Demand for commodities has grown faster, mainly under the influence of rapidly industrializing countries like China and India, says a document on commodities from the United Nations Conference on Trade and Development.
Current and anticipated increases in demand for commodities provide a unique historical opportunity for alleviating poverty. However, this desired outcome will not come automatically.
Over the past few years, demand for commodities has grown faster than the long-term trend, mainly under the influence of increasing Asian demand, particularly from rapidly industrializing China and India.
Prices of most commodities on international markets have risen as a result of demand growth, reinforced by tight supply capacities, tense geopolitical conditions (especially with respect to the oil market) and intense speculative activity.
Numerous developing countries rely on commodities for export revenues, and commodity production and trade provide employment for more than 2.5 billion people worldwide.
The impact on developing countries exporting agricultural products varies, with some benefiting over the period (e.g. coffee exporters) and others recording a deterioration between 2003 and 2005 (cotton or soybean exporting countries).
Their gains or losses have mainly been the consequence of their import/export structures and especially the share of oil imports in their total
imports. However, while the net effect on their GDPs may be positive or negative, the impact on the commodity sector is likely to be unambiguously positive, and a share will reach the poorest, including small farmers.
For the next five to ten years, demand for commodities should continue to grow, mainly due to increases in demand from developing countries stimulated by a particularly vigorous commodity consumption per unit of GDP compared to that of developed countries (including when GDP is calculated at purchasing power parities), faster economic growth, and increasing populations.
The population of the 50 least developed countries is projected to more than double by 2050, reaching 1.7 billion (from 0.8 billion in 2005). Growth in the rest of the developing world is also projected to be robust, although less rapid, with the population rising from 4.5 billion to 6.1 billion between 2005 and 2050.
These factors will lead to further growth in trade between developing countries, known as South-South trade. Such trade will make up a greater share of total commodity exports and will shift the centre of gravity of global commodity demand from developed to developing countries.
Commodity prices reached record historical levels in nominal terms in 2006. They increased by more than 30% between 2005 and 2006 (and by 80 per cent from 2000 to 2006), mainly due to the rise in prices of crude oil, metals and minerals.