Overcoming commodity dependence at center of discussion at high-level event

FAO co-organized an Informal Interactive Dialogue on Commodity Markets, together with the President of the 73rd Session of the UN General Assembly (PGA), H.E. María Fernanda Espinosa Garcés, and the United Nations Conference on Trade and Development (UNCTAD). The event gathered Member States, the UN System and other stakeholders to discuss the challenges being faced by commodity-dependent developing countries (CDDCs) and to generate recommendations on improving prospects.

The informal interactive dialogue consisted of an opening segment, two interactive panels, two plenary sessions and a closing segment.

“Let us reflect on how to overcome the dependencies that often perpetuate inequalities between and within our countries,” said H.E. María Fernanda Espinosa Garcés during her opening remarks. “Addressing these challenges will contribute to the eradication of poverty, promote food security and support the preservation of our environment, so that by 2030, we can achieve the goal of living in more prosperous, peaceful, resilient and inclusive societies,” she said.

José Graziano da Silva, FAO Director-General, addressed the event through a video message, highlighting the importance of having this dialogue, especially for developing countries. “Commodity dependence can affect the capacity of countries in implementing the 2030 Agenda for Sustainable Development.” He also noted, “Sound policies can enhance the commodity sector’s contribution to sustainable growth, including linkages with other sectors of the economy.”

Pamela Coke-Hamilton, UNCTAD Director of the International Trade and Commodities Division, echoed the concerns that commodity-dependent developing countries face. “CDDC exporters of commodities are worse off during commodity markets downturns, as it may have a negative effect on food security, spending on health and education by households and hampering the achievement of the SDGs.” She also underscored the need for international trade to diversify and create more access for developing countries.

Carla Mucavi, Director of the FAO Liaison Office in New York, moderated the first panel on “Commodity Prices and Development,” guiding the discussion on long-term economic development in an era of declining commodity prices, linkages between commodity prices and growth and development, and possible solutions and policies to the challenges faced by commodity-dependent countries.

Raziye Bilge Koçyiğit Grba, Deputy Permanent Representative of Turkey noted that many developing countries face steep challenges in commodity markets, as there remains structural barriers such as limited access to financial services and weak infrastructure. She informed the participants that it is crucial to provide support to commodity-dependent countries, including through technical assistance to increase capacity to detect and avert trade mispricing. She shared the experience of Turkey in terms diversifying its economy and improving the functioning of commodity markets.

Rob Vos, Director of Markets, Trade and Institutions Division at the International Food Policy Research Institute (IFPRI), remarked that most of the least-developed countries are classified as such because of their vulnerability to external economic shocks. He emphasized that the concern for commodity-dependent countries is not so much that commodity prices are currently low, it is their volatility that should be the main concern. He recommended actions on three fronts: (i) at the macro level, introduce counter-cyclical budget, possibly complemented by commodity-price linked fiscal stabilization and savings funds; (ii) at the meso level, promote integration of food value chains, climate-resilient crop diversification, and development of non-farm activities; and (iii) at the micro level, strengthen the resilience and risk-coping mechanism for farmers and other food sector actors.

Fredrik Alfer, Deputy Permanent Representative of Sweden to FAO in Rome, stressed that commodity-dependent countries need to embark on a transformation process by diversifying both vertically and horizontally, boost productivity of small-holders and support their integration into regional and international markets and commodity value chains. He also called to learn from successful examples of commodity-dependent developing countries that transformed the challenge of commodity dependence into more inclusive growth and development.

Mario Cimoli, Deputy Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), provided a review of Latin American commodity markets and policy implications as Latin America has agricultural commodities in abundance, Cimoli emphasized the importance of trade balance and public policy.

The event also coincided with the launch of the 2019 UNCTAD Report on the State of Commodity Dependence. Published biennially, the report contains statistical profiles for 189 countries, comprising 30 indicators aimed at describing the extent of each country’s export and import commodity dependence, as well as key structural and socioeconomic variables that are related to the commodity dependence phenomenon.

The proceedings of the event will be distilled in a UNGA President’s summary to be circulated to all Members States, the UN System and other stakeholders.