Source: World Trade Organisation
Trade Dialogues on Food
International Trade and Food Security in the Era of COVID-19, Virtual Remarks by Deputy Director-General Alan Wm. Wolff
What role does international trade in food play in global food security and just how dependent are countries on one another for their food security?
First let me say that we are happy to be initiating in WTO a trade dialogue on food through these webinars: such a dialogue has never been more timely.
Just recently the heads of the WTO, FAO and WHO issued a joint statement in which they warned that:
We must ensure that our response to COVID-19 does not unintentionally create unwarranted shortages of essential items and exacerbate hunger and malnutrition.
In other words, they cautioned against the COVID crisis turning into a food crisis.
Now, it is important to understand that international trade in food is not simply a luxury. The movement of food from the parts of our planet that have a food surplus to the parts that have a food deficit is absolutely critical for global food security.
1 in every 6 people around the world depends almost entirely on international trade to be fed and I want to expand on that. That’s 17% of humanity or 1.3 billion people.
Currently, there are over 30 countries in the world that must rely on imported food, not to increase their food variety, but to avoid starvation. There are many reasons for this situation that include poor agricultural productivity, and serious land and water limitations. Many of these countries lie in Africa, and some are in the Middle East.
Globally agriculture uses up around 40% of the global land area, and about 70% of the world’s total freshwater, mostly for irrigation.
International trade in food is trade in land, trade in water and trade in energy. As the United Nations Development Program tells us, were a country such as Egypt to aim for food self-sufficiency it would need three River Niles not one. So I hope that this helps our viewers visualize just how critical it is to keep international trade in food flowing. Trade in food is not a luxury, but a must.
Now reliance on international trade for food security is only likely to grow.
According to the Potsdam Institute for Climate Impact Research, if you roll the clock forward, by the year 2050, around 50% of humanity could depend on international trade to be fed and not just today’s 17%. This is because of population growth and our changing climate. Using current data on population, food and water consumption in each nation, the Potsdam Institute concludes that countries will find themselves obligated to increase their dependence on each other to feed their people. It will also become necessary to dramatically enhance agricultural productivity and make changes to their diet.
The countries with the most reliance on imports were found to be in North Africa, the Middle East and Central America, with over half their population depending on imported food by 2050. The recent work of the Intergovernmental Panel on Climate Change (the IPCC) on the agricultural sector has also shed light on the significant amount of stress that climate change will pose to our collective food security.
The importance of international trade in food also comes from the fact that it has vastly expanded the human diet. We are now able to eat more fruits and vegetables all year round, with substantial improvements to human health and longevity.
It is also important to remember that even for those countries that are able to feed themselves, and who in theory could be food self-sufficient if they were to try, their agricultural systems would not be able to run without international trade in fertilizer and all the other inputs that go into agricultural production.
Each year the world applies about 180 million tons of fertilizer to farmland to us help us grow enough wheat, rice and maize to sustain our growing population. Around 40% of total world fertilizer production is traded in international markets. Many countries also need to import their animal feed. Take soybeans. Approximately 60% of total world production of soybeans is traded internationally, with substantial proportions of it used to feed animals. The same goes for everything from seeds, all the way to the tractors and other equipment that farmers use every day to sow and harvest their land.
The WTO has vivid memories of the 2008 food crisis where, at the first signs of tightening food markets, countries rushed to impose food export restrictions, with one restriction leading to another. This cut-off the rice and other critical food supply of countries that have difficulty feeding themselves. Many were the Trade and Agricultural Ministers of countries from the Middle East in particular who put themselves on the first plane to Geneva to discuss the situation with the WTO.
Our dependency on each other is made all the more critical by the fact that international markets in some key food staples are tight. For example, rice is particularly thinly traded commodity. Only 5% of global production is traded internationally. So when rice markets are throttled, for whatever reason, this can result in serious shortages of what is a food staple in many parts of the world.
