UNCTAD plays a leading role in assisting commodity-dependent countries to enhance their capacity to use modern commodity risk management and finance tools. Work in this area involves research, policy advice, training and technical cooperation activities, geared to both the private and the public sectors. The following activities are emphasized:

Integration of commodity marketing, risk management and finance operations ;
Solutions to problems of access to commodity risk management and finance markets; training, development of manuals, capacity-building for banks, farmer's associations, etc.;
Improving the use of financial instruments in oil and gas trade, and the financial management of oil and gas resources;
Prudential rules for the safe use of price risk management instruments;
Legal and regulatory reforms to reduce transaction costs and improve access to international commodity risk management and finance markets including means of reducing sovereign risk;
The functioning of commodity exchanges and the role of new groups of non-trade-related participants in commodity futures markets;
The development of regional and national commodity exchanges and new futures contracts (see Emerging Commodity Exchanges);
The use of market-based price risk management tools in schemes designed to stabilize the income of producers of commodities and in arrangement to mitigate the impact of fluctuating commodity prices on government revenues;
Structured commodity finance, including asset-backed financing and the use of warehouse receipts as collateral

Some of the work is carried out in cooperation with other organizations.

  The work on diversification places special emphasis on the creation of an enabling environment for improving supply capacities as well as on improving the ability of producers and exporters to respond in a timely and flexible manner to emerging market opportunities and niches. The goal of this work is to contribute to the development and economic diversification of developing countries which are heavily dependent on commodity exports and for which the new international economic environment presents unprecedent challenges and opportunities. Relevant activities and topics include the following:

• Diversification in the new international economic environment: product and sector-based reviews of challenges and emerging opportunities; developments in the multilateral trading system that affect the diversification process and the interests of commodity-dependent countries;
• Assistance in the design and implementation of diversification policies and measures under the multilateral trading rules and assessment of their social and developmental implications;
• Assistance to commodity-based enterprises with regard to quality requirements, information exchanges, and dealing with the multiplicity of rules in international markets;
• Changing structure of international commodity markets and positioning of enterprises from developing countries in these markets to capture new opportunities; institutional and infrastruture prerequisites for diversification;
• The role of formal and informal institutional structures, including their communication and support functions;
• The potential benefits of commodity-based clusters; evaluation of successful experiences;
• The establishment of mutually beneficial partnerships.
• A specific project on diversification and commodity based development (project P), financed by the United Nations development account. It aims (i) to promote the horizontal, vertical and geographical diversification of production and trade structures; (ii) to improve government's capacities to formulate focused, effective and sequenced policies in this respect; (iii) to increase the competence of enterprises in adapting their business strategies and supplies to the Post-Uruguay Round trading framework; and (iv) to strengthen positive linkages between the commodity sector and the rest of the economy.
  

The aim of work in this area is to contribute to economically and ecologically sustainable management of natural resources, particularly in developping countries. The methods used include provision of advice and capacity-building to governments and industry, organization of training events, issues-oriented research, publications, dissemination of information through the Internet and presentations. Extensive networking and cooperation are maintained with private industry, NGOs, and other elements of civil society. The implementation of this work involves the following:

• Support in the formulation of macro- and micro-economic policies and legislation in the mineral sector, as well as in the preparation of mining laws, mining taxation systems and foreign investment frameworks;
• Advice and training in regional planning and participatory development in areas dependent on exploitation of natural resources;
• Development and application of frameworks for regional planning that facilitate cooperation and consultation between national and regional governments, industry and local communities.

  The aim of work in this area is to monitor and analyse the evolution of the world market for major commodities, to disseminate commodity market information, and to convene and service, as appropriate, meetings related to the negotiation, renegotiation or the functioning of international commodity agreements (ICAs). Activities include:

• Analyses of recent developments in commodity markets and their prospects, including publication of the World Commodity Survey;
• Statistical publications containing comprehensive data on commodity trade and related issues (e.g. The Handbook of World Mineral Trade Statistics and The Monthly Commodity Price Bulletin);
• Coordination of activities and monitoring developments of international commodity bodies;
• Implementing a specific project "INFOCOMM" - market information in the commodities area - financed by the Government of France. INFOCOMM seeks to strengthen UNCTAD's effort in promoting market transparency by the development of an International Commodity Informatin Electronic Portal, the publication of the "World Commodity Survey 2003-2004" and the preparation of a CD-Rom on cocoa market structures.
  
  Provision of background and detailed information on commodities, click the Infocomm buttons below.