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Agricultural Trade and the Transition to Sustainable Food Systems
1. Agricultural Trade, Global Value Chains and
the Transition to Sustainable Food Systems
Johan Swinnen
International Food Policy Research Institute
Brussels, Belgium | March 4, 2020
INFOPOINT SEMINAR
2. IFPRI @ World
Countries with
significant research
IFPRI country
program office
IFPRI regional office
IFPRI Headquarters
3. IFPRI staff in DC Headquarters and outside HQ
IFPRI @ World
68%
46%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Share of staff in DC Headquarters
206 230 254 284 275
321 352 333 314 300 292 281
95
116
123
183 202
211
224 231 254 269 280 326
301
346
377
467 477
532
576 564 568 569 572
607
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Staff in DC
Staff outside DC
4. IFPRI VISION
IFPRI MISSION
A world free of HUNGER and MALNUTRITION
To provide research-based policy
solutions that sustainably reduce poverty
and end hunger and malnutrition.
5. Global hunger is on the rise
INDICATOR OF CHRONIC HUNGER (FAO)
822
10,8
5,0
7,0
9,0
11,0
13,0
15,0
17,0
300
400
500
600
700
800
900
1000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Percentage
Millions
Number (Millions)
Prevalence (%)
Global undernourishment
(Millions and %)
Regional undernourishment (%)
8,6
6,5
14,7
22,8
10,8
0
5
10
15
20
25
30
East and
Southeast
Asia
LAC South Asia Sub-Saharan
Africa
World
Percentage
2000 2005 2010 2015 2018
6. Undernourishment in Africa
INDICATOR OF CHRONIC HUNGER (FAO)
Prevalence of undernourishment in
Africa (%)
Number undernourished in Africa
(millions)
199,7 196 199,8
217,9
256,1
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Eastern Africa Middle Africa Northern Africa
Southern Africa Western Africa
0
5
10
15
20
25
30
35
40
45
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Eastern Africa Middle Africa
Northern Africa Southern Africa
Western Africa Sub-Saharan Africa
7. Johan Swinnen, March 2020
Trade is key for sustainable
food security and nutrition
Trade can contribute to
• Food security
• Improving nutrition through diversification of food
baskets, producers, and suppliers
• Increasing productivity and sustainability by
facilitating diffusion of technology and innovation
• Giving poor farmers access to high value markets
• Stronger value chains, mitigating conflict, and to
higher quality and quantities of goods and services
Source: Martin and Laborde 2018
8. Johan Swinnen, March 2020
0
10
20
30
40
50
60
70
80
1991 1996 2001 2006 2011 2016
Nominalrateofasistance(%)
OECD
-20
-10
0
10
20
30
40
50
60
70
80
1993 1998 2003 2008 2013
Non-OECD
Market Price Support
Coupled Subsidies
Decoupled Subsidies
Total Support
Large changes in trade distorting agricultural policies
Nominal Rates of Assistance (%) 1990-2016
Source: OECD and Laborde et al. 2019
9. Agriculture and
Rural Development
CAP budget evolution and the proposal for the future
Source: DG AGRI.
0,0%
0,1%
0,2%
0,3%
0,4%
0,5%
0,6%
0,7%
0,8%
0
10
20
30
40
50
60
70
80
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
as share of
GDP
in billion EUR
Pillar II 2021-2027 proposal
Pillar I 2021-2017 proposal (excl. mkt)
10. Johan Swinnen, March 2020
Not everybody benefits – structural
adjustments
Trade liberalization is increasingly about
other policies than traditional tariffs etc
Complex interaction of trade (policies)
and environment / climate change
…
Not everybody agrees that free(er) trade is good
Why? Several reasons
13. Johan Swinnen, March 2020
African economic
growth is reflected in
growing shares of world
agriculture and trade
+20%
+16%
Share in agricultural GDP Share in agricultural trade
Africa Share in World Agric. GDP & Trade (2005 – 2017)
Johan Swinnen, January 2020
14. Johan Swinnen, March 2020
Africa’s agri-food trade has fluctuated
African Agri-food Trade 2005-2017
Johan Swinnen, January 2020
Net Agricultural Exports (US$ Billion)
15. Johan Swinnen, March 2020
Africa’s agri-food trade and global food prices
African Agri-food Trade 2005-2017
Johan Swinnen, January 2020
100
120
140
160
180
200
220
240
FAO Food price index 2005-2017
16. Johan Swinnen, March 2020
Agri-food trade : moving up the value chain ?
