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Twenty-Seventh Annual Meeting of the Governing Council of the Common Fund for Commodities

8-9 December, 2015: The Hague

Statement of H.E. J.S. Mukul, Ambassador of India

Chairperson of the Governing Council,

Managing Director,

Excellencies,

Distinguished Governors, Alternate Governors and Advisors,

Ladies and Gentlemen:

At the outset, I would like to thank the Government of The Netherlands and were privileged to hear today remarks from Director Inclusive Green Growth /Ambassador Sustainable Development in the Ministry of Foreign Affairs, The Netherlands on behalf of the Minister for Foreign Trade and Development Cooperation, which demonstrates the strong concern and support of the Dutch Government to the issues of production, processing, trade and consumption of commodities. I would like to thank you for your efforts, Madam Chairperson, in guiding the CFC’s work and place on record our appreciation for the work of the Secretariat under the leadership of the Managing Director to make the CFC working more efficient.

Madam Chairperson,

2. As Members are aware, the Common Fund for Commodities (CFC) remains a relatively young organization which has been in existence for around 25 years. The founding fathers of the CFC affirmed the importance of commodities to producers and consumers for foreign exchange earnings, for welfare and economic development, as well as the need to conduct production and trade for the mutual advantage and equitable benefit of all. They encouraged the promotion of economic and social development, particularly of the developing countries. It may be recalled that the CFC went through a major process of first understanding new expectations and then formulating the niche and future basis for the CFC as an efficient and effective working organization. It is hoped that with the introduction of new reforms and approval and adoption of the amendments to the Agreement Establishing the Fund, the CFC will be able to meet the rising expectations of its Members, development partners and other relevant organizations.

3. The objectives and functions of the Agreement Establishing the CFC were modernized and expanded to include amongst others issues directed at mobilization of resources and financing measures and actions in the field of commodities; establishing partnerships to encourage synergies through co-operation and implementation of commodity development activities; and disseminating knowledge and providing information on new and innovative approaches in the field of commodities. This has enhanced trust and cooperation of Member States with a focus, on one side with interests and responsibilities of governments, private sector, and knowledge institutes and on the other with interests of marginalized groups who produce commodities taking into account the social, economic and environmental aspects.

Madam Chairperson,

4. As Members are aware, India is a strong supporter of CFC playing an important role in the commodity sector, especially in support of small and marginalized groups. The commodity prices after showing a decline in 1980s and 1990s bounced back from 2003 to 2008 before again collapsing on account of the international financial and economic crisis. The high volatility in commodity prices is a cause of grave concern for all countries. For India, agriculture production and trade contributes about one-fifth of total gross domestic product (GDP) and about ten per cent of the total export earnings, but unfortunately has one of the lowest yields in many commodities as most of the area is dependent on rainfall. Small holder production offers a large, if not the largest employment opportunity in India and even a modest improvement in its performance has a great beneficial effect in terms of reducing income inequality and promoting development. This is especially true not only for India but for all developing countries where agriculture is less about commercialization but more about livelihoods and food security for low income and resource poor farmers.

5. The small-holder farmers face multiple challenges ranging from volatile food prices to erratic agricultural markets, pests, diseases and climate change, just to mention a few. The small producers of traded crops, particularly those that are traded internationally, face the double disadvantage of volatile prices and lack of knowledge of risk management instruments such as crop insurance or technology to protect them from the vagaries of weather and diseases. Even when they have the knowledge to have access to these instruments, there is the absence of advisory services. Moreover, the market linked instruments are not always grower-friendly as there is often absence of standardized policy interventions from the governments or public agencies to guide and regulate such instruments for specific needs.

6. It is generally accepted that in the long-term, price spikes and volatility can only be addressed through more stable and predictable production and reducing the mismatch between demand and supply. For this, more investment is required in agriculture to enhance production and productivity. We believe that a consistent policy environment is necessary to encourage and enable farmers to invest more in increasing productivity and production, which will help them to realize their true potential in meeting development needs including food security and rural development.

Madam Chairperson,

7. One of the key challenges facing the developing countries like India lies in the field of ensuring stable growth of production of commodities and stabilization of farmers’ incomes. Our past experience suggests that these twin challenges require public interventions in both areas - evolving appropriate public interventions for assuring minimum support to farmers for a minimum level of production for all crops that are traded, and designing cost-effective market instruments that can help them insure against uncertainties or vagaries of market, i.e. demand and supply. We believe that the CFC, with its expertise and knowledge of cross-country experiences, can and must act as leader in this field and help the member countries in designing and evolving an optimal combination of such policies and instruments for the benefit of small farmers and sectors in member countries. One size may not fit all. Hence, country-specific exercises may need to be undertaken in consultation with the governments of member countries.

8. As a knowledge generating institution, it is expected that the CFC will build partnerships to transfer knowledge and scale up successful interventions, particularly those which can help developing countries access the fruits of latest R&D efforts, move up the value chain and market their agricultural produce not as commodities but as processed, value added and branded products.

Madam Chairperson,

9. In conclusion, I would like to emphasize that we will continue supporting CFC in the furtherance of its goals, and its efforts to devise measures and actions which will act as a safety net to protect farmers from the volatility of commodity prices and be an instrument in protecting and expanding capacity of producers to meet new challenges emerging from changes in soil, technology, climate change and food security.

Thank you for your kind attention.