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Commodities

Either directly or indirectly, millions of people in the world?s poorest countries depend heavily on exports of agricultural products such as coffee, cocoa, timber and cotton. Take coffee - in Bangladesh, 25 million families depend on the crop; in Burundi, it accounts for 80% of export revenues.

Revenue from agricultural commodities (through taxation) is vital for enabling governments in producing countries to provide basic services such as health and education.

International action in this area happens mainly through the international commodity bodies andagreements. The idea is to improvecollaboration among consumers and producers, with the goal of reducing:

  • market instability in the short term
  • dependence in the long term

Targeting individual products

Although the EC generally considers the agricultural sector as a whole, focusing in on specific products is sometimes the best way to address problems with particular supply chains at the national or regional level. EU support is also given to specific sectors to accompany developing countries in addressing challenges related to changes in EU market access.

Focus on commodities

Agricultural commodities (e.g. sugar, coffee, cotton, bananas, cocoa, rice, and tea) are crucial to the employment and income of millions of people in developing countries and form a major source of export income for these countries. Often there is a strong concentration on a few export crops: in about 50 countries, three or less primary products constitute the bulk of export revenue, implying vulnerability, the more so as the long-term price trend of commodities has been negative and prices have been highly volatile. Furthermore, the commodity sectors in many countries have difficulties in adapting to increasingly strong international competition. In 2004, the no doc : Action_Plan_Commodities_en.pdf laid the foundation for renewed engagement of the EU in agricultural commodities in developing countries and set out the strategic orientations for cooperation.

Several projects and programmes support the implementation of the EU Action Plan on Commodities. Most directly related is the 'All-ACP Agricultural Commodities Programme' (9th EDF; ?45 million) which operates until 2011 and assists ACP states in developing and implementing commodity sector strategies, as well as improve price risk management. The programme works with all the main international organisations involved in commodities (World Bank, FAO, UNCTAD, ITC and CFC).

Sugar

ACP sugar exporting countries have long benefitted from preferential access to the EU market under the Sugar Protocol. Thereform of theEU sugar regime (2006), the denunciation of the Sugar Protocol (2007 with effect from 2009) and the new import regime in the EU pose challenges of price reduction and competition to the Sugar Protocol countries. The Accompanying Measures for Sugar Protocol countries (AMSP) support the necessary adjustment processes in 18 ACP sugar producing countries in order to accompany the sugar reform of the EU market. An indicative budget of ?1.28 billion has been provided for the period 2006-2013.

Bananas

On 17/03/2010 the Commission adopted a €190 million support package for banana exporters from African, Caribbean and Pacific (ACP) states. This proposal was part of the historic Geneva Agreement on Trade in Bananas. The EU concluded this deal with Latin American countries and the US in December 2009 which settles 15 years banana disputes. It also cuts the tariff which the EU applies to bananas imported from Latin American countries. Today's measures aim to support ACP banana exporters to adjust to this new trading environment, taking into account each country's specific situation.

The measures will focus on three goals:

  • boosting the banana sector's competitiveness,
  • promoting economic diversification
  • addressing broader social, economic and environmental impacts.

Beneficiary countries' adjustment will vary, depending on the importance of the banana sector and their ability to adapt. With additional efforts, some countries will remain competitive and others may have to opt for other solutions. The actual measures will be country-specific, identified and prepared by ACP countries in coordination with the EU within wider agriculture and development strategies.

In addition, ACP bananas countries will continue to enjoy duty- and quota-free access to the EU under separate trade and development agreements, the so-called Economic Partnership Agreements (EPAs). The Commission will now submit its proposal to the EU's decision-making bodies, the Council and the European Parliament.

Questions and Answers on Banana Accompanying Measures

The EC has provided over €450 million in the period 1994-2008 (not all funds have been disbursed and activities will continue for another 3 years) to 12 traditional ACP banana exporting countries (Belize, Cameroon, Cape Verde, Côte d'Ivoire, Dominica, Grenada, Jamaica, Madagascar, St. Lucia, St. Vincent and the Grenadines, Somalia and Suriname. Cape Verde, Grenada, Madagascar and Somalia no longer export significant volumes of bananas to the EU), in order to diversify away from banana exports or to improve competitiveness. The external evaluation report (2009) of the assistance provided under the Special Framework of Assistance (SFA, 1999-2008) highlights that the assistance has been beneficial in improving competitiveness in a number of countries investing in the bananas sector (like Suriname and Cameroun). This has resulted in an increasing trade volume and a stable market share of ACP bananas on the EU market, despite certain countries moving away from a focus on bananas.

Cotton

Cotton is at the core of the livelihoods for millions of small farmers in Africa. These farmers have suffered the negative effects of a volatile, but a generally declining world market price. Recognising the difficulty of the sectors, an EU-Africa Partnership on Cotton was discussed in 2004, leading to an Action Plan for Cooperation. The EU-Africa Partnership on Cotton has led to the mobilisation of more than ?300 million in support to cotton from EU Member States (mainly France) and the EC (European Development Fund resources). This makes the EU by far the largest supporter of cotton in Africa. In early 2009, the Mid-Term Review of the Partnership was concluded with recommendations for an improved continuation.

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Last update: 17/02/2012 | Top