Johan Swinnen, January 2020 Source: UNCTADstat 2020
0
5
10
15
20
25
30
35
40
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Millions
Agricultural primary commodities
Resource-based manufactures: agro-based (Lall classification)
0
5
10
15
20
25
30
35
40
45
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Millions
Agricultural primary commodities
Resource-based manufactures: agro-based (Lall classification)
IMPORTS to Africa (USD)
More PROCESSED
EXPORTS from Africa (USD):
More RAW MATERIALS
17. 26.563
67.769
102.822
140.116
-
20.000
40.000
60.000
80.000
100.000
120.000
140.000
160.000
1998 2000 2002 2004 2006 2008 2010 2012
tons
CHOCOLATE imports
in Africa
0
1000
2000
3000
4000
5000
6000
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
tons
World Africa Western Africa
COCOA exports
from Africa
MOVING UP THE VALUE CHAIN:
Cocoa processing (grinding) in
Africa: from 13% in 2005 to 17%
in 2010 to 21% in 2015
18. Johan Swinnen, March 2020
EU is the main trade partner for African agri-food
But its share is declining
Johan Swinnen, January 2020
African agri-food EXPORTS to … (%) African agri-food IMPORTS from … (%)
0%
10%
20%
30%
40%
50%
60%
70%
Africa America EU Asia Other
0%
5%
10%
15%
20%
25%
30%
35%
40%
Africa America EU Asia Other
Source: UNCTADStat 2020
19. Johan Swinnen, March 2020
Which EU countries are the main trading partners
with Africa in agri- food ?
Johan Swinnen, January 2020
Top 10
importers of
African agric
Share of African
agricultural
exports (%)
Top 10 agricultural
exporters to Africa
Share of African
agricultural imports
(%)
Netherlands 8.58 Brazil 9.24
France 6.98 Russia 7.04
Spain 5.66 Argentina 5.87
United States 5.28 France 5.77
Germany 4.65 India 4.77
China 4.49 United States 4.39
United Kingdom 4.38 Indonesia 4.19
India 3.96 China 3.73
Italy 3.52 Malaysia 3.44
Belgium 3.26 Ukraine 3.33
Source: UNCTADStat 2020, Arican Agriculture Trade Monitor 2019
21. Johan Swinnen, March 2020
Intra-Africa agri-food trade is growing rapidly
Regional Economic Communities (RECs)
Johan Swinnen, January 2020 Source: Africa Agriculture Trade Monitor 2019
Agricultural trade within RECs
1998-2013
Average annual trade growth within RECs,
1998-2013
22. Johan Swinnen, March 2020
Africa regional trade is growing rapidly
but still relatively low in global perspective
BUT ! Significant
regional trade may
go unrecorded.
Refined indicators
suggest that intra-
African trade may
be higher than
reported
(Bouet, Cosnard, and Laborde 2017)
Johan Swinnen, January 2020 Source: Africa Agriculture Trade Monitor 2019
Intra-regional trade as share of total agricultural trade 2000-2013
23. Johan Swinnen, March 2020
Factors affecting regional trade
1. Tariff levels within RECs are
relatively low
But: overlapping membership complicates
harmonization and coordination within
RECs
2. Deficient trade infrastructure
3. Costly non-tariff measures
Safeguards, SPS standards, technical
barriers to trade (TBTs), IP measures,
rules of origin, etc.
