Press release number: IFAD 07/04

Council approves new budget; takes critical look at trade issues

19 February 2004, Rome – The Governing Council of the International Fund for Agricultural Development (IFAD), a UN organization dedicated to eradicating rural poverty ended its 27th session today. It approved every item on its agenda and fostered a lively dialogue about the important role trade can play in reducing rural poverty.

“About 900 million rural people around the world are struggling with chronic deprivation,” said IFAD’s President, Lennart Båge. “They have the talent, skills and capacity to work their way out of poverty. We just need to give them the opportunity to do so, and market access is an important first step.”

IFAD’s member states approved a work programme of USD 463 million for the upcoming year, as well as a USD 57 million, “zero-growth” budget to finance the organization’s administration. Mr Båge reported that about 50 percent of the work programme will be allocated to projects in Africa.

The total value of the organization’s 2004 work programme, which is co-financed with member governments and other bodies, is estimated to be around USD 1 billion – a similar figure to previous years’ programmes.

The Governing Council also elected Guido Mantega, Brazil’s Minister of Planning, Budget and Management, as its chairperson for the next two years. In his opening statement, Mr Mantega shared an impassioned message from his country’s president, Luis Inácio da Silva, which called upon all countries to fight in the “war” against hunger, poverty and social exclusion.

The major theme of the meeting and its side events was agricultural trade. In his keynote address, the President of Burkina Faso, Blaise Compaoré, said the world’s agricultural trade policies were causing “negative economic and social shocks” in many African nations. “Subsidies to producers in the northern hemisphere artificially inflate the supply on international markets and push export prices down,” Mr Compaoré said.

This is especially evident in cotton-producing nations like Burkina Faso, where farmers are forced to sell high-quality cotton at depressed prices despite their more-efficient production and growing international demand for the fibre.

In a press conference, Mr Compaoré highlighted the fact that, in 2001, developed countries spent six times more in agricultural subsidies (USD 311 billion) than they allocated to development aid (USD 55 billion).

The international trade of agricultural products is an important issue to IFAD because food crops are the main products of the rural poor, and food and labour markets are vital to their survival.

The Governing Council is IFAD’s highest decision-making authority and meets annually to vote on the organization’s budget, policies and regulations.