U.N.: Cheaper Food, More Hunger

Hundreds of millions of people in poor countries risk hunger as the price of basic commodities such as sugar and coffee falls and trade policies that favor rich nations remain in place, a U.N. agency warned Tuesday.

As wealthier nations have subsidized their farmers and used their resources to diversify exports, the world's least developed countries have borne the brunt of a steady decline in commodity prices from the late 1990s through 2001, the U.N. Food and Agriculture Organization said.

As prices of commodities including sugar, coffee, cotton and bananas have fallen, poor countries — most in sub-Saharan Africa, Latin America and the Caribbean — have had less money to import food, the Rome-based agency said in its first report on agricultural commodity markets.

The report noted that the same price reductions have left many developing countries paying less for their food imports, while the prices of some commodities including cereals, oil crops, dairy products, fibers and raw materials have rebounded over the last two years.

But many of the world's poorest countries remain dependent on one or a just a few agricultural commodities for much of their export revenues, continue to be vulnerable to price fluctuations, and face mounting debt.

"These problems are exacerbated by market distortions, arising from tariffs and subsidies in developed countries, tariffs in developing countries and the market power ... of large transnational corporations," the report said.

Between 2001 and 2003 developing countries had an average agricultural trade deficit of $6 billion, a figure that is expected to increase to $15 billion by 2015 and $35 billion by 2030, the agency's assistant director general, Hartwig De Haen, told a news conference.

Some 43 developing countries depend on a single commodity for more than 20 percent of their revenues from merchandise exports, the report said.

It called on World Trade Organization negotiations to give priority to bringing down agricultural tariffs, producer support and export subsidies in developed countries — but urged developing countries to reduce their own tariffs and take advantage of trade liberalization.

The report said that commodity prices — reduced by increases in global productivity — are forced further down by high agricultural tariffs and producer subsidies in rich countries.

De Haen said the agency would push for "special and differential treatment for developing countries" in helping to protect them against agricultural price changes.

He said that the least developed countries, which lacked the resources to shift production to high value export crops, also had problems meeting quality standards and delivery deadlines of rich country supermarket chains.

The report proposed measures including insurance schemes to help protect farmers against price fluctuations, and called for developing countries to diversify agricultural production to nontraditional goods.

The agency said it was also involved in instructing developing countries on how to respond to price changes and how to act effectively in international trade negotiations.

"There is no silver bullet that will solve all of these problems," said David Hallam, editor of the report.