The document discusses the 23rd annual meeting of the governing council of the Common Fund for Commodities (CFC). Key points include: - The governing council endorsed recommendations to reform the CFC's mandate and operations. An open-ended committee was formed to work on reforms and present an interim report in April. - Member state representatives voiced support for reforming the CFC's role to address issues like commodity price volatility and ensuring the organization's continued relevance. Kenya supported flexibility in reform options while focusing on a sustainable solution. - The meeting was held in The Hague and included remarks from the Dutch government supporting the CFC's role in global commodity discussions and encouraging partnerships.

1. Special Partnership Issue
Newsletter 1 | April 2012
Common Fund for
Commodities
Committee to present an interim report at the Executive Board Meeting in April
Open-Ended Reform Committee’s
Work Underway by Member-States
THE HAGUE – At its 23rd Annual
Meeting, the Governing Council of
the Common Fund for Commodities,
endorsed the recommendations of
the Executive Board and urged the
open-ended reform committee to
proceed with the necessary work on
the mandate and institutional reforms
of the Fund with a report expected
by July 2012.
The 23rd meeting, held in December 7-8
at the Steigenberger Kurhaus, was opened
by the acting Chairperson, Ms. Giuseppina
Zarra (Italy). The welcoming statement
by the host government was delivered by
Mr. Martin de la Beij, Director, Depart­ment
of Sustainable Development
Cooperation, the Netherlands Ministry of
Foreign Affairs, on behalf of Mr. Ben
Knapen, the Minister for European Affairs
and International Cooperation.
In the welcoming remarks, Mr. de la Beij,
said the Common Fund can still play its
role in the international global discussions
on commodities and sustainable develop-ment
cooperation, as new actors enter
the field and influence by national
governments is reduced.
“I would encourage the Common Fund
to embrace emerging opportunities to
engage with the private sector, intensify
policy coordination and communications
with other international agencies as well as
NGOs and research organizations in order
to deliver effective solutions for develop-ment
cooperation among all its members,”
said Mr. de la Beij.
Amb. Mchumo in his formal statement to
the Council outlined the major highlights
of the Secretariat’s work plan in 2011. He
noted that the Fund’s active commodity
development advocacy initiatives were
especially relevant in the new reality of the
global financial challenges, and particularly
1
Host government representative,
Mr. de la Beij, acting chairperson
Ms. Zarra (Italy), and Amb. Mchumo at the
opening session of the 23rd annual meeting
of the Governing Council in The Hague.
photo CFC
continues on page 2 >
Content
1-2 23rd Governing Council
3 Reassess Commodities Strategy
4-5 Bamboo Charcoal Provides
Income Opportunities
6-9 GC-23 National Statements
10-11 2nd African Coffee
Sustainability Forum
12-14 Q & A Terry Townsend (ICAC)
15 CFC-ICAC Cotton Publication
16 49th Consultative Committee
17 Spotlight on Price Volatility
20 Dairy Sector
Ms. Hadja Zenab Diallo (Guinea)
photo CFC

2. Mr. Thomopoulos (Greece) and Ms. Grohmann (Germany) during the 23rd meeting.
2
He recapped that Fund’s contribution
in 2011 to commodity dependence and
market volatility discussions and outcomes
of the Brussels Conference, the Global
Commodities Forum, UN LDC-IV’s
Istanbul Programme of Action, and the
66th session of the Second Committee
of the UN General Assembly.
“The G-20 in its recently concluded
meeting in Cannes presented an agenda to
restore confidence in the global economy
through its commitment to reinvigorate
growth, create jobs, ensure financial stabil-ity,
and make globalization more sustain-able
and inclusive,” Amb. Mchumo said.
“It is our ardent wish and desire that
concerted international action coupled
with policy coherence will lead to
improved economic prospects and spur
growth of global economy.”
Among decisions by the Council in
December, was that all steps required to
launch the formal procedure to appoint a
new Managing Director shall be initiated
> continued from page 1
the impact of commodity price volatility
and fluctuations on the economies of
commodity-dependent developing
countries.
On the reform process, being the main
issue for the Council’s agenda deliberations
this year, Amb. Mchumo indicated that
the Secretariat had provided the necessary
ground work and the adopted Agreed
Conclusions contain the principles of
agreement, the rationale for reform and
the implementation plan for reforming
the mandate and institutional structure
of the Common Fund.
“The reform process is member-countries
driven and I would reiterate that providing
the political and philosophical rationale for
and guidance on the Fund’s future is the
task of member-countries,” he said. “We
therefore expect and call on the member-ship
to put forward all ideas regarding their
vision of the Fund and its future role and
mandate, as they see and envisage it.”
photo CFC
in accordance with the decision on the
reform of the CFC. A list of candidates
for the position of the Managing Director
shall be presented for consideration at the
24th Annual Meeting of the Governing
Council. Mr. Parvindar Singh, Chief,
Policy, Programme and Evaluation Unit,
would serve as acting Managing Director
on an interim basis with effect from
1st September 2012 for the duration up
to the 24th Annual Meeting of the
Governing Council, when the term of
Amb. Mchumo concludes on 31 August
2012.
H.E. Amb. Sirajuddin Hamid Yousif
(Sudan) was elected Chairman of the 2012
Annual Meeting of the Governing
Council. The Vice-Chairpersons are: H.E.
Mr. Karim Ben Becher (Tunisia/Africa
Group); Ms. Giuseppina Zarra (Italy/
OECD Group); Mr. Wu Mingxin
(China); H.E Haifa Aissami Madah
(Venezuela/ Latin American Group); H.E.
Mr. Buddhi Athauda (Sri Lanka/Asian
Group) Names to be communicated-
The Russian Federation. •

3. 3
Reassess Commodities Strategy to Spur
Growth in Producing Countries
NEW YORK – The reform process
being undertaken by the Common
Fund to consolidate a more focussed
mandate, greater efficiency in its
operations and governance, should
be a lightning-rod opportunity for
the institution to continue helping
commodity-dependent countries take
advantage of the economic growth
availed by the rapidly expanding
global commodity markets.
The Managing Director, Amb. Mchumo
offered this view in his address in New
York, during the 66th Meeting of the
United Nations General Assembly’s
Second Committee, which deliberates
on macroeconomic policy issues related
to commodities and development.
In his statement, Amb. Mchumo called
on the Second Committee, “to articulate
the need for an open and flexible strategy
for the new role of commodities, which
could guide the development community
to be wise about commodities, as a pillar
of sustainable global growth and develop-ment.”
Amb. Mchumo recalled that the inter­national
consensus required for global
commodities supply management had
not fully materialized in over 20 years of
CFC operations, and that it was a clear
indication that theoretical and political
underpinnings for collective action in
this respect, still fell short of Member
Countries’ expectations.
Amb. Mchumo in a broad overview
during his remarks noted that commodity-dependent
countries need not wait to take
advantage of the lucrative opportunities
that are emerging in commodity markets.
He said, “The opportunities are there and
should be developed further by taking the
sector’s activities and operations, as close
as possible to primary producers, while
keeping the door open for the private
sector and financial investors to come in
at the earliest stage.”
“Finding new ways to take Member
Countries out of the cycle of commodity
dependency will require practical innovation
and replication much like the successes,
which have been documented and dissemi-nated
by the Common Fund across many
commodity sectors,” said Amb. Mchumo.
“Some areas still require urgent attention-raising
agricultural productivity through
technology and applied R&D knowledge;
effective use of productive resources and
water; improved market linkages; and
direct measures to transfer and mitigate
risk to reduce vulnerability of producers,”
he said.
He reassured the Committee that: “In the
run-up to UNCTAD XIII in Doha, the
Common Fund will do its part in attending
to these issues. We therefore welcome the
renewed attention by the G20 concerning
greater market transparency for the benefit
of food market and price stability, but
much intensified action is called for in the
light of the rapidly expanding knowledge
of commodity market, as mirror of global
capital movements.” •
Advocacy
photo Hans Dijkstra, gaw ontwerp+commubicatie
Improved market conditions for commodity producers can sustain global food security initiatives.

