Trade, food security and sustainable agriculture

SDG indicators

SDG target 2.b: Correct and prevent trade restrictions and distortions in world agricultural markets, including through the parallel elimination of all forms of agricultural export subsidies and all export measures with equivalent effect, in accordance with the mandate of the Doha Development Round
SDG indicator 2.b.1: Agricultural export subsidies


SDG target 2.c: Adopt measures to ensure the proper functioning of food commodity markets and their derivatives and facilitate timely access to market information, including on food reserves, in order to help limit extreme food price volatility
SDG indicator 2.c.1: Indicator of (food) price anomalies

Goal 2 of the 2030 Agenda sets out to “End hunger, achieve food security and improved nutrition and promote sustainable agriculture”. As with other SDGs, realizing this goal will require a multifaceted approach. One part of the equation is the necessity for properly functioning food commodity markets. To ensure that markets around the world have access to nutritious food requires international trade and cross-border cooperation. In the context of climate change, with risks of decreased predictability of harvests and uncertainty regarding the sustainability of many regional crops, the importance of trade in food commodities may well increase rather than diminish.

Two targets belonging to SDG 2 deal with the proper functioning of food markets. Target 2.c, limits or reduces price volatility through better access to market information. Furthermore, target 2.b aims to avoid market distortions by eliminating export subsidies and equivalent measures. Cooperation via multilateral trade has an important role to play in order to alleviate hunger, complementing other efforts, such as, increasing ODA and OOFs to the agricultural sector (see Official support for sustainable development).

Increasing food insecurity due to COVID-19 calls for more international cooperation

The Global Report on Food Crisis -—
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counts 155 million people living under conditions considered a food crisis or worse. This is the highest number in that publication’s five-year history. Food crises are characterized as situations where people struggle to meet minimum food needs and where levels of acute malnutrition are above-normal. The report counts another 208 million people living under stressed conditions where they can still get necessary nutrition, but only by forgoing some essential non-food expenditures.

The causes of food crises are often multifaceted with several factors reinforcing each other. The most common primary driver is conflict. In June 2021, the -—
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categorized South Sudan, Yemen, Nigeria and Ethiopia as countries of highest concern; all areas where people are fleeing violence. However, the number of food crises where the primary factor was considered an economic shock doubled to 17 in 2020 -—
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. These economic shocks include shocks due to the COVID-19 pandemic. The food crises report points out that the pandemic has threatened many vulnerable people’s livelihoods but also disrupted supply chains which in turn have led to food price anomalies. Ahead of the fifteenth session of UNCTAD and the Twelfth Ministerial Conference of WTO, UNCTAD recommends that the international trade architecture is enhanced to ensure that international trade can do its part in increasing food security -—
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. These recommendations include counteracting export restrictions of essential food and more favorable trade terms for developing economies.

Through Article XI of GATT-94 parties agree, in principle, to not apply export bans or restrictions. However, members are allowed to apply temporary restrictions to safeguard products such as food, and in early 2020 several WTO members introduced export prohibitions and restrictions on food to ensure food stability within their territories -—
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. This raised fears that if the number of export restrictions continues to grow, they could disrupt the global food supply chain, and “imperil global food security, especially in atomized net food-importing developing countries” -—
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. By the end of 2020, new export restrictions on food were uncommon -—
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and measures introduced in the beginning of the year had been terminated -—
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The WTO Agreement on Agriculture -—
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requires countries to give due consideration to the food security needs of others while considering temporary export restrictions on food. Furthermore, an argument that trade restrictions on food lacks utility is the fact that the world as a whole has a sufficient inventories of staple foods -—
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. Past food crises have made the world more prepared for the current one. Figure 1 shows that in 2020 global stocks-to-use ratios for key staples were still substantially higher than in 2008, when the market conditions for these products were tight.

Figure 1. World stocks-to-use ratio of select food commodities
(Percentage)

Source: UNCTAD calculations based on -—
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Notes: Years are standard international trade years that depend on hemisphere and that does not correspond exactly to calendar years. The selected commodities are the most commonly recorded staple foods in the dataset. The world total is based on the sum of domestic consumption and the sum of ending stocks for individual economies for a given year. Included economies are those with data on both measures for a given commodity since the year 2000. This number is 118 for corn, 113 for rice and 117 for wheat.