Johan Swinnen, January 2020 Source: Africa Agriculture Trade Monitor 2019
1,9
3,8
2,6
1,6
5,6
6,9
3,8
6,9
11,4
8,4
11,2
0 2 4 6 8 10 12
COMESA
SADC
AMU
ECCAS
EAC
ECOWAS
All Intra-Africa imports
COMESA for Common Market for Eastern and Southern Africa, SADC for
Southern Africa Development Community, AMU for Arab Maghreb Union,
ECCAS for Economic Community of Central African States, EAC for East
African Community, ECOWAS for Economic Community of West African States
Tariffs on intraregional imports
versus all imports, 2015
24. Johan Swinnen, March 2020Johan Swinnen, January 2020 Source: Bouët, Cosnard and Laborde, 2017
0% 200% 400% 600% 800%
Mayotte
Namibia
Comoros
Djibouti
Senegal
Centr. Af.r R.
South Africa
Burundi
Gambia, The
Chad
Algeria
Average Import Duty
Average Ad-Valorem NTM
Cost of Time to Import
(Border)
Cost of Time to Import
(Documentary)
Border costs to import
Documentary costs to import
Components of import
cost - 2004/2013
0% 50% 100% 150% 200%
Sudan
Mayotte
Mauritius
Mali
Ethiopia
Sierra Leone
Chad
South Africa
Namibia
Cote d'Ivoire
Angola
Congo DR
Average Export Duty
Export restrictions
Cost of Time to Export
(Border)
Cost of Time to Export
(Documentary)
Border costs to export
Documentary costs to export NTMNTM
Components of export
cost - 2004/2013
Border and trade costs are key obstacles
to intra-African trade integration
25. Johan Swinnen, March 2020
Unlocking potential for intra-regional trade expansion
Invest in transport and communications infrastructure
Address non-tariff measures (NTMs) with increased technical assistance
and more transparency
Simplify SPS standards and rules of origin
Advance promising integration initiatives
Free Trade Areas: COMESA, SADC, EAC, etc
ECOWAS-North Africa initiative
Africa Continental Free Trade Area: Could soften impact of global trade
conflicts on African economies
Johan Swinnen, January 2020 Source: Africa Agriculture Trade Monitor 2019
27. Johan Swinnen, March 2020
Climate change impacts vary widely – by crop,
region, and emissions scenario
Change in potential average yields for corn, potatoes, rice, and wheat in 2050
Source: National Geographic, based on IFPRI analysis
28. Johan Swinnen, March 2020
Trade is crucial for climate adaptation and mitigation
Climate-induced yield changes
generate large price movements and
adjustments in acreage and trade
Poorer countries likely to bear
larger share of costs from climate
impact on agriculture
• Net food importers (Asia, MENA)
• Limited adaptation through trade due
to high trade costs and specialization
in crops with little trade (SSA)
Source: Gouel and Laborde 2018
Market adaptations rely significantly on an international trade system
allowing large reallocations of trade flows
29. Johan Swinnen, March 2020
Agricultural and trade policies affect climate change
But, again, the impact is complex
Emissions from agriculture and land use change have contributed up to a
third of total GHG emissions – but with large commodity differences
Source: Mamun, Martin, and Tokgoz 2019; Laborde et al. 2019
Emissions from Agriculture and Land
Use relative to Other Emissions, 2010
Rice
Other
Cereals
Milk
Ruminant
meat
Pigmeat Poultry Total
Crop residues 1.5 3.6 0 0 0 0 5.1
Enteric
fermentation
0 0 11 30.5 0.6 0 42.1
Manure 0 0 6.2 16.8 3.7 2.9 29.6
Pesticides 0.2 0.8 0 0.1 0 0 1.1
Rice cultivation 12.6 0 0 0 0 0 12.6
Synthetic
Fertilizers
2.4 6.5 0 0.7 0 0 9.6
Total 16.7 10.9 17.2 48.1 4.3 2.9 100
Emissions by commodity & source (% of agric. emissions)
30. Johan Swinnen, March 2020
Producer Assistance, $bn, 2016-18
Market
Price
Support;
201
Coupled
Subsidies;
178
Decoupled
Subsidies;
66
General
Services ;
105
0
5
10
15
20
25
30
%
Import Tariffs, 2016-2018
Trade protection and coupled support is
concentrated in emission-intensive commodities
Source: Laborde et al. 2019
31. Johan Swinnen, March 2020 Source: Laborde et al. 2019
Win-Win or Trade-Off in economic & environmental effects?
