BACKGROUND

1. At its 62nd Session the Committee agreed to review at its next Session the functioning of its Intergovernmental Commodity Groups (IGGs), including the adaptation of their work programmes to the World Food Summit Plan of Action; their role under changing international trading conditions and disciplines; and modifications in their operational procedures and commodity coverage. This document outlines these developments.

FOLLOW-UP TO THE WORLD FOOD SUMMIT PLAN OF ACTION

2. The various Intergovernmental Groups have contributed in different ways to the supporting commitments of the World Food Summit Plan of Action. While the workplans of the Groups have not changed fundamentally, they have become more focussed as a result of the Summit. Commitment Four, on international trade, is of most central concern to the IGGs, for which trade in agricultural commodities is of prime interest. All Groups have analysed, in different ways, the functioning of the world trade system, particularly in the light of policy changes arising from the Uruguay Round Agreements and its implications for developing countries. A particular emphasis has been placed on the impact which the Uruguay Round Agreements have had on food security. Some Groups regularly monitor member countries' trade and agricultural policies and evaluate their appropriateness with respect to promoting the objectives of sustainable growth and food security. Some Groups have also addressed related issues, such as SPS disciplines in the evolving WTO framework.

3. A number of Groups have reviewed the role which the production and trade of their own commodities play in combating poverty and food insecurity. For example, the Sub-Group on Bananas conducted such a review in St Lucia and Costa Rica; the IGG on Jute, Kenaf and Allied Fibres has done parallel work in relation to jute in India and Bangladesh; and the IGG on Tea undertook a study, Price Deterioration, Export Earnings and Food Security of Small Tea Growers - A Case Study for Indonesia, Kenya, Sri Lanka and Tanzania.

4. Other work of the Groups, particularly operational activities involving their sponsoring and supervision of commodity development projects funded by the Common Fund for Commodities (CFC), relate directly to the alleviation of poverty and food insecurity addressed by Commitment Two. These projects typically provide technical assistance to improve the agricultural productivity and infrastructure of developing countries, especially the LIFDCs, thereby optimising the opportunities arising from the international trade framework. While this work has not arisen specifically in response to the WFS, it is nevertheless undertaken in line with the WFS commitments.

THE ROLE AND COMMODITY COVERAGE OF THE IGGS UNDER CHANGING INTERNATIONAL TRADING CONDITIONS AND DISCIPLINES

5. The international trading environment has changed in different ways over the years since IGGs were established and their working patterns established, and the role of the Groups has evolved in response to these changes.

Market transparency and involvement of the private sector

6. Firstly, it is apparent that governments of many countries now play a somewhat diminished role in commodity marketing and trade. Guaranteeing and stabilizing prices, and maintaining commodity marketing boards are no longer seen as the legitimate role of government in many countries, and this perception is reflected in the work programme of the IGGs. Two Groups continue to set indicative prices for their products¹, but neither these nor any other Groups take action to influence prices. Supply management and price stabilization appeared on the agenda of some Groups in the 1970s and 1980s, but these issues are no longer debated. It may, however, be noted that a new generation of market-based risk management proposals are being considered in some circles and that, in the course of the next few years, such proposals for offsetting some of the adverse effects of price variation may be considered by the IGGs.

7. The Groups now see the increased importance of market transparency as an aid in facilitating the efficient operation of markets and, at the same time, have sought to involve the private sector in the exchange of information, ideas, and assessments of market conditions and concerns. They have found innovative ways to pursue these objectives, particularly by adopting appropriate means to facilitate the exchange of market intelligence and dissemination of the results of analyses. These means have generally been less formal than the traditional sessions of the Groups, thereby permitting the participation of a wider audience, including non-governmental organizations and the private sector. They have included Intersessional Consultations on Fibres in 1995, 1997 and 1999, and the Consultation on Fibres held in conjunction with the Joint Meeting of the IGG on Hard Fibres and the IGG on Jute, Kenaf and Allied Fibres in December 2000. It is expected that a conference on Citrus will be held in China in 2001 within the resources made available to the IGG on Citrus.

