05/13/2019 | Press release | Distributed by Public on 05/13/2019 09:41
I would like to thank the Government of Japan for hosting this meeting, and for the excellent facilities and arrangements offered to make our meetings and our stay in Niigata fruitful and enjoyable.
Technological advances have fundamentally transformed the interactions within domestic and international agri-food value chains. Of particular relevance to our discussion today are the main results of a recent report on Global Value Chain Development. Its findings were discussed on 13 April at a special event during the 2019 Spring Meetings of the IMF and World Bank Group.
The Global Value Chain Development Report 2019
Many of the findings of the Report, co-published by the WTO, the World Bank Group, OECD, the Institute of Developing Economies (IDE-JETRO), the Research Center of Global Value Chains of the University of International Business and Economics, and the China Development Research Foundation can apply and should be applied to agriculture trade:
The Report underscores the continued evolution of global value chains (GVCs) in the last two decades and their critical role in opening new markets for countries, sectors and firms, notably by reducing trade barriers and lowering costs. GVCs play a major positive role in the world economy. There are very substantia direct economic benefits.
Empirical research has shown that trade has not been a significant factor in the loss of manufacturing jobs in developed economies and has generated employment and increased incomes in developing economies. As production processes have evolved under global value chains, job gains have been recorded in the services sector. This is crucially important for agri-food value chains (FVCs), demonstrating broad gains in both developed and developing economies.
The Report does recognize that GVCs can cause structural changes which vary considerably across regions, countries and individuals with different skill levels, particularly in developed countries. The Report therefore underscores the need for governments to design and implement adjustment policies to ensure that economic gains, which outweigh the costs, are spread more evenly. The Report concludes that on-going digital transformation provides significant scope to boost global growth, and indeed trade, especially for small and medium enterprises (SMEs).
Innovation, digital connectivity, Information Communications and Technology (ICT)
The WTO has underscored the importance of ICT in helping developing countries to enhance digital connectivity. In December 2015, at the WTO Ministerial Conference in Nairobi, the scope of the Information Technology Agreement (ITA) was expanded to include a further 201 high-tech products. ITA benefits are extended to the entire WTO membership.
With the benefits of greater availability of ITC products and services, FVC (food value chain)/GVC stakeholders are increasingly able to rely on real time access to data to inform their planting, processing, marketing, distribution and investment decisions. Enhancing investments in digital connectivity, electronic logistical support mechanisms and ICT-powered information systems can generate new efficiencies within FVCs/GVCs, particularly in agri-food industries, which are data-intensive, exposed to risks (e.g., weather vagaries, price volatility, food safety, etc.) and highly dependent on the services sector. (1)
Examples of benefits to stakeholders in the value chains include the following:
To maximize efficiency gains, the GVC Development Report 2019 calls for governments to develop comprehensive digital strategies that encompass investments in ICT; provide for training and capacity-building; and improve trade openness, the business environment and innovation. Indeed, institutional research and educational frameworks at local, regional and international level must be designed and implemented in a way that is supportive of GVC stakeholders.
Stakeholders of any FVC can better anticipate price fluctuations and take necessary actions in their respective fields, whether they are active in futures markets and insurance, or represent the farming community, food manufacturing, trading, distribution, investment. Without transparency, which is the cornerstone of a predictable trading environment, informed and sound decision-making, let alone effective risk management, would be elusive.
The WTO rules-based framework provides practical commercial benefits to participants in nascent and developing FVCs/GVCs and their stakeholders by facilitating their daily operations and encouraging regulatory cooperation among governments. In a GVC environment, when import barriers raise input costs and act as a tax on a Member's own exports, policies that restrict, or unnecessarily increase, the costs of trade hinder the development of agri-food value chains.
Enhancing the overall competitiveness of agri-food GVCs and allowing industries to exploit underlying comparative advantages require the adoption of open and transparent trade policies. This includes reducing distorting domestic support and market access barriers; ensuring that non-tariff measures are transparent, and, in the case of food safety measures, that they are science-based and applied in a non-discriminatory manner.
In addition to the ITA, the WTO Agreements cover food safety (SPS), technical barriers to trade (TBT), intellectual property rights that are relevant to technology transfer policies and regulations (TRIPS), streamlined and modernized customs procedures (Trade Facilitation) and Services. Each represents an important context for the development of the necessary components of value added in agri-food exports and in final products. They help ensure that GVCs operate efficiently.
