Commodities: The Lifeblood of the Poorest Countries

by Gustavo Capdevila

Geneva, 23 Mar 2001 (IPS) -- Reducing poverty by half in the world’s 49 least developed countries (LDCs) by 2015 requires the reinforcement of the commodities sector, concluded a United Nations-sponsored workshop of experts Friday.

The consolidation of commodity production and marketing capabilities in the poorest of the developing countries could be achieved through the transfer and adoption of suitable production technologies, according to the workshop participants.

They recommended strengthening research and development capacity in LDCs and making improved seeds and planting material more readily available.

The economies of LDCs are decidedly dependent on their commodities sectors. Agriculture and fishing, for example, represent more than 36 percent of their gross domestic product and 80 percent of their export revenues, according to UN statistics.

In the countries studied, more than 70 percent of the population is employed in the production of commodities, though the majority participate only as subsistence farmers.

The Workshop on Enhancing Productive Capacities and Diversification of Commodities in LDCs, this Thursday and Friday in Geneva, was organised by the Common Fund for Commodities and the UN Conference on Trade and Development (UNCTAD.

Many of the world’s poorest countries are losing market shares, pointed out Rolf Boehnke, managing director of the Common Fund.

Furthermore, this group of 49 countries has become a net commodity importer, with combined exports in the sector at $6.8 billion annually against $9.0 billion in imports. The situation is complicated by the fact that LDCs have also turned into net importers of food. Their annual exports in the sector, taking into account coffee, tobacco, tea and cocoa exports, totalled $3.8 billion, but their imports for the same period surpassed $7.9 billion.

Developed countries, in particular the European Union (EU), have significantly increased their share of world commodity exports, according to the workshop’s conclusions.

This change is largely due to the agricultural support policies applied by the 15 countries of the European bloc, accprding to Mr. Abdelaziz Megzari, chief of the Commodities unit at UNCTAD.

Data published by UNCTAD in its Commodities Handbook, reveal the change of dynamics in the distribution of commodities exports between the periods 1970-1972 and 1998-1999.

Overall, industrialised countries saw their share rise from 58.8 percent to 66.3 percent. Within that group, the EU’s portion expanded from 28.2 in the first period to 38.6 percent in the second.

In contrast, developing countries held a combined share of 31.5 percent of world commodities exports in 1970-1972, dropping to 26.3 percent in 1998-1999.

But the participation of LDCs plummeted from an already low 4.7 percent of the commodities export market in the initial period to a nearly imperceptible one percent in 1998-1999.

Megzari stressed that the 49 LDCs “have suffered much more from loss of market shares than from adverse movements in their commodity terms of trade.”  Competitiveness on open world commodity markets is more important than stable or improved commodity prices, he said, noting that the importance of traditional commodities like coffee, cocoa, sugar and cotton in international trade continues on a downward trend.

Boehnke, meanwhile, asserted that “new vistas are opened for more specialised non-traditional commodities” that can be produced by the LDCs. The dynamic growth sectors are now fish, fruits, vegetables, dairy products, poultry and cut flowers, according to the commodity experts.

Coffee, ranked first as an exchange earner in 1970-1972, has now fallen to fifth place among commodity exports.