Increasing trade in food – small change in actors

In the period 2015 – 2019 the median for individual economies was that 11 per cent of merchandise imports consisted of basic food1. However, at country level, the importance of food to individual countries’ import basket can vary considerably. In Haiti and Somalia, food comprised 42 per cent of the total value of merchandise imports. Merchandise exports exceeded 30 per cent in Benin, Yemen, American Samoa, Eritrea, South Sudan and Guinea-Bissau -—
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The median of economies’ net imports of basic food, defined as imports minus exports of these products, was 4.6 per cent of total merchandise imports for the period 2015 – 2019. South America is home to several net food-exporting countries while many net-importing countries are found in the Middle East and Africa (see map 1). Another prominent group of net food importers are the SIDS. Net imports of basic food exceeded 10 per cent of merchandise imports for half of SIDS. At the same time, many islands and other economies with access to oceans are net exporters of basic food – the extreme being the Falkland Islands where an estimated 95 per cent of exports in 2019 were crustaceans, mollusks and aquatic invertebrates -—
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. At the regional level, Latin America and the Caribbean together with Oceania are net food exporters while Africa and Asia are net food importers (see table 1).

Map 1. Net import of food as a ratio to total imports, 2015-2019
(Percentage)

Source: UNCTAD calculations based on -—
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Notes: Net food imports are calculated as imports minus exports of basic food excluding tea, coffee, cocoa and spices (SITC 0 + 22 + 4 less 07) during the years 2015-2019. The percentage displayed is reached by dividing net food imports with total imports of all goods for the economy in the same period.

Economies turn to partners outside their own geographical region for much of the food that they import. Europe stands out as a region with high intra-regional food trade. Only a quarter of the US$0.5 trillion of the food imported by European economies originates from outside the region. This is in stark contrast to Africa, where 85 per cent of food imports are extra-regional. There has been little change in these patterns over the recent decade (see table 1).

Table 1. Total imports of basic food and the share of intra-group imports by geographical region
(Billions of US$ in current prices and associated percentages)
Group of economiesFood importsaExtra-group importsbNet food importsc
2019
(Billion of US$)
2005 - 2009
(per cent)
2015 - 2019
(per cent)
2005 - 2009
(per cent)
2015 - 2019
(per cent)
Africa74.486.784.56.76.7
Northern America145.564.470.2-1.6-1.4
Latin America and the Caribbean75.060.161.6-10.8-13.2
Asia474.760.964.65.07.3
Europe513.028.126.33.20.7
Oceania17.870.373.3-11.1-13.6

Source: UNCTAD calculations based on -—
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Notes: Food, basic excluding tea, coffee, cocoa and spices (SITC 0 + 22 + 4 less 07).
a Billions of US$ in current prices.
b As a ratio to total food imports.
c As a ratio to total imports of all products.

For several of individual economies that constitute the top net importers of basic food, net imports have increased over the past decade (see figure 2). Most significant among these are Yemen, and Wallis and Futuna Islands. Eritrea and Timor-Leste have moved in the other direction, both because of significantly growing exports of vegetables -—
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Figure 2. Net food imports as ratio to total imports, 2015 – 2019 compared to 2005 – 2009
(Percentage)

Source: UNCTAD calculations based on -—
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Notes: The point represents values for 2015 – 2019 while the line segment reaches the value for 2005 – 2009. Net food imports are calculated as imports minus exports of the product group “food, basic excluding tea, coffee, cocoa and spices (SITC 0 + 22 + 4 less 07)”. The percentage displayed is reached by dividing net food imports with total imports of all products in the corresponding period. Included economies are the top fifteen net importers of import food in 2015 – 2019 after excluding South Sudan for which data are not available before 2011.

