countries. The results of these analyses, which have been delivered in a number of ways, have generated considerable interest and the Secretariat therefore wishes to inform the Committee of these activities which contribute to international co-operation and market transparency in commodities outside formal intergovernmental activities. Non-IGG commodities which have been the subject of joint studies, conferences or other activities since the 63rd Session of the Committee include sugar; coffee; pulses; cotton; tobacco; and organic horticultural products.


2.         The organisation of a number of meetings and conferences has been prompted by the need for a better understanding of the future of commodities, particularly in the light of recent low commodity prices and probable policy changes as a result of the Doha Round. These events have typically been supported by sponsors or financed at least in part by the payment of fees by participants, and have at most involved only a small cost to FAO. Results of the conferences have been made available to FAO members.

3.         After the success of the 1999 China International Cotton Conference, the Government of China again requested the Commodities and Trade Division of FAO for technical support to its 2001 China International Cotton Conference. The World Trade Organization (WTO), the United Nations Conference on Trade and Development (UNCTAD), the International Cotton Advisory Committee (ICAC), and the United States Department of Agriculture (USDA) sent experts to participate in the conference, which focussed on the prospects for the Chinese cotton industry and the world cotton market, particularly in the light of the Uruguay Round Agreements on Agriculture and on Textiles and Clothing, China’s admission to the WTO, and the new WTO negotiations. The conference, which brought together over 150 experts from the textile industry (both government and the private sector) of major cotton producing and consuming countries, as well as from international organizations, facilitated the exchange of ideas and discussion of policy options. It benefited both the host government and the international participants. Moreover, the private sector was actively involved through presentation and sponsorship.

4.         The third international sugar conference organized by FAO, entitled the FAO/Mozambique International Sugar Conference: Sugar and Development in Africa and the World was held in Maputo on October 2002, with the co-operation of the Ministry of Agriculture through its National Sugar Institute (INA). The conference had a theme of sustainability and trade and consisted of presentations and discussion of factors contributing to the recent low world sugar prices and their implications for sustainability, diversification and trade. An overview of the international trade policy framework for sugar was examined along with the impact of on-going policy reforms and structural adjustments on the world sugar market. A preliminary quantitative market outlook to 2010 and implications for producing and consuming countries was examined, the competitiveness and sustainability, by country and by region were analyzed, and privatization and diversification options evaluated. Participants included 115 international delegates from 23 countries, as well as numerous representatives from various Mozambique government ministries involved in sugar production, marketing and research.  The countries represented included Angola, Belgium, Denmark, Ecuador, Fiji, France, Germany, Guyana, Italy, Kenya, Malawi, Mauritania, Mauritius, Mozambique, Uganda, United States, United Kingdom, South Africa, Swaziland, Sweden, Tanzania and Zambia.

5. A Conference Supporting the Diversification of Exports in the Caribbean/Latin American Region through the Development of Organic Horticulture was held in Trinidad and Tobago in October 2001. The Conference focused on the market situation and outlook for organic fruit and vegetables and on ways in which countries in the Region can take advantage of the potential market opportunities. Organic fruit and vegetable markets offer potential for countries to increase their export earnings and diversify their agricultural base.


6.         FAO has a long history of cooperation with other bodies in the conduct and publication of studies on commodity production and trade. In particular, many analyses have been undertaken in co-operation with the various International Commodity Organizations. Such studies have combined the multi-disciplinary expertise and resources of FAO with the knowledge and data of these commodities possessed by the specialist International Commodity Organizations. Recent studies include a joint exercise with the International Coffee Organization (ICO) to produce a set of coffee projections to 2010.  At the request of the International Coffee Council, ESC constructed a quantitative model and projected global production and trade volumes, as well as specific projections for ICO member countries.  FAO and the ICO have also embarked on a study of the impact of coffee trade on food security in selected African countries.

7. A publication entitled, World Markets for Organic Fruit and Vegetables: Opportunities for Developing Countries in the Production and Export of Organic Horticultural Products, was prepared jointly by the Division, the International Trade Centre (UNCTAD/WTO) and the Technical Centre for Agriculture and Rural Cooperation (CTA) in 2001. This publication presented recent findings of a joint FAO/ITC/CTA study on international trade in fresh organic fruit and vegetables. It provided detailed information on demand for these products in the world's largest organic markets (United States, Japan and European countries), including data on sales and imports. In addition to the current market situation, the study analyzed the prospects for further growth in sales in the short and medium term. Moreover, it provided case studies of seven developing countries, which had established an organic export sector. The publication gave recommendations on which product categories were likely to provide market opportunities to developing countries.