4. Bamboo Charcoal Provides Income
Opportunities While Saving Africa’s Forests
DURBAN, SOUTH AFRICA –
Bamboo, a plant not often associated
with Africa, may be the key to com-bating
Bamboo is a fast-growing plant and produces large amounts of biomass: an ideal energy source.
4
soil degradation and massive
deforestation on the continent as an
alternative source of energy.
A partnership among African nations and
communities, the International Network
for Bamboo and Rattan (INBAR) and
China are working to substitute bamboo
charcoal and firewood for forest wood on
which 80 percent of the rural population
in sub-Saharan Africa depends for its fuel
needs.
INBAR’s Bamboo as Sustainable Biomass
Energy initiative is funded by the Common
Fund for Commodities (CFC) and the
European Union (EU). The initiative is
driven by growing concerns about energy,
health and food security, and climate
change, and is the first to transfer bamboo
charcoal technologies from China to
sub-Saharan Africa to produce sustainable
‘green bio-fuels’ using locally available
bamboo resources.
Initial successes with bamboo charcoal
in Ethiopia and Ghana, which have put
bamboo biomass at the center of renew-able
energy policies, are spurring interest
in countries across the continent and
prompting calls for greater investment in
bamboo-based charcoal production as a
‘green biofuel’ that can fight deforestation
and mitigate climate change.
“Bamboo, the perfect biomass grass,
grows naturally across Africa and presents
a viable, cleaner and sustainable alternative
to wood fuel,” said Dr. J. Coosje Hoogen­doorn,
Director General of INBAR at a
side event at UNFCCC COP17 in
Durban. “Without such an alternative,
wood charcoal will remain the primary
household energy source for decades to
come – with disastrous consequences.”
Burning wood also has a significant impact
on the climate. Scientists predict that the
burning of wood fuel by African house-holds
will release the equivalent of 6.7 bil-lion
tonnes of greenhouse gasses into the
atmosphere by 2050, resulting in further
climate change through clearing of tropi-cal
forests.
In terms of health, the burning of fuel
wood claims the lives of an estimated
2 million people every year – mostly
women and children – who inhale the
smoke. Continued widespread indoor use
of forest wood charcoal as a household
fuel could cause 10 million premature
deaths by 2030.
Saving Forests, Mitigating
Climate Change
It takes seven to ten tons of raw wood
to produce one ton of wood charcoal,
making wood fuel collection an important
driver of deforestation on a continent of
nearly one billion people who have few
alternative fuel sources.
Advocacy
**Editor’s note: The work being finalized
shortly on the proposed CFC-ICB joint
communications strategy calls for coordination
and shared resources. Below is a test show­case
output of collaboration between INBAR and
CFC on a side-event hosted by INBAR at
COP 17, assisted by the Nairobi-based PR
firm, Burness Communications during COP
17 in Durban. The media approach and
output from the event secured global media
coverage and story placements and the
Common Fund for Commodities was duly
acknowledged as the one of the key funders
of INBAR’s Bamboo as Sustainable
Biomass Energy Initiative.
photo iStockphoto

5. 5
The initiative is to produce sustainable ‘green bio-fuels’ using locally available bamboo resources
in sub-Saharan Africa.
“Ensuring food security in a changing
climate is one of the major challenges of
our era. It is well known that the destruc-tion
of forests has negative repercussions
on livelihoods and sustainable agriculture
as it feeds into a cycle of climate change,
drought and poverty,” said Dr. Patrick
Verkooijen, Head Agriculture and
Climate Change of the World Bank.
“Feeding people in decades to come
will require ingenuity and innovation to
produce more food on less land in more
sustainable ways.”
Indeed, scientists believe that deforestation
across the Horn of Africa has contributed
to pervasive drought in the region. Years
of tree-clearing, particularly in hard-hit
Somalia, have eliminated fragile forests
that stood as the last line of defense against
the conversion of sparsely forested dry
lands and pastures into useless desert,
according to researchers from the
Consultative Group on International
Agricultural Research (CGIAR).
The International Energy Agency (IEA)
predicts that if business continues as usual,
by 2030 biomass energy in sub-Saharan
Africa will still account for about three-quarters
of total residential energy, under-scoring
the urgency of coming up with a
sustainable alternative biomass to replace
wood.
Sub-Saharan Africa has over 2.75 million
hectares of bamboo forest, equivalent to
roughly 4 percent of the continent’s total
forest cover.
“Rural communities need access to
sustainable approaches that will keep
trees in the ground and the environment
safe,” said Professor Karanja M. Njoroge,
Executive Director, Green Belt
Movement. “Bamboo grows naturally
across Africa’s diverse landscapes, but
unlike trees, it regrows after harvest and
lends itself very well for energy plantations
on degraded lands. We should put it to
good use to provide clean energy for the
continent.”
“With further investment and policy
reform, community kiln technologies
could be up-scaled to reach thousands
of communities in Ethiopia,” said
Melaku Tadesse, National Coordinator
for Climate Change Unit at Ethiopia’s
Ministry of Agriculture. A number of
African countries are pressing for develop-ment
of their own bamboo charcoal
industries to provide sustainable, affordable
energy for growing populations.
Harnessing the Perfect
Biomass Energy Source
Bamboo is one of the fastest-growing
plants on the planet and produces large
amounts of biomass, making it an ideal
energy source. Tropical bamboos can be
harvested after just three years, rather than
the two to six decades needed to generate
a timber forest.
The entire bamboo plant, including the
stem, branch and its rhizome, can be used
to produce charcoal, making it highly
resource-efficient, with limited wastage.
Its high heating value also makes it an
efficient fuel.
Charcoal is made through the controlled
burning of bamboo in kilns, whether
traditional, metal, or brick. The technolo-gy
is being adapted to produce larger
quantities of charcoal to serve a larger
number of rural and urban communities
as well as to produce bamboo charcoal
briquettes that are ideal for cooking
because they burn longer and produce
less smoke and air pollution than ‘natural’
charcoal.
In addition to charcoal, bamboo offers
many new opportunities for income
generation. It can be processed into a vast
range of wood products, from floorboards
to furniture and from charcoal to edible
shoots. The world bamboo export was
estimated at 1.6 USD billion in 2009, a
decline of about 659 USD million from
2.2 USD billion 2008. •
photo iStockphoto