Among the new developments in the WTO, Members are currently considering possible reform steps in the fields of E-commerce, investment, and micro, medium and small enterprises (MSMEs), that are designed to strengthen the multilateral trading system.
Positive results in these endeavors will generate new pathways for sustainable agricultural policy reform and inclusive economic growth. All stakeholders in agri-food value chains, and all countries at every stage of economic development, stand to benefit from fully participating in a strengthened and dynamic multilateral trading system.
E-commerce has the potential to generate growth opportunities both within domestic agri-food value chains as well as in cross-border trade. By connecting remote rural communities to markets, e-commerce is increasingly being used to move agricultural produce from surplus to deficit areas. A WTO study found that by 2030, digital technologies could boost trade by up to 34%, lowering costs and increasing productivity.
The availability of the latest technologies should be as widespread as possible. The huge technological gaps that exist among countries in terms of digital connectivity need to be bridged. Technical assistance and capacity building will be required.
At the last WTO Ministerial Conference in Buenos Aires in December 2017, a group of WTO Members took steps to seek common ground. In a transparent and inclusive manner, 76 countries decided to launch a Member-led Initiative on E-commerce. The sponsors and other interested Members have been sharing experiences and insights. Earlier this year, 77 WTO Members announced their intention to launch negotiations and develop new rules to discipline the trade-related aspects of e-commerce, including:
E-commerce discussions and upcoming negotiations at the WTO can build on a large and growing number of bilateral and regional agreements that contain provisions to facilitate cross-border e-commerce. Currently about 30% of the RTAs notified to the WTO contain e-commerce provisions, and this number is expected to increase. The work within the WTO on e-commerce and the digital economy is expected to have an important bearing on agri-food GVCs. Farmers and others in the food value chain should have a recognized right to access to, and free movement, of data relevant to assuring their participation of the benefits of this technological revolution.
In the WTO, such work also proceeds on a second track, with discussions under the Work Programme on Electronic Commerce taking place in regular WTO bodies, and under the auspices of the WTO General Council. Close attention should be paid to any decision that repeals or limits the decision taken by Members not to impose customs duties on electronic transmissions (the Moratorium on customs duties on electronic transmission that has been routinely extended for two-year periods).
While WTO rules already cover trade-related investment measures (the TRIMs Agreement), an initiative on Investment Facilitation for Development was also jointly sponsored by a large group of Members at the last Ministerial Conference.
Structured discussions are currently taking place among over 50 delegations, including many developing and LDC Members as well as non-signatories. As is the case with E-commerce, domestic laws, bilateral as well as RTAs have already operationalized some of the elements that are being discussed at multilateral level.
Recently, the discussions have moved to a new phase, with lively exchanges on Members' standpoints, experiences, as well as the likely scope, functions and components of new disciplines that would streamline administrative processes and requirements; improve the transparency and predictability of investment measures; enhance international cooperation, information sharing and the exchange of best practices; and reflect the development dimension of the multilateral framework.
The participating WTO Members have underscored the need to encourage participation by additional developing country Members. They plan to explore further technical assistance and capacity-building in this area. Facilitating investments in the agricultural sector and institutional capacities, including digital and physical infrastructure and logistical support services; education; and innovation is vital to establishing domestic enabling environments and sound development strategies, including for agri-food sectors.
Training and capacity-building: within FVCs/GVCs
Capacity-building and skills development are critical determinants of competitiveness within GVCs and essential components for successful developing country participation in GVCs. The GVC Development Report 2019 emphasizes the importance of training and capacity-building to maximize the gains from GVCs.
Commitments to enhance investment in research, education, research and extension are important pieces of the puzzle. At the same time, it is important that solutions to develop both human skills and institutional capacity emanate from national policy makers, taking account of domestic economic and social dimensions.
WTO's Reviews of the Aid-For-Trade Initiative have also confirmed that skills were a major supply-side constraint for small operators in developing countries. Even as trade and investment flows foster the dissemination of knowledge and promote the transfer technology and know-how, MSMEs in developing countries, particularly the least-developed (LDCs), need to acquire the skills, talent and expertise that are required to reap the benefits of GVC participation in the digital economy.
Training and capacity-building: food safety along FVCs/GVCs
Within the framework of the Standards Trade Development Facility (STDF), which is hosted by the WTO Secretariat, the WTO collaborates with FAO, OIE, WHO and the World Bank, and donor countries, to assist developing countries meet food safety requirements in their export markets and enhance market access to higher-value domestic, regional and global markets.
