Fifteenth Session

Rome, 25-29 January 1999, Red Room


Table of Contents


1. The FAO Conference at its Twenty-ninth Session (7-18 November 1997) stressed the need to recognize the particular constraints of Small Island Developing States (SIDS) and invited the Organization to hold an international conference on agriculture in SIDS, as part of the World Food Summit follow-up (paragraphs 45 and 53, C97/REP). In response to this suggestion, and as a continuation of its efforts to assist SIDS in developing their capacities in agriculture, forestry and fisheries, FAO is preparing a Special Ministerial Conference on Agriculture in Small Island Developing States, to be held in Rome,12 March 1999.

2. The special needs of SIDS are not a new subject for FAO. A number of regional and international conferences and initiatives have been organised by the Organization in past years to address common issues, and in January this year, a paper entitled, "Trade Issues Facing Small Island Developing States" was presented to the Committee on Commodity Problems. Furthermore, as part of the Director-General's decentralisation process, FAO established two Sub-Regional Offices in 1996; for the Caribbean and for the Pacific Islands. Each office has a technical team assembled to service the specific requirements of SIDS in these regions, with a view to strengthening participatory and technologically-based efforts to develop sustainable agriculture and rural development.

3. The Commission for Sustainable Development, at its sixth session held from 20 April-1 May 1998, called upon the international community, United Nations agencies and intergovernmental bodies to provide assistance to SIDS in the area of practical and concrete actions. The Commission invited the international community, United Nations agencies and intergovernmental bodies to support regional initiatives and to collaborate, in partnership with regional organisations and institutions, to accelerate preparations for the review in 1999.

4. United Nations General Assembly resolution 52/202 has reaffirmed the commitment of the international community to the development of SIDS. It recommended that the Seventh Session of the Commission on Sustainable Development (CSD-7), scheduled in Spring 1999, should serve as a preparatory meeting for the UNGA Special Session, Autumn 1999. This should take the form of a two day in-depth assessment and appraisal of the implementation of the SIDS Programme of Action.

5. Against the above-mentioned background and with a view to contributing to future efforts to help SIDS, the Special Ministerial Conference on Agriculture in Small Island Developing States intends to further mobilise public opinion and focus attention on their specific problems associated with agriculture and rural development. Since one of the specific objectives of this present Conference is to develop priority programmes for intensification of agriculture and diversification of the economy, this paper highlights issues and constraints faced by SIDS in the development of the agricultural sector so that COAG might provide guidance on the kinds of programmes that FAO should consider.


6. Small Island Developing States (SIDS) have in common a number of structural problems: they tend to be remote and geographically-dispersed; their populations and therefore their markets are small; their resource base narrow, fragile and prone to disruption by natural disasters; they often depend for foreign exchange on a small range of primary product exports; and they have limited local capital for productive investment. In short, their potential for revenue generation is limited.

7. The above stereotypes must, however, be qualified, since SIDS are a diverse group in terms of their levels of economic development and their competitiveness in agricultural markets. In the higher income SIDS with per caput GDP above $6 000 (Antigua and Barbuda, Bahamas, Bahrain, Barbados, Cyprus, Jamaica and Malta), agriculture plays a relatively small role in the economy, supplying less than 10 percent of GDP and employing less than 20 percent of the work force. At the opposite end of the scale, the least developed countries (LDCs) in the group (Cape Verde, Comoros, Guinea Bissau, Haiti, Maldives, Samoa, Sao Tomé and Principe, Solomon Islands, and Vanuatu) have per caput incomes below $1 500 and rely on agriculture for as much as 50 percent of GDP and 75 percent of employment.

8. Agriculture continues to be the backbone of the economy in the poorer SIDS; providing the main source of livelihood for their inhabitants, as well as being a major export earner. Although most SIDS do not have a revealed comparative advantage in agricultural production overall, several have a revealed comparative advantage in particular agricultural commodities. Nine SIDS are net agricultural exporters (Belize, Cuba, Fiji, Guyana, Mauritius, Papua New Guinea, St Vincent and the Grenadines, Solomon Islands, and Vanuatu). SIDS are potentially vulnerable to the fluctuations of the international markets because their agricultural exports are highly concentrated, with a small number of commercial crops sold in a limited number of markets.