6. 23rd Annual Meeting of the Governing Council
National Statements
Member-States Voice Strong Support for
Reforming CFC’s Mandate and Role
Member-country representatives
delivered national statements at the
23rd Governing Council meeting
in The Hague. Below are selected
edited excerpts:
The delegation of Kenya at the outset indicated
that they appreciated the Fund’s project activi-ties
6
and implementation in the country and
the East African region. Regarding the reform
process, the delegation mentioned that while
the rationale for institutional reforms was well
understood and welcomed, flexibility would be
essential when attempting to assess the merits
of all the options that are on the table.
The delegation strongly urged and implored the
member states to focus on a prudent, workable
and sustainable option that would ensure
the Fund’s improved efficiency, delivery and
effectiveness. The delegation welcomed the
opportunity to be involved in the open-ended
reform committee; and urged that consultations
be expedited to be able to meet the set deadlines
for concluding the committee’s mandate prior
to the next Executive Board meeting.
•••
challenges, especially in escalating food prices,
supply disruptions and sustained price volatility
require the Fund’s realignment to ensure rele-vance;
and for the institution to be instrumental
in meeting these challenges.
•••
The delegation of Italy, on behalf of the
OECD provided an overarching overview of
the current global economic situation and pre-sented
an expansive analysis of the prevailing
challenges, especially in the donor member
states. The delegation restated the position,
as enunciated in the Final Declaration of the
G20 Summit in Cannes, regarding approaches
and policies being mobilized to address the
economic-financial-debt crisis, while focusing on
global issues such as development, food security,
unemployment and economic recovery. The
delegation also noted the outcomes of the 4th
High-Level Forum on Aid Effectiveness, held
in the Republic of South Korea, where a more
inclusive development agenda was incorporated
in the final document establishing the Busan
Global Partnership for Effective Development
Cooperation released in December 2011.
These recent developments in the international
community, including the MDG targets, the
The delegation of Peru, representing the
Group of Latin American and Caribbean
Countries (GRULAC) recalled that the
results of the discussions from the last meetings
of the Ad-Hoc Working Group and the Agreed
Conclusions reflect the commitment of member
states on the principles of international coopera-tion
and their support for commodities’ role in
the development agenda. Noting that CFC
has had a positive impact in the social and
economic development in beneficiary states, the
GRULAC is fully committed to the work of
the Reform Committee chaired by Ecuador,
and call on all members to participate actively
and to reach a consensus position on the future
and mandate of the Common Fund for
Commodities. •••
According to the delegation of The Philippines,
the Common Fund’s interventions, steadfast
support and commitment in the country is greatly
appreciated. The delegation, in congratulating the
Managing Director for his report, leadership and
the work of his indefatigable team, stated the
Common Fund is still critically important and
a driving force for enhancing the development
aspirations of the commodity producing member
states. The delegation observed that growing
Amb. Rono (Kenya)
Amb. Wagner Tizon (Peru) Amb. Morales (The Phillipines)
photos CFC

7. following the reform process. Yemen had
considered the recommendations of the
Executive Board, the designated options and
the Agreed Conclusions. The delegation point-ed
out while Yemen had not benefitted greatly
as a founding member of the CFC, the country
remained optimistic that CFC can assist its
agricultural sector, fisheries, animal wealth as
well as projects to improve irrigation for food
crops and rural development.
7
•••
Following the recommendations of the
Executive Board on the way forward with the
reform process, the delegation of the United
Republic of Tanzania stated that the country
was now in a position to express its full satis-faction
on the proposed course of action and the
work of the reform committee. The delegation
expects that the open-ended reform committee
consultations should culminate in a stronger,
effective institution that can address and deliver
sustainable development solutions to small
holder commodity producers.
The delegation said that the pace and mecha-nism
now in place should ensure that CFC is
supported and adequately funded to maintain
its concerted focus and performance in sustain-able
development.
•••
According the delegation of Burkina Faso, the
country’s economy has benefited greatly from
commodity development investments advanced by
the Common Fund. Therefore, it is imperative
that the reform process take consideration of the
delegation stressed presented an opportunity to
reflect on the mandate and future role of the
Common Fund, particularly given the evolving
circumstances and emerging global development
cooperation architecture.
•••
With the highly integrated and globalized
economy, the role of the Common Fund,
according the delegation of Egypt, can only be
appreciated, and more so, because of the direct
assistance the Fund offers to developing coun-tries
in Africa, Asia and the Latin American
region. Over the years, Egypt has for a long
time cooperated within the framework of the
Fund, believing firmly that its operations and
activities constitute a remarkable contribution
within the network of development cooperation
and assistance to developing and least developed
countries currently facing enormous economic
challenges. Egypt stands in line with the reform
process, options and the agreed conclusions,
which should enable the Fund to effectively
meet the development challenges and the
economic realities that member states are
facing today.
•••
The delegation of Sri Lanka on behalf of the
Asia Group sought to reiterate that member
states were reconciled to the notion that the
Common Fund has a unique and important
role through its targeted interventions and
financing of sustainable development of com-modity
production and market project initiatives
in LDCs. With declining export revenues,
domestic food security needs and volatile market
pressures, many countries are now vulnerable
to social dislocations. Increased vulnerability,
unprecedented price fluctuations and natural
challenges have had a direct impact on the
economic policies and development priorities
of many LDCs, the principal targets of CFC
project financing. Through project interventions
by the Common Fund, Sri Lanka is one
of the member-states, where it is vital to move
initiatives in the direction of diversification in
commodity production to explore opportunities
to develop niche markets and expansion of
South-South cooperation in trade.
•••
Amb. Yousif (Sudan)
The delegation of Sudan on behalf of the
African Group praised the Managing Director
and the Secretariat for the comprehensive report
on institutional activities in 2011. Specifically
on the point relating to the work of the reform
committee, the delegation was in full support
of expected deliberation of the specified
options within the framework of the Agreed
Conclusions, as approved by the Executive
Board. As customary, the delegation reaffirmed
its support of the Fund’s interventions in
Sudan, stating that as a developing, commodity-dependent
country, Sudan valued the positive
outcomes of many projects currently being
undertaken in the country.
•••
According to the delegation of Yemen, CFC
project interventions in LDCs should remain
Mr. Kumararatne (Sri Lanka) the priority for any new institutional structure
Mr. Mapunda (Tanzania)

