Agricultural commodity prices are still in a long term decline, according the United Nations Food and Agriculture Organisation. Falling prices threaten the food security of hundreds of millions of people in developing countries.

“The long-term downward trend in agricultural commodity prices threatens the food security of hundreds of millions of people in some of the world’s poorest developing countries where the sale of commodities is often the only source of cash,” the FAO said in a release on a new report; “The State of Agricultural Commodity Markets 2004.”

“While the overall trend in commodity prices has been downward from the late 1990s through 2001, the report shows that prices on world markets have rebounded, or at least levelled off, over the past two years,” the FAO said. “However, not all commodities have performed the same. There have been rebounds in cereals, oil crops, dairy products, fibres and raw materials, while horticultural product prices remained more sensitive to market balance and meat prices were disrupted by animal disease outbreaks.”

“The Least Developed Countries, where usually small producers account for the bulk of agricultural production and exports, have been unable to mobilize the investment and training required to shift to new crops,” said Hartwig de Haen, FAO assistant director-general, economic and social department. “They also have difficulties meeting the high quality standards and strict delivery deadlines of the major supermarket chains in the developed countries.”

The report points out that many developing countries rely on exports of a small number of agricultural commodities, or even of a single commodity. “A drought or a drop in prices on the international markets can quickly drain their foreign exchange reserves, stifle their ability to pay for essential imports and plunge them into debt,” the FAO said.

The report urges World Trade Organization negotiators to give priority to reducing agricultural tariffs, producer support and export subsidies in developed countries. “It also highlights the need for developing countries to improve their capacity to take advantage of opportunities opened by trade liberalization,” the FAO said.