Agricultural markets and supply chains are at the heart of the development process. Food and agriculture markets expand consumers’ choices and create incentives for farmers. Well‐functioning markets and trade enable the optimal allocation of resources, diffuse knowledge and technologies, and provide avenues that link agriculture with other sectors of the economy through a network of agricultural commodity and input supply chains. Thus, the market mechanism is crucial for the structural transformation of the economy and for growth and development. Markets are vital to improving the livelihoods of millions of people and can provide additional benefits, such as contributing to food security by ensuring that food moves from surplus to deficit areas.
The role of well-functioning markets, both global and domestic, is significant in driving economic growth. However, in some cases, markets may not reconcile the interests of individuals with those of society as a whole. Markets may result in negative environmental outcomes or fail to address social objectives, such as reducing inequality. In addition, when agricultural commodity and input supply chains are not efficient and resilient, they cannot rapidly respond to demand‐ and supply-side shocks, thereby threatening food security and livelihoods. Market failures and supply chain disruptions undermine the social, economic and environmental benefits central to the 2030 Agenda for Sustainable Development.
Policies and mechanisms for sustainable markets
| Trade has an important role to play in climate change adaptation efforts
and can contribute to food security in many countries. In the short
term, by moving food from surplus to deficit areas, trade can provide a
mechanism to address production shortfalls due to extreme weather
events. Global agricultural market integration could reinforce the
adaptive role of trade by increasing availability of, and access to,
food in countries that will be negatively affected by climate change.
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| Trade could also be central to climate change mitigation efforts. If
trade could provide the necessary signals to farmers to produce low
carbon footprint products, emissions could be reduced globally.
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| Enhancing the resilience of supply chains to risks can help safeguard food security and reduce social deprivation and political stresses associated with poverty and inequality. Importantly, the relationship between resilience and sustainability means that policies for each of these pieces need to be considered together. |
| Contract farming schemes can help address the constraints smallholders
face in price risk, access to inputs and credit, and access to
technology. These schemes can improve productivity, raise
commercialization rates, increase incomes and reduce poverty.
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| Sustainability certification schemes can harness the market mechanism to
provide information on how food is produced and how sustainability
benefits the environment and society. As a result, the trade-offs
between economic, social and environmental objectives can be addressed.
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| Governments set policy priorities and build general resilience, but it is actors throughout the supply chain who are directly affected and who need to consider business strategies and interventions to adapt and transform for the future. |
Publications
Agricultural trade & policy responses during the first wave of the COVID-19 pandemic in 2020
10/05/2021
Measures adopted around the world to contain the COVID-19 outbreak helped curb the spread of the virus and lowered the pressure on health systems. However, they also affected the global trading system, and the supply and demand of agricultural and food products. In response to concerns over food security and food safety worldwide, many countries reacted immediately to apply policy measures aiming to limit potentially adverse impacts on domestic markets. Covering the first half of 2020, the report provides an overview of short-term changes in trade patterns and policy measures related to agricultural trade that countries adopted in response to the pandemic. Despite the shocks caused by the COVID-19 pandemic and containment measures, the efforts of governments and agricultural sector stakeholders to keep agricultural markets open and trade flowing smoothly contributed to remarkably resilient value chains. Effects on global trade in food and agriculture remained limited to short-term disruptions at the very beginning of the pandemic. Governments’ policy responses covered a wide range of measures, including export restrictions, lowering of import barriers, and domestic measures. Most of the trade restricting measures were short-lived–. International political commitments were pivotal in the coordination of a global response to the crisis and in deterring countries from taking unilateral measures that could have harmed food security in other parts of the world. However, COVID-19 is still spreading and may entail severe implications for access to food and longer-term shifts in global demand and supply of food and agricultural commodities.
The Linkages between Migration, Agriculture, Food Security and Rural Development
01/08/2018
Understanding contemporary migration, both international and internal, remains a challenge. The decision by people to migrate either within their own countries or across borders is influenced by an intricate set of factors.
Projects
Related links
- Increasing the resilience of agricultural supply chains
- Digital technologies for food markets
- Price volatility in agricultural markets
Partners
Videos
The State of Agricultural Commodity Markets 2022 (SOCO)
28/06/2022
This edition of The State of Agricultural Commodity Markets (SOCO) discusses how trade policies, based on both multilateral and regional approaches,...