8. On other occasions, sessions of Groups have been held alongside or in conjunction with other events on the same commodity, such as meetings, conferences or trade fairs, which are of interest to delegates attending the FAO session. These occasions include the 6th Session of the Sub-Group on Hides and Skins, which was held in conjunction with the ITC-sponsored leather fair and symposium "Meet in Africa" in Cape Town in 1998, the 12th Session of the IGG on Tea which was held in conjunction with a Tea Business Conference in Indonesia in 1997, and the first Session of the IGG on Bananas and Tropical Fruit which was held in conjunction with the annual meeting of the Australian Banana Growers' Association. It is expected that the IGGs on Grains, Rice, Meat and Oilseeds, Oils and Fats will, in mid 2001, meet back-to-back with an international commodity conference on related issues.

The changing international policy environment

9. The Uruguay Round of Trade Negotiations was the first MTN round to include agriculture. This introduced to the IGGs a new set of issues extending beyond the country-specific measures of the past, and the Intergovernmental Groups took a close interest in the negotiations and in their outcome. Many of the Groups, including the IGGs on Rice; Bananas; Citrus; and Jute, Kenaf and Allied Fibres, as well as the Sub-Group on Hides and Skins, undertook, during the negotiations or subsequent to their completion, analyses of the likely impact which the Agreements, particularly the Agreement on Agriculture, would have on their commodity. The IGGs on Rice; Meat; and Oilseeds, Oils and Fats have, since the early 1990s, been in the process of revising their guidelines on international co-operation, to ensure their consistency with the WTO Agreements while maintaining their overall original thrust. The continuation of the reform process in agriculture is likely to entail the ongoing prominence of this role of the IGGs.

Composition of trade

10. Changes in the composition of world trade have occurred over a number of years. Some commodities, once little known in world trade, have risen to prominence in response to increased demand by increasingly affluent consumers, while others have declined in significance. The Sub-Group on Tropical Fruits was created in 1998 in response to the emerging importance of these commodities, not only in world trade, but also in nutrition, food security and poverty alleviation. Under the auspices of the Sub-Group, the Tropical Fruit Network was inaugurated in July 2000 and will play a central role in the co-ordination of research and development and the dissemination of information on tropical fruits. The Network will also provide an important forum for interaction between governments and their private sectors and will report to the Sub-Group on Tropical Fruits.

11. The Informal Consultations conducted jointly by the IGG on Hard Fibres and the IGG on Jute, Kenaf and Allied Fibres have included, inter alia, some coverage of other natural fibres such as flax and hemp, which previously had not been included in the activities of either Group. Hemp, in particular, is becoming an important fibre in world markets as governments in many countries are finding ways to permit its production. Neither of these Groups has, however, addressed the possibility of formally extending its mandate to include additional fibres. Possible extension of the mandate of the IGG on Grains to include a Sub-Group on Cassava, Yams and Sweet Potatoes was considered by the Joint Meeting of the IGG on Grains and the IGG on Rice in 1999. ²

12. The Committee was informed at its 62^nd Session that the commodities covered by the IGGs had, over a number of years, constituted a declining proportion of the value of world trade in agricultural commodities, having fallen from almost 50 percent in 1976 to 45 percent in 1996. The most recent estimate available, for 1998, shows that this proportion has continued to fall, to 42 percent in 1998 (see Table 1). Global agricultural trade includes some items such as prepared foods, cigarettes and tobacco and alcoholic beverages which have, on the whole, grown at a somewhat faster rate than those items covered by the IGGs. In order to more closely define the significance of the commodity coverage of the IGGs, a subset of trade data was extracted to include only agricultural commodities in raw and processed forms, excluding tobacco and alcoholic beverages, items such as processed foods and food wastes which could not be identified with a particular commodity, and excluding also commodities covered by existing non-FAO commodity organisations. This set of items was taken to be those which could ultimately have the potential for coverage by the IGG system. Of this set, the present IGG coverage amounts to around 56 percent.