A noticeable change has occurred over time in total food trade; the value of exports in basic food in constant 2019 prices has doubled since 2000, reaching almost US$1.3 trillion in 2019, up from US$610 billion in 2000. This is in large part driven by a general increase in merchandise trade, but while 5.4 per cent of merchandise trade was basic food in 2000, this proportion grew to 6.8 per cent in 2019. The growth in trade value has been accompanied by a slow and steady decrease in the export concentration index for basic food from 0.154 in 2000 to 0.125 in 2019. This indicates that economies that previously were not big exporters of food now participate more in the global trade of these products. Indeed, the export concentration of basic food has decreased more than the concentration index for total exports during this period -—
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Trade in fruits and vegetables, the most traded food-product group, has grown steadily over the last two decades and accounted for 22 per cent (US$ 282 billion) of all exports in total basic food in 2019 (see figure 3). Cereals accounted for 14 per cent of exports of basic food.

Figure 3. Total world export of selected food product groups
(Billions of US$ at constant 2019 prices)

Source: UNCTAD calculations based on -—
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Note: Product groups are SITC product groups 01 - 05. These five groups together constituted 67 per cent of the world export in basic food in 2019. All product groups except dairy products and birds’ eggs are in the top five in total export value. Fruits also includes nuts. See -—
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for the product classification used.

Price information is valuable and is being gathered more often

Like other commodities, the price of food has increased over the last two decades. Stable increases in prices give consumers and producers a theoretical chance to budget and plan, whereas volatile prices are more disruptive to the livelihoods of people on both sides of the market. The price of food has been increasing in the second half of 2020, especially in the first months of 2021. There is a strong correlation between food prices and commodity prices generally, though food prices have tended to be less volatile than, for example, non-edible agricultural raw materials or metals (see figure 4). However, sharp rises in food prices between 2007 and 2008 and again in 2011 highlighted the need to develop methods to track price volatility as advance warnings of food crises -—
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Figure 4. Growth rate for selected subindices of UNCTAD's Free market commodity price index
(Percentage, monthly, year-on-year)

Source: -—
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Spikes in food prices can deny low-income families’ access to sufficient nutritious food. Abnormalities in food prices are in themselves strong indicators of potential threats to food security and provide valuable warning signs, signaling the need for action. Prices carry broad information about recent changes in supply and demand as well as signals about expectations and risks for future food markets. They can be observed easily and frequently -—
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The methodology for the SDG indicator of food price anomalies2 relies on identifying food prices with growth rates that differ from the historical average -—
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. Grains are some of the most tracked or monitored food products, most particularly rice (see table 2).3

Table 2. Food price anomalies, 2020 (SDG 2.c.1)
Type of productNumber of economies with price dataCategorization of price
Abnormally lowNormal or moderately low/highAbnormally high
Maize470416
Millet10082
Rice551495
Sorgum170170
Wheat422346

Source: UNCTAD calculations based on -—
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Notes: Abnormal prices are defined as a compound growth rate of one standard deviation or more from the historical mean -—
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. Products are not comparable since product prices are recorded in different economies.

Food price anomalies and volatility are often combined with losses in agricultural income, climate extremes, reduced food access and extreme changes in the quantity, quality and diversity of food consumed -—
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. The episodes of high food price volatility pose a major threat to food access, especially in developing economies, including LDCs. These episodes are expected to become more frequent with the rising number of extreme climate-related events.

Agricultural export subsidies are vanishing but production is still supported

International trade in open and transparent markets may alleviate the effects of external shocks. UNCTAD has long called for increased transparency and tighter regulation of commodity markets to help avoid speculative bubbles -—
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. Applying these initiatives in food markets can contribute to food security.

WTO members have agreed that export subsidies may have harmful effects on international trade -—
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. Agricultural subsidies were originally intended to aid domestic producers and farmers in areas where agricultural production costs were high and to ensure the production of enough food to meet domestic needs. Agricultural export subsidies are a form of government intervention to modify a country’s terms of trade. They protect producers from international market competition; i.e., economies where the costs of production, such as labour or land, are cheaper. As such, subsidies may have many spillover effects for the global economy where they can exacerbate price volatility and food price spikes. They allow exporters to gain market share without the efficiencies that should accompany such growth.