In making trade work for growth, employment and poverty reduction, the STDF has been working in a dynamic, inclusive and pragmatic way. Ensuring that efforts have a sustained and lasting impact on the ground is vitally important in approaching skills development from an integrated value chain perspective. This translates into strengthened relationships; enhanced awareness of the needs of respective stakeholders; efficient diffusion of technology and best practices; and increased access to technical and market information.
The STDF has reached out to several target groups of stakeholders. These include small-holders, farm associations and cooperatives, extension officers, commodity processors, marketing and distribution services, traders, national institutions and commodity boards, food safety and quality inspection units, as well as technical, vocational, education and research centres, local universities, international commodity organizations, and NGOs that are active in advancing the technical know-how, productive capacities and competitiveness of smaller GVC players.
Examples of SDTF-supported projects that strengthen GVCs/FVCs for the benefit of developing countries
Partnerships promote ginger exports and rural incomes in Nepal
Beneficiary:Ginger farmers and other value chain stakeholders in Nepal
Led by:FAO with the Ministry of Agricultural Development, Ministry of Commerce and Supply, the Federation of Nepalese Chambers of Commerce and Industry and the NGPTA
Time-frame:June 2012 - September 2015
STDF funding: US$462,144 (total project value US$1,212,629)
The safe trade gap
Ginger is a treasured cash crop for small-scale farmers, many of them women, in remote mountain areas of Nepal with few income-generating opportunities. However, farmers struggled with low yields and pests and diseases, and post-harvest losses as high as 90%. At the same time, demonstrating the safety and quality of production was a challenge. Most fresh ginger was sold unwashed to India at low prices, via informal channels. Farmers and traders had no way to add value to their products. As a result, they were unable to access higher-value markets in Bangladesh, Europe, Japan and the Middle East.
The Public and private sector came together to revitalize and add value in the ginger value chain, and address food safety and phytosanitary challenges, with support from the STDF and the Enhanced Integrated Framework (EIF). Strong partnerships were built with local authorities, ginger producers and traders. Farmer field schools boosted practical knowledge and skills on good agricultural practices (GAPs) and post-harvest handling. Demonstration plots showed how new methods and techniques could be used to improve productivity and manage pests and diseases. Training of trainers scaled up the knowledge shared. Drama, video and visual aids increased uptake of messages in communities with low literacy levels. Farmers and cooperatives worked with the Nepal Ginger Producers Trade Association (NGPTA) to add value to ginger and increase productivity.
In 2017, the STDF published a results story on its ginger project: Chandra Kala Rai's ginger cooperative in eastern Nepal was among the close to 2,000 small-holder farmers ¬- most of them women - who benefitted from the FAO-led project. The farmers had struggled with low yields, pests and diseases, and post-harvest losses as high as 90%.
Farmer field schools boosted practical knowledge and skills on Good Agricultural Practices and post-harvest handling. Farmers worked with the Nepal Ginger Producers Traders Association (NGPTA) to add value to ginger and increase productivity. Following the project, post-harvest losses dropped by 30% and farmers saw their incomes grow by over 60%. A new ginger washing facility is supporting up to 8,000 ginger-producing households.
In 2017, the NGPTA mobilized matching funds from Denmark for a paved road to the ginger washing facility and increased washing capacity, expanding the impact of the STDF project. In 2017, farmers involved in the project exported their ginger to Bangladesh and welcomed a visit by European buyers. (In 2018, they started exporting to Europe)
Partnerships in Senegal boost safe cabbage production and regional exports
Beneficiary: Farmers and other stakeholders along the cabbage value chain in Senegal
Led by: AUMN
Time-frame: February 2012 - July 2014
STDF funding: US$577,142 (total project value US$636,175)
The safe trade gap
The cabbage sector is one of the most important sectors of Senegalese agriculture, and Senegal is one of the main suppliers of cabbage for the region. Yet, the sector in the country was not well organized, and suffered from a lack of awareness and expertise on how to meet sanitary and phytosanitary (SPS) standards. Information gaps resulted in pest attacks, and the excessive use or misuse of pesticides, which led to rejections at borders due to toxic residues that were not in line with export market requirements. At the same time, tackling poverty and driving rural development in cabbage growing areas was a pressing challenge. To boost productivity in the cabbage sector and promote better access to regional markets, there was a need to find solutions to plug gaps in safety and quality across the value chain.
