The State of

Agricultural Commodity Markets 2020

We live in an interconnected world

Emerging and developing countries have become active participants in global markets. They account for about one-third of global trade.

Technological advancements contributed to transforming production and trade processes, which has, in turn, enabled global value chains in food and agriculture to emerge.

International trade can be a powerful instrument, and markets can be harnessed to foster sustainable economic, social and environmental outcomes.

Global value chains offer opportunities for developing countries to integrate into global markets.

But in this rapidly transforming market environment, we should leave no one behind.

International trade

Since 1995, international trade in food and agriculture has more than doubled in real value but its growth rate has been slower since the 2008 financial crisis.

Developing countries and emerging economies are increasingly participating in global markets, and their exports make up more than one-third of global agri-food trade.

linkFIGURE 1.1

Evolution of agri-food trade, 1995-2018 (countries classified in groups by income level)

A. Agri-food exports (USD billion)

  • High-income
  • Upper middle-income
  • Lower middle-income
  • Low-income

B. Agri-food exports and imports, average annual growth rates

  • Exports
  • Imports

Note: All calculations are based on values of trade at 2015 prices. Country income groups are based on the classification of the World Bank. The calculations in Panel B are based on three-year averages of values of trade at 2015 prices.
Source: FAO calculations using UN Comtrade data (accessed May 2020).

Increased awareness of developments in global agricultural and food markets and a systematic understanding of trade policies are crucial for addressing challenges related to the transformation process, financial shocks, natural disasters and health-related crises, such as the COVID-19 pandemic.

Global value chains

Global value chains have emerged rapidly and are widespread in food and agriculture. About one-third of global agricultural and food exports are traded within global value chains.

Lower trade barriers can promote global value chains and contribute to growth in agriculture and the food industry. Every time products cross borders, they are subject to import tariffs, which escalate along global value chains and hinder value-added creation.

linkFIGURE 2.2

GVC participation rates in agriculture in 2015


Note: GVC participation rates are the sum of backward and forward GVC linkages as ratio of gross exports. See Box 2.1 for definitions.
Source: FAO analysis by Dellink et al. 2020.

Trade policies that foster open markets should be complemented by measures that improve the capacity to compete in modern global value chains. These include investments in infrastructure, effective regulation and, most importantly, efforts targeting the upgrade of skills for farmers and workers.


Markets are key for development and yet in many developing countries farmers have limited access to them.

Many smallholder farmers face significant constraints to access markets. For women, these constraints are even higher. Because of the many constraints they face, households headed by women generate significantly less income than those headed by men.

Stringent requirements in modern food value chains could further isolate farmers from the market mechanism. Increasing farmers’ participation in markets expands their choices. Markets allow farmers to decide how and what to produce and how to invest in their farms, their families and themselves. This can lead to livelihood improvements in agriculture or other economic sectors.

Contract farming can help farmers to increase their participation in markets and modern value chains.

A number of studies show that contract farming can help farmers access markets and increase their incomes significantly – often by up to 50%.

linkFIGURE 3.4

Share of household production sold in markets across the farm size distribution in Ghana, Malawi, Uganda and Viet Nam, Quintiles

  • 1st quintile
  • 2nd quintile
  • 3nd quintile
  • 4nd quintile
  • 5nd quintile

Source: Smallholder DataPortrait, FAO.
The data were compiled from Living Standards Measurement Studies (Ghana 2013, Malawi 2011, Uganda 2012, Viet Nam 2008).

linkFIGURE 3.5

Average total household income by gender of household head (USD, valued at 2011 prices)

  • Households headed by men
  • Households headed by women

Source: Smallholder DataPortrait, FAO.
The data were compiled from Living Standards Measurement Studies (Ghana 2013, Malawi 2011, Uganda 2012, Viet Nam 2008).


Agricultural and food markets can be harnessed to deliver sustainable development outcomes. Promoting and widely applying voluntary sustainability certification schemes can address trade-offs between economic, environmental and social objectives.

Bridging the digital divide

Digital technologies can be leveraged to help farmers overcome multiple market failures and facilitate smallholder farmers’ integration in markets and value chains. They can also promote international trade and effectively improve market-based institutional arrangements for contributing towards sustainable outcomes.

Understanding the challenges that arise from digital technologies and addressing the risks associated with their use require enhanced collaboration and consensus among all stakeholders, including governments, the private sector and the farmers themselves, to improve governance mechanisms.

linkFIGURE 4.3

Individuals using the internet, percent of population

  • Developed countries
  • Developing countries
  • World
  • Least developed countries

Note: 2019 values correspond to ITU's estimate for 2019 as of 28 October 2019.
Source: ITU. 2020. ITU Statistics: ICT Key Indicators. Available at https://www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx (accessed May 2020).

COVID-19: Keeping trade going

In the first part of 2020, markets, both domestic and global, are once more facing significant challenges due to the outbreak of COVID-19 and to the restrictions on people’s movement and international travel that were imposed to contain its spread.

The pandemic and its impact on the global economy are expected to affect trade considerably. The WTO suggested that world merchandise trade would plummet by 13–32 percent due to the COVID-19 pandemic disrupting economic activities.

Governments and the private sector are attaching high priority to keeping food value chains alive and functioning amid movement restrictions. Efforts are being made to link food production areas with urban centres through special channels (following safety measures, such as testing, physical distancing and other hygienic practices) to accelerate the delivery of perishable and nutritious foods to affected populations.

At the global level, policy-makers in many major food exporting countries committed not to impose restrictive trade measures, such as export bans, to ensure that trade could continue to move food and agricultural products from surplus to deficit regions, thus promoting food security globally.

Towards sustainable outcomes

The State of Agriculture Commodity Markets 2020 report underlines that we need to rely on markets as an integral part of the global food system. This is all the more important in the face of major disruptions, whether they come from health crises, locust outbreaks or climate change impacts.

Well-functioning markets are key for development and economic growth. International trade can be a powerful instrument, and markets can be harnessed to foster sustainable economic, social and environmental outcomes.