Since its first edition in 2004, the Food and Agriculture Organization of the United Nation’s (FAO) flagship report The State of Agricultural Commodity Markets (SOCO), has addressed emerging developments, long-term trends and structural changes in food and agricultural markets. While this goal still stands, and has been reinforced by new developments, the world has changed significantly over the past 18 years.
The global food and agricultural market has expanded since 1995. While all nations have strengthened their participation in the global market, emerging economies and developing countries are playing a greater role. Trade, originally viewed as purely economic exchange, has today become an essential tool used to advance economic, social and environmental outcomes.
The outbreak of the COVID-19 pandemic in early 2020 demonstrated how a robust and well-integrated global agrifood system could help countries withstand unprecedented challenges. Indeed, global trade in food and agricultural products proved to be remarkably resilient to the disruptions caused by the pandemic. Disruptions were striking but generally short-lived, proving that by working together we are stronger.
The war in Ukraine is affecting a region of significant importance for global food security and nutrition. With the situation protracting, there is much uncertainty around Ukraine’s ability to farm, harvest and trade crops in both the current and upcoming agricultural seasons. For trade, the impending risk of fragmenting global food and agricultural markets poses additional threats to world food security.
Such events emphasize the need for more breakthrough research, a deeper understanding of trade networks, and better approaches to facilitate integration and promote well-functioning food and agricultural markets. Currently, the trade policy environment is characterized by a deadlock in multilateral trade negotiations under the World Trade Organization (WTO) and by a proliferation of more profound regional trade agreements that, in addition to market access, aim to promote convergence in domestic policies and regulation among their signatories. The 2022 edition of SOCO examines how mutually reinforcing multilateral and regional efforts can address the sustainable development challenges of today and those of the future.
The 2030 Agenda for Sustainable Development recognizes international trade as an engine for inclusive economic growth and poverty reduction, and as an important means to achieve the Sustainable Development Goals. Trade can contribute to building a better world, free of hunger and malnutrition.
Trade can move food from where it can be produced at a relatively low cost to where it is needed. In this way, trade can promote world food security and healthy diets – it helps many countries in the world meet their food requirements in terms of both quantity and diversity at levels above those which their domestic production could sustain. Trade could help agriculture across the world to use natural resources, such as land and water, more efficiently. It can also be an avenue to diffuse knowledge worldwide. Global value chains create opportunities for technology transfer and can promote agricultural productivity improvements. Increasing productivity is important for developing countries.
There is no doubt that open, rules-based, predictable and well-functioning global markets benefit all countries. In the aggregate, global markets improve efficiency in agriculture and offer consumers a wider choice of food at more affordable prices. At the same time, food and agricultural trade can result in negative environmental or social outcomes. Producing for export can result in more pollution, deforestation and greenhouse gas emissions. Cheaper food imports could leave smallholder farmers in developing countries unable to compete. Women farmers who have limited access to capital and inputs could be affected the most. Trade policies alone cannot, and should not, be expected to fully address the trade-offs among economic, environmental and social objectives. They must be complemented by other, more targeted measures.
How we decide on trade policies and the complementary measures that can promote sustainable agrifood systems is also important. Multilateral trade rules provide the most fundamental pillars of global food and agricultural trade. Often, deeper and extensive regional trade agreements are built on the multilateral framework to promote further trade integration. These agreements can promote regional food and agricultural value chains by allowing for additional norms for cooperation and harmonizing food regulation and standards. The importance of trade agreements does not only emanate from economic gains. Trade integration can also reduce the probability of conflict. For example, when it was created in 1958, the European Common Market aspired to unite Europe and preserve peace in a continent torn by successive wars.
Today, global food and agricultural markets are more integrated than ever; however, with the increasingly complex challenges we face, our primary focus should be on safeguarding the essential and beneficial functions of those markets. A fragmentation of global food trade could threaten food security in many parts of the world. At times of crises, export restrictions can add to extreme price volatility and harm low-income food-deficit countries, particularly those that depend on global markets for their food security. They can also have adverse medium-term impacts.
SOCO 2022 examines multilateral and regional approaches to agricultural trade policy in terms of agrifood systems resilience, economic growth and environmental outcomes. Multilateral and regional trade integration can be mutually supportive in making food and agricultural trade an engine for growth. But when it comes to global challenges such as climate change, it is multilateral cooperation that will be effective with trade policies that help climate mitigation efforts to have global reach. Global challenges require global solutions.
Food and agricultural trade policies should aim to safeguard global food security, help to address the trade-offs between economic and environmental objectives, and strengthen the resilience of the global agrifood system to shocks, such as conflicts, pandemics and extreme weather. This report offers timely and invaluable insights for policymakers and other key actors to assist them in taking concrete actions.
Qu Dongyu |
