International trade in open and transparent markets may help alleviate the effects of shocks and ensure food security
Goal 2 of the 2030 Agenda aims to “End hunger, achieve food security and improved nutrition and promote sustainable agriculture” by 2030. Achieving this goal requires a multifaceted approach, including ensuring global market access to nutritious food through international trade and cross-border cooperation. Climate change threatens harvest predictability and regional crop sustainability, increasing the importance of food commodity trade. The Bridgetown covenant urges UNCTAD to address the challenges faced by commodity-dependent and net food-importing developing economies -—
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Two SDGSustainable Development Goal 2 targets focus on functional food markets. Target 2.c aims to reduce price volatility by improving market information access. Target 2.b seeks to eliminate market distortions by removing export subsidiesExport subsidies refer to the granting of support by governments to some beneficiary entity or entities to achieve export objectives. Export subsidiesmay involve direct payments to a firm, industry, producers of a certain agricultural product etc. to achieve some type of export performance. In addition, export subsidies may include low-cost export loans, rebates on imported raw materials and tax benefits such as duty-free imports of raw material. They can also take the form of government financed marketing. Most subsidies have existed in agriculture -—
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—-. and similar measures, in line with the Doha Development RoundAlso called the Doha Development Agenda is a round of trade negotiations among WTO members launched in 2001 at the WTO’s Fourth Ministerial Conference in Doha, Qatar. A fundamental objective of the Doha round is to improve the trading prospects of developing economies. -—
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—-. A well-functioning global market supports hunger alleviation, complementing efforts, such as increasing ODAOfficial Development Assistance (ODA) are resource flows to countries and territories which are: (a) undertaken by the official sector; (b) with promotion of economic development and welfare as the main objective; (c) at concessional financial terms (implying a minimum grant element depending on the recipient country and the type of loan). In addition to financial flows, technical co-operation is also included -—
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—-. and OOFsOther official flows (OOF) are transactions by the official sector with countries and territories which do not meet the conditions for eligibility as ODA, either because they are not primarily aimed at development or because they do not meet the minimum grant element requirement -—
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—-. to the agricultural sector (see Development financing).
Table of contents
The goal to end hunger is falling further behind schedule
According to FAOFood and Agriculture Organization of the United Nations -—
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—-, between 691 and 782 million people, or nearly one in ten globally, were undernourished in 2022. Survey data indicates that 11.3 per cent of the world’s population faced severe food insecurityFood insecurity is a situation where an individual cannot reliably access or afford healthy food. The FAO describes a moderately food insecure person as someone who cannot afford a healthy diet. has experienced uncertainty about the ability to access food and is likely to skip meals occasionally because of lack of resources. A severely food insecure person has at times run out of food and has during the last year gone a whole day without food. For SDG indicator 2.1.2, food insecurity is estimated based on survey data using the Food Insecurity Experience Scale developed by FAO. It consists of eight questions pertaining to whether the respondents or their families have reduced the quantity or quality of consumed food over the last 12 months because of lack of resources. -—
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—-, while an additional 18.3 per cent experienced moderate food insecurity (figure 1). Women are particularly vulnerable; with 80 million more women than men experiencing moderate or severe food insecurity in 2022 -—
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—-. Indicators show increasing hunger over the past five years, though the trend did not worsen in 2022.
