The Risks of Increased Production of Agricultural Commodity Exports

In LYIP’s view, increasing harvests and production of agricultural commodity exports will not reliably or sustainably reduce poverty, even if realized in conjunction with value addition and improved access to transport and markets. Production led approaches put African countries in intense competition with other developing countries that are also increasing production of commodities, processing and value addition. This exacerbates a situation of oversupply and long term low prices of commodities. Recent decades of development centered on production and market access for commodities have fallen short in improving the lives of poor families in Sub-Saharan Africa.

In an increasingly competitive and global marketplace, increasing production simply adds to the glut of products vying for the same small share of production returns. As the income from the physical value of products in export markets declines (now valued at only 15 percent of total sources of income in 1998, see “Distinctive Values”), the importance of identifying distinctive qualities in products and the role of value capture and management, including the use of Intellectual Property (IP), becomes clear. The value of a brand or a manufacturing license is now far more important than a product’s physical production.