Essential reading for this month: the 2022 State of Agricultural Commodity Markets (SOCO) report, presented by its main author, FAO’s George Rapsomanikis

The State of Agricultural Commodity Markets or SOCO is one of FAO’s most recently established flagship reports. Its first edition came out in 2004, when World Trade Organization (WTO) members began efforts in Geneva to put the Doha Round of trade negotiations back on track after the deadlock in the WTO Ministerial Conference held in Cancún, Mexico in September 2003. SOCO 2009 was launched in the midst of extreme food price volatility that was affecting all countries – both developed and developing.

The SOCO report looks at how the global food market structure changes, what the impacts of these changes are, and how trade policies can promote food security. Without losing their topical focus, recent editions of the report have extensively analysed and discussed themes such as the linkages of food trade with sustainable development, the role of trade in a warmer planet, trade’s impacts on food security and nutrition, and smallholder integration in global value chains.

This is no simple task. We can all agree that less food waste is good. But we cannot easily reach a consensus on whether less food trade is good. Food trade issues are politically sensitive and often lead to heated discussions. Nearly 20 years have passed since Cancún and the WTO negotiations on agricultural trade have made little progress. Trade was not a priority in UN Food Systems Summit discussions in September 2021, although it was recognized as a means to achieve zero hunger.

The impact of the COVID-19 pandemic on food trade and man-made conflicts, such as the war in Ukraine have affected global markets significantly and food self-sufficiency has again become a priority topic for discussion. When global markets are volatile, uncertain and undersupplied, self-sufficiency in food is seen as promoting food security.

However, many countries do not have the natural resources and the agro-climatic conditions and technology to become self-sufficient. Food self-sufficiency is an expensive way to ensure the availability of adequate and diverse foods. For many countries, trade, together with domestic production, can help to promote food security and nutrition at lower cost.

The 2022 edition of SOCO finds that since 1995, trade between countries has increased significantly, but that this wave of globalization lost steam in 2008 with the financial crisis. Nevertheless, globalization has changed the food trade landscape. Emerging economies and developing countries are now important players in the global market. Trade within regions is becoming more important than before.

Today, the global food market is more resilient to shocks such as pandemics, conflicts and extreme weather events, but when it comes to specific crops such as grains, markets are still vulnerable. To improve their resilience and ensure food security and healthy diets, countries should aim to diversify the products imported and to increase the number of their trade partners.

It is in our collective interest to foster food and agricultural trade, and to assess its economic, environmental and social impacts.

And this is another key message of SOCO 2022. Globally, trade can result in water and land savings, but, as with all economic activities, production for exports can have negative environmental impacts that often depend on local conditions and are more pronounced in poorly regulated settings.

Environmental issues are becoming increasingly important in trade-policy discussions. Trade policies alone cannot easily address environmental externalities, so complementary measures are necessary. At the multilateral level, WTO rules can help to address trade-offs between economic and environmental objectives. Increasingly, regional trade agreements include environment-related provisions that target agriculture and food.

However, global problems require global solutions. When it comes to the global environmental externalities, such as greenhouse gases and climate change, only a multilateral approach will be effective. For example, with carbon taxes and border tax adjustments, trade rules can help to expand the reach of mitigation policies.

The digital version of the SOCO report can be found here: www.fao.org/3/cc0471en/online/cc0471en.html

The executive summary is available here: www.fao.org/3/cc0471en/online/state-of-agricultural-commodity-markets/2022/executive-summary.html