Roundtable discussion on Promoting market access for the rural poor

The global marketplace has changed tremendously over the past two decades. Liberalization of domestic and international trade has created a more dynamic commercial climate, which offers new opportunities for many rural people to boost their incomes. But the unpredictable and often inequitable new system has also brought problems for poor rural people.

About 900 million rural people live in extreme poverty, on less than USD 1 a day. The majority rely on agriculture to survive. For them, freer markets offer a chance to increase their incomes. IFAD has proved that helping the rural poor improve access to markets is a vital first step on overcoming poverty. But to take advantage of new opportunities, the rural poor need support to overcome many obstacles.

A roundtable discussion will be held on 20 February 2003 at IFAD’s Governing Council session to explore the difficulties rural poor people face marketing their produce and products. Guest speakers from a range of countries and disciplines will suggest ways the poorest of the poor can be assisted to overcome these hurdles.

Limited access to markets is a major obstacle in rural areas of developing countries. Low population densities, poor infrastructure and high transport costs can combine to make it extremely difficult and expensive to get produce to market. Lack of technology, which could provide up-to-date information about commodity prices and other important factors, is another constraint.

There are other less visible obstacles. Small-scale producers often lack the understanding and business skills required to compete effectively in the marketplace. Many are not sufficiently organized to negotiate with more powerful market intermediaries. Also, subsidies by wealthier countries for their own products, coupled with tight rules on health and quality standards, make it hard for producers from developing countries to break into international markets.

The globalization of trade and capital flows offers new opportunities for growth in poor countries. But evidence suggests that, so far, the industrialized countries have received the greatest benefits, especially their agricultural sectors, which are of great importance to many of their economies. A World Bank study shows that agricultural and other labour-intensive products account for more than half the export revenues of low-income countries and 70% of those of the least-developed countries. Yet, in the past 20 years, market prices in these sectors have fallen dramatically. In 2000, prices of 18 major agricultural export commodities were at least 25% lower in real terms than in 1980. Such price falls are partly the result of support to producers in the developed world.

Here are statistics that show the obstacles faced by farmers in developing countries.

• Farmers in the OECD countries received a total of USD 311 billion in agricultural subsidies in 2001, a figure six times the total of foreign aid given to poor countries in the same year.
• Prices received by OECD farmers were, on average, 31% above world prices.
• Product support as a whole in OECD countries – in the form of domestic subsidies, import tariffs and export subsidies – was estimated at nearly one-third of total farm receipts.

Trade liberalization has created new markets for producers in developing countries, especially the niche markets of tropical fruits and vegetables, organic produce, rural crafts and products bearing a fair trade label. IFAD is working with small producers to identify and develop these markets.

IFAD-funded projects help small producers improve their access to market by enhancing their understanding, marketing and negotiating skills and organizational power. They provide support to market intermediaries to better connect buyers and sellers. They also help governments establish policies, laws and institutions that support the rural poor.

Many IFAD-funded projects help get products to market by providing better roads and technologies and by supporting improvements in production, storage, package and processing to ensure produces meet international standards.

Internationally, IFAD advocates for fairer trade. It supports the Millennium Declaration, issued in September 2000, which calls for a more open trading system, which is less discriminatory and includes a commitment to development and poverty reduction.

When: Thursday, 20 February 2003, 10:30 a.m. to 1:00 pm.

Where: Palazzo dei Congressi
Piazzale J. F. Kennedy
00144 Rome (EUR)

Who: Chairperson: Mr Sartaj Aziz, Senator, Former Minister of Finance and Agriculture of Pakistan and former Assistant President of IFAD

Discussants:

• Ms. Lucia Gonzales, Responsible for Agribusiness Development PRODECOP, Chile
• Mr. Charles Gore, Senior Economic Affairs Officer, United Nations Conference on Trade and Development
• The Honorable Charles N. Keenja, Minister for Agriculture and Food Security of the United Republic of Tanzania
• Mr. Martin Khor, President, Third World Network
• Mr. Jake Walter, Director Technoserve, Mozambique

IFAD Focal Point:

Mr. Edward Heinemann