Post-slump agricultural commodity prices remain at historic lows, UN report says

Although international prices of agricultural commodities have generally made a hesitant recovery after a prolonged slump in the second half of the 1990s, prices remain at historically low levels and the longer term trend continues downward, according to new United Nations reports on the problem.

Concern over low producer prices for such major commodities as coffee, sugar, meat, oils and cotton tops the agenda at a three-day meeting of the UN Committee on Commodity Problems (CCP), which opened yesterday in Rome.

The role of the CCP, an interim committee of the UN Food and Agriculture Organization (FAO) Governing Council, is to review such problems and develop policy recommendations for the Council to sustain better market conditions and break the boom and bust cycles.

“Variability continues to be the dominant feature of commodity price behaviour,” according to one of the documents prepared for the meeting.

For example, between 1998 and 2001 coffee prices fell 58 per cent because of oversupply, sluggish demand and rising stocks. Persistent low prices have led to supply reductions, which have strengthened prices recently. Prices rose by a third between 2001 and November 2004, as total production for the crop year 2003-2004 reached 6 million tons, the lowest since 1998-1999.

“Prospects of a similar crop size in 2004-2005 could result in a continued upward trend in prices,” the document says. But the challenge for the coffee industry is “how to sustain these better market conditions to avoid a return to the boom and bust cycles.”

The Committee will review a series of reports from the intergovernmental groups, examine food security in light of trade policy reforms and discuss emerging issues of importance to agricultural commodity markets.