Figure 1. Indicators show increasing levels of hunger– ‒
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—-. and SDG 2.1.2 on food insecurity
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Note: Numbers are three-year averages with 2022 representing the period 2021–2023. Estimates of undernourishment are derived from the average dietary intake per person and its variation in a country. Experienced food security is based on surveys using the Food Insecurity Experience Scale -—
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LDCsLeast developed country are particularly exposed to food insecurity. In 2022, about 690 million people, or 61 per cent of their population, faced moderate or severe food insecurity, compared to around 46 per cent in SIDSSmall island developing states (SIDS) were recognized as a distinct group of developing countries at the Earth Summit in Rio de Janeiro in June 1992. More information on UNCTAD official page. and 8 per cent in high-income countries (figure 2). For LDCs, this marks a 9-percentage point increase from 2018. However, the prevalence of moderate and severe food insecurity varies significantly among LDCs, with an average of 89 per cent in Sierra Leone and 29 per cent in Myanmar -—
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Figure 2. Food security deteriorating most where hunger was already prevalent Source: -—
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Notes: Numbers are three-year averages with 2022 representing the period 2021–2023 and 2018 the period 2017–2019. For country group composition see -—
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In 2023, at the height of extreme hunger, food crises affected 59 countries or territories, leaving a total 282 million people suffering from acute malnutrition or increasing mortality, and urgently needing assistance. This marks an increase of 24 million people since 2022. Conflicts have exacerbated the food crises. In Sudan, 6.3 million people were in an emergency situation, alongside 30 million others worldwide, and the war in Gaza doubled the number of people in a catastrophe to 705 000 -—
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—-. Over half of the population in Gaza, or 1.1 million people, were projected to be in catastrophe by spring 2024 -—
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Efforts to alleviate hunger are underfunded. From 2017 to 2021, funding did not keep pace with the increasing number of people in acute food crises. While humanitarian food aid increased by 52 per cent in 2022, development assistance to food sectors remained stagnant, highlighting the need for sustainable improvements in food security -—
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Conflicts and weather extremes are major drivers of food crises, contributing to increasing hunger, in addition to other conditions where people cannot afford to buy food in appropriate quantities and quality. Economic downturns and high food prices are increasingly making adequate nutrition out of reach for people with limited means -—
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Some economies are more resilient to food price shocks than others
Stable increases in prices allow consumers and producers to budget and plan, while volatile prices disrupt livelihoods. Sharp rises in food prices between 2007 and 2008, and again in 2011, highlighted the need for methods to track price volatility as advance warnings of food crises -—
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—-. Prices convey information about recent changes in supply and demand as well as expectations and risks regarding future food supply, and they can be observed frequently -—
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—-. Abnormalities in food prices are strong indicators of potential threats to food security and provide valuable warning signs, signaling the need for action. Consequently, food prices are closely monitored by the GIEWSGlobal Information and Early Warning System on Food and Agriculture -—
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—- and the AMISAgricultural Market Information System -—
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—- which have been established as early warning systems to prevent food crisis outbreaks.
Figure 3. Many countries are still adjusting to higher food prices– ‒
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—-. and UNCTAD Commodity Price Index for food
Source: SDG Global Database -—
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Notes: The SDG indicator of food price anomalies (SDG 2.c.1) relies on identifying food prices with growth rates that differ from the historical average -—
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—-. The UNCTAD Commodity Price Index tracks the average development of prices, in United States dollars, of main primary commodities exported by developing economies. The sub-index of food excludes tropical beverages, vegetable oilseeds and oils. For more information, see -—
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Almost two in five economies experienced abnormally high food prices in 2022, following several years of food price growth (figure 3). The COVID-19COVID-19 is an infectious disease caused by the strain of coronavirus SARS-CoV-2 discovered in December 2019. Coronaviruses are a large family of viruses which may cause illness in animals or humans. In humans, several coronaviruses are known to cause respiratory infections ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). The most recently discovered coronavirus causes coronavirus disease COVID-19 -—
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—-. pandemicCommonly described by the WHO as ‘the worldwide spread of a new disease’, no strict definition is provided. In 2009, they set out the basic requirements for a pandemic: • New virus emerges in humans
• Minimal or no population immunity
• Causes serious illness; high morbidity/mortality
• Spreads easily from person to person
• Global outbreak of disease.
The US Centre for Disease Control uses a similar approach, but with a reduced set of criteria. It is very difficult to gauge whether the spread of a disease should be termed an outbreak, epidemic or pandemic. In other words, when to declare a pandemic isn’t a black and white decision -—
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—-. and the war in Ukraine pushed food prices to historically high levels, disproportionally affecting countries and households already struggling -—
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—-. The rise in food prices, coupled with a strengthening United States dollar, has placed a double burden on net food-importing countries. International trade in open and transparent markets may help alleviate the effects of shocks and, among the policy actions that the situation requires, -—
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—- recommends maintaining international markets open and accelerating transport and trade facilitation initiatives.