8. 23rd Annual Meeting of the Governing Council
crisis in the international economy and the impact
on poor, developing countries and LDCs.
The reform consultation need not be negative,
since the mandate of the CFC has noble inten-tions,
8
the delegation said. Burkina Faso will
welcome the new vision and the consideration of
all the options, with the hope that CFC will
continue to contribute to poverty reduction in a
spirit of international solidarity.
•••
The Algeria delegation called on the Council
to take stock on the future of the Common
Fund, based on the fact that in less than five
years, the international community has to
answer on the progress and accomplishments of
the MDG targets. This was vital, since there is
synergy between the mission and mandate of
the Fund and the millennium targets, especially
in regards to poverty reduction, the central role
of commodities in economic development and
growth in member states. The delegation
reiterated its support for the reform process
and urged the open-ended reform committee
to maintain focus on integrating the Fund’s
future mandate and mission with commodity
development priorities to enhance trade, market
access and poverty reduction.
•••
The delegation of Malaysia reaffirmed its
steadfast commitment to the Common Fund,
with reference to the very successful project inter-ventions
in a range of diverse commodity sectors
like rubber, palm oil, and organic aquaculture.
At the center of the country’s National
Commodity Policy 2011-2020, catalytic proj-ects
such as those financed by CFC will be
invaluable in enhancing the competitiveness and
sustainability of many sectors, especially palm
oil. The delegation reported that the national
development agenda is anchored by a broad
commodity sector that utilizes good practices and
pursues effective approaches for resource manage-ment
to ensure environmental sustainability and
economic viability.
•••
The delegation of Thailand commended the
activities of the Common Fund for the past 20
years and indicated that the country appreciated
all the projects implemented there, including the
most recent on smallholder dairy development
launched in March 2011, which will enhance
productivity and promote market access for dairy
products. Regarding the future role and man-date
of CFC, the delegation emphasized that,
due to the current reality of limited financial
resources, the Fund could streamline its opera-tions
with a focus on food production and food
security. Thailand will support the reform com-mittee
consultations to ensure the Fund remains
in a position to fulfil its mandate at the fullest
level.
•••
The Zimbabwe delegation observed that it is
important for the Common Fund to continue
executing its mandate. The success of the orga-nization’s
work in commodity development has
had a positive impact on the livelihoods the
marginalized poor in many member countries.
The delegation rued the protracted nature of
the two-year deliberations had put on hold
many worthy project initiatives, that could
have had a meaningful impact on poor farmers.
The delegation acknowledged that the Fund
must readily embrace some fundamental
reforms, just as many international institutions
are undertaking to reposition themselves to the
evolving global environment and limited
resources.
•••
The delegation of Pakistan extended its
appreciation of the Managing Director’s leader-ship
and that able work of the Secretariat. The
delegation also supported the work of the Ad
Hoc Working Group and the outcomes, which
will guide the reform process. The delegation
noted that the work of the reform committee
should move forward in the spirit of internation-al
cooperation, so that CFC can become a
stronger, efficient institution. The Fund’s
Ms. Some (Burkina Fasso)
Ms. Bechikhi (Algeria) Ms. Poosiripinyo (Thailand)
Amb. Muchada (Zimbabwe)
photos CFC

9. 9
•••
The delegation of China provided an overview
of the global economic situation noting that slow
growth, sovereign debt crises and rising protec-tionism
had generally had a negative impact,
particularly, commodity-dependent developing
countries and LDCs. For this reason, China
welcomed the reform process, which should
an opportunity to strengthen CFC’s unique
identity, project implementation activities and
its key role in reducing poverty in developing
countries. On the reform process, China offered
some proposals including comprehensive reforms
in the management structure and mechanism;
reinforcing partnerships – more extensive part-nerships
with private sector and with other orga-nizations
and increased capacity for advocacy to
enhance CFC’s international reputation.
•••
The delegation of the Cote d Ívoire reported
that the country was very appreciative of the
support and solidarity on account of the prevail-ing
situation in the country. The economy con-tinues
to recover and the delegation indicated
that the Fund’s intervention would be essential
to the recovery. Regarding the reform process, the
delegation implored the Council to move forward
with haste as discussion had take too long.
•••
The delegation o the Federal Republic of
Nigeria acknowledged that the Common Fund
is at crossroad, in terms of the future role,
mandate and financial sustainability. Nigeria
Amb. Chaudhry (Pakistan)
operations and performance should also address
the matter of member-countries that are under-represented
in terms of CFC project interven-tions
and activities.
•••
The delegation of Mexico outlined the coun-try’s
activities in the international fora with
regard to development cooperation, particularly
around the G-20 programme. The delegation
told the Council that Government of Mexico
welcomed the G-20 Agriculture Ministers
Action Plan, as well as the outcome of the
Cannes Summit. According to the delegation,
Mexico will continue to support international
Mr. Parada (Mexico)
efforts to improve conditions, especially in com-modity
dependent countries in LAC region.
The delegation said Mexico was fully commit-ted
to the reform process of the Fund to bring
the institution in line with the new context in
global development cooperation.
believes that if these challenges are astutely
addressed, the Fund’s governance, effec-tiveness
and accountability will improve thereby
preserving its unique identity and commodity-specific
institutional expertise. The delegation
urged members to have a united position that
will ensure a positive outcome for the reform
process and decisions, which will allow the
CFC to continue delivering high impact results
through its commodity based interventions.
•••
The delegation of Indonesia in reference to the
Fund’s overarching mandate, called on Member
States to continue support for the organization,
given the enormous challenges many poor coun-tries
are facing. Food prices continue to skyrock-et
and the impact of climate change, unstable
commodity markets, population growth, slow
pace on both MDG targets and Doha Round,
are factors in the dire situation that commodity-dependent
developing countries are in. Within
the reform process and mechanism, the delega-tion
indicated that alternative funding should be
sought and a review of the First Account may
be contemplated.
•••
The representative of the delegation of Guinea
extended the country’s appreciation of CFC
financing for a range of commodities sectors that
are vital to economy of the country. The delega-tion
recounted that the Fund’s intervention in
three sectors, had a positive impact, even though
activities in the other participating countries had
been hampered for the past few years. •
Mr. Wu (China)
Mr. Adriyanto (Indonesia)

