Poor governance, weak institutions threat to agricultural commodity markets: FAO

Ministers have been asked to discuss how commodities should be related to post-2015 development goals

By Vani Manocha
Published: Thursday 09 October 2014

Agriculture in Kenya (Photo: Wikipedia)

To boost voice of smallholders, governments ought to review the way international agricultural commodity markets are governed, said José Graziano da Silva, Director-General at Food and Agriculture Organization (FAO). He said this at the world at the third ministerial meeting on international agricultural commodity market, held in Rome this week.

According to a press release by FAO, commodity markets have caught global attention due to volatile food prices in the past five years. While prices are currently declining, Graziano da Silva noted that underlying problems lurk in market institutions, largely forged in the 1970s. Enormous changes since then, in production and distribution fronts, "have had far-reaching implications not only for how international commodity markets work but also for food security, property rights and access to productive resources, and the position of smallholder commodity producers," he said in opening remarks.
Commodity production and export account for a fifth of the world's economic activity and are estimated to provide incomes and employment for more than a billion people. FAO, therefore, has piloted the idea of creating inclusive "multi-stakeholder fora" involving all stakeholders in a particular commodity market—government, private sector producers and traders, consumers and non-governmental organisations.

‘Information and coordination are missing’

Ministers who attended the meeting include those from Burkina Faso, Central African Republic, Georgia, Haiti, Lebanon, Malawi, Mauritania, Portugal, South Africa, Sudan, Tonga, Ukraine, United Republic of Tanzania and Zambia. Countries like Italy, Japan, the United Kingdom and United States had sent their vice ministers or senior officials.

Lassaad Lachaal, agriculture minister of Tunisia and chairperson of the ministerial meeting, said that there were "deficiencies" today in amassing reliable, up-to-date information on commodity stock levels and trends and that a stronger institutional scheme to promote policy coordination is needed.

The ministers have been asked to discuss how commodities should be related to the broader international development goals of the Post-2015 Development Agenda.

Nearly two-thirds of developing countries rely on primary commodity exports for more than 50 per cent of their export earnings. Many countries have high levels of dependence on commodities such as bananas, jute or cotton. Coffee alone accounts for two-thirds of Burundi's export earnings.

Smallholders in developing countries produce the lion's share of the world's agricultural commodities, including non-staple foods such as sugar and coffee. Globally, 80 per cent of coffee is produced by smallholders, and the figure is higher for cocoa. Both products are part of global value chains that are often dominated by distributors.

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