13. The proportion of agricultural trade represented by the Groups could be enhanced by extending their coverage to certain commodities currently included in the Secretariat's programme of work and which are not covered by other International Commodity Organisations. For example dairy products and pulses could be incorporated into the IGG system at relatively small cost³. Pulses have already been included in the mandate of the IGG on Grains for the purposes of CFC Commodity development measures, while the next session of the IGG on Meat will consider the adoption of dairy products for the same purpose. Including dairy products and pulses would raise the commodity coverage by the IGGs from 56 percent to more than 65 percent⁴.

14. Processed and manufactured food products constitute an increasingly significant element of trade for many agricultural commodities, and this "value adding" has been reflected in the work programme of some IGGs. The IGG on Citrus, for example, has paid increasing attention to the trade in frozen concentrated orange juice. The IGGs on Hard Fibres and on Jute, faced with declining trade in traditional products, have shown increasing interest in trade in non-traditional or diversified products. The Sub-Group on Hides and Skins has, since its inception, recognised that reaching a thorough understanding of the sector and its problems necessarily requires addressing the market not only for raw materials but for processed and manufactured items as well. It may be, however, that the Groups overall have not fully adjusted their focus to account for the increased proportion of trade in processed or semi-processed form, and further attention to these items could enhance their trade coverage.

Commodity development measures

15. As the relevance of market management issues waned, most of the Groups have taken an interest in commodity development work, in particular in the sponsoring of projects funded by the Common Fund for Commodities (see document CCP 01/15). The Groups have an important role in formulating development strategies and prioritising projects for their commodities. In addition to sponsoring projects central to their own areas of commodity interest, and following requests by the Common Fund, some Groups have agreed to sponsor projects on other commodities. There remain a few "orphan commodities", for which the Fund is seeking adoption, including dates and ramie.

New issues

16. Emerging issues in world trade are reflected in changes in the agenda of Group sessions in recent years. For example, the Sub-Group on Bananas discussed the development of organic and fair trade bananas at its May 1999 meeting, and the Secretariat subsequently organized an Ad-hoc Expert Meeting on Socially and Environmentally Responsible Banana Production and Trade, attended by representatives of producers, NGOs and the ILO. The development of biotechnology has been recognised as having a potential impact on trade, and this issue has been studied by some Groups. Analysis of commodity market aspects of developments in the area of agricultural biotechnology is continuing, and details are contained in document CCP 01/14.

Communication technology

17. The development of electronic media, particularly e-mail and the internet, has permitted the adoption of innovative approaches to the dissemination and sharing of information and ideas. These media have been used by the Commodity Groups firstly, as a more effective means of disseminating regular information such as the commodity bulletins on rice, bananas, citrus and jute, and the documents for their various Sessions, but also to permit more interactive forms of communication by, for example, initiating e-mail fora on commodities including natural fibres, meat, oilcrops, and rice.⁵

CHANGES IN THE OPERATING PROCEDURES OF THE IGGs

18. In recent years, the Committee has taken a continuing interest in the role, structure and operating procedures of its Intergovernmental Groups, with a view to improving their cost effectiveness. At its 62^nd Session the Committee endorsed the convening of joint meetings of related IGGs to deal with thematic issues of common concern. In fact, the first Joint Meeting of two IGGs, that on Hard Fibres and Jute, Kenaf and Allied Fibres, had been held in 1998, prior to the Committee's 62nd Session in 1999. These two Groups held their second successful Joint Meeting in December 2000. The IGGs on Rice and on Grains met jointly in 1999 and endorsed proposals to organise further joint sessions, including whenever appropriate with other related commodity groups. Plans are in hand for a joint meeting of the IGGs on Grains; Rice; Meat; and Oilseeds, Oils and Fats in July 2001. The holding of joint meetings offers benefits from bringing together diverse expertise associated with different commodities, particularly if flexibility is exercised in organizing such meetings so as to address emerging issues which, from time to time, affect different combinations of commodity groups.

