High agri productivity: Providing boost to poor nations’ growth

MANILA, Philippines - The significant increases in the prices of agricultural products and natural resources are helping some developing countries achieve strong growth and opening new growth opportunities for many of them.

“Countries that managed to increase productivity in the agricultural sector have been characterized by high rates of economic growth and poverty reduction (in particular, improvements in the livelihoods of the very poor),” according to the World Trade Report 2014.

The report said that agriculture plays a crucial role for development strategies of many developing and least-developed countries (LDCs) as it represents an important sector, both in terms of production and consumption.

Agricultural trade has increased significantly in recent years, in the context of high and rising agricultural prices.

“This has created opportunities for developing countries to leverage agricultural exports for development,” it said.

The report also highlighted the various development challenges facing exporters of agricultural goods, particularly the LDCs.

Foremost among them is the rising share of processed goods in total agricultural trade, which reflects increased vertical coordination of production structures, the report said.

“(This) indicates that involvement in food supply chains is very important,” it said.

Further, the report said productivity gaps may also represent a disadvantage for developing country producers in global competition.

The report said prices in the agricultural sector are volatile, which can create difficulties for consumers and for producers amid their investment decisions.

“Evidence suggests that if counter-cyclical measures that aim at reducing volatility are introduced jointly by net importers and net exporters, price hikes may actually be exacerbated,” the report added.

The World Trade Report 2014 looks at how four recent major economic trends have changed how developing countries can use trade to facilitate their development.

Apart from higher prices for agricultural goods and natural resources, other trends are the economic rise of developing economies, the growing integration of global production through supply chains and the increasing interdependence of the world economy.