NEW DELHI: The State of Food and Agriculture Report (SOFA) 2005, of the United Nations' Food and Agriculture Organisation has warned that the benefits of trade reforms may not reach the poor unless urgent complementary policies and investments were made.

The report, released on Wednesday, calls for basic market institutions and infrastructure to be set up before opening national agricultural markets to international competition, especially from subsidised competitors. It examines agricultural trade and poverty, seeking to answer the question: Can trade work for the poor?

Case studies cited by the FAO report indicate that reforms could help reduce hunger and poverty if they were designed and implemented within an explicit pro-poor strategy. The studies also showed a clear need to provide carefully targeted investments and transitional compensatory measures for the poor during the early stages of trade liberalisation. Between 70 and 85 per cent of the potential benefits for developing countries would derive from their own reform policies in agriculture, FAO says.

The warning assumes significance as it comes just days ahead of the crucial World Trade Organisation meeting in Hong Kong, where a final push will be made to reach an agreement to liberalise agricultural trade.

Pro-poor growth

According to the report, trade reforms could work for the poor only if policies and investments were put in place to allow the poor to benefit from trade opportunities and to protect the vulnerable against trade-related shocks.

"Agricultural trade and further trade liberalisation can unlock the potential of the agriculture sector to promote pro-poor growth, but these benefits are not guaranteed," the report says.

Industrial countries have the most to gain from farm trade liberalisation because their agriculture sectors were the most distorted by existing policies. "Consumers in currently protected markets and producers in countries with low levels of domestic support would tend to gain the most," it adds.

Developing countries "as a whole" could also benefit from liberalisation, but SOFA 2005 warns that some groups could be hurt in the short run. These include net food importing countries and countries that had been given preferential access to the highly protected markets of wealthier member countries of the Organisation for Economic Cooperation and Development (OECD).

For developing countries the greatest potential gains from agricultural liberalisation would depend not on reform of the agriculture support system in OECD countries but on reforming their own trade policies, which would encourage greater trade between them.

The report holds that the benefits of trade liberalisation went well beyond the immediate impact on producers and consumers because the reforms would contribute significantly to economic growth and to raising the wages of unskilled workers in developing countries.

Trade could be a catalyst for change, promoting conditions that enabled the poor to raise their incomes and live longer, healthier and more productive lives.

Printer friendly page  
Send this article to Friends by E-Mail