Commodity producers across developing countries are facing a host of issues, says a study from the United Nations Conference on Trade and Development.
Inadequate infrastructure, low productivity, untapped economies of scale and lack of support services are the main supply-side constraints facing commodity producers in developing countries.
The absence of adequate infrastructure increases transaction costs and introduces risks, particularly with respect to producers´ ability to meet delivery commitments.
Mining and oil production usually carry their own infrastructure costs and, indeed, infrastructure often accounts for the major share of total investment in these industries.
Agriculture has a completely different structure for financing and production, with limited possibilities for attracting loans. Because production is spread over large areas and many producers, it is very difficult to finance infrastructure investment against the proceeds of future production.
High transportation
costs affect competitiveness in many developing countries, especially landlocked countries. It is not unusual in Africa for as much as 40% of national export earnings to be diverted into international transport services.
Lack of storage facilities is a major source of loss in developing country agriculture and a major impediment to competitiveness. After-harvest losses could be easily reduced in many countries through better storage facilities.
Low productivity limits the cost advantages. In Africa, agricultural productivity has stagnated for the past ten years at an estimated US$375 per worker (constant 1995 US$). This is 12% lower than in 1980, when value-added per worker was US$424.
Yields have also stagnated or fallen for a wide range of crops in many countries. Yields of the most important food grains, tubers and legumes (maize, millet, sorghum, yams, cassava, and groundnuts) in most African countries are no higher than in 1980. This has made the challenge of attaining food security even more difficult.