9. In 1994-95, the total value of agricultural exports of the SIDS countries was about US$8.2 billion compared with $7.9 billion a decade ago. While there has been little growth in the value of agricultural exports from SIDS in the last decade, the value of agricultural imports has almost doubled from $4.3 billion in the early 1980s to $8.0 billion in 1994-95. Cuba alone accounted for 45 percent of all SIDS agricultural exports in 1994-95, and along with Cyprus, Dominican Republic, Fiji, Mauritius and Papua New Guinea, these top six exporters supplied almost 80 percent of the total. Real prices of most major commodities exported by these countries declined in the 1980s and have stagnated in the 1990s. The index of real prices (1980=100) for sugar fell to 25 a decade later. During the same period, the real price index for bananas fell to 92, and for tropical beverages it fell to 37. Since the early 1990s, the downward trend for these commodities has slowed or reversed so that by 1998 the estimated real price indices were 23, 90, and 51, respectively.

10. The process of trade liberalization resulting in part from the Uruguay Round Agreement on Agriculture (AoA) will have wide-ranging implications for many SIDS. The AoA is reducing Most Favoured Nation (MFN) tariffs for agricultural products in many markets, opening up opportunities both in primary commodities as well as in higher value processed products for low-cost competitive producers, including many of the SIDS. Because, however, most agricultural exports from SIDS depend on preferential access to developed-country markets, reductions in MFN tariffs may tend to shrink the margin of preference for SID's exports. Although the estimated loss in tariff preferences due to the AoA is not large overall, some commodities and countries are likely to be affected more than others.1 For SIDS, the trade preferences associated with two products, sugar and bananas, are of overwhelming importance. Most of the preferences associated with these products were only negligibly affected by the AoA; should these products figure in future liberalization, however, the situation could change.

11. The Uruguay Round Agreement is imposing disciplines on the use of domestic supports and export subsidies in many of the major producers and exporters of temperate-zone agricultural commodities. This may result in world food prices being higher than they would otherwise have been and reduce the availability of subsidised food imports. Since nearly all SIDS are net food importers, this may have a negative impact on their balance of payments and may increase the general cost of living. Some SIDS may find it difficult to maintain their food import volumes without sacrificing other essential imports.

12. In the Uruguay Round of negotiations most SIDS chose to "bind" their agricultural tariffs, often at levels exceeding 100 percent, and were not required to offer tariff reductions. Among the SIDS, only Cyprus made commitments on domestic support or export subsidies. Notwithstanding the generally light commitments by SIDS in the Uruguay Round, a number of SIDS have undertaken significant economic reforms since the 1980s either unilaterally or through regional agreements including, inter alia, trade policy liberalization. All SIDS, whether or not they are actively engaged in policy reforms themselves, face challenges and opportunities in the emerging global trading environment. Against this backdrop, SIDS are looking for opportunities to diversify their economies - and especially their agricultural sectors - in order to maintain domestic employment opportunities and to produce crops that can be profitably exported.

13. The integration of SIDS into the global economy is particularly difficult due to the following constraints:


14. The agricultural sector of most SIDS comprises: (i) a large number of small traditional farmers practising mixed cropping (root crops, pulse, vegetables, and perennials) mostly for home-consumption. They have limited access to formal credit sources; (ii) a small number of more commercially-oriented small farms with easy access to credit sources; (iii) a small number of large commercial farms, with easy access to commercial credit, that dominate the agricultural sector and account for a large proportion of traditional export crops; and (iv) a small number of large farms that are currently idle, even though the restricted area of most SIDS makes competition for land severe. The following groups of constraints affect most types of production system.

15. Labour and other inputs: Farmers have traditionally used few purchased inputs for their low-input/low-output production system. Often these inputs are not readily available, and their price is high relative to the value of most outputs. The availability of farm labour is a persistent constraint. This is due to the out-migration of a large part of the young male population in many SIDS, and the alternative higher-income employment opportunities in commercial farming, urban areas and the tourist sector. As a consequence the percentage of female-headed households has increased.

16. Plant genetic resources: Although FAO has implemented various interventions in the field of germplasm information management and seed programmes in the past, availability of quality planting material is generally inadequate to meet demand - particularly if rapid expansion of production is to be undertaken. There is a strong dependence on imported seeds for many crops.

17. Plant protection and post-harvest conditions: There is widespread use of pesticide in horticultural production systems. However, efficient pest and pesticide control and monitoring programmes are few. Only a small number of SIDS are participating in the information exchange activities of the Prior Informed Consent (PIC) arrangement. Improper selection of produce for harvest and improper post-harvest handling, packaging and storage techniques, due to the lack of knowledge and appropriate technologies, contribute to the substantial post-harvest losses.

18. Livestock: Although most smallholders keep a few domestic pigs and poultry, more commercially orientated livestock systems are relatively new. Geographic isolation and associated high transportation costs seriously affect the financial viability of any livestock enterprise dependent on imported inputs. Major constraints include inadequate nutrition, ineffective animal health services, high cost of purchased feed, problems in procurement of commercial feed, poor genetic stock and inadequate management of breeding farms and hatcheries, and labour shortages. Due to these constraints, the scope for rapid development of livestock production appears to be limited, but potential exists for import substitution since high transport costs work against imports.