10. 2nd African Coffee Sustainability Forum
Common Fund’s sponsorship
boosts EAFCA’s forum in Ethiopia
Promoting cross-border partnerships and regional cooperation
ADDIS ABABA – The Common
Fund was one of several key sponsors
of EAFCA’s 2nd African Coffee
Sustainability Forum held recently
in Ethiopia.
The Forum’s whose theme focused on
“Creating market access through sustain-able
practices”, also hosted the 7th African
Coffee Scientific Workshop on:
“Leveraging scientific research for
improved productivity and sustainability
of African coffees.”
Many leading coffee organizations, indus-try
representatives and CFC’s international
partners took part in the Forum, including
the International Coffee Organization
(ICO), IITA, CABI, the European Union
and others.
In press statement, EAFCA’s executive
director, Samuel N. Kamau, said, “It was
inspiring to see all these people sharing
their knowledge and putting their ideas
together to build a more sustainable
African coffee sector. Issues such as climate
change or quality and productivity cannot
be addressed by only a few companies or
organizations.”
“Increasingly, there is an increasing
understanding that cooperation among all
the actors is needed to find long-lasting
solutions to these problems,” he said.
Among the 130 participants were repre-sentatives
from producer organizations,
members of trade and industry, academia,
sustainability standards, NGOs, financial
institutions, public sector entities and
development cooperation agencies.
Besides those active in the African coffee
sector, there was also an important pres-ence
of delegates from other regions, most
notably Brazil. The aim was to present
experiences from other countries and
regions in order to increase cross-border
and inter-regional cooperation.
At the scientific workshop, a task-force of
20 African top coffee scientists discussed
the challenges and opportunities of Africa’s
coffee industry ahead of the main forum,
and they concluded that Africa has some
of the best coffees in the world, thanks
to its diverse growing environments and
large genetic diversity. Unfortunately,
they noted, this wealth remains largely
untapped, with Africa supplying less than
15 percent of the world coffee market.
This is primarily due to the low coffee
yields of its smallholder producers,
generally less than half of those in Asia
and Latin-America.
While farmers struggle with poor soil
fertility and pest and disease pressure,
climate change is further threatening
yield quality and quantity.
CFC’s interventions in quality improvement and productivity have increased the potential of
smallholder producers in the coffee sector in Africa.
10
photo CFC

11. 11
According to a press statement released
by EAFCA, “Despite these challenges,
the future for Africa’s coffee could be very
bright if the right people and the right
technologies are put together. Compared
to the other continents, Africa has invested
very little of its coffee revenues into
research, extension and infrastructure
investments, but changes are on their way
and some countries like Ethiopia have put
coffee high on the agenda.”
The coffee scientists argue that site-specific
technology packages have to be
developed that lead to more affordable,
efficient, profitable, and sustainable pro-duction.
The current blanket recommen-dations
do not cater for the large diversity
of farmers, yield constraints, and market
opportunities. The development of such
integrated technology packages requires
strengthening and integration of research
with extension, farmers, the coffee indus-try,
and government bodies.
“Smartly combining the knowledge and
needs of the various stakeholders can help
farmers to double their yield, improve
their coffee quality, adapt to progressive
climate change, and making more profit.
Recognizing, embracing, and using
Africa’s diversity will be the key to a
bright future for Africa’s smallholder
coffee producers,’’ the EAFCA statement
noted.
At the Forum proper, three topic areas
dominated the proceedings and parallel
discussions: coffee quality and productivi-ty,
climate change and capacity building
and organizational development. Key
expert speakers addressed these topics in
plenary sessions. Besides the presentations,
the delegates took part in working groups
for in-depth discussions on these issues.
Participants exchanged lessons learned,
as well as shared best practices and jointly
identified possible solutions to the
challenges. •
photo iStockphoto
18 percent of Common Fund’s project implementation involves coffee.

12. & Terry Townsend, Executive Director, International Cotton
Advisory Committee (ICAC) Washington, D.C.
CFC-ICAC partnership sustaining
cotton sector’s rising prices
Cotton, the commodity, as opposed to the
sector, seem to generate intense debate,
in terms of its role and place in the develop-ment
strategies of many producer countries,
especially in Africa and emerging economies.
How does ICAC navigate the many issues, that
don’t seem to have clear-cut policy solutions?
There is a broad recognition among government officials that
cotton is an engine of economic development, income generation
and food security. Cotton supports jobs in agriculture and contrib-utes
to industrialization through linkages to input markets and
end-use processing. Cotton provides income for cash purchases, it
is a drought-resistant crop providing insurance against crop failure,
and cotton contributes to higher yields of food crops when grown
in rotations.
The ICAC assists governments in facilitating a healthy cotton
economy by providing information necessary for decision-making,
by raising awareness of critical issues and by encouraging
cooperation on matters of shared concern. The ICAC does not
advocate for increased cotton production but instead advocates
for increased opportunities for farmers to produce crops that
result in the highest returns and safety, and often cotton is
included in such a crop rotation system.
ICAC and CFC partnership has been
very effective. What interventions are you
personally proud to have been associated
with?
Since the CFC became operational in the early
1990s, twenty-four cotton projects have been sponsored by
ICAC and funded by CFC and the European Union. The ICAC-CFC
collaboration brought additional funding to cotton research
and enhanced international collaboration on cotton across coun-tries
and in some cases even across continents. Developed and
developing countries were able to work together on common
issues. The CFC/ICAC projects brought together international
experts for finding efficient and cost effective solutions. Every
cotton project has been successful, but I will particularly mention
two projects.
CFC/ICAC 11 – Improvement of the Marketability of Cotton
Produced in the Zones Affected by Stickiness, was conducted
between 1997 and 2001. Research was completed in France and
Sudan in cooperation with the Sudan Cotton Company, and the
results have been fantastic. Prior to this project, all cotton pro-duced
in Sudan was heavily discounted due to a reputation for
stickiness. Using techniques developed during the CFC/ICAC
project, Sudan has been able to not only reduce the incidence of
stickiness but to also reliably segregate bales exhibiting stickiness
from those that do not and of course export only the bales with-out
contamination. Project partners have quantified the project
benefits in terms of monetary gains at US$95 million from 1997-
2009.
QA&
QA&
12
photo ICAC
Mr. Terry Townsend, ICAC’s executive director.

13. CFC/ICAC 14 – Sustainable Control of the Cotton Bollworm
Helicoverpa armigera in Small-Scale Cotton Production Systems,
was conducted between 2000 and 2004 in China, India, Pakistan
and the UK. The project had substantial technical achievements
resulting in reduced use of pesticides and increased efficacy in
the control of a major economic pest. The project played a big
role in reversing the declining yield trend in China, India and
Pakistan. The resulting increases in net returns to growers amount
to several million dollars of economic value each year. The proj-ect
demonstrated the best attributes of intergovernmental organi-zations
in being able to facilitate cooperation on a topic of shared
interests among partners who could not have achieved such
cooperation without the assistance of the CFC and the ICAC.
As you know, the major thrust of CFC
project financing places priority on out-comes
that will ensure that producers can
have secure and sustainable economic liveli-hoods.
Does ICAC have specific examples of
projects that have achieved these objectives?
In addition to the two projects mentioned above that have been
particularly noteworthy in their outcomes, all the projects sup-ported
by the CFC have resulted in concrete benefits for cotton
producers. CFC projects have contributed to reduced input use,
increased yields, better management of diseases and insects,
increased value from the use of cotton stalks for the production of
particle board, and worldwide improvement in the measurement
of cotton quality leading to improvement in cotton marketing.
Applied research and marketing in particu-lar
appear to be at the core of the ICAC-CFC
cooperation. Can you elaborate more
on how and if the private sector has con-tributed
to this? What does the private sector
stand to gain from this?
QA&
The private sector has been involved in many cotton projects
funded by the CFC. Such partnerships help to insure that project
design is pragmatic and that results have commercial application.
The private sector has been involved in a project that developed
tests for the existence of biotech traits in cotton seeds, in a project
that demonstrated the economic feasibility of using cotton stalks
in the manufacturing of particle board, and in a project to stan-dardize
instrument testing of cotton.
All CFC/ICAC projects are designed so as to ensure that repre-sentatives
of the private sector participating in projects do not
gain unfair competitive advantage and that the results of each
project are fully transmitted to all interested parties. The private
sector benefits from the increased production of cotton and
improved efficiency in cotton marketing that result from project
completion.
QA&
13
photo iStockphoto
Common Fund’s project activities in cotton quality improvement through research and development led to monetary gains of nearly USD 95 million
between 1997-2009.