Collaboration and dialogue among the public and private actors in the cabbage sector was key to the success of the project, led by the Association des Unions Maraichères des Niayes (AUMN). Together, small-scale growers, traders and government agencies worked with the industry association to revitalize cabbage production and develop the sector. A draft national strategy was developed and laid the foundation for stakeholder cooperation, helping to promote value chain development and replicate the project's approach longer-term. The project supplied quality inputs (seeds, fertilizers and pesticides) to growers, rolled out technical training and support for producers on good agricultural practices and ran targeted marketing campaigns on safety and quality production.
'The project's success was due to genuine collaboration between the private sector and public institutions. We joined our efforts in support of a common objective - helping small-scale producers to improve the quality and safety of cabbage, which increased their access to regional export markets'. Mamadou Ndiaye, Association des Unions Maraîchères des Niayes, Senegal
Safer fruit and vegetable exports secure livelihoods in Sri Lanka
Beneficiary: Farmers and other stakeholders involved in fruit and vegetable value chains in Sri Lanka
Led by: ITC
Time-frame: March 2013 - June 2016
STDF funding: US$562,484 (total project value US$758,598)
The safe trade gap
Fruits and vegetables have a high export value in global markets and Sri Lanka has a strong potential to cultivate crops, such as mango, papaya, pineapple, green chilli and tomato. Farmers, processors and traders in remote producing areas of the country, including many women and young people, were being held back from domestic and export markets by not managing to meet sanitary and phytosanitary (SPS) measures. That was putting a break on Sri Lanka's employment opportunities, farmers and exporters' income and the potential for better nutrition and domestic health with safe produce for local and international consumers. Tackling gaps in safety and quality across fruit and vegetable value chains was a priority.
Building and sustaining the capacity of the public and private sector to meet quality and international food safety and plant health standards, across fruit and vegetable value chains, was at the heart of the project led by ITC. Close government and business collaboration brought together the Department of Agriculture with the private sector, including the Ceylon Chamber of Commerce, the Lanka Fruit and Vegetable Producers, Processors, and Exporters Association, the National Agribusiness Council and the Sri Lanka Export Development Board. Targeted SPS training and capacity building programmes were run for the Department of Agriculture and over 200 master trainers, field level trainers, and field level extension officers who, in turn, are training farmers.
'Exports could be 'pushed up exponentially' if small-holder farmers are trained in proper growing protocols that meet international standards. Success will depend on training farmers working with one-half or one acre. They need to participate in a quality and food safety training programme'. Dawn Austin, Nidro Supply Ltd, Sri Lanka
Stronger phytosanitary controls help Uganda's flower exports to grow
Beneficiary:Flower producers in Uganda
Led by:CABI and the Department of Crop Protection in Uganda and the Uganda Flower Exporters Association
Time-frame:January 2012 - May 2015
STDF funding: US$348,632 (total project value US$392,154)
The safe trade gap
Flower producers in Uganda faced heavy losses with the growing interception of cut flower exports to the EU. Costs rose with increased inspections, treatment and rejected consignments. In turn, investment in the sector was slowing, which was impacting on trade flows and economic growth. The problem - plant pests. The solution - getting the right tools and knowledge on phytosanitary measures in place to keep the flower supply chain safe. At the same time this would help to safeguard the livelihoods of the country's 6,000 flower workers, 80% of them women, and their families.
Flower producers and exporters came together with the Department of Crop Protection (DCP) in Uganda to build capacity to meet international phytosanitary standards and EU requirements. A strong public-private partnership between the DCP and the Uganda Flower Exporters Association (UFEA) was created based on joint dialogue and planning. Efforts were made to raise awareness and gain buy-in from national decision-makers. With technical expertise from CABI and other partners, hands-on practical training and study tours were rolled out for the public and private sector. Government teams were deployed to boost efficiency of inspections and certification at exit points and an electronic format for export certification and accessible reference materials were developed.
'The use of biological agents improves the health and safety of women who work in the greenhouse by reducing exposure to pesticides and its health risks. Of the 8,500 direct workers in the flower sector, 80% are women who have an income for their families'. Esther Nekambi, Uganda Flower Exporters Association
For more information, see: http://www.standardsfacility.org/results-stories
Note: This statement reflects the work of the WTO's Agriculture Division, and particularly of Majda Petschen and the Division Director, Edwini Kessie. The STDF material reflects the work of that institution and of the STDF Staff Secretary of the STDF, Melvin Spreij.