19. On other occasions, Groups have held separate "back-to back" meetings within the one week. The IGG on Meat and its Subgroup on Hides and Skins met back-to-back in South Africa in 1998, and the Subgroups on Bananas and Tropical fruits met back-to-back in Australia in 1999 as part of the Intergovernmental Group on Bananas and on Tropical Fruits.

20. At its 62^nd Session, the Committee decided that, on a trial basis and for selected IGGs, the final report of the session, recording recommendations and major conclusions, might be prepared by the Secretariat or a Rapporteur and despatched to participants within two weeks. The first trial of this procedure is expected to be by the Joint Meeting of the Thirty-first Session of the IGG on Hard Fibres and the Thirty-third Session of the Intergovernmental Group on Jute, Kenaf and Allied Fibres, to be held in December 2000. The Secretariat will report to the Committee on this trial.

21. Following recommendations of the Committee prior to its 62^nd Session, meetings of the IGGs have continued to be limited in length. Documentation and reporting have continued to follow the shorter mode established following the 61^st Session of the Committee. Some Sessions have been shortened to allow time to be spent on the thematic conferences referred to above. At its 62^nd Session, the CCP also recommended that future Sessions of IGGs might be suspended when there is no pressing business to conduct. While each Group has generally continued to meet once in each biennium, there may be no need for the IGG on Citrus to hold a formal Session during the current biennium. Overall, the reform of the IGGs has resulted in savings through shorter, less frequent sessions and reduced documentation: eleven IGG sessions cost US$266 000 in 1998-99, compared to US$836 000 for ten in 1992-93.

22. Since Groups now meet only once, at most, in each biennium, some have taken steps to ensure that their programmes continue in the interval between Sessions. Three Groups, the IGGs on Hard Fibres; Rice; and Grains have each established mechanisms by which decisions, particularly relating to projects funded by the Common Fund for Commodities, can be made by the Group's bureau in the period between its formal Sessions. This mechanism has been used several times, and has proved to be a useful tool. The IGGs on Hard Fibres and on Jute, Kenaf and Allied Fibres have held Intersessional Consultations to permit an exchange of market intelligence and other information in the interval between Sessions.

CONCLUSIONS

23. The Intergovernmental Commodity Groups have continued to demonstrate their flexibility and responsiveness in adapting to the requirements of the environment in which they operate and in responding to the demands of their members. Their work programmes have evolved in line with changes in the global economic and trade policies, and emerging priorities, such as those of the World Food Summit, are now reflected in their agenda. The Groups have, when required, adopted working arrangements to enhance the participation of non-Government organizations and the private sector, and in doing so have benefited from a wider range of expertise. The Committee may wish to take note of the evolution which has occurred in the IGG system in the past few years, and to make recommendations for any further changes which may be required in the role and commodity coverage of the groups, in their operating procedures, or in their work programmes, particularly in so far as they address the World Food Summit Plan of Action.

1 The Intergovernmental Group on Hard Fibres sets indicative prices for sisal fibre, sisal baler twine, and abaca fibre, and the Intergovernmental Group on Jute, Kenaf and Allied Fibres sets indicative prices for jute fibre, but has not for some years set indicative prices for kenaf.

2 This subject has been reported to the CCP under Item 4(a)

3 Information on the Secretariat's programme of work on those commodities which are not part of the IGG system is provided in document CCP 01/10.

4 Commodity groups which constitute the remaining 35 percent include: Fruit, vegetables and nuts, not covered elsewhere, 16 percent; Processed foods, mainly from cereals, 5.5 percent and Wine 4.5 percent.

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