19. Market constraints: The domestic marketing system, which is usually based on non-institutional channels formed by private intermediaries, is generally poorly developed. Efficient marketing systems are difficult to establish due to remoteness of farms, poor infrastructure and high transport costs, lack of investment in market research, and rudimentary market information systems. Knowledge of the market place, on the part of both producers and exporters, is limited. Marketing economies of scale, or the bargaining power possessed by larger entrepreneurs, are not available to small-volume producers and exporters.

20. Other key constraints to be addressed in promoting exports include the high cost and limited availability of air and sea transportation systems, the lack of efficient handling facilities for fresh produce, and inadequate transportation services for non-traditional produce. Many SIDS have marketing boards which are statutory marketing authorities. They are geared primarily towards generating income from commercial activities related to the export of traditional agricultural products and have not responded competitively to the growing number of more efficient, private sector exporters of agricultural produce.

21. Institutional Constraints: Agricultural research is mainly government-funded and is constrained by limited human and financial resources. It is weakly linked to extension services, the farming community, and to other key sectors such as agro-processing and tourism. Few SIDS have clearly identified research priorities, which are relevant to the smallholder sector. There is a considerable need to train local manpower in research and technology development at post-graduate level. The impact of farmers' organizations has been limited because they generally suffer from weak management, low level and quality of services, low participation of members and inadequate financial resources.


22. The current agricultural sector in SIDS is in transition, driven by changing world markets, trade imbalances, the quest for greater food security and by growing human population. Given the prevailing threats to the continuation of trade preferences for traditional export crop industries, agricultural diversification and intensification can contribute strongly to broaden the potential range of income sources for farmers, as well as helping to meet the objective of increased food security.

23. In the short-run, SIDS will wish to focus on taking full advantage of the current preferential trade opportunities available to them, and also of the market openings arising from the Uruguay Round. For the longer run, the SIDS may want to focus their efforts on raising their competitive position in their traditional agricultural exports and diversifying into other commodities and higher value products. Faced with the challenge of being competitive in the global market, the SIDS would benefit from in-depth studies on their comparative advantage in the production and export of agricultural products, including diversification possibilities in fast growing commodities and markets as well as in higher value processed products. Such reviews should draw from the experiences of other countries and seek to identify factors that have hampered competitiveness.

24. Exports of some basic raw food commodities, certain high-value fresh tropical fruits, niche-market fruits and vegetables during the northern winter season, and value-added processed foods, are extremely important to producers and processors, and to the overall economy. SIDS are well suited to fresh fruit and vegetable production, and some of them are relatively close to markets in Australia, New Zealand, Japan and the USA. There is also a potential for inter-country trade or import substitution. A more diversified production structure could provide greater stability in export earnings and promote import substitution. Provided a range of appropriate policies is implemented, diversification can contribute to sustainable agriculture, the sound utilisation of natural resources and the protection of the environment.


25. Sustainable farming systems: Intensification appears inevitable if domestic and export market needs are to be met. However, in order to protect the fragile ecosystem of SIDS sustainable production systems need to be developed. Both traditional and new crops should be cultivated on the basis of integrated crop management and conservation farming principles in order to achieve sustainable and environmentally-friendly production. The following actions merit consideration:

26. Plant genetic resources (PGR): Intensified and diversified crop production requires a strong seed programme, either at regional or sub-regional level. Elements of such a strategy include: (i) the development of regional technical capability for seed supply; (ii) the development of appropriate seed policies to enhance national and regional efforts in PGR utilisation and seed supply; and (iii) development of a germplasm information network to link the separate islands and to bridge information gaps in the region.

27. Plant protection: Current pest control strategies, based mainly on the use of pesticides, should be reviewed. The practice of Integrated Pest Management (IPM) is an alternative strategy for effective, efficient, balanced and environmentally safe pest control. Biological control can be effective and relatively easy to implement in SIDS; due to their small size, and pests cannot spread easily to neighbouring territories. Production could be undertaken in official Pest Free Areas (PFA) so as to meet the special needs of niche export markets.

28. Pest eradication programmes should be seriously considered when dealing with important crops and a small number of pests with a simple life cycle and infection/infestation process. Other areas of intervention are: (i) establishment of harmonised pesticide legislation and registration requirements to establish a common legal framework for the importation and distribution of pesticides; (ii) monitoring of pesticide residues in the environment (e.g. drinking water) and in agricultural produce; (iii) active participation and joint decision making within the PIC procedure; (iv) verification of the existence of obsolete pesticides and their improved storage.