Changes in global food prices can trigger food price shocks in an economy, but local supply challenges and the types of food a country relies on also play crucial roles. The war in Ukraine has put international trade in cereals in the spotlight, as Ukraine and the Russian Federation are major exporters of grains -—
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—-. Cereals and cereal preparations (excluding beverages) are significant in global trade. In 2021, they made up 14 per cent of basic food1 imports in value terms -—
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—-, and provided 43 per cent of the calories available to the world’s population -—
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The type of cereal typically consumed in a country varies, as does the share of cereals in dietary energy supply. In the Democratic Republic of the Congo, for example, cereals cover 15 per cent of dietary energy supply, whereas in Bangladesh, they cover 72 per cent. Globally, 21 per cent of the volume of cereals supplied were imports in 2021. However, many countries are particularly vulnerable to market disruptions due to the importance of cereals in their diet combined with a heavy reliance on imports for the supply of cereals. In Lesotho and Yemen more than 56 per cent of calories supplied came from cereals, and over 90 per cent of these cereals were imported in 2021 (UNCTAD calculations based on -—
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In a world with a calory surplus, most economies are net-importers of food
Globally, in pure calorie terms, there is enough food to feed the world. The average person living on the planet needs a minimum of 1 830 kcal per day to avoid undernourishment and about 2 360 kcal per day for optimal health. In 2021, the food available per person amounted to 2 978 kcal per day, up from 2 854 kcal in 2011 -—
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The factors affecting food production are unevenly distributed across time and space, highlighting the benefits of a diversified global food market. Trade between regions and country can help adjust to changing conditions affecting food production due to climate change -—
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—-. Trade helps countries, especially LDCs, to increase both the total amount of calories supplied and diversify the available food for consumption -—
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—-. A well-functioning global value chain in the agro-food sectors creates opportunities for producers in developing economies, contributing to local economic development -—
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—-. The International Covenant on Economic, Social and Cultural Rights -—
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—- recognizes freedom from hunger as a fundamental right and mandates parties to the Covenant to take measures to ensure this right, including equitable distribution of the world’s food supply.
The importance of food in individual economies’ import baskets varies considerably across countries. From 2018 to 2022, basic food1 made up from as little as a couple of per cent of total imports in some economies, but up to 45 per cent in Haiti. In American Samoa, Yemen, Eritrea, and Somalia basic food exceeded 35 per cent of merchandise imports, with the median being 12 per cent (UNCTAD calculations based on UNCTADstat -—
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Two thirds of economies import more food than they export. During 2018–2022, the median net imports of basic food, after subtracting exports from imports, were 4.4 percent of total merchandise imports. South America has several net food-exporting countries, while many net food-importing countries, including many LDCs, are found in the Middle East and Africa (map 1). Several SIDS also had a relatively large negative trade balance in food, with the median net import of basic food among SIDS at 13 per cent of total imports.
Map 1. Both large net food exporters and importers are found in the global southSource: UNCTAD calculations based on UNCTADstat -—
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Notes: The trade balance in basic food is calculated as exports minus imports of basic food excluding tea, coffee, cocoa and spices (SITCStandard International Trade Classification. The commodity groupings of SITC reflect (a) the materials used in production, (b) the processing stage, (c) market practices and uses of the products, (d) the importance of the commodities in terms of world trade, and (e) technological changes. 0 + 22 + 4 less 07) between 2018 and 2022. The percentage displayed is reached by dividing this trade balance with total imports of all goods for the economy in the same period.
Examining the level of processing helps make the picture of trade in food clearer
In 2024, UNCTAD released a new dataset on trade in processed food -—
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—-, developed in collaboration with WHOWorld Health Organization. This project provided new data for better understanding of the role of trade in the complex areas of health, food and nutrient intake. The dataset includes 19 aggregated food categories and 7 categories of processing. Analysis shows that in 2022, 48 per cent of food imports and 37 per cent of food exports were raw products. The rest were processed in some form, such as cooking, drying, smoking, salting or combining into composite products. The trade also included ingredients not meant for consumption in their transported form and precursors used in food production, such as seeds, fertilized eggs and livestock.
