Trade liberalisation alone is not enough, said the UN agency in a report published today. Policies and investments must be put in place to allow the poor to benefit from trade opportunities and to protect the vulnerable against trade-related shocks.
"But these benefits are not guaranteed," it said.
The FAO's warning comes amide fears that the crunch meeting in Hong Kong will fail to deliver necessary reform. Already there have been complaints that the recent ministerial declaration is considerably less ambitious than the stated original objectives of the meeting.
Industrial countries have the most to gain from agriculture trade liberalisation, because their agriculture sectors are the most distorted by existing policies. For the EU food and drink industries, a good deal in Hong Kong in December would be a comprehensive set of rules in agricultural trade, leading to balanced and coherent reforms in agricultural policies.
Developing countries as a whole will also benefit from liberalisation, but the FAO warns that some groups could be hurt in the short run.
Those groups include net food importing countries and countries that have been given preferential access to the highly protected markets of wealthier member countries of the Organization for Economic Cooperation and Development (OECD).
While acknowledging that OECD subsidies help net food importing countries keep their food import bills down, Hartwig de Haen, FAO assistant director-general, economic and social department, said, "OECD subsidies to agriculture send incorrect signals to these countries leading them to neglect their own agriculture."
According to FAO therefore, progress for developing countries will depend not on reform of the agriculture support system in OECD countries but on reforming their own trade policies, which would encourage greater trade between them.
Between 70 and 85 per cent of the potential benefits for developing countries would derive from their own reform policies in agriculture, said the UN agency.
The FAO therefore calls for basic market institutions and infrastructure to be set up before opening national agricultural markets to international competition, especially from subsidised competitors. Case studies cited by the FAO report show that reforms can help reduce hunger and poverty if they are designed and implemented within an explicit pro-poor strategy.
It is hoped that trade ministers will succeed in concluding negotiations on the WTO global trade agreement on agriculture and services. The negotiators have already missed their initial deadline of 1 January 2005 for a final agreement on the Doha Round, which began in 2001.