(Tuesday, 10 July 2007, 11:30-1 p.m.)
Summary of discussions
1. Round table four addressed the topic “Globalization, Agriculture and the Least Developed Countries”. The Panel was chaired by H. E. Dr. Eltigani Salih Fidail, Minister of International Cooperation of Sudan. Alexander Sarris, Director of the Markets and Trade Division of the Food and Agriculture Organization (FAO) was the presenter of the issues paper “Globalization, Agriculture and the Least Developed Countries”.
2. The key messages of the presentation highlighted that agriculture is the backbone of the least developed countries. Available evidence suggests that agricultural growth can lead to economic growth and poverty reduction in the least developed countries. However, productivity growth in the agricultural sector in the least developed countries has lagged behind productivity levels in other developing countries. Least developed countries need to encourage targeted policies for agricultural development and enhance product competitiveness not only at the international level, but also at the domestic and regional levels, as such markets are quite substantial and can provide considerable room for economic growth and poverty reduction. In this context, assistance in international trade negotiations and policy flexibilities are key elements.
3. The presentation also emphasized the role of ‘aid-for-trade’ in alleviating supply side constraints. It was stressed that the share for agriculture of ‘aid-for-trade’ has declined. Many least developed countries are affected by preference erosion, increases in prices of food imports, reduction in tariff revenues, and increases in transportation costs, among other constraints. Thus, least developed countries require adjustment assistance in the form of technology transfer, and adequate use of existing technologies, and rural infrastructure.
4. Most participants agreed to the major recommendations stated in the issues paper. The main points raised by participants during the discussion include:
Constraints in agricultural development
- Attention was drawn to the lack of access to credit, lack of irrigation systems, high transportation costs, low levels of investment, high energy costs, adverse climate conditions, disease burden, migration, unemployment and dependence on food imports are all major reasons for the steady decline in the agricultural productivity levels of least developed countries.
- Most participants agreed on the fact that lack of investment in agriculture infrastructure and research and development introduce further difficulties for least developed countries to address inherent market failures in domestic and international agricultural markets.
- Some participants also highlighted the role of culture and religion as major difficulties for introducing mechanized agricultural systems in the least developed countries.
- Participants felt that in order to achieve food security, it is vital that least developed countries evolve from self-sufficiency agriculture towards modern agriculture.
- There was a broad understanding that the agricultural subsidies in OECD countries have negative impacts in the agricultural sectors of the least developed countries. Such subsidies affect international price levels, such as the case of cotton.
- It was stressed that processed goods originating in least developed countries face high and escalated tariffs, which prevent the least developed countries from further improving product quality. What is more, finished products come back to least developed countries domestic markets with higher prices.
- Some delegations called on developed countries to act on their commitments to make the WTO Hong Kong Ministerial Declaration effective, notably granting bound-duty and quota-free access to all exports of all least developed countries on a permanent basis elimination. It was also noted that in order to enhance agriculture-based economic growth, tariff and non-tariff barriers and sanitary and phytosanitary barriers need to be removed.
Policies and institutions needed to encourage agriculture-based development
- Several interventions highlighted that the development of the agricultural sector is among the priorities of development plans in many least developed countries. In order to improve access to financing, launch a Green Revolution, and improve productivity levels, there is a need to further invest in improvement of seed quality, promote the value addition of agricultural products and encourage the development of agro industries in partnership with local producers.
- Participants stressed the crucial role of small and medium sized enterprises, microfinance institutions, new technologies, better participation in commercialization and distribution chains and the availability of financial mechanisms to women and youth for enhanced agricultural productivity and poverty reduction.
- It was also emphasized that agriculture is a central pillar for development of the least developed countries, and that if productive capacities are to be brought to the forefront, more public investments will be needed to overcome agricultural stagnation, along with implementation of macroeconomic, regulatory and institutional.
- South-South cooperation and public-private partnerships were viewed as positive instruments for the promotion of solutions to common problems in agriculture, as well as key vehicles for industrialization. Also, information sharing at the local and regional level regarding market access opportunities was viewed as a proper channel to improve agriculture productivity.
Strategies and linkages of agriculture and the overall economy
- Some participants expressed the need for implementing harmonized and integrated approaches vis-à-vis particular approaches, including various levels of intervention, notably at the political and financial levels.
- Participants called on development partners, financial institutions and international organizations to see the importance of agriculture and effectively assist the least developed countries in their transition from domestic-oriented agricultural production towards an internationally competitive agricultural sector.
5. Participants concluded that agriculture is the backbone of the economy of the least developed countries. Almost 70% of their population –mostly in rural areas- depends on income generated by agricultural production. However, despite its importance, this sector remains underutilized. Challenges ahead for least developed countries, especially food security issues, must be adequately addressed if they are to achieve the MDGs. In this context, official development assistance, technology transfer, revitalized small and medium enterprises, integration of agricultural policies into national development strategies, strengthening of South-South cooperation, and elimination of agricultural subsidies constitute major elements that will contribute to the effective and productive engagement of the least developed countries in globalization.