High Food Prices will Continue to Hurt Poor Countries, WTO Ag Committee Hears

Bridges Weekly Trade News
December 11, 2008
By ICTSD

Email this page

Agricultural prices remain high despite recent drops and are likely to exacerbate nutritional and economic problems in poor and developing countries that are net-food importers, a meeting of the WTO’s regular Agriculture Committee heard on 4 December.

The meeting’s discussion on the relationship between WTO rules and national food security was driven by a statement by least developed countries (LDCs) and reports that were presented by international organisation’s which are observers to the Agriculture Committee - including the International Grains Council, the International Monetary Fund (IMF), the UN Conference on Trade and Development (UNCTAD) and the UN Food and Agriculture Organisation (FAO).

Tanzania, on behalf of the LDCs, warned that some countries “have already been hard hit by violent public protests that have often resulted in serious casualties.”

Such concerns were supported by the findings of the international organisations present. Although the FAO’s food price index is now lower than it has been in nine months, it is still 51 percent above where it was in September 2006, the FAO noted. As such, LDCs and developing countries that are net food importers face an import bill of US$ 22.2 billion for the period 2007 to 2008 - a 125 percent jump from five years ago.

And the FAO said the food import bill is likely to remain high. High grain costs, increasing freight costs, declining volumes of food aid, and the need to import more to replenish stocks were among the reasons FAO cited.

The IMF cautioned that fluctuating food prices “weakened macroeconomic fundamentals in many countries, leaving them more susceptible to financial contagion and the consequent slowdown in global growth.”

Likewise, UNCTAD called the situation a wake-up call, but one that “can be turned into an opportunity by developing countries and the international community to revitalise global agriculture production and trade.” In particular, UNCTAD suggested that the ongoing Doha Round of international trade talks at the WTO “could be a major step to reform the agriculture trading system” by producing fair rules and supporting developing countries.

Possible responses to the situation were also considered at the meeting. These comprised action by LDCs and net food importers to increase their own assistance and improve farming productivity, as well as action by the international community in reforming disciplines on tariffs, subsidies and food aid as part of an eventual Doha Round deal.

In addition to discussing implementation of the Agriculture Agreement, the committee also considered three Doha problems that developing countries face in the implementation of the present agreement. These included export credit and financing, tariff quota administration, and improving the effectiveness of work under the net-food importing countries decision.

The regular Agriculture Committee handles with routine elements of the WTO, and not the agriculture ‘special sessions’ of the Doha talks.

ICTSD reporting.

NOTICE: In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving this information for research and educational purposes.

Subscribe via RSS

Global Food Challenge
IATP explains the policies that have caused the food crisis and the solutions we need.

Green Chemistry
The Green Chemistry revolution is making safer products and protecting human health and the environment.

Local Foods
IATP analyzes the key policy and marketplace issues driving local food systems.

NAFTA
NAFTA leaves a huge footprint on the U.S. and the world. As Washington gears up for the debate, IATP analyzes what's at stake.

Water
From ethanol to privatization, water is a hot issue in trade and agriculture worldwide. Trade Observatory has document and headline collections dedicated to water issues.

Keep up-to-date on the latest trade issues at Think Forward.