Under the Doha Mandate, the eighth session of the Multi-year Expert Meeting on Commodities and Development was held from 21 to 22 April 2016, in Room XXVI of the Palais des Nations, Geneva.

The Accra Accord (para. 208) mandated the Trade and Development Board to establish a multi-year expert meeting on commodities. The topic of the eighth session was decided at the fifty-sixth executive session of the Trade and Development Board in 2012. The terms of reference of the eighth session were approved at the meeting of the extended Bureau of the Board held on 30 November 2012. As set out by the Doha Mandate (paras. 4 and 5), the purpose of the meeting is to enable commodity-dependent developing countries to identify measures in order to secure, as a priority, adequate access to food and energy, to use commodity revenues for economic growth and poverty reduction and to cope with the challenges of commodity price volatility.

The meeting was expected to provide a forum for sharing country experiences in terms of identifying and implementing appropriate policies at the national, regional and international levels; addressing the impacts of declining commodity prices on vulnerable groups; and helping commodity-dependent developing countries formulate sustainable and inclusive development strategies, including those that promote value addition and economic diversification. The meeting also identified the ways and means for these countries, particularly the least developed countries, to maximize development benefits from commodity production and trade, including the promotion of diversification and the integration of natural resources policies into national development strategies (Doha Mandate, para. 31(i)).

In accordance with paragraph 56 (g) of the Doha Mandate, the meeting offered developing countries an opportunity to share their experiences in order to achieve more sustainable and strengthened agricultural production and food security and increase investment in agriculture and export capacity, taking into account the special needs of African countries, least developed countries and net food-importing developing countries, as well as the needs of small-scale farmers. The meeting will generate lessons learned from experiences and identify practical options and actionable outcomes for harnessing opportunities and addressing the challenges of longstanding commodity trade and development issues at the national, regional and international levels. The meeting will also review the contribution of UNCTAD in assisting developing countries in the area of commodities.

Key issues

The UNCTAD secretariat prepared a document entitled “Recent developments and new challenges in commodity markets, and policy options for commodity-based inclusive growth and sustainable development”. The paper reviews recent developments in key commodity markets, including agriculture, minerals, ores and metals, and energy. It highlights price trends and driving forces of price movements and identifies emerging developments in the global commodity economy that are set to change the commodity landscape and pose new challenges for commodity-dependent developing countries. The document concludes with policy recommendations to address those challenges and ensure inclusive growth and sustainable development in those countries.

The secretariat further issued a background note entitled “Review of UNCTAD efforts to strengthen commodity production in commodity-dependent developing countries and improve food security and export competitiveness in light of the post-2015 Sustainable Development Goals”. The note reviews recent activities of the UNCTAD Special Unit on Commodities in support of commodity-dependent developing countries under the three pillars, namely research and analysis, consensus-building and technical cooperation. It highlights the continued decline in commodity prices and its negative implications on the socioeconomic sector of commodity-dependent developing countries. The note ends with some policy suggestions that could be pursued to mitigate those effects.

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Opening Statement by the Deputy Secretary-General of UNCTAD

21 April 2016

Good morning,

Thank you all for coming today.

Commodity markets are anything but predictable. But on top of this, the main challenge for many countries is the downward trend commodity prices that have followed since 2011.

These downward trends can have important implications on the development efforts of many countries. And it is therefore important to find answers to one question: how can our policy responses address these challenges and foster inclusive growth?

This expert meeting is the right place to seek those answers.

In a few minutes, you’ll be hearing more detailed assessments of trends in commodities markets and suggested policy responses.

With the time remaining to me, I’d like to leave you with three messages.

First, commodities prices are low, and there should be no assumption that this will change any time soon. Spring may still be a long way off.

We can’t say anything with certainty, but what we know from previous cycles is that the busts typically last longer than the booms.

Last year, the slump in commodity markets continued. The UNCTAD Non-Oil Commodity Price Index averaged 182 points in January this year – down from 219 points last January. That’s a significant 17% decrease.

The reasons were varied: Increased supply stemming from the US shale revolution, flagging Chinese demand, weak recoveries in Japan and in the EU, a strong US dollar lagging recovery of global economic output. Further, large investments in production capacity that were made during the boom years have kept a lid on prices.

In recent months, prices have gone up, but they could easily dip again.

This poses challenges for developing countries that are dependent on commodities. Macroeconomic imbalances are symptoms of this: widening fiscal deficits, eroding currencies, and looming sovereign risk. Where governments inadequately anticipated the reversal of economic fortunes after a decade-long boom, did not build the necessary firewalls, these symptoms are increasingly acute.

The second message I’d like to leave you with is that developing countries must not let a serious crisis go to waste.

For years, many commodity-dependent developing countries lost out on the opportunity to harness the commodity boom. Most of them did not succeed to accelerate structural transformation and to build productive capacities.

While it’s true that some countries acted with foresight, for example to establish sovereign wealth funds, not all of these have produced the results anticipated.

What this means is that countries that did not make sufficient reforms during the boom years will have little choice but to implement them now.

This task will not be easy. Borrowing costs for commodity-dependent countries are high – despite the historically low interest rates that prevail in the developed world.

But the current market conditions should be seen as an opportunity to make decisions that have been avoided for too long.

This leads me to my third message: there is a broad consensus, or at least convergence, on the reforms needed in commodity-dependent developing countries. But a consensus in theory is not the same as a consensus in practice.

With shrinking revenues from commodities, governments will have to make hard choices about budget priorities.

But what sound leadership demands may be different from what political expediency requires – especially when a government is under stress.

The list of requirements is long: They need to diversify away from commodities, promote productivity growth and private sector development and cut trade cost. They need to become leaner and more efficient in their administration while protecting social spending. They need to borrow more responsibly and better manage the volatility of markets. And they need to adopt the right accompanying policies to realize trade’s potential for sustainable development.

This list is by no means exhaustive. But already, it suggests the magnitude of the challenge ahead.

Thank you again for joining us today to tackle these important issues. We are grateful for your time and look forward to the discussions to follow.

Thank you for your attention.