With the current global boom in the prices of commodities ranging from oil to base metals to grains -– staple ingredients of a modern economy –- poised to lift millions of people out of poverty, senior ministers today weighed possible actions to help developing countries benefit from the windfall, reboot chronically cash-starved poverty reduction strategies and diversify into new commodity sectors to shield their fragile economies if the boom stumbles.

Midway through the week-long twelfth Ministerial Meeting of the United Nations Conference on Trade and Development (UNCTAD XII), taking place in Accra, Ghana, participants held a timely discussion on “The changing face of commodities in the twenty-first century”, in which they expressed the hope that commodity price spikes could bolster economic growth in African and other developing countries.  They recognized, however, that commodities were notoriously cyclical, with busts often following booms, and warned that the world’s poorest nations must be insulated against a global slowdown, especially if the current credit crunch in the United States sparked an economic slowdown in other advanced economies.

“In spite of the gains and opportunities, developing countries must not become complacent,” said Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), who opened the discussion.  Many poor countries remained “on the losing side of the equation”, since profits were often siphoned off at the product manufacturing, packaging and processing levels and failed to trickle down to the local level, particularly in agro-based economies.  Reversing that trend not only called for fundamental changes in the global economic structure, but also for greater diversification by developing countries away from excessive dependence on commodities.

Panel Moderator Ransford Smith, Deputy Secretary-General of the Commonwealth, noted that demand for commodities had grown faster, driven mainly by rapidly industrializing countries like China, Brazil and India.  That demand had a varied impact on developing countries exporting agricultural products, with some benefiting and others, particularly some agro-based economies, posting losses.  Those gains or losses were mainly a consequence of national import-export structures, and it was, therefore, necessary for developing countries to consider how to diversify their exports, so as shore up their economies and make themselves able to adapt quickly to market realities.

The panel members were Joaquim David, Minister of Industry of Angola; Esther Obeng Dapaah, Minister of Lands, Forestry and Mines of Ghana; Sid’Ahmed Ould Raiss, Minister for Commerce and Industry of Mauritania; Nelson Gaggawala, Minister of State for Trade of Uganda; A. Dumont, Head of Argentina’s delegation; Gamini Lakshman Peiris, Minister of Export Development and International Trade of Sri Lanka; Carolina Escarra, Director General for Bilateral and Multilateral Relations and Integration of Venezuela; Carlos Márcio Cozendey, Director of the Economic Department at the Ministry of Foreign Affairs of Brazil; and John Clarke, Deputy Head of the European Union delegation.

Specially invited discussants were Ahmed bin Hassan al Dheeb, Under-Secretary for Commerce and Industry of Oman; Choukri Mamoghli, Deputy Minister for Trade of Tunisia; Guy-Alain Emmanuel Gauze, Permanent Representative of Côte d’Ivoire to the United Nations in Geneva; Hamid Rashid, Director-General for Multilateral Economic Affairs Wing of Bangladesh; Hans-Peter Egler, State Secretary for Economic Affairs of Germany; Ali Mchumo, Managing Director of the Common Fund for Commodities; Panos Konandreas, representative of the Food and Agriculture Organization (FAO) in Geneva; and Aftab Alam Khan, Action Aid International, who represented the Civil Society Forum.

Mr. David said Angola had grown from a modest exporter of oil to a major supplier of nearly 2 million barrels a day.  Given the high price of oil, per capita income had grown from $400 to $2,000 per year; but, being so dependent on one commodity, the whole economy was vulnerable to fluctuating prices.  In addition, oil was not labour-intensive and did not produce many jobs.  It was, therefore, necessary to diversify the economy.  For that reason, Angola had embarked on intensive rebuilding of infrastructure destroyed in the long civil war and a macroeconomic programme to reduce inflation.  Two funds had been created, one of which contained a percentage of oil and diamond revenues to finance projects outside the commodity-based industries.  As a result, the growth rate of the economy was 20 per cent a year, with non-oil industries growing 40 per cent in the same period.

Mr. al Dheeb, noting that a large percentage of Oman’s economy was also dependent on oil, said the country had embarked on programmes to diversify into gas and tourism, among other areas.  It also used much of its oil revenue for human resources training.  The Government had established three funds that invested in infrastructure at home and abroad, he said, adding that it also had created a mega-industrial hub and a new port.  It had also pursued privatization, particularly in the power and communications sector, instituted strategies for greater employment, particularly in the rural areas, and invested $3 billion in tourist resorts.

Ms. Escarra said oil receipts had funded large-scale projects in sectors ranging from health to defence.  The Venezuelan Government had imposed greater taxes on profits when the price of oil exceeded a certain price, but it was also important to conserve resources such as forests and not become too dependent on one commodity.  Oil revenues must be used wisely for both development and solidarity.

Ms. Obeng Dapaah noted that Ghana had previously been known as the Gold Coast, and its economy still benefited from minerals as well as cocoa.  However, it earned minimal income from gold and had not profited from the current spike in prices.  Approximately 17,500 people were employed in the sector.  Ghana had relied too much on a group of minerals and wished to diversify.

A choice must be made between merely taking in royalties or fully managing the extraction and sales of minerals, she said.  The laws on such matters, intended to attract investors, had previously been too liberal, and there was at present no way to find out how much profit was being made from mining.  It was also not possible to increase the royalties or improve mining conditions.  Her Ministry was also looking for ways to spread the benefits of mining and empower small-scale miners, whom it sought to regularize through safety regulations and other measures.