Market
distortions
Emissions
Market Price Support ++ +/-
Coupled Subsidies + ++
Decoupled Subsidies 0* 0*
General Services - - or --
IFPRI research shows heterogenous impacts of
trade liberalization and agricultural policy reform
32. Johan Swinnen, March 2020
Support policy reforms for sustainable food systems
Decoupling agricultural subsidies is good for
both markets and the environment
Design policies to address challenges or
externalities associated with trade by targeting
policy to the immediate source of the problem
Address environmental impacts with resource
management policies, rather than limiting trade, to
address overexploitation of resources and biodiversity
loss
Support trade opening with active policies and
strong institutions for cooperation and
coordination
Photo: CIAT
Source: Martin and Laborde 2018
34. Johan Swinnen, March 2020
Rapid Growth of Food Standards in Trade and Value Chains
0
5000
10000
15000
20000
SPS notifications to WTO
Public
Regulations
GlobalGAP certifications
Private
Standards
35. Johan Swinnen, March 2020
Food Standards: a new form of protectionism ?
Are food standards non-tariff barriers (NTBs)
which have grown as tariffs have been constrained by
international trade agreements ?
36. Johan Swinnen, March 2020
Complaints (STCs) against SPS at WTO
Complaints against SPS measure of Complaints submitted by
Country Number % Country Number %
EU 78 18.0 EU 88 20.3
USA 47 10.8 USA 87 20.0
Japan 29 6.7 Argentina 47 10.8
China 28 6.5 China 34 7.8
Australia 18 4.1 Canada 31 7.1
Brazil 16 3.7 Brazil 30 6.9
Indonesia 14 3.2. India 22 5.1
South
Korea
13 3.0 Australia 12 2.8
Canada 12 2.8 Chile 12 2.8
Mexico 12 2.8 Mexico 12 2.8
37. Johan Swinnen, March 2020
Studies show:
• Standards can be
BARRIERS to trade and
to poverty reduction…
• Standards can be
CATALYSTS to trade
and poverty reduction …
0
100
200
300
400
500
600
1995 2000 2005 2010 2015
Africa Latin America Asia
Growth of Fruit and Vegetable Exports
1995-2017 (1995=100)
Impact of food standards and regulations is complex
38. A simple value chain model
Input/Technology Company
Farmer
Processor
Consumer
PRODUCT
(Processed)
Finance
Finance
Finance
PRODUCT
(Technology & Inputs)
PRODUCT
(Raw Material)
39. Value chain innovation
Technology Company
Farmer
Processor
Consumer
Processed productFinance
Finance
TECHNOLOGY
& INPUTS
Raw
Material
40. Studies show that:
• Value chain innovations can contribute importantly to farmers’ access to
finance and inputs and to technology transfer
• Smallholder integration is mixed
• Contract enforcement problems are very serious
• Organization of the value chain is endogenous
o to market imperfections
o to enforcement institutions
oto nature of the commodity (incl standards)
o to nature of the technology
• Benefits for the poor can come through 3 channels:
o Access to inputs and markets
o Efficiency premia for poor suppliers
o Employment opportunities for poor households
41. Comparative Illustration:
3 Cases of SSA Horticultural Exports to EU
Small-
holders
Industry
structure
High value
exports to
EU
Madagascar
green beans
100%
contract
Monopoly yes
Senegal
green beans
Mixed &
changing
Competition yes
Senegal
cherry
tomatoes
0% Monopoly yes
42. 1. F&V exports from Madagascar
100% smallholders + monopoly
• Rapid growth
o 100 farmers in 1990
o 10,000 small farmers on contract in 2005
• Major technology (fertilizer) adoption effects
• Important productivity spillovers
oRice productivity increased by 70%
oLength of lean periods falls by 2.5 months
- (with contract: 1.7; without contract: 4.3 months)
45. 3. Tomato exports from
Senegal:
Large farms + monopoly
Worst Case Scenario ?