8. In cooperation with the International Cotton Advisory Committee (ICAC), a set of cotton market projections to 2010 will be completed in 2003, based on the current world apparel fibre consumption survey.

9.         Within the context of inter-agency co-operation, particularly within the United Nations Ad Hoc Interagency Task Force on Tobacco Control, ESC has undertaken a project consisting of a number of studies into various aspects of the global tobacco economy. This work was supported by the Swedish government agency, SIDA. The research was directed, in part, at identifying changes which might be expected in the tobacco economy during the current decade, and a model was developed of global supply and demand in order to generate projections to the year 2010. The study also considered the impact which effective tobacco control might have on the economies of tobacco producing countries. A small number of producing countries was studied in some detail, descriptive reports were prepared and, for five countries, quantitative General Equilibrium modelling was undertaken.

10. The results of the projections indicated that, if present policies continued, global production and consumption of tobacco are expected to continue to grow, under the influence of expanding populations and increasing levels of income. An alternative projection scenario was also analysed, incorporating assumptions that consumption taxes would be increased significantly and that support for tobacco farming would be reduced. The impact of these measures would be fairly modest, as taxation rates would remain heaviest in developed countries where consumption is already at reduced levels. In the developing countries the fiscal burden would be smaller and demand would continue to rise given the continuing impact which population growth and rising incomes have on demand for cigarettes. Thus, aggregate levels of production and consumption would not decline, although under this scenario consumption per head, across all countries including the developing countries would be expected to contract a little. If strong and effective tobacco control measures were introduced, the impact would clearly be felt by the economies of tobacco producing countries.

12.       The Commodities and Trade Division has initiated work on the global market for processed oils and fats. Products derived from oils and fats, which are used for numerous edible and non-food/industrial purposes, are estimated to account for a significant share, particularly in value terms, of the overall market. Better knowledge of production, consumption, and trade of these high value added products could help developing countries to better adjust their industries to changing market conditions, possibly increasing their participation in the global market for and production of value added oil and fat products.

13.       Work on the Strategy and Policy Framework for the Rehabilitation and the Development of the Sugar Sector of the Dominican Republic began in March 2002 and should be completed in the first half of 2003. The project was a TCP funded project with ESC as the Lead Technical Division. The objective of the project was to rehabilitate and restore efficiency and competitiveness to the sugar sector of the Dominican Republic. The project team was responsible for analyzing the technical, financial, legal and administrative constraints, with a view to provide recommendations for a cohesive sugar sector policy with an appropriate regulatory framework to support the rehabilitation of the sector. Institutional strengthening and capacity building at all levels were also important components.


14. In addition to the electronic information exchange systems developed for some of the commodities covered by the IGGs, ESC operates e-mail fora for bananas, natural fibres, oilseeds, oils, meals, rice, dairy products, meat, and pulses. These systems allow participants from diverse parts of the world to exchange information and views on issues relevant to the national and international markets of the commodities concerned.

15.       While the use of these electronic means of communication permits widespread sharing of information and views at very little direct cost, it does not provide the benefits of direct face-to-face contact with people from different countries. Also, while e-mail and the internet are widely available, they are by no means universally so, particularly in developing countries. These forms of communication are therefore seen as supplementing, rather than replacing, traditional meetings and conferences.


16.       In addition to specific ad hoc activities dealing with emerging issues or concerns, the commodities referred to in this document are regularly covered in situation and outlook assessments in the Division’s annual publication, Commodity Market Review (CMR) and electronically updated at least twice a year in the Divisional website1, as well as published twice a year in the Food Outlook for sugar, pulses, and roots and tubers. Mid-term projections are also undertaken periodically (projections to 2010 were completed in November 2002), and together with the growing volume of commodity information are available on the Division’s website.


17.       In most of the activities referred to above, costs are shared, or, in many cases, borne entirely by other organisations. Such arrangements permit analyses of key issues and the dissemination of results with only a limited, if any, burden on the regular programme. In fact, these activities reinforce FAO's programme, particularly under sub-programme 224P4 "International Co-operation in Commodity and Trade Issues” and 224P5 "Measures to Enhance Commodity and Trade Development".


18.       The Commodities and Trade Division has undertaken a range of activities associated with commodities other than those covered by its Intergovernmental Groups.  These activities typically allow the Organization to contribute to the functioning of international commodity trade, to the benefit particularly of developing countries involved with those commodities.  They have often also attracted extra-budgetary resources, thereby reinforcing the Organization’s regular programme in commodity market and trade policy analysis and outlook work.  The Committee may wish to take note of the activities reported in this document and make recommendations regarding the substance and approaches to be adopted for future work in this area.


1 Commodities and Trade Division Website: