* Poorest countries hit by commodity price plunge
* "Less for more" -- as price fall outstrips higher sales
* Massive drop in iron and copper prices
By Jonathan Lynn
GENEVA, Jan 26 (Reuters) - Last year's plunge in commodity prices has hit some of the world's poorest producers much harder than originally feared, forcing them to pump out much more and yet earning them far less, a forthcoming study shows.
The dramatic shift in the terms of trade of the least developed countries (LDCs) underscores the dangers for poor countries or relying on one or two products or markets and the need to diversify exports.
A decline in commodity prices was always going to hurt developing country exporters, but the data underline just how hard it is for poor countries, already suffering from the drying up of investment flows, to mobilise capital for their needs.
A study on the diversification needs of LDCs by the International Trade Centre (ITC) shows that overall their export volumes, excluding crude oil, were 2.6 percent higher in the first three quarters of 2009 than a year earlier, but export earnings were 12.0 percent lower.
The study will be published later this week by the ITC, a joint agency of the United Nations and World Trade Organisation that helps developing countries improve their export capacity.
ITC lead economist Willem van der Geest said a sharp drop in LDC exports in the second half of 2008 was followed by partial recovery in the first three quarters of last year, but in the meantime prices had fallen sharply from their 2008 peaks.
"You ship out more but the prices are down," van der Geest said in an interview.
LESS FOR MORE
In some export groups, such as textiles the price fall was relatively moderate, so countries such as Bangladesh get off relatively lightly.
But in resources such as iron ore or metals, exported by impoverished African states such as the Democratic Republic of the Congo, the price fall is a savage 50-70 percent.
"For the DRCs and Zambias of the world it's a disastrous development," van der Geest said.
Ores such as iron, accounting for 8 percent of LDC non-crude exports, grew 24.7 percent by volume in the first three quarters of last year but fell 22.4 percent by value.
"You ship out a quarter more and you get a quarter less, so you've lost half," van der Geest said.
And for copper, accounting for 4 percent of the total, volumes climbed 59.2 percent but in value terms the exports were still down 7.3 percent -- an overall loss of nearly 70 percent.
The only commodity groups to show value gains were oilseeds, grain and fruit, and tobacco, together making up only three percent of non-crude exports. Crude oil accounts for 55 percent of total LDC exports.
Since many commodity prices will remain low for some time, the lesson for LDCs is that they need to diversify their export base, something that would have been easier during the commodity boom, van der Geest said.
The data also show that the plight of the poorest countries is being masked by the strong recovery of big emerging economies like China that are benefiting from cheaper raw materials.
"The dynamics must come from emerging countries. Unfortunately it doesn't pull up the other developing countries in quite as strong a way as you would hope," van der Geest said.