1. Very stringent standards
2. Poor country
3. Complete exclusion of
smallholders
4. Extreme VC consolidation
5. Foreign owned multinational
46. 3. Tomato exports from Senegal:
Large farms + monopoly
Worst Case Scenario ?
• Strong employment
growth: 40% of
households in the
region employed
• Strong positive
income and anti-
poverty effects at HH
and regional level
(Static estimates)
Poverty (%)
48. What about
domestic VC & staple foods ?
• Tom Reardon, Chris Barrett: “In developing
countries 80%-90% of agriculture supplies
domestic VCs, not export VCs ….”
• In poor countries (eg SSA and India), value chain
innovations seem initially concentrated in high-
value VC
• But things are changing …
49. 49
Dairy in India 2008 - 2016
• The “largest agric sector
in the world”
• India is the largest milk
producer in the world
• 70 million rural
households produce milk
• Strong income growth =>
big increase in demand
for milk in India
51. 51
Increases in technology adoption
(% HH in Punjab)
0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8
Share of crossbred cows
Use of improved feed
Hygiene index
2008 2015
Source: Burkitbayeva, Janssen & Swinnen (2019)
52. Hygiene index and VC channels
Punjab dairy 2008-2015
2015: 80% have
0.6 Hygiene Index
2008: 20% have
0.6 Hygiene Index
53. Dairy in India
(Punjab & AP)
2008-2016
• Significant technology
adoption
• Limited VC innovations
despite significant
market growth
• Very limited VCD with
smallholders
• VCD concentrated in
emerging (new class of)
larger farmers
54. LICOS 54
VCD is rapidly growing
in an emerging new dairy sector
• Large-scale
• Closer to urban areas
• Better educated farm managers
• Fully integrated and vertically coordinated in
modern dairy chains through
• Information provision
• Improved access to finance
– Provision of loans for dairy equipment
– Provision of loans for herd size extension
– Facilitating bank loans
• Intermediary between farms and technology
companies
55. Location Herd
size
%
crossbre
d cows
Milk
buyer
Procureme
nt contract
Milking
machines
Land size
Farm 1 Outskirts of Amritsar 165 100% Verka no yes 15 acres
Farm 2 Outskirts of Amritsar 122 100% Verka no yes 60 acres
Farm 3 Rural area in Amritsar 90 100% private dairy no yes 45 acres
Farm 4 Outskirts of Ludhiana 150 99% Verka no yes 10 acres
Farm 5 Outskirts of Ludhiana 160 100% PDFA no yes 70 acres
Farm 6 Outskirts of Moga 130 100% Nestlé no yes 60 acres
Farm 7 Rural area in Ludhiana 105 98% private dairy no yes 50 acres
Farm 8 Rural area in Mansa 70 100% households no yes /
Farm 9 Rural area in Mansa 93 97% Nestlé no yes /
Farm 10 Rural area in Hoshiarpur 70 93% private dairy no no 30 acres
Farm 11 Rural area in Firozpur 103 98% Nestlé no yes 30 acres
The emerging class of (new) modern dairy farms
fully integrated in VC (Punjab 2015)
61. DAIRY PROCESSING
COMPANIES in ETHIOPIA
0
5
10
15
20
25
30
35
Totalnumberofdairyprocessing
companies
Source: Minten et al (2019)
62. GROWTH OF COMMERCIAL FARMS 2007-2017
0
1
2
3
4
5
6
Rural Suburban
Farms with more than 25 cows (per
woreda)
2007 2017
Source: Minten et al (2019)
63. DISTANCE TO CITY AND TECHNOLOGY ADOPTION
– PRE-MIXED FEEDS
Source: Minten et al (2019)
64. Future potential of VCD
for poverty reduction
• Private sector:
o strongest growth in high value sectors (with innovation requirements and
potential)
o Many of the models observed in East Europe in the 1990s are now developing in
higher vl poorer countries, such as SSA
• Public/Private/NGO sector
o Much of the CSR & NGO programs include VC-type elements
o How can one make VCD work in staple food markets ? (80-90% of poor
countries’ agriculture)
65. Example:
