Brussels launches action plan on commodities in developing countries

- Last updated on GMT

Related tags: Action plan, International trade, European union

The European Commission has announced a number of initiatives to
help developing countries enhance their export performance and
reduce their vulnerability from price fluctuations of major
international agricultural commodities such as coffee, Brussels
said today.

The idea behind the key objectives is to improve the income of commodity producers in developing countries and reduce producers' and states' income vulnerability to price fluctuations.

"The initiatives involve a comprehensive EU action plan on agricultural commodity dependency,"​ said Poul Nielson, EU Commissioner for development and humanitarian aid.

Europe has met with fierce criticism from developing countries over its subsidy-rich agriculture system. Despite reform led by Agriculture commissioner Franz Fischler the WTO round table in September last year fell largely because developing countries stood firm, maintaining the developed countries could do more to bridge the trade gap.

But Nielson was optimistic this week that the Commission action plan could boost the situation. "The problems faced by many commodity-dependent developing countries today are acute and potentially very damaging. They can be reduced but there is no magic formula.

The EU must stand ready to offer its full support. With the proposal of a commodities action plan we have outlined a common vision for this support, which will now have to be followed up by member states."

Internationally traded agricultural products such as cotton, sugar and cocoa provide a major source of employment and income for millions of people in developing countries as well as a major source of revenue for their governments. Some 54 commodity dependent developing countries (CDDCs) today generate over 20 per cent of their total export earnings from three or less agricultural commodities.

The Commission's action plans identifies six major areas of intervention: support commodity dependent developing countries (CDDCs) in elaborating comprehensive commodity strategies covering critical parts of the commodity chain; responding to price decline; managing risks and increasing access to finance; support for diversification - the EU should assist CDDCs to make informed choices on promoting diversification and support the implementation of these choices; successful integration of CDDCs in the international trading system; and finally 'enhancing sustainable corporate practices and investments in CDDCs.?

Between 1970 and 2000, prices for some of the main agricultural exports of developing countries, such as sugar, cotton, cocoa and coffee, fell by 30 to 60 per cent (constant dollars). Although the long-term downward trend in real prices requires producing countries to continuously address the competitiveness of their commodities, these vulnerable countries have few resources to counter the situation.

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