The State of Agricultural Commodity Markets 2022

The expansion of food and agricultural trade and the emergence of new players in global markets has changed the structure of the trade network. In 1995, there were a few large trading hubs – that is countries that are connected to many trade partners and characterized by a large number of trade links, many of which are of high value (Figure 1.7). Over time, together with the expansion of trade and the emergence of new players, the number of hubs increased while the dominance of the individual hubs weakened.

FIGURE 1.7The food and agricultural trade network and trade hubs in 1995 and 2019

NOTE: The circles denote countries. Large circles can be trade hubs. When trade hubs are located in (outside) the core of the network, the network is more centralized (decentralized). Countries with trade values lower than 0.01 percent of the overall trade are excluded. Measured on the basis of trade intensity.
SOURCE: Jafari, Y., Engemann, H. & Zimmermann, A. 2022. The evolution of the global structure of food and agricultural trade: Evidence from network analysis. Background paper for The State of Agricultural Commodity Markets 2022. Rome, FAO.

In terms of trade intensity, the United States of America was the most significant hub in 1995 and remained so in 2019. Following its accession to the WTO in 2001 and the rapid growth it experienced, China evolved from being a relatively small hub in 1995 to the second largest hub in 2019, moving from the periphery of the network to become one of its central players.¹⁷ Several Northern and Western European countries that were among the top ten hubs in 1995 were reduced in relative importance and gave way to emerging economies such as India, the Russian Federation and South Africa (Figure 1.7). Emerging economies became more globalized and, at the same time, developed as important regional hubs, linking smaller countries in their regions to the global market.^{18, 19}

Indeed, the structure of the global food and agricultural trade network evolved to become more decentralized, with a greater number of hubs that are less dominant. This suggests that in 2019, trade links were more equally distributed across individual countries compared with 1995. Resembling overall globalization patterns, the largest part of this decentralization process occurred between 1995 and 2007, while its momentum has since slowed down considerably (Figure 1.8).

FIGURE 1.8The decentralization of food and agricultural trade links, 1995–2019

NOTE: A decreasing index of centralization can indicate the evolution towards a more even trade network with high connectivity among countries and decentralized trade structures.
SOURCE: Jafari, Y., Engemann, H. & Zimmermann, A. 2022. The evolution of the global structure of food and agricultural trade: Evidence from network analysis. Background paper for The State of Agricultural Commodity Markets 2022. Rome, FAO.

Along with increasing connectivity globally, the food and agricultural trade network became more balanced between 1995 and 2007. In 1995, the trade network had a pronounced core-periphery structure with few traders in the core and many less connected countries in the periphery. With more, though less dominant, trade hubs, there was a change to a more balanced structure, characterized by smaller core-periphery sub-networks (Figure 1.7). Similar structural changes characterized by a tendency towards decentralization are also observed in the merchandise trade network.^{20, 21}