Commodity Development Strategies in the Integrated Framework A quick presentation of work done by CSEND in cooperation with UNDP Global Commodity Forum – Side Event Geneva, 23rd March 2010 (finalised on 10th April 2010) Lichia Yiu President, CSEND

Overview of the presentation 1.Integrated Framework and DTIS 2.CSEND’s DTIS Analysis ( 2.CSEND’s DTIS Analysis (Raymond Saner, Lichia Yiu, Alka Bhatia) 3.Findings Csend 2009 finalised 10th April 2010

Integrated Framework (IF) Partnership of six agencies, donors and LDCs Aims to: “mainstream” trade into national development plans; “mainstream” trade into national development plans; help coordinate trade-related technical assistance; help coordinate trade-related technical assistance; promote integration of LDCs into the global economy promote integration of LDCs into the global economy Csend 2009 finalised 10th April 2010

Integrated Framework The systematic approach to trade capacity building, it’s primary tool: ‘Diagnostic Trade Integration Study’ (DTIS) DTIS addresses trade development and seeks to improve linkages between trade and poverty reduction strategies Not designed only for development of commodities Csend 2009 finalised 10th April 2010

Commodity Problématique Primary commodities Major source of income and employment, especially for LDCs Countries dependent solely on primary agricultural commodities rank low on the Human Development Index (HDI) Volatility of prices, changes in demand High demand – gains not evenly distributed Csend 2009 finalised 10th April 2010

Commodity Problématique Primary commodities Potential for poverty reduction, esp. of small farm producers and women Poverty reduction through development of commodity sector and transition up the production ladder Commodity development strategy – address supply side and value chain issues and inadequate diversification of production In the past - emphasis on trade in primary commodities at the cost of industrial development Csend 2009 finalised 10th April 2010

CSEND’s DTIS Analysis - CSEND’s DTIS Analysis - Scope Analysis of existing DTISs of the IF with reference to commodity diversification, value addition and industrial development. National focus. Global trade issues such as market access not examined. Csend 2009 finalised 10th April 2010

CSEND’s DTIS Analysis - Methodology Assess supply side constraints, diversification, value chain creation and forward and backward linkages for industrial development in existing DTISs. Analyse different stages of commodity value and supply chain Analyse different stages of commodity value and supply chain Focus on actors at each stage: policy makers, institutions and entrepreneurs Focus on actors at each stage: policy makers, institutions and entrepreneurs Identify areas for further action Identify areas for further action Csend 2009 finalised 10th April 2010

CSEND Analysis – Methodology 2 Set of criteria developed spanning supply side (domestic production capacities) and value chain (trading capacities) issues. Csend 2009 finalised 10th April 2010

CSEND Analysis – Methodology 3 Criteria of supply-chain analysis: Infrastructure issues: warehousing and storage (cold chains) electricity IT and telecom transportation Production of primary commodity inputs: productivity improvements, technology inputs, management know-how, skills development of workforce, gender particpation Csend 2009 finalised 10th April 2010

CSEND Analysis – Methodology 4 Criteria of value-chain analysis: Processing production inputs (primary and secondary) Standard setting (creating, adopting, implementing) Quality culture (general awareness and demand for quality products) Quality infrastructure (laboratories, accrediation facilities, personnel training) Distribution system (including marketing- and export-promotion services) Business linkages (availability and conditions for joint ventures, franchising, credits, financial serives) Pricing mechanisms (existence of commodity boards, futures trading) Investment climate (regulations on competition rules, repatriation of profits) Social and environmental sustainability Csend 2009 finalised 10th April 2010

Analysis – Methodology 5 Criteria integrated into a Commodity Development process Matrix in which relevant information from each DTIS recorded and analyzed. Recommendations or references classified separately at 3 levels of intervention by commodities: Policy Institutional actors Enterprise development Csend 2009 finalised 10th April 2010

Country Commodity Development Strategy Map Csend 2009 finalised 10th April 2010

Cross-country comparison Counting references by country and chain components Csend 2009 finalised 10th April 2010

Analysis - Findings DTISs have following characteristics: 1.Inconsistent in-country approach to commodity development, across commodities Csend 2009 finalised 10th April 2010

Analysis - Findings 2. Inconsistent between-country approach to commodity development 3. Policy oriented bias – long on policy recommendations and short on implementable actions Csend 2009 finalised 10th April 2010

Analysis - Findings Insufficient attention to infrastructure Supply-side issues lack in depth analysis Processing of primary commodities not linked to a comprehensive strategy for commodity development and diversification All DTISs directed towards increasing exports but factors of supply production not given adequate attention Csend 2009 finalised 10th April 2010

Mapping of Variegation of Commodity Development Strategies by Country in the IF Csend 2009 finalised 10th April 2010

Improvements Needed Diversification Regional Alliances Skill Development More effective use of DTIS 2, EIF Building a Data based monitoring system for aid mgmt Csend 2009 finalised 10th April 2010

Specific Recommendations Policy recommendations Sensitize relevant ministries in LDCs about the need to develop integrated national policy frameworks for commodity-led growth strategies Sensitize relevant ministries in LDCs about the need to develop integrated national policy frameworks for commodity-led growth strategies Implement policies to improve productivity, to create linkages between farming community, enterprises with universities and research entities Implement policies to improve productivity, to create linkages between farming community, enterprises with universities and research entities Develop a viable programme for R&D to employ newer technologies to build competitiveness Develop a viable programme for R&D to employ newer technologies to build competitiveness Create policy framework to facilitate dev of backward and forward linkages in production, processing, value addition and marketing Create policy framework to facilitate dev of backward and forward linkages in production, processing, value addition and marketing Support local economic development and cluster initiatives Support local economic development and cluster initiatives Make quality a national priority Make quality a national priority Create sustainable regional partnerships for economies of scale Create sustainable regional partnerships for economies of scale Csend 2009 finalised 10th April 2010

Specific – Recommendations 2 Recommendations on institutional arrangements Need for supportive institutional framework comprising banks, commodity boards, donors and a dynamic public sector Need for supportive institutional framework comprising banks, commodity boards, donors and a dynamic public sector Development of cooperatives for economy of scale Development of cooperatives for economy of scale Development of functioning market information systems Development of functioning market information systems Institutions in charge of competition policy, SME development etc Institutions in charge of competition policy, SME development etc Csend 2009 finalised 10th April 2010

Specific – Recommendations 3 Recommendations on enterprise participation Strengthen producer organizations, use them for information dissemination Strengthen producer organizations, use them for information dissemination Develop consultative strategies to inform Government Develop consultative strategies to inform Government Mobilize enterprise inputs to identify areas of value addition Mobilize enterprise inputs to identify areas of value addition Encourage participation of enterprises in policy dialogue Encourage participation of enterprises in policy dialogue Raise awareness of the enterprises of their social and environmental impact Raise awareness of the enterprises of their social and environmental impact Csend 2009 finalised 10th April 2010

Thank you