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Declining Prices Hurt Developing World : Trade: U.N. report says consumers benefit, but efforts to create jobs and expand markets in poorer nations are hindered.

July 28, 1993|From Associated Press

WASHINGTON — Declining prices for agriculture, fishery and forestry products--including sharp drops for coffee and cocoa--are hurting the developing world, the U.N. Food and Agricultural Organization said Tuesday.

At best, prices are expected to rise sluggishly through the end of the century, the agency said in its annual report of world commodities trading. Lower prices could be good for consumers but will hinder efforts to provide jobs and develop new consumer markets in the world's poorer countries.

The report said that developing countries have increased their exports by 45% since 1980, but the fall in prices "more than wiped out the volume gain." Prices on world markets for coffee and cocoa are down 70% from 1980; sugar is down nearly 60%, and cotton and rubber have dropped 50%, it said.

Overall, the real prices of agricultural, fishery and forestry products exported by developing countries have dropped 39%. The U.N. index of commodity export prices for the developing world dropped 8% in just the last two years. For industrial countries, the price drop has been 19% since 1980 and about 2% over the last two years.

The report follows a private Worldwatch Institute survey earlier this month that offers a contrasting view of future world food supplies. It focuses on declining worldwide per capita production of meat, fish and grain.

The U.N. report deals with overall commodities production, which is continuing to increase for most commodities even though prices have slipped. It predicts that global agricultural output will continue to grow faster than demand, which will tend to keep prices from rising.

Richard Perkins, FAO commodities and trade director, disputed the notion that the world is running out of food production capability. He said that per capita decreases are largely due to population growth in Africa and the fact that some developed countries are decreasing production to avoid surpluses and keep prices from collapsing.

Over the last dozen years, slow growth in demand, rising protectionism and stepped-up productivity in wealthy countries have all contributed to smaller markets for commodities that provide the lifeblood for poorer nations around the globe, the FAO report said.

Coffee, cocoa, cotton and rubber prices have dipped even more, according to the report of commodities prices and prospects. Countries that rely on these products are finding it increasingly difficult to earn the foreign currency required to meet their own import needs.

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