14. &
May I get your views on the report dissemi-nated
by the Fairtrade Foundation in
November 2010, which cast a shadow on
the cotton sector and industry? Further, to
a certain extent also, various policy briefs
released by Oxfam have maintained pressure
on the sector. Is it still possible to create a
level playing field for all producers, especially
smallholders in Africa?
The ICAC works with all organizations that have an interest in
the improvement of the world cotton sector, including special-ized
production and marketing programs such as organic,
Fairtrade, Cotton made in Africa and BCI. The ICAC also
cooperates with Oxfam and other NGOs on a variety of research
efforts to raise awareness and provide information. The report
by Fairtrade in November 2010, The Great Cotton Stitch-Up,
contained criticism of subsidies paid to cotton growers in the
United States and Europe. The report was valid, but somewhat
out of date, since world markets for agricultural commodities,
including cotton, have risen in recent years, and the impacts of
subsidies on production have been greatly reduced. Likewise,
Oxfam has reported extensively on the impacts of subsidies in
developed countries on the world price of cotton and the
incomes of smallholders. Again, fundamental shifts in market
conditions since 2008 have rendered many of these criticisms
moot. Nevertheless, the concerns of developing countries about
subsidies are still valid because prices may decline again, and if
that happens, subsidies will again affect cotton prices. The venue
for the negotiation of cotton subsidies is the World Trade
Organization (WTO), and the ICAC strongly supports a substan-tial
outcome to the Doha Development Agenda in the WTO.
The Fairtrade report documents a conflu-ence
of complex policy and legislative con-tradictions:
the dormant Doha Round,
CAP, EU subsidies, EPAs etc. Will the
smallholder producers in the C-4 ever be
able to participate fully in the cotton trade?
Producers in the C4, including smallholders, participate fully in
world cotton trade. Almost all cotton from Benin, Burkina Faso,
Chad and Mali is exported, and producers receive the full world
price for cotton when adjusted for the costs of storage, transporta-tion
and ginning. The objective of the Doha Round is to reduce
distortions caused by government measures so that all producers
are able to benefit to the extent that agronomics and economics
permit efficient production.
The ICAC Recorder’s recent special edition
is a useful advocacy tool for both institu-tions.
I recall that you’ve been a forceful
voice for increased activities to promote the
role of commodities in development. Will
ICAC continue its support for the proposed
CFC-ICBs joint communications strategy?
The ICAC is highly appreciative of the role of the CFC as an
advocate for commodity industries and as a voice for commodi-ties.
During recent decades, commodity industries have suffered
from inadequate public sector investment and lack of focus from
government officials as development agendas have encouraged
countries to diversify. Given the crucial role of commodities in
pro-poor and pro-environment economic development policies,
such inattention has been harmful. The CFC and International
Commodity Bodies have a shared common interest in raising
awareness of the positive roles of commodity industries and in
providing information about how governments can support com-modity
development. The ICAC will always be an enthusiastic
partner with the CFC in a joint communications strategy.
Are there any major changes expected at
ICAC in 2012? Moving forward, how can
you characterize your working relationship
with Common Fund and what we can do
better, given the changes that are anticipated
following the institutional reform process at
the Fund?
There will be no major changes in the ICAC during 2012.
However, the ICAC will select a new executive director during
2013 to take office on January 1, 2014. Nevertheless, the ICAC is
institutionally committed to a strong partnership with the CFC in
the development of commodity industries and the communica-tion
of commodity development strategies that result in increased
opportunities, rising incomes and improved standards of living.
The work of the CFC is important to the world cotton industry
and benefits millions of producers. The CFC and ICBs can do a
better job in 2012 of articulating that commodity industries are
beneficial, that commodity industries are the keys to development
for hundreds of millions of smallholders, and that governments
have a vital role in facilitating healthy commodity industries. •
QA&
QA&
QA&
QA&
14 photo ICAC
The concerns of developing countries about subsidies are still valid and
ICAC strongly supports a substantial outcome to the Doha Round.

15. 15
Project Proposal Reviews by the Consultative
Committee Completed
AMSTERDAM – The Consultative
Committee meeting recently here in
January reviewed project proposals
over a range of commodity sectors
and project interventions for financing
consideration by the Common Fund.
The committee, which is chaired by
Mr. Abdelatif Ahmed Mohamed Ijaimi
(Sudan) worked through 11 proposal
reviews and then deliberated for the
Committee’s recommendations to the
Executive Board.
Managing Director, Amb. Mchumo
welcomed the committee and reported on
developments in the Common Fund since
the last meeting, including the Governing
Council’s decision on the Fund’s reform
process.
Amb. Mchumo also briefed the committee
on the recent 66th Meeting of the UN
Second Committee, where the Common
Fund, raised the matter of the impact of
price volatility on the economies of com-modity
dependent developing countries.
The resolutions adopted by the Second
Committee on commodities and market
volatility, call for coordinated work by
countries and international organizations to
develop better practical approaches to inter-vening
in commodity markets to promote
their positive role in global development.
Amb. Mchumo added that these discus-sions
were reflected in some of the latest
project proposals on the agenda of the
Committee in the 49th session.
Amb. Mchumo said, “The current meet-ing
of the Committee would consider
11 proposals. I recognized the diversity
and considerable share of new ideas
involved in the current proposals, but I’m
confident the Committee will rise to the
challenge and provide substantial guidance
for the effective use of Common Fund
resources in the interest of its member-countries.”
Under the priority guidelines
established by the Executive Board, the
Project Briefs
Committee agreed on the following order
for the regular projects recommended for
approval under the Second Account:
>CFC/ICCO/43 – Integrated
Management of Cocoa Pests and Pathogens
in Africa: Controlling Indigenous Pests and
Diseases and Preventing the Introduction of
Exogenous Ones in Cameroon, Cote
d’Ivoire, Ghana and Nigeria;
>CFC/FIGR/17 – East African Rice
Sector Development in Tanzania and
Uganda;
>CFC/IOOC/09—Economic Valorisation
of Olive Genetic Resources, Creation of Pilot
Demonstration Nursery Centres (Quality
Enhancement through Nursery Development)
in the Mediterranean Region.
As it is within the powers of the Managing
Director, the committee also forwarded
several fast track proposals for his approval.
The proposals include: Bamboo, Access to
Commodity Finance; Producer-Consumer
Cooperation in Soft Commodities; and
Zinc Die-Casting. •
photo CFC
Members of the Consultative
Council reviewing projects in the
January meeting.