The WTO Agreement on Agriculture, which came into force in 1995 -—
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, has placed limits on export subsidies that distort agricultural trade in order to prevent the disposal or dumping of surplus commodities on global agricultural markets. Following the 2015 Nairobi Ministerial Conference, WTO members have taken steps to phase out export subsidy entitlements from their WTO schedule of commitments in order to level the playing field between developed and developing economies. Apart from a few selected agricultural products, developed countries agreed to remove export subsidies with immediate effect, and most developing countries agreed to do so by 2018. However, developing countries will retain the flexibility to cover marketing and transport costs for agriculture exports until the end of 2023, while the poorest and food-import dependent developing countries will be granted more time to reduce export subsidies -—
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Notifications of agricultural export subsidies were between US$ three and four trillion in the early years of the 2000s but have since decreased substantially. The 2015 Nairobi package has further strengthened WTO members’ commitment to abolish trade-distorting subsidies in agricultural markets. In 2018, only five economies notified WTO about agricultural export subsidies to a total value of US$138 million (see figure 5).

Figure 5. Notifications to WTO of agricultural export subsidy outlay (SDG 2.b.1)
(Millions of US$)

Source: -—
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Notes: Only export subsidies notified to WTO by members who are required to do so are included -—
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However, governments still provide substantial support to agricultural producers through budgetary transfers and policy measures that amount to a market price support -—
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. In OECD countries, these forms of support sum to about US$231 billion in 2019, which accounts for about 18 per cent of gross farm receipts. In 2000, this figure was 31 per cent -—
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. Agricultural markets are further supported by budgetary transfers to consumers and by general service supports that are not paid directly to producers but has the agricultural sector as its main beneficiary. A report by the -—
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estimates that, globally, the agricultural sector is supported to the tune of US$700 billion per year.

The report of the -—
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found that the current use of agricultural subsidies leads to inefficient land use and that there are huge opportunities in reorienting subsidies away from high carbon-emitting production and incentives for deforestation and redirecting them towards more sustainable practices. The positive effects would be manifold, including improving global health and combatting climate change. Especially among OECD economies there is a push towards payments to producers that are conditional on production practices that preserve public goods, such as, biodiversity. The OECD notes that policy approaches to support sustainable agriculture are available but remain underutilized -—
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Other intervention measures

Governments have a wide range of policy instruments at their disposal, including tariffs and NTMs. As mentioned in Barriers to trade tariffs on agricultural products are generally considerably higher than those for manufactured products or natural resources. Tariffs are slowly being reduced and NTMs, besides export subsidies, are playing an ever-greater role in international trade.

There are multiple links between NTMs and the SDG goals. NTMs threaten trade openness, but not all measures are harmful. Some measures relate to health and environmental protection. Transparent technical import measures can encourage exporters to fulfill requirements that in turn promote sustainable agriculture. Meeting the challenge of navigating the competing ways that NTMs can affect food security is part of UNCTAD’s work in this area -—
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Most countries impose some form of technical import measure to at least one food product. The most common measures are sanitary and phytosanitary. Of the 91 economies with NTMs recorded in the TRAINS database -—
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, 72 have some measure imposed on basic food. All of the 72 have some sanitary and phytosanitary measures and most have more than 50 such measures (see table 3).

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found that government support for agriculture is predominately provided via measures that distort production and trade. Forty per cent of support to agricultural producers, in 2017 – 2019, was in the form of market price supports. These create gaps between effective producer prices and international market prices. The resulting price distortions vary widely between economies but have generally been decreasing over the last two decades. In 2000, agricultural producers received 30 per cent more for their products than international market levels, compared with only 9 per cent in 2019 -—
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Table 3. Relative prevalence of categories of NTMs for food products
NTM categoryNumber of economies imposingMedian number of measures per economy
Technical import measures7292.5
Sanitary and phytosanitary measures7269.5
Technical barriers to trade7018
Pre-shipment inspection593
Non-technical import measures7212.5
Contingent trade protective measures32
Quantity control measures688
Price control measures644
Other non-technical import measures352
Export measures7125

Source: UNCTAD calculations based on -—
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Notes: Measures in force as of May 2021. Only measures affecting all countries are included (bilateral measures are excluded). Product groups considered are HS chapter 01-24 excluding 05 – Products of animal origin, not elsewhere specified or included, 06 – Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage, 09 – Coffee, tea, mate and spices, 13 – Lac; gums, resins and other vegetable saps and extracts, 14 – Vegetable plaiting materials; vegetable products not elsewhere specified or included, 22 – Beverages, spirits and vinegar, and 24 – Tobacco and manufactured tobacco substitute. There are, in total, 91 economies in the database.

