CCP 05/INF/3

Mr Chairman, Excellencies, Distinguished Delegates, Ladies and Gentlemen,

Welcome to the 65th Session of the Committee on Commodity Problems (CCP).

Arrangements for this Session of CCP are rather different from those of previous occasions. In response to requests from some members, and following extensive discussions in the Programme and Finance Committees, this CCP takes place over fewer days, and back-to-back with the 19^th Session of the Committee on Agriculture in the hope of making efficiency savings both for Members and the Organization. This has been achieved by focusing the agenda for this session on recent agricultural commodity market developments and policy issues - the core mandate of CCP. Some matters which were previously reported and discussed at the CCP, mainly reports from CCP’s subsidiary bodies such as the Intergovernmental Groups for particular commodities, will be matters for information, but, of course, delegates may wish to comment on them. These new arrangements are on an experimental basis, and will be evaluated by the Secretariat. However, feedback from delegates to assist in this process is welcome.

In addition to the CCP itself, the Secretariat has organised a number of important special events during the course of the Session. These are:

1. a High-Level Round Table on Trade and Food Security;
2. a discussion of Experiences with Regional Programmes for Food Security;
3. a more technical discussion of model-based analyses of the impact of OECD policies on world commodity markets organised by FAO, OECD and the World Bank;
4. a presentation by the EC on CAP Reform and the developing countries.

I commend all of these special events to your attention.

The role of CCP is to review commodity problems of an international nature, to survey the world commodity situation, and to develop appropriate policy recommendations for the FAO Council.

Since the last CCP, agricultural commodity prices have, in general, continued their hesitant recovery from the low levels recorded in the second half of the 1990s. However, the longer term trend in real commodity prices continues downward. The recent history also illustrates the high degree of variability in prices. These basic features, and their economic implications for developing countries depending on commodity exports on the one hand and food imports on the other, are the background to your discussions.

The Committee might wish to reflect on feasible responses to commodity price instability. Over the years, many different measures have been proposed to cope with international price instability, but it is apparent that measures based on market interventions have proved disappointing. The Secretariat has prepared a document to inform the Committee of a recent initiative in managing price risks using futures and options markets.

With regard to commodity market developments, factors underlying them, implications for commodity exporters and food importers and policy and international actions to address commodity problems, I would like to draw your attention to a new FAO flagship publication, The State of Agricultural Commodity Markets, which was launched in February this year. This is the first issue of a new biennial publication. It aims to present commodity market issues in an objective and accessible way to policy makers, commodity market observers and all those interested in commodity market developments and their impacts on developing countries.

As in previous sessions the Committee will review recent trade policy developments. The Secretariat will present a paper on economic and trade policy reforms and their impact on food security. It presents the results of a major FAO study of the experiences of 15 developing countries over the last twenty years in domestic policy reform, including such issues as the reduction or elimination of trade barriers, and institutional reforms in agricultural marketing systems that emphasize market mechanisms rather than administrative pricing. Most importantly, the Committee will have the opportunity to discuss the policy lessons to be drawn from this study.

The Commodities and Trade Division is expanding its capacity to undertake analyses of policy reform scenarios and undertake outlook work through the development of an analytical model - the COSIMO model. This has been in close and continuing collaboration with OECD, and is illustrative of a trend towards greater technical cooperation with our partner agencies. The Secretariat would welcome the views of the Committee on this project, especially since it is hoped that eventually the model will be made available to member countries to help them assess policy developments.

With regard to policy analysis by the Secretariat, I would like to draw your attention to an important collaborative initiative - that between FAO, the World Bank, OECD and IFPRI. This is the agricultural policy indicators project, which is aimed at assisting developing countries in identifying, collecting, analysing and monitoring policy indicators so as to better understand how agricultural policy affects food security, poverty reduction, agricultural growth and rural development.

In addition to analyzing specific trade policy issues, FAO is continuing and expanding its work in capacity building and support to member governments in relation to the ongoing WTO negotiations, and in its technical assistance to individual member governments in relation to commodity policy. However, the demand for such assistance far exceeds our supply because of resources constraints.

The final major issue for your consideration is food aid. This is highly topical, given the ongoing WTO negotiations which are considering the impact of food aid on commercial trade. The existing provisions of the WTO Agreement on Agriculture include reference to the FAO Principles of Surplus Disposal and Consultative Obligations, which are addressed by the CCP’s sub-committee, the Consultative Sub-Committee on Surplus Disposal (CSSD). The WTO negotiations may have implications for food aid and trade, the recipients and donors of such aid, and the role of the CSSD. Therefore, the report of the CSSD will be presented as part of the discussion on food aid. The negotiations on food aid within the WTO rules give renewed importance to the CSSD and to the relevance of your debate at this Session. The Committee may wish to consider the role which the CSSD might play in monitoring adherence to any new disciplines agreed in the WTO, and how the effectiveness of the CSSD in doing so might be strengthened.

Mr Chairman, Excellencies, Distinguished Delegates, Ladies and Gentlemen,

Your participation in this session of the CCP is much appreciated. The agenda focuses on key issues of crucial importance to commodity trade and development. I would like to remind you that the CCP is the only truly global platform for the discussion of problems facing agricultural commodity producers, exporters and importers and for identifying appropriate solutions to them. Thus, our discussions here are of unique importance. They will also provide guidance for FAO’s commodity-related work programme.

I wish you a constructive and successful meeting.