16. Cotton publication highlighting joint
CFC-ICAC cooperation released
AMSTERDAM – A new special edi-tion
16
publication produced jointly by
the Common Fund and International
Cotton Advisory Committee (ICAC)
has been released. The publication,
“Cooperation for Development: Results
and Impacts of Joint ICAC and CFC
Activities” highlights the excellent
cooperation and good relations
between CFC and ICAC, the desig-nated
international commodity body
for cotton.
The special issue documents the achieve-ments
and impacts that have resulted from
the collaboration between ICAC and the
respective project executing agencies, as
facilitated by commodity development
financing by the Common Fund. The pub-lication
provides succinct descriptions of
the overall cotton portfolio of 14 regular
and 12 fast-track projects and substantive
insight on the impact that the completed
projects have accomplished in the different
member-countries.
www.common-fund.org/data/documenten/ICAC.ed12
While the project outcomes may be
assessed differently depending on objec-tives
of the respective interventions, it is
clearly evident that the project activities
have resulted, directly or indirectly, in
substantive benefits for the member-countries
involved, especially in applied
research, crop protection methods,
productivity improvements with related
benefit-cost increases, increased marketing
perspectives and better utilization of waste
and by-products.
Managing Director, Amb. Mchumo
said, “As an impact document for both
organizations, the publication is a very
comprehensive and an essential resource
that confirms the Fund’s contribution
to the cotton sector and industry; and
as a commodity-specific reflection of
the Common Fund’s overall mandate
in commodity development.” •
photo ICAC
Small-scale producers, especially women have become competitive
through efficient production; even as the subsidies debate persists
and the Doha Round objectives are stalled.

17. Chief Executive Officer, the Ethiopian
Commodity Exchange and co-convened
by UNDP in Addis Ababa. The article
below published courtesy of CIRAD, a
past partner of CFC in project imple-mentation
options at the center of the convention’s
theme, agenda and discussions in
Ethiopia. In 2011, CFC contributed to
the emerging knowledge base in the poli-cy
debate on price volatility.
17
Spotlight
Managing Agricultural Price Volatility
in Africa
PARIS – Soaring agricultural prices
in 2007-2008, followed by decreasing
prices in 2009/2010 then a new surge
in late 2010-2011, have placed the
management of agricultural price
volatility at the heart of policy
debates.
Many developing countries have imple-mented
policies to limit agricultural price
volatility and its adverse effects, without
always achieving the expected results.
Analysis of recent experiences in Africa
shows that in order to be effective, a policy
measure must meet four conditions: it must
be based on robust knowledge; it must be
predictable; its funding must be secured;
and its enforcement must be monitored.
Protecting the Domestic
Market
For several years, often in response to
the 2007/2008 crisis, many developing
countries have been stepping up their
intervention to stabilize agricultural prices
on their domestic markets. The policies
implemented are particularly aimed at
protecting domestic markets from price
fluctuations on the international market,
by combining border measures with
domestic market measures. They reflect
both the will to restore the role of the
State in the regulation of agri-food mar-kets
and a loss of faith in the functioning
of international trade.
These policies diverge from the recom-mendations
of international donors.
Donors argue that trade liberalization
stabilizes prices, as a price shock on a
national market is absorbed by a globalised
market through dilution or compensation
effects. To avoid the adverse effects of
price hikes or slumps, they advocate, in
the short term, private risk management
mechanisms and safety nets and, in the
medium and long term, programmes to
increase agricultural productivity.
A broad range of policy measures are
available to countries. Border measures
are aimed at adjusting supply to demand
in the territory, by controlling imports and
exports: tariffs, import and export licenses;
state imports; or export restrictions.
Domestic market measures are aimed
more at adjusting supply to demand over
time, especially through the management
of buffer stocks, which may be combined
with subsidies, or taxes on the price of
products or agricultural inputs.
To limit agricultural price volatility on
their markets, African countries have
combined border measures with domestic
market measures. But how effective has
this been? Despite the lack of hindsight,
several lessons emerge from recent
experiences. Five African countries were
studied: Madagascar and Mali for rice, and
Kenya, Malawi and Zambia for maize.
These five countries share certain charac-teristics.
Their revenue is low: gross domes-tic
product per capita is less than 1,000 US
dollars. Their cereal consumption is high:
cereals account for over half of total
calorie intake (from 50 percent in Kenya to
66 percent in Mali). Finally, these countries
import less than a quarter of their cereal
consumption (from 10 percent in Malawi
to 25 percent in Kenya).
For each country, price volatility manage-ment
policies have been described and
classified by periods according to the
measures undertaken. The periods laid
out reveal a tradition of intervention in
agricultural markets that has persisted in
Amb. Mchumo was invited as the main
panelist on the keynote session on:
Africa in the Global Context of
Commodity Markets, moderated
by the BBC, which was recently orga-nized
by Ms. Eleni Gabre-Madhin,
touches on some policy
East African countries, including during
the period of liberalization. However,
price instability management policies were
abandoned in Mali and Madagascar, before
being restored recently. Countries by
country and period by period, local price
series have been examined.
The coefficients of variation (the ratio of
the standard deviation to the mean) have
been calculated and compared to those on
international markets. State intervention
is considered effective if the coefficient
of variation for agricultural prices on
the domestic market is lower than the
coefficient on the international market.
Three situations can be distinguished:
- State intervention has limited cereal
price volatility, for example in
Madagascar and Zambia during the
management of the 2007/2008 crisis;
- State intervention only partially

18. succeeded in limiting price volatility,
for example in Mali during the 2005
and 2008 crises;
- State intervention increased price vola-tility,
for example in Madagascar (2004),
in Zambia (2001, 2002 and 2005), in
Malawi (2005) and in Kenya (2008).
What were the factors of success or failure?
Beyond the measure chosen, the conditions
for implementing this measure appear to be
decisive.
Choosing measures accord-ing
to national specificities
In order to be effective, each type of
measure must meet four conditions, with
varying degrees of importance depending
on the measure: the intervention must be
based on robust knowledge; it must be
predictable; its funding must be secured;
and its enforcement must be monitored.
Robust knowledge
Whatever the measure, in-depth knowl-edge
of the situation and of the mechanisms
at work is required. In practice, access to
robust expertise is a decisive condition for
the effectiveness of State intervention.
Technical expertise underpins decisions
and guides choices. What stock volumes
should be built up? At what moment in
time? At what price? At what price should
stocks be sold off? What volumes should
be imported or exported? At what level
should tariffs be set? Accurate analyses based
on sound data are needed to anticipate
requirements, for example through early
warning systems. In Zambia in 2001, food
requirements were underestimated, which
delayed the government’s reaction and
that of private importers; however, in 2005
they were correctly anticipated thanks to
informal exchanges of information between
representative of farmers and of the govern-ment.
Expertise may be collective, as in
Madagascar within the consultation plat-form
set up in 2008.
State intervention should be announced so
that private operators can anticipate it and
make informed strategy decisions. This is
a key condition whatever the measure
considered. For import control, private
importers must be able to predict the
volumes imported by the State, the date
of importation and the tariff level. For
internal market measures, merchants must
be able to anticipate the volumes that will
be sold off, the date of sale and the selling
price. In the absence of this information,
private operators will tend to withdraw
from the market: this is known as the
crowding out effect, and may increase
price volatility.
For example, in Zambia in 2005 and in
Kenya in 2008, some merchants, seeing
domestic prices rise, asked the State to
waive import tariffs. The State announced
an agreement in principle, without
specifying the date of implementation.
In expectation of the tariff waiver, the
operators delayed their imports, which
accentuated price hikes. As another
example, in Zambia in 2001 and 2002,
in Madagascar in 2004 and in Malawi in
2005, the State decided to import cereals
to offset the deficit caused by insufficient
national production, without specifying
the date or the volumes of such imports.
Fearing state competition (especially given
18
Financialization of commodity markets is seen as creating disadvantages in prices and investments
for African producers.
photo UNCTAD

