How Climate Change Will Affect Global Trade in Food

Thursday, September 20, 2018 0:26

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Human Wrongs Watch

Open, predictable and fair global food markets can help strengthen climate change response efforts and contribute to fighting hunger, says new report.

In some regions, climate change will decrease agricultural productivity, making imports particularly important for food security.

Trade as a safety net

Many countries already rely on international markets as a source of food to meet their deficit, either due to high costs of agricultural production  (as for example in countries with limited land and water resources) or when climate or other natural disasters undercut national food production.

For example, in Bangladesh, in 2017, the Government slashed custom duties on rice to increase imports and stabilize the domestic market after severe floods saw retail prices of the stable grain soar by over thirty percent.

Similarly, South Africa – a traditional producer and net exporter of maize – recently increased imports to dampen the effect of successive droughts.

In general, FAO’s report says that open, predictable and fair international food markets are important for trade to help support food security and climate adaptation.

However, while better-integrated markets reinforce the adaptive role of trade to climate change, for countries already highly reliant on food imports, it would deepen that dependence, the report notes. Thus the importance of considering national priorities and objectives.

Additional policy options

Beyond market integration measures, an even wider range of non-distortionary policy approaches exist that could be used to better harness agricultural trade to help farmers build up their resilience, boost farm output, support food security, and reduce the food sector’s greenhouse gas emissions, FAO’s report argues.

At the national level, these include spending more on research and development and on agricultural extension services to encourage the use of climate-smart approaches by farmers.  Expenditures on environmental programmes and ecosystem services that reduce the negative effects of emissions from agriculture also would not affect trade.

Especially in developing countries at risk of climate change, support to farmers will be key to helping them become competitive, and achieve a better balance in export and import performance.

All of these options could be aligned with WTO rules as well as with newer commitments made under the Paris Agreement — there is no fundamental conflict between climate change policies under the agreement and multilateral trade rules, the report says.

Recent trends in global agricultural trade

The report also provides an overview of the performance of the international agriculture trading system in recent years, and the direction in which it is headed.

While fast agricultural trade growth between 2000 and 2008 gave way to contractions during 2009-2012 and then to sluggish growth ever since, the bigger picture is that in value terms agricultural trade grew significantly between 2000 and 2016 — from $570 billion to $1.6 trillion.

Much of this was driven by economic expansion in China as well as increased global demand for biofuels.

Notably, the profile of emerging economies in global agricultural trade has greatly increased, with rising per capita incomes and reduced poverty levels. This has boosted food consumption and imports and led to gains in agricultural productivity, driving up food exports, not only to markets in the industrialized world but also to other countries in the Global South.

Indeed, while traditional food exporting giants like Europe or the United States remain top agricultural exporters in value terms, newcomers are challenging their supremacy.

For example, between 2000 and 2016, Brazil increased its share in global food trade from 3.2 to 5.7 percent, China leapt ahead of Canada and Australia to become the world’s fourth most important agricultural exporter, and Indonesia and India increased their agricultural exports enough to place them among the world’s top ten biggest food exporters (8^thand 10^th, respectively).

Over the same period, the combined share in total export value of the United States, the European Union, Australia and Canada declined by ten percentage points.

*SOURCE: FAO. Go to ORIGINAL.  2018 Human Wrongs Watch