Info Service on Finance and Development (Apr12/02)
UN General Assembly resolution on food and commodity price volatility
9 April (Bhumika Muchhala) – The UN General Assembly in New York adopted
a final resolution on excessive commodity price volatility on 14 February
2012, calling for a “coherent set of policy actions at the national,
regional and international levels to address excessive price volatility
and support commodity-dependent developing countries in mitigating negative
The resolution emphasizes deep concern of episodic commodity price booms and subsequent busts, while also reaffirming that “every State has and shall freely exercise full permanent sovereignty over all its wealth, natural resources and economic activities.”
The contributions of the Common Fund for Commodities and other international commodities organizations are recognized and these are encouraged to continue strengthening coordination with the International Trade Centre, the United Nations Conference on Trade and Development, the United Nations Industrial Development Organization and other relevant bodies.
One area of study highlighted by the resolution is the question of how to establish greater stability in commodities markets and to enhance activities in developing countries to improve access to markets and reliability of supply, enhancing diversification and addition of value, improving the competitiveness of commodities, strengthening the market chain, improving market structures, broadening the export base and ensuring the effective participation of all stakeholders.
Member states also recognize “the fact that many commodity-dependent developing countries and economies in transition continue to be highly vulnerable to price fluctuations,” which alerts a need to “improve the regulation, functioning and transparency of financial and commodity markets, which can address excessive commodity price volatility.”
The resolution stresses the importance of “appropriate non-trade-distorting tools at the international level and the improvement of transparency in the international commodity market” toward the goal of mitigating and managing the impact of excessive price volatility.
In particular, the uncertainty in global commodity markets reinforces the need to comprehensively deal with various factors, such as the demand for commodities, supply capacities, commodity revenues and investments, while taking into account the diversity of each country’s unique situation and needs, and the promotion of their sustainable development, which requires a strengthening of the nexus between trade, food, finance, investment in sustainable agriculture, energy and industrialization.
With regard to the international trading regime, the resolution encourages “developed countries that have not already done so and developing countries declaring themselves in a position to do so to take steps towards the goal of realizing timely implementation of duty-free and quota-free market access on a lasting basis for all least developed countries, consistent with the Hong Kong Ministerial Declaration adopted by the World Trade Organization in 2005.”
The agreement by the Ministerial Conference and appropriate organs of the WTO to regularly review the impact of the results of the Uruguay Round on the least developed countries as well as on net food-importing developing countries is recalled.
This review should foster positive measures to enable least developed countries to achieve their development objectives. In particular, the implementation of the Marrakesh Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food- Importing Developing Countries is called upon.
International financial institutions and development banks are called upon to assist developing countries, in particular commodity-dependent developing countries, in managing the effects of excessive price volatility.
The impacts of climate change on the production of agricultural commodities is also highlighted.
For commodity-dependent economies, the resolution calls upon the international community to cooperate together to identify trade-related policies and instruments as well as investment and financial policies as key elements of the development strategies of those economies.
Particular emphasis is placed on facilitating value addition in commodity and related product value chains, by supporting large-scale diversification of these economies and by encouraging the use and further development of market-oriented risk management tools, instruments and strategies.
The final resolution on commodity prices also recognizes the potential for innovation, productivity improvements and promotion of non-traditional exports in most commodity-dependent developing countries, particularly in Africa, and calls for enhanced support by the international community as well as exchanges of experience in these areas within the framework of South-South economic cooperation.
The resolution stresses that technical assistance and capacity-building aimed at improving the commodity export competitiveness of producers is particularly important, especially in Africa.
The donor community is invited to provide necessary resources for commodity-specific, financial and technical assistance, in particular for human and institutional capacity-building, as well as infrastructure development of developing countries, with a view to reducing their institutional bottlenecks and transaction costs and enhancing their commodity trade and development in accordance with national development plans.
The resolution also stresses that the Aid for Trade initiative should aim to help developing countries, particularly least developed countries, to build the supply-side capacity and trade-related infrastructure that they need to assist them to implement and benefit from WTO agreements and, more broadly, to expand their trade. The urgent need for the provision of, and access to, trade finance to commodity-dependent developing countries, given the tightened access to all types of credit and noting debt sustainability, is underscored.
The resolution underlines the importance of increased investments in infrastructure as a means of promoting agricultural development and enhancing commodity diversification and trade, and urges the international community to assist commodity-dependent developing countries and to invest in and support research and development of agricultural productivity.
Large-scale land acquisitions in developing countries by, among others, transnational corporations, incur risk to development efforts, the resolution states.
The Committee on World Food Security is urged to promote responsible international investment in agriculture by finalizing the voluntary guidelines on the responsible governance of land, fisheries and forest tenure in the context of national food security.
The United Nations Conference on Trade and Development, in cooperation with other relevant international organizations, is invited to continue its research and analysis on this issue, as well as engage actively in collaborative research and analysis of the commodity problematique and related capacity and consensus-building activities “with a view to providing regular analysis and policy advice relevant to the sustainable development of commodity- dependent developing countries, particularly low-income countries.”
With regard to rural development, the resolution underlines the important contribution of the commodities sector to rural development, in particular to providing rural employment and income, and to the efforts for achieving food security.
International measures and national strategies to improve the performance of the agricultural sector are emphasized. This includes strategies that regulate markets and trading systems to ensure a better supply-side response from producers, in particular small farmers, in order to incentivize them to take the risks inherent in investing in increased and diversified production;
In conclusion, the importance of continuing substantive consideration of the sub-item entitled “Commodities,” is reaffirmed by the General Assembly, which will include the sub-item in the provisional agenda of its sixty-eighth session, under the item entitled “Macroeconomic policy questions.”+