29. Irrigation: Exports of traditional crops have declined in recent years and productivity of non-traditional crops is low. In order to combat the serious decline in revenue, irrigation is an opportunity to reduce the unit cost of growing a crop by increasing yields and improve quality, and diversifying into other crops. In islands where water is scarce, localised irrigation systems, either high tech (commercial drip systems, micro-aspersion) or low-tech (simple drip irrigation systems appropriate for gardening) can be introduced for high-value crops. In the highlands of arid or semi-arid islands, various types of water harvesting and runoff capture techniques can be introduced, mostly for drinking water, cattle, and to a lesser extent for gardening.

30. New crops: SIDS in general have a strong comparative advantage in the production of certain tropical fruits (e.g. papaya, banana, plantain, mango, pineapple, watermelon, dasheen, tania etc.), tuber/root crops (e.g. taro, yams, sweet potato, cassava), nuts and spices (e.g. canarium nut, Brazil nut, terminalia nut, vanilla, black pepper) vegetables and cut flowers. Increased production would be absorbed both in the domestic market (e.g. local tourist market) - either to meet increased demand or substitute for imports - and in export markets. In the latter case, the potential of these crops - possibly under organic farming conditions - for niche markets should be explored.

31. Agro-processing: Programmes should be mounted to introduce or extend appropriate technology and to develop expertise in agro-processing. SIDS need to develop small-scale, low-cost agro-processing ventures to increase the value and market potential of products (e.g. essential oils, pharmaceutical crops, natural flavours and colouring).

32. Animal production and health: Production and productivity of small-scale poultry and pigs can be increased using locally-available feeds. Coconuts (copra), yams and taro are high-energy foods that are readily available. Most island states have either a commercial or artisanal fishing industry and the potential for making silage from fish-waste. This can provide a high-quality protein supplement - particularly for pigs and poultry - that complements the "energy" feed available locally. Development of feed mills based on the use of local ingredients could encourage semi-intensive indigenous livestock industries targeted at urban markets and the demands of the tourist industry. The integration of livestock into mixed-farming and tree-crop systems to optimise use of crop residues and vegetation on uncultivated land, as well as to assist the recycling of soil fertility, is an area of considerable potential.

33. Management skills need to be upgraded and feeds and pastures improved in order to realise the full potential of selected breeds. As a more versatile product than fresh milk, niche markets for yoghurt could be developed. Animal health services should be supported, local staff trained, and specific disease eradication programmes be promoted (e.g. Tropical Bont Tick in the Caribbean).

34. Marketing: The marketing strategy for agricultural exports to hard currency areas will hinge on joint marketing, promotion of commodities being sold in niche markets, monitoring the need for change in operating strategies as commodities enter into mainstream markets and the building of strategic alliances with market participants (producer/exporter/ importer alliances). Joint marketing services, with strong private sector participation, should be knowledgeable concerning available markets. They should set standards, provide information and co-ordinate decisions on buying raw materials, transportation, packaging, training, quality, etc. in order to be more competitive.

35. Existing Marketing Boards and private exporters could be seen as the agencies that are best placed to provide (i) market intelligence and information; (ii) exporter facilitation, and (iii) develop farmer organizations (FOs). The development and strengthening of FOs is an important aspect of ensuring the sustainability of the production of non-traditional agricultural commodities. Selected FOs should have commercial orientation, operate economic sized units and enjoy secure land tenure.

36. Human Resource Development: The international community, including FAO, has a role in assisting governments and private sector actors in the SIDS to better understand their opportunities and obligations within the international trading system. Agricultural diversification requires a pro-active, project-oriented and multi-disciplinary approach to develop the production/marketing systems required for the targeted non-traditional agricultural crops. The skills of all actors (e.g. farmers, exporters, administrators and extension personnel) need to be upgraded through training. In particular, extension staff requires a reorientation to market-oriented farm management, with attention paid both to increased productivity and better business planning resulting from improvements in farmers' organizational and managerial skills.


37. This document highlights the major agricultural issues and constraints faced by SIDS and suggests strategies to address them. COAG may wish to advise on ways to further refine these strategies, as well as propose appropriate modalities for implementing them, in order to help attain the sustainable agricultural development of this particular group of countries.

1Yamazaki (1996) estimated a potential loss for all developing countries of US$632 million in 1992 dollars due to the AoA (about 25 percent of the total value of preferential margins in that year), with the biggest losses being in fruits and nuts, and tropical beverages and spices.