Regarding food ready for consumption, developing regions have different trade profiles. Broadly, the global South is a net importer of cereals, with developed economies being the main net exporter. The relationship reverses for processed food. Developing Africa and Americas are net exporters of food excluding cereal, especially for raw food commodities other than cereals, which contribute significantly to the food trade surplus of the developing Americas. Developing Asia and Oceania, as a group, are net importers of raw food commodities and net exporters of food processed in any form (figure 4).
Figure 4. Processed food move south to north, cereals move north to southSource: UNCTAD calculations based on UNCTADstat -—
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Notes: Food ready for consumption. Ingredients and precursors are excluded from the data. See -—
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—- for more details on the classification of processing.
We need a new SDG indicator to track market distorting policies
Many governments support domestic food production to ensure sufficient food supply and protect farmers from weather extremes and other uncontrollable events. However, this support can distort markets by pushing down prices, disadvantaging producers who do not receive subsidies -—
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—-. This can lead to overproduction in some regions and hinder development of the agricultural sector in others. Economies that do not, or cannot, provide such support are disadvantaged in international trade and risk becoming more food insecure. Export subsidies for agricultural products, in particular, have a highly distorting effect on international food markets -—
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The WTOWorld Trade Organization Agreement on Agriculture -—
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—- set limits on export subsidies that distort agricultural trade. At the Nairobi Ministerial Conference -—
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—- WTO members agreed to phase out remaining export subsidy entitlements to level the playing field between developed and developing economies. With a few exceptions, developed economies agreed to remove export subsidies immediately, while most developing economies agreed to do so by 2018. However, developing economies retained the flexibility to cover marketing and transport costs for agricultural exports until the end of 2023, and the poorest and food-import-dependent developing economies have been granted more time to reduce export subsidies -—
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Notifications of agricultural export subsidies ranged between $3 and $4 trillion in the early 2000s, with the majority provided by the EUEuropean Union. These subsidies declined rapidly from 2005 and reached almost zero in 2021, with Mauritius being the only country reporting any amount that year (figure 5).
Figure 5. Agricultural export subsidies are becoming a thing of the pastSource: -—
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Notes: Only export subsidies notified by members who have commitments to notify WTO are included. Other members are not entitled to exports subsidies and are assumed not to have export subsidies. Values for members that have not made notifications cannot be estimated and are treated a zero -—
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Phasing out export subsidies was a key mandate of the Doha Development Round, referenced in SDG target 2.b, which also called for “substantial reductions in trade-distorting domestic support” -—
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—- and continued negotiations on the amount and pace of these reductions -—
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—- . WTO members are required to notify the WTO about all forms of domestic support for agriculture, including price support measures, defined as the product of food production and the gap between producer and market price -—
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—-. The only SDG indicator tracking progress on target 2.b is related to notifications of export subsidies (figure 5). This indicator is a victim of its own success, as the target is clearly defined and largely met, though global vigilance is needed to prevent backsliding. This leaves a gap in tracking the elimination of “export measures with equivalent effect.”
The debate on what should be tracked and how continues, and the global community should engage further. Export subsidies, as defined in SDG indicator 2.b.1, are not the only measures affecting global food markets. The OECDOrganization for Economic Cooperation and Development estimates positive market price support as the total of explicit and implicit transfers through policy measures creating a price gap between domestic prices paid to producers and the equivalent border price. From 2020 to 2022, positive market price support in the OECD and eleven emerging economies was estimated at $333 billion per year, equivalent to 7 per cent of gross farm receipts -—
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—- and 85 times higher than the notified export subsidies at any time during the 2000s.
Notes
- 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. In the HSThe Harmonized System (HS) is an international nomenclature developed by the World Customs Organization, which is arranged in six-digit codes allowing all participating countries to classify traded goods on a common basis. Beyond the six-digit level, countries are free to introduce national distinctions for tariffs and many other purposes. classification a comparable set of products would be included in chapters 1-24 excluding 05 - Products of animal origin, not elsewhere specifed or included, 06 - Live trees and other plants; bulbs, roots and the like; cut fowers 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 specifed or included, 22 - Beverages, spirits and vinegar, and 24 - Tobacco and manufactured tobacco substitute.
References
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