VCD model for SSA food staple sourcing
• Special purpose vehicle
(SPV) to source staple
foods by WFP in East
Africa
• Joint project with World
Bank, input supplying
companies and re-
insurance companies
WFP
Technology
Company
Finance
World Bank
Special
Project
Farms
ReInsurance
Company
66. Voluntary Sustainability Standards (VSS)
(incl. FairTrade etc)
CASE : Certification in coffee in Ethiopia
Study by Bart Minten and
colleagues from IFPRI &
LICOS (Bart Minten,
Mekdim Dereje
Ermias Engida
Seneshaw Tamru )
66
67. VSS Certification in Coffee
Globally:
• VSS rapidly taking off (4%
in 2005, now 20%)
• Coffee leading agricultural
commodity in VSS
In Ethiopia:
• VSS low and slow
• Coffee most important
export product : 25% of its
forex earnings
• 4 million coffee farmers
0
2
4
6
8
10
12
14
16
18
20
2005 2010 2015
%
Ethiopia World
68. Why low uptake of VSS certification ?
• Transmission of VSS premium to farmer =
30%
• Average coffee farmer in Ethiopia, if all coffee
certified: income increase with 7.5 USD (per
year !)
oWith 100% premium transmission, increase of 20
USD per year…
• Impact of certification on coffee producers’
welfare is small.
• Combined with implementation costs : low
adoption of Fair Trade in Ethiopia
70. Johan Swinnen, March 2020
Food Security Portal provides
tools for timely responses to
address food insecurity
Food Price Watch and the Excessive
Food Price Variability Early Warning
System
Food Crises Risk Monitor
Early Warning Hub
Foresight and other tools
Data and tools to monitor food security crises
especially in the context of climate uncertainty
72. Increased Attention to Food Systems
UN Food Systems Summit 2021
Mobilizing commitment to create
systems that are:
Climate resilient
Sustainable
Inclusive
73. What are Food Systems?
Food systems collect “all the elements (environment, people,
inputs, processes, infrastructures, institutions, etc.) and activities
that relate to the production, processing, distribution, preparation
and consumption of food, and the output of these activities,
including socio-economic and environmental outcomes” – HLPE
2017
Ideal food systems are nutrition-, health-, and safety-driven,
productive and efficient (and thus able to deliver affordable food),
environmentally sustainable and climate-smart, and inclusive.
74. What are the benefits of creating inclusive food
systems?
Better integrating marginalized people into national food systems
achieves inclusive economic growth.
Increasing household incomes reduces absolute poverty and
improves access to service.
Inclusive food systems can break the intergenerational cycle of
poverty, hunger, and malnutrition.
Inclusion can help reduce global and national inequalities.
Inclusion is a moral imperative!
75. Johan Swinnen, March 2020
2018 Global Food Policy Report, Chapter 3: The Free Flow of Goods and Food Security
and Nutrition -- by Will Martin and David Laborde, 2018
Swinnen et al, 2015, Quality Standards, Value Chains and International Development,
Cambridge University Press.
Reforming Agricultural Support for Improved Environmental Outcomes
-- by Abdullah Mamun, Will Martin, Simla Tokgoz, 2019
Modeling the Impacts of Agricultural Support Policies on Greenhouse Gas Emissions
from Agriculture -- by David Laborde, Abdullah Mamun, Will Martin and Valeria Piñeiro, 2019
The Crucial Role of International Trade in Adaptation to Climate Change
-- by Christophe Gouel, David Laborde, 2019
2017 ReSAKSS Annual Trends and Outlook Report, Chapter 5: Trade, climate change, and
climate-smart agriculture – by Beliyou Haile, Carlo Azzarri, Jawoo Koo, Alessandro de Pinto, 2017
For more details and information