Summary of discussions
1. This round table 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 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 back- bone of the least developed countries. Available evidence suggests that agricul- tural growth can lead to economic growth and poverty reduction in LDCs. However, productivity growth in the agricultural sector in these countries has lagged behind that of other developing countries. LDCs need to encourage targeted policies for agricultural development and enhance product competi- tiveness not only at the international level, but also at the domestic and region- al 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 LDCs are affected by preference erosion, increases in prices of food imports, reduction in tariff revenues, and increases in transportation costs, among other constraints. Thus, LDCs require adjustment assistance in the form of technology transfer, adequate use of existing technologies, and improved rural infrastructure.
4. Participants concluded that agriculture is the backbone of the economy of LDCs. Almost 70 percent of their population, mostly in rural areas, depends on income generated by agricultural production. Yet, this sector remains underutilized. Challenges facing LDCs, especially food security issues, must be adequately addressed if they are to achieve the MDGs. In this context, ODA, 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 in the effective and productive engagement of LDCs.
5. Most participants agreed to the major recommendations stated in the issues paper. The main points raised by participants during the discussion follow:
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 depend- ence on food imports. These are all major reasons for the steady decline in the agricultural productivity levels of LDCs.
• Most participants agreed that lack of investment in agricultural infrastructure and research and development makes it more difficult for LDCs to address inherent market failures in domestic and international agricultural markets.
• Some participants also highlighted the role of culture and religion in the resist- ance to mechanized agricultural systems in LDCs.
• Participants felt that in order to achieve food security, it is vital that LDCs evolve from traditional locally self-sufficient agriculture towards modern agriculture.
• There was a broad understanding that the agricultural subsidies in OECD coun- tries have a negative impact on the agricultural sectors of LDCs. Such subsidies affect international price levels, as in the case of cotton.
• It was stressed that processed goods originating in LDCs face high and escalat- ed tariffs, which prevent them from improving product quality. What is more, finished products come back to LDC domestic markets at 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 LDCs on a permanent basis. It was also noted that in order to enhance agriculture-based economic growth, tariff and non-tariff barriers and SPS barriers need to be removed.
Need for policies and institutions that encourage agriculture-based development
• Several interventions highlighted that the development of the agricultural sector is among the priorities of development plans in many LDCs. 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 commer- cialization and distribution chains and the availability of financial mechanisms to women and youth to enhance agricultural productivity and reduce poverty.
• It was also emphasized that agriculture is a central pillar for development of LDCs, and that if productive capacities are to be brought to the forefront, more public investment will be needed to overcome agricultural stagnation, along with implementation of macroeconomic, regulatory and institutional reforms.
• South-South cooperation and public-private partnerships were viewed as posi- tive instruments for the promotion of solutions to common problems in agricul- ture, as well as key vehicles for industrialization. Also, information sharing at the local and regional level regarding market access opportunities was seen as nec- essary to improve agriculture productivity.
Strategies and linkages of agriculture and the overall economy
• Some participants expressed the need for implementing integrated vis-à-vis more isolated approaches, including various levels of intervention, notably at the political and financial levels.
• Participants called on development partners, financial institutions and interna- tional organizations to see the importance of agriculture and effectively assist LDCs in their transition from domestic-oriented agricultural production towards an internationally competitive agricultural sector.