Mr. Ould Raiss said Mauritania had been exporting minerals and, with the prices of imported food soaring, the country must now decide where to dedicate its export funds and how to avoid imbalances that could undermine the economy.  It was necessary to facilitate food supplies to countries like Mauritania under modified market rules.  Importing food was too risky for many companies and new tools were needed to ensure food security.

Turning the discussion towards food commodities, Mr. Gaggawala said Uganda had high mountains topped with ice caps that irrigated crops throughout the year.  The current high food prices presented an opportunity for investors.  The colonial Government had dictated the production and prices of coffee and cotton, but the current Government had liberalized 100 per cent.  Uganda also had oil and phosphates, and welcomed investors.

In order to provide more jobs, however, coffee must be processed near where it was grown, and cotton should be woven into clothes inside the country, he said.  In addition, the country needed transportation infrastructure and technology for food preservation.  The policy climate must also be improved and technology must be shared.  The international community must look at the current commodity crisis as an opportunity to lift the least developed countries out of poverty by helping them boost productivity.

Mr. Peiris said Sri Lanka was paying much attention to the effective delivery of food stocks and the prevention of hoarding.  However, it was up to the public, ultimately, to ensure the success of storage mechanisms to prevent profiteering.  Another important consideration was adding value to all commodities.  Sri Lanka could not compete in run-of-the-mill products, so it had concentrated on top-of-the-line production in tea and cinnamon.  In addition, the country now used raw latex to produce gloves and large tyres.  With regard to minerals, Sri Lanka had to balance policies for the benefit of both investors and the public.  State and private collaboration was needed, as was environmental protection that did not rule out economic growth.

Mr. Dumont, noting that Argentina imported and exported a range of commodities, said the Government and private companies played a significant role.  The country could no longer export frozen meat due to subsidies paid to European producers, and it now produced only the best cuts or industrially produced meat.

Factors that had allowed the agricultural sector to expand included free trade agreements and the fact that Argentina’s domestic market now included the Southern Common Market (MERCOSUR), he said.  Technological progress also allowed added value.  Factors limiting development included different norms that restricted trade.

Mr. Clarke said there were no shortcuts available when trade in commodities sustained billions of people in the developing world.  Dependence on commodities was a symptom of unstable economies and imbalanced growth, and developing countries must do more to improve their competitiveness by diversifying out of excessive dependence on commodities.  That would require, at the minimum, strong Government leadership and enhanced regional integration to make those countries more attractive to foreign investment and create overall greater economic and political stability.

Calling attention to stock market fluctuations and their impact on commodity pricing, Mr. Mamoghli said it was time UNCTAD and similar international organizations considered seriously the ripple effects of stock market activity, especially as it related to market speculation and inflation.  It was also time for the international community to consider establishing programmes to train more financial experts to help people in such financial matters, especially in developing countries.  “People need to know how their money is being used,” he pointed out.

Mr. Egler said all interested stakeholders must come together to discuss all the implications of the current commodity boom and come up with specific action plans to ensure sustainable production and market diversification for the benefit of all.  “We have to join forces to define the basic criteria for the mass market to become more sustainable.”  There was a need for plans that would bring producers and buyers together and stimulate local-level growth.

Mr. Gauze said the technical capacities of developing countries must be enhanced in order not only to improve competitiveness, but also to enhance production methods.  Emerging agro-based economies must be more adaptable to market exigencies and policies must be designed to ensure the long-term sustainability of economic growth and agricultural productivity.

Mr. Rashid said that, despite the success of its green revolution, Bangladesh still imported millions of tons of rice, a situation exacerbated by high food prices and the policies of exporting countries.  Food aid was not growing to meet the country’s needs.  As a net importer of food and other commodities, Bangladesh and other countries in a similar situation needed better mechanisms to help them borrow to meet their immediate liquidity needs, which must be addressed immediately, otherwise the Millennium Development Goals would not achieved.

Mr. Cozendey said Brazil had not reduced its sugar exports and had expanded its production of ethanol from sugar and increased the productivity of other arable land.  In the context of high food prices, it was important to increase technological cooperation to boost production, and Brazil was cooperating with its neighbours in that way.

Mr. Mchumo said the Global Initiative on Commodities had convened due to the need to agree on a comprehensive international programme to address the commodity problem.  The Global Initiative brought together a wide range of stakeholders to create a road map, which had been distributed at UNCTAD XII.  Official development assistance targeted to production and diversification in developing countries was part of that road map.  The Initiative had concluded that the long-term cause of the food crisis was neglect of agricultural production in developing countries, which must be redressed at the highest levels.

Mr. Konandreas said cereal stocks were at historically low levels, but there was reason to expect a substantial replenishment, given two consecutive good years.  However, subsidization of biofuels and other factors may prevent recovery from the crisis at present.  Current World Trade Organization regimes were too weak to help prevent restrictions and subsidies exacerbating the crisis.  In addition, trade facilitation and transportation infrastructure must be pursued at the multilateral level.

Mr. Khan said the Civil Society Forum had agreed on the importance of reversing the focus on the international food trade industry and helping to diversify production.  It was also important to ensure fair prices for producers and workers on the ground, and to follow environmental principles, as well as binding restrictions on transnational companies.  Those were all globalization-related problems, and it was hard to understand why the industrialized countries opposed the establishment of bodies to focus on solving them.