COMMODITY PRICE VOLATILITY ACCELERATES
Commodity producers are again reaping the benefits of high growth, particularly from high- demand importers, like China, and are increasingly formalising their integration into global commodity value chains. There is a growing recognition that, properly managed, resource rents can provide an important tool in the fight against poverty. At the same time however, there are serious concerns about the way in which commodity markets have been evolving in recent years. Since mid-2010, commodities have, for the second time in 3 years, been experiencing extremely high price volatility, which is exacerbating problems for producers, traders and consumers, writes Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).
Commodities continue to provide the largest source of revenue and employment for dependent countries and their principal source of foreign exchange. Agriculture provides livelihoods for 2.3 billion people globally, mainly on poor, rural, smallholder farms, often with a high participation rate of women. However, as countries seek to rebuild from the economic crisis of 2008-9 and establish job-creating growth, one should perhaps be careful to distinguish between agricultural commodities that have a higher labour intensity from many non-agricultural commodities. Countries must pay further attention to this feature of growth in the commodities sector as they seek to innovate and diversify both within the sector and away from it, for example into higher value stages of the global commodity value chain or into related industries.
Despite a contraction in commodities trade and a fall in prices in 2008-9, the historical trend is towards increasing demand, especially in high growth areas in the developing world, which have been one of the main drivers of the commodity economy in recent years. Meeting that demand in a sustainable manner, whilst ensuring a sufficient and predictable supply, poses significant challenges. Ensuring such a predictable environment is also needed to address the acute problems of food and energy security, especially in environments of extreme poverty with the potential for social and political unrest. An increasing, and increasingly young population in the developing world, coupled with what has so far been a jobless recovery and a lack of social protection in many of these countries, will not easily withstand future price rises.
(*) Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).
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© Inter Press Service (2011) — All Rights Reserved. Original source: Inter Press Service