The State of Agricultural Commodity Markets

The State of Agricultural Commodity Markets 2015–16Trade and food security: achieving a better balance between national priorities and the collective good

This edition of The State of Agricultural Commodity Markets aims to reduce the current polarization of views on the impacts of agricultural trade on food security and on the manner in which agricultural trade should be governed to ensure that increased trade openness is beneficial to all countries. By providing evidence and clarity on a range of topics, the report seeks to contribute to a more informed debate on policy choices and to identify required improvements in the policy processes within which these choices are made.

Key messages

1. Global trade in food products continues to expand rapidly, but the structure and pattern of trade differs significantly by commodity and by region. Key drivers of production and demand, including trade and related policies, shape these patterns in different ways, with potentially important implications for food security.
2. Greater participation in global trade is an inevitable part of most countries’ national trade strategies. However, the process of opening to trade, and its consequences, will need to be appropriately managed if trade is to work in favour of improved food security outcomes.
3. Trade affects each of the four dimensions of food security: food availability, access, utilization and stability. The interaction of trade with these dimensions is complex and depends on a variety of underlying factors, producing great differences in country experiences and making it difficult to ascertain a generalizable relationship.
4. The relationship between the level of engagement in trade and food security is influenced by the way food markets work, by the ability and willingness of producers to respond to the changing incentives that trade can bring, and by the geography of food insecurity, each of which needs to be accounted for in the formulation of trade policy interventions.
5. Trade and related policy objectives address different dimensions of food security, will differ across countries, and will change over time. The appropriateness of alternative trade policy options is largely determined by longer-term processes of economic transformation and the role of the agriculture sector within these.
6. Episodes of food price spikes are important for their potential negative impacts on food security. Geopolitical and weather uncertainties, as well as government responses, are likely to exacerbate these episodes in the future, with increasing potential for disruptions to trade flows. The likelihood of price spikes, even if episodic, needs to be factored into longer-term decisions related to the management of trade in food and agricultural products.
7. Trade and food security concerns can be better articulated in the multilateral trading system through improvements to the World Trade Organization’s Agreement on Agriculture. However, the right balance needs to be struck between the benefits of collective action brought through disciplines on the use of trade policy, and the policy space required by developing countries, the identification of which needs to be informed by specific country-level needs.
8. Shifting attention from the pros and cons of specific policies towards addressing weaknesses in the governance processes of agriculture and trade policy-making will improve identification of required policy space and its appropriate use. Strengthening these processes requires building synergies to increase policy coherence for food security, to enable governments to balance priorities in the design of trade policies, and to improve their compliance with regional and global trade frameworks.

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