I am pleased to introduce the sixth annual progress report of the Secretary-General on the implementation of the Programme of Action of the Least Developed Countries for the Decade 2001-2010.

The report assesses the progress in the implementation of the Programme of Action against 30 international goals and targets, contained therein, as well as the commitments of the least developed countries and their development partners in seven interlinked areas: namely 1) fostering a people-centred policy framework; 2) good governance at national and international levels; 3) building human and institutional capacities; 4) building productive capacities to make globalization work for LDCs; 5) enhancing the role of trade in development; 6) reducing vulnerability and protecting the environment and 7) mobilizing financial resources. As in the past, the report follows the structure of the Programme of Action and contains a statistical annex with country data.

The report this year shows that strong economic performance of LDCs continued with most of them, except the Pacific, having met or being on track to meet the growth and investment targets of the Brussels Programme by 2010. Merchandise exports of LDCs have been growing double the rate of the world exports since 2000. Net Foreign Direct Investments and remittances inflows to LDCs have more than doubled.

Progress on human development targets has been noticeable in health and education but further progress on these targets crucially depends on improved access to water and sanitation where progress has been far less, due to chronic underinvestment in the infrastructure for delivering services in rural areas and rapid growth of population in urban areas. Less progress than previously thought has been also made in gender parity in education and no progress on maternal mortality. Trend data on extreme poverty suggest that in half of the LDCs for which data are available almost 50 per cent of population live in extreme poverty. Malnutrition also seems to be worsening, particularly among children and women.

The rising costs of basic food can exacerbate malnutrition and seriously jeopardize international efforts to achieve the overarching objective of the Brussels Programme to halve the proportion of people living in extreme poverty and hunger in LDCs by 2010. Furthermore, it risks destabilizing the political situation and triggering social unrest in countries with political instability which include 26 LDCs.

Global food crisis has affected all countries but the poorest have been hit most. Almost 72 per cent of population in LDCs lives in rural areas and depends on agriculture in employment, income and subsistence.

Notwithstanding its importance for the economy and livelihoods, agriculture remains underdeveloped and agricultural productivity has been declining in LDCs due to chronic underinvestment in science and research, lack of access to land, modern technology, markets and finance, transport and storage infrastructure, trade and macroeconomic policies biased against agriculture. As a result, many LDCs, net exporters of agricultural products in 60s, have become net importers and grew dependent on food imports in meeting the nutritional needs of their populations by early 1990s.

According to FAO, food imports contribute to 35 per cent of calories intake in the Net Food Importing Developing Countries (NFIDCs) which include almost half of the LDCs.  Forty seven out of 49 LDCs are also classified by FAO as low income food deficit countries (LIFDCs) with domestic food production insufficient to meet the nutritional needs of their populations, resulting in malnutrition. Furthermore, twenty LDCs have been identified by FAO as countries in food crisis, requiring urgent humanitarian assistance.

Recent instability and high levels of world food prices have also increased food bills and reduced foreign exchange. In 2007 alone, total food bills of LDCs have increased by 19 per cent and those for vegetable oils and dairy products by 37 and 63 per cent respectively. Bills for cereals were also up by 26 per cent.

The report makes a number of policy recommendations to address both the impact and the causes of high food prices with the view to ensuring long-term food security and eradication of poverty and hunger in LDCs.

Short term strategy proposed in the report includes 1) immediate humanitarian assistance to countries in food crisis which requires scaling up international assistance and closing a $750 million gap doled up by high food prices in the WFP budget; 2) social protection programmes like cash support, food-for-work programmes, school feeding programmes; and 3) financial lending and crop insurance schemes to smallholder farmers.

Midterm strategy includes a) improving farmers’ access to finance and markets, which will enable them to purchase agricultural inputs (seeds and fertilizers), as well as agricultural machinery and tools and other innovations for receiving higher yields; 2) investment in better irrigation, transport infrastructure, electricity, research and development and improvement of market information systems.

In the long run, the state-led ‘green revolution’, through its extension, should facilitate the transition of LDCs to a high-value agricultural revolution led by the private sector. Long-term strategy for food security also calls for full trade liberalization which could significantly increase agricultural commodity prices and increase incomes for LDCs as well as industrial strategies aiming at processing of agricultural products and light manufactures, and - ultimately - high-technology exports.

These recommendations are by no means exhaustive but they provide with a general direction. Individual paths could certainly vary. Most importantly, LDCs need to make some progress in the value chain in order to create wealth, decent jobs and be able to compete on the international market.