NEW YORK
- China and India, the world's two most populous
nations, will soon be potentially big markets for a wide
range of commodities, like cotton, rice, coffee, cocoa,
palm oil and rubber, which should translate into a rare
boon for the developing countries that produce them,
says a new United Nations report.
''Thailand
expects its rice exports for this year to increase by
one million tons, to nearly eight million tons because
of strong Chinese demand, earning revenues of US$2.4
billion compared to $1.9 billion last year,'' said the
20-page study from the UN department of economic and
social affairs.
The accelerating demand for
rubber from China's fast developing automobile industry
has also created "a boom" for rubber industries in
neighboring countries. The east Asian giant is also set
to overtake India as the world's leading importer of
vegetable oils and is expected to buy up to 5.5 million
tons of palm and soy bean oil in 2004, up from 4.2
million tons in 2003.
''India's share of world
consumption of major commodities is relatively modest,''
says the study, ''but China's rapid industrialization
has led to it becoming a major market for most raw
materials'', including copper, iron ore, lead and zinc.
China and India have a combined population of
2.3 billion people, about 37% of the world's population.
A $100 increase in the per capita income of these two
countries (representing a 10% rise in China and 20% for
India) would translate into about $230 billion in
additional demand for commodities. ''Commodity prices
increased considerably in 2003 and the first half of
2004, particularly for minerals, while prices of
agricultural products rose more slowly,'' the report
added. General economic recovery and the rapidly
increasing demand in Asia, particularly China, were the
main reasons for the increases.
The study, which
will go before a UN committee at the current session of
the General Assembly, scheduled to end in mid-December,
says that over the long term, increasing Chinese demand
for vegetable oils, particularly palm oil, will benefit
Malaysia, which accounts for half the global production,
and Indonesia, another significant producer.
According to figures released by the UN
Conference on Trade and Development (UNCTAD), 95 of 141
developing countries are more than 50% dependent on
commodity exports, including oil. For most sub-Saharan
African nations, the figure is 80%. ''This dependence
makes most countries particularly vulnerable to
commodity market fluctuations and is a real handicap to
economic development,'' UNCTAD said in a report released
at a UN conference in Săo Paulo, Brazil, last June.
The world's 50 least developed countries (LDCs),
"the poorest of the poor", now depend heavily on
commodities for their economic survival. Since 1997, the
fall in prices of some commodities, including coffee,
cotton and sugar, has been ''dramatic'', causing large
economic losses and increased poverty in several
developing nations.
According to UNCTAD, about
70% of the world's coffee supply is provided by
smallholders. Coffee growing supports about 40% of the
rural labor force in countries such as Nicaragua.
''Essentially, depressed coffee prices have been caused
by five consecutive years (1998-99 to 2002-03) in which
total coffee production has exceeded demand,'' UNCTAD
said.
Phil Bloomer, head of Oxfam's
International Make Trade Fair Campaigns, says:
''Commodity dependence is the single-most important
trade issue for the world's poorest nations.'' The
countries most affected by plummeting prices are in
Africa. Burkina Faso and Mali depend on cotton, Ghana on
cocoa and gold, Kenya and Malawi on tea and Ivory Coast
on cocoa and cotton. Coffee accounts for 67% of the
income of Ethiopia and 79% of that of Burundi.
But the study says African countries experienced
a 10% annual increase in agricultural exports to China
from 1995 to 2002. Anwarul Karim Chowdhury, UN
under-secretary-general for the least developed
countries, says commodities occupy a very important
place in those nations' quest for equitable trading
arrangements.
The development efforts of most
LDCs - 34 of which are from sub-Saharan Africa - ''can
only go forward if their primary commodities, which
traditionally come from the agricultural sector,
generate sufficient export earnings and employment,''
Chowdhury told IPS. Besides increasing South-South
trade, he said, the rising demand for commodities from
China and India would provide a much-needed stimulus for
the world's developing and poorer nations.
In
order to assure fair commodity pricing and reduce their
volatility, he argued, there is an urgent need to reach
an effective agreement to allow LDC commodity exporters
to compete on a level playing field with richer nations.
"Assuring LDC producers their fair share will not only
benefit their agricultural sectors by increased
employment savings and reduction of poverty in rural
areas, but will also allow the LDCs to reinvest any
surplus in necessary services and infrastructure,"
Chowdhury added.
The UN study says the
importance of the relationship between commodity
production and both the incidence of poverty and the
potential to reduce it is illustrated by the basic fact
that more than two billion people in the world are
employed in commodity production - "and that the
majority of them are poor".
But the
report strikes a positive note when it concludes, "The
coming years may see an unprecedented opportunity for
developing countries to increase exports of commodities,
particularly to other developing countries, as a result
of favorable market conditions over the medium term,
both for raw materials and for food commodities."