GTA systematically documents trade interventions by traded product and classifies their probable effect as harmful or liberalizing4. There is a tendency towards more liberalization of tariffs, but the overwhelmingly biggest category of new measures, 2016 – 2020, are non-technical import measures; of which 2 576 are categorized as harmful5. It is also worth noting that though export subsidies seem to be disappearing in figure 5, GTA lists 795 new interventions classified as harmful export subsidies on basic food. The difference between this observation and official SDG data, shown in figure 5, can be explained by differing definitions and by the fact that economies that have pledged to not use export subsidies are not required to notify the WTO if they do -—
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Figure 6. Trade interventions implemented between 2016 and 2020 for food products by type and effect
(Number of documented interventions)

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Notes: Included products are HS codes 01-24 minus 05, 06, 09, 13, 14, 22 and 24. The database also contains a total of 42 interventions evaluated “potentially harmful” not displayed.

A review of trade policy changes since 2006 by -—
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showed a resurgence of market access protection and government subsidies in order to maintain domestic farm incomes. Indeed, after correcting for the fact that newer interventions have had a shorter time to be documented, analysis of the interventions in the GTA database shows an uneven but upward trend in harmful measures imposed on food products. Moreover, there have been more harmful than liberalizing measures each year since GTA started documenting trade interventions, with the sole exception of 2011 (see figure 7).

Figure 7. Trade intervention by year and effect
(Number of documented interventions)

Source: UNCTAD calculations based on -—
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Notes: To ensure comparability between years, only interventions documented in the database before the end of the same year are included.

UNCTAD work on trade in biodiversity-related products

Trade in agricultural or food products is only part of total trade on products based on biodiversity (biotrade). This category comprises all products with a biological origin, including vegetable and animal species found on land, water or air. Since 1996, UNCTAD’s BioTrade Initiative has fostered trade as an incentive for biodiversity conservation and improved economic and social welfare, particularly in developing countries, through sustainable trade activities. UNCTAD and BioTrade partners focus on enhancing biodiversity-based sectors, creating an enabling policy environment and sustainable sourcing capacities for BioTrade companies, access and benefit-sharing, and increased trade in value-added -—
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In response to the 2030 Agenda and the SDGs, as well as to reflect evolving legal and policy frameworks, and building on partners’ decade-long experience, UNCTAD completed a new version of the BioTrade P&C in early 2020 -—
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. The P&C is a set of guidelines for businesses, governments and civil society wishing to support the conservation and sustainable use of biodiversity, as well as the fair and equitable sharing of benefits through trade.6 These are promoted under the Global BioTrade programme, launched by UNCTAD in 2018 with the support of the Swiss State Secretariat for Economic Affairs SECO -—
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BioTrade is being implemented in over 80 countries worldwide in sectors, such as, personal care, phytopharma, food, fashion, handicrafts, textiles and natural fibres and sustainable tourism, among others -—
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. Sales by BioTrade companies and initiatives reported in 2020 amounted to €9 billion, an increase of nearly 75 per cent from 2019 -—
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. New companies implementing the P&C, particularly transnational companies, contributed to this increase in sales despite the challenges linked to the COVID-19 pandemic. The BioTrade Initiative directly supports SDGs 1, 2, 5, 8, 10, 12, 14, 15 and 17 and additionally contributes to the post-2020 global biodiversity framework to be adopted during the 15th Conference of the Parties to the Convention on Biological Diversity, scheduled for October 2021 -—
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BioTrade in practice: Supporting the SDGs in the Mekong region