19. that State imports may be subject to lower
tariffs), the private operators decided not
to import. The volume of State imports
was too low and the date of importation
too late to limit the price hikes on domes-tic
markets.
Conversely, predictable intervention may
ensure effectiveness. In Madagascar during
the 2008 crisis, the State decided to use
imports to meet national rice consumption
and to restrict soaring agricultural prices. It
set up a consultation platform to anticipate
requirements for rice. Private operators
and public agents shared information and
were able to implement appropriate strate-gies.
Secured funding
The State must be in a position to free up
funds to finance the costs linked to State
intervention. Financial capacity is essential
to costly measures. For example, in Mali
in 2005 and 2008, the budget allocated
to the operation of buffer stocks was not
enough to provide these stocks with their
own working capital and to therefore
build up sufficient volumes to curb soaring
cereal prices. On the contrary, in Zambia
and Kenya, substantial financial resources
were allocated to the operation of buffer
stocks and to maize price subsidies. In
Zambia, the public budget allocated to
internal market measures represented
4 percent of the total national budget in
2007; this considerable budget was partly
financed by mining revenue.
Furthermore, it is important to plan
how to limit the additional costs that may
arise, especially those linked to production
incentives, such as producer price subsidies.
In Malawi, for example, producer price
and agricultural input subsidies proved
particularly costly, calling into question
the price instability management policy.
A quota system would limit the existence
of additional costs.
Monitored enforcement
The State must be able to guarantee
that its intervention has been effectively
implemented and carried through. This
monitoring capacity is essential for border
measures (imports and exports). In Mali
in 2005, national production was low,
leading the government to ban cereal
exports. This measure proved ineffective
due to difficulties monitoring borders –
a condition that is even harder to meet
given that the country has extensive land
borders, as do many of the Sahel countries.
Monitoring capacities are also necessary
for intervention on domestic markets,
especially for cereal consumption subsidies
and the administration of producer prices.
For example, in Zambia in 2001, the
subsidies paid to merchants were not
passed on to consumer prices; they
therefore failed to limit price increases.
Measures may be circumvented by public
agents (stabilization agencies not applying
floor prices) or by private operators (mer-chants
not passing on prices or choosing to
export in an illegal manner). In any case,
this behavior is motivated by the pursuit
of private income, and it undermines the
effectiveness of the stabilization policy.
To ensure the policy it has defined is
effective, the State must therefore be able
to both monitor its enforcement and to
penalize non-compliant behaviors.
Associating public
and private stakeholders
Beyond seeking miracle remedies, govern-ments
must ensure that the measures
adopted will be effective in the context
of their countries, failing which they may
exacerbate the crisis. They must therefore
choose measures according to their institu-tional,
geographical, social, political and
economic environment. For example,
a low-income country with no specific
resources, or one that is dependent on
donors for its current expenditures, will
need to guarantee its financial capacity
before building up public buffer stocks.
A landlocked country with extensive land
borders should not ban exports to halt
soaring prices, but instead should favor
regional policies to offset the porosity of
its borders. On the other hand, an island
country may choose to control its borders,
as Madagascar did to good effect. The four
conditions identified concern the capacity
of states to define and enforce policies,
and to ensure operators have faith in state
intervention and will comply with it.
Some developing countries may struggle
to meet these conditions because of their
institutional fragility. Although the State
has a key role to play, alone it will be
unable to stabilize agricultural prices on
domestic markets. Cooperation between
public and private actors is vital to the
success of price volatility management
policies. Consultation platforms have
demonstrated their effectiveness in
Madagascar.
Public-private partnerships may also be
envisaged to manage stocks: consultation
on the methods for stockholding, joint
funding, or contractual arrangements
between the State and private actors
concerning storage. This cooperation
between public and private operators is
still in its infancy in developing countries,
and requires further research. In particular,
the apparent contradiction between the
need for transparency regarding stock
volumes to anticipate food crises and
the pursuit of private interests must be
analyzed. •
Authors: Élodie Maître d’Hôtel, Arlène
Alpha, Raphaël Beaujeu, Françoise Gérard, &
Laurent Levard / CIRAD 2011.
19

20. CFC project implementation has hugely up-scaled the viability of smallholder dairy sector in Lesotho
and Zambia. In Zambia, dairy farmers are supplying major commercial processors such as Parmalat.
20
Calendar 2012
• January 23-27, Amsterdam (NL)
49th Meeting of the Consultative
Committee
• April 17-18, Amsterdam (NL)
53rd Meeting of the Executive
Board
• May 31, Rome (I)
19th Annual Meeting with ICBs
• July 2-6, Amsterdam (NL)
50th Meeting of the Consultative
Committee
• 12-13 Dec, The Hague (NL)
24th Meeting of the Governing
Council
CFC Newsletter Issue 1 / Volume XXII / April 2012
The Common Fund for Commodities is an intergovernmental financial institution establis-hed
within the framework of the United Nations. The Fund currently has a membership
of 105 countries, and several institutional members including the European Union (EU),
the African Union (AU), East African Community, the Common Market for Eastern and
Southern Africa (COMESA) and other major regional economic organisations. The secreta-riat
is based in Amsterdam, The Netherlands. www.common-fund.org
The CFC Newsletter is published by the Communications Office.
Editor Charles Jama Phone + 31 20 575 4956 E-mail info@common-fund.org
Design GAW ontwerp+communicatie Printing Moderndruk, Bennekom
CFC Mission and Vision Statement
Mission “To contribute to poverty alle-viation
by strengthening the income-generating
capacity of commodity
producers and mitigating vulnerability
to their economic well being”.
Vision “To strengthen and diversify the
commodity sector in developing coun-tries
and transform it to be a major
contributor to poverty alleviation and
sustained economic growth and deve-lopment.”
photos CFC