For years, megadiverse countries in the Mekong region have been leaders in developing products and services based on the sustainable use of biodiversity. The regional BioTrade project in Southeast Asia, implemented by Helvetas Swiss Intercooperation, has been supporting companies in implementing the BioTrade P&C in Lao PDR, Myanmar and Viet Nam since 2016 -—
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BioTrade is contributing significantly to the 2030 Agenda by conserving biodiversity, generating livelihoods and food security for rural populations and vulnerable groups, and helping developing countries increase their exports. From January to August 2020, the total exports of BioTrade companies connected to the Regional Biotrade Project reached US$14.7 million for biodiversity-related products. This value is higher than the total annual exports of US$ 12.2 million in 2019. Similarly, 17,575 people (54 per cent of whom are women) in Viet Nam, Myanmar and Lao PDR were employed or enjoyed increased incomes due to the Regional Biotrade Project -—
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Providing the latest data on trade in biodiversity-related products

UNCTAD is also developing a statistical tool providing updated trade flows for biodiversity-based products and will host information from BioTrade partners under a set of “Trade and biodiversity profiles”. A pilot exercise was conducted to identify trade flows of BioTrade priority species and products (grouped in over 140 HS Codes) from 2010 to 2018 in 14 BioTrade beneficiary countries in Africa, Latin America and Southeast Asia.

The results of this exercise for Myanmar, Lao PDR and Viet Nam show an increase in exports for the three countries from US$1.6 billion in 2010 to US$5.2 billion in 2018. The top six biodiversity/BioTrade export products were edible fruits, fish meat, non-alcoholic beverages, nuts and other seeds, food preparations, and cosmetics and toilet preparations. As shown in figure 8, BioTrade has grown at a faster rate than overall exports in Myanmar. In Viet Nam BioTrade and general exports have followed similar trends, and did so also in Lao PDR between 2011 and 2016.

Figure 8. Trade value indices for trade in biodiversity-based products and total exports, Lao PDR, Myanmar and Vietnam
(Index, 2010 = 100)

Source: UNCTAD calculations based on -—
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BioTrade products still have a small weight in the total exports for these countries, but this share has shown a growing trend in Myanmar, and since 2011 in Lao PDR. For example, from 2010 to 2018, Myanmar registered a 262 per cent growth in the exports of the selected BioTrade products, three times faster than for overall exports. As a result, the share of BioTrade in total exports in this country increased from 1.5 per cent in 2010 to 2.8 per cent in 2018 (with a maximum of 4.2 per cent in 2013) (see figure 9).

The increasing demand among consumers worldwide for natural and environmentally friendly products continues to offer growing opportunities for BioTrade. The UNCTAD BioTrade initiative is continuously enhancing data availability and more data will become publicly available in 2021 on UNCTADstat under the “Trade and Biodiversity database” -—
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Figure 9. Share of BioTrade products in total trade, Myanmar
(Percentage)

Source: UNCTAD calculations based on -—
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Notes

  1. Basic food refers here to a category of food products that excludes beverages and tobacco, tropical beverages (such as coffee and tea) and spices. When SITC codes are used, the included codes are 0 - Food and live animals, 22 - Oil seeds and oleaginous fruits, 4 - Animal and vegetable oils, fats and waxes with the exclusion of 07 - Coffee, tea, cocoa, spices, and manufactures thereof. When HS codes are used, basic food refers to chapter 1-24 excluding 05 - Products of animal origin, not elsewhere specified or included, 06 - Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage, 09 - Coffee, tea, mate and spices, 13 - Lac; gums, resins and other vegetable saps and extracts, 14 - Vegetable plaiting materials; vegetable products not elsewhere specified or included, 22 - Beverages, spirits and vinegar, and 24 - Tobacco and manufactured tobacco substitute.
  2. SDG indicator 2.c.1.
  3. The FAO collects and disseminates food commodity prices via the Food Price Monitoring and Analysis database -—
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    . The prices tracked differs from economy to economy. In May 2020 there were annual indicators of food price anomaly for five cereal products from 2015 and 2020 in the Global SDG Database -—
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  4. A small portion of measures documented in the GTA database are evaluated as “potentially harmful”. These are excluded from the present analysis.
  5. It is important to note that the number of interventions does not necessarily represent the proportional impact of exports affected by them.
  6. The BioTrade P&C are also aligned to the objectives of multilateral environmental agreements, including the Convention on Biological Diversity, the Convention on International Trade in Endangered Species and Wild Fauna and Flora, the Ramsar Convention on Wetlands, and others.

References

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