It is for all these reasons that international trade in food has tripled since the year 2000. It is now over $1.5 trillion. Developing countries have significantly expanded their share of agricultural export markets over the years, and this has played a very important role in pulling their farmers and rural areas out of poverty.
So we have to keep markets open, keep trade in food flowing, and continue to improve the WTO rule-book so international trade is perceived as reliable.
What has been the trade policy response that you have seen to the COVID-19 crisis? Has COVID-19 galvanized countries into recognizing the role of trade in food security, or rather is it reinforcing the call that we hear in some quarters for greater food self-sufficiency?
I have not seen any country talk about the need for food self-sufficiency in the wake of this crisis. Rather the opposite. The Agriculture Ministers of the G20 met just a few weeks back and reaffirmed the need to keep international trade in food flowing. Specifically, they said:
We agree that emergency measures in the context of the COVID-19 pandemic must be targeted, proportionate, transparent, and temporary, and that they do not create unnecessary barriers to trade or disruption to global food supply chains, and are consistent with World Trade Organization (WTO) rules.
The problem with the COVID-19 crisis as we have heard from many members of this panel, is that we are living through an unprecedented economic shutdown. The concern with the shutdown of national borders, with reduced air cargo travel, and with reduced shipping, has been that food may not be able to travel as easily between countries.
It is in reaction to this, I believe, that a few countries have imposed temporary food export restrictions in wake of COVID-19, rather than a desire for long-term food self-sufficiency.
Let me share with you what we are seeing in the WTO, in the area of food. In response to COVID-19, based on the sources of information from which the WTO is able to draw, we have seen that 17 of the 80 countries that have imposed export restrictions, have done so on food. The remaining restrictions have tended to target personal protective equipment, medical gear, and pharmaceuticals.
It is important that any export restrictions being applied to food during COVID-19 be temporary and be notified as far in advance as possible to other countries so as to not impact their food security. In particular since as we know that there is no global food shortage today.
Our experience with the 2008 food crisis demonstrated that many of the food export restrictions that were enacted were maintained long after the crisis, and that unfortunately 40% of them were concentrated on rice, and about 30% of them on wheat. We must do our best to prevent this from happening again, and I must say that we have not yet seen in this crisis export restrictive measures of the same magnitude.
Morality is not a term often linked to trade policy decisions and yet we know that placing export controls on medical goods and medicines and personal protective equipment, currently has a moral dimension. There is no part of trade in which a moral dimension is more present than in the supply of essential food. In fact, existing WTO rules already require that exporting countries give consideration to the effects of food export prohibitions or restrictions on the food security of others.
We are also beginning to see some measures being taken on the importing country side, such as higher tariffs on certain agricultural commodities, to counter the fall in prices and to protect domestic producers. I hope that this will not become a trend.
What I would like to highlight, however, are all the important trade liberalizing and facilitating efforts that we, in the WTO, have seen in the wake of this crisis.
A few days ago, 49 countries pledged to support open and predictable trade in food and agricultural products, and to not disrupt food supply chains. This initiative was led by Canada. Representing 63% of global exports of food and agriculture products and 55% of global imports, the 49 countries committed:
- to not disrupt the global food supply chain;
- to not impose food export restrictions;
- to ensure that the response to COVID-19 remains targeted, proportionate, transparent and temporary;
- to exercise restraint in establishing domestic food stocks of agricultural products that are traditionally exported; and
- to quickly notify COVID response measures to the WTO
The pledge is open for other countries to sign.
We have also seen New Zealand and Singapore notify an agreement to the WTO in which they commit to maintaining open and connected supply chains amidst the Covid-19 pandemic. They commit to facilitating trade and refraining from imposing export restrictions on a range of products, including certain food preparations.
Furthermore, on the SPS side, while we have seen some countries tighten their SPS standards for certain imported products like exotic animals and meats through emergency measures, we have also seen a big wave of SPS measures accepting electronic certificates in lieu of more typical paper-based documentation.
It would be interesting to see if COVID ends up leading to the modernization and digitalization of all sorts of trade-related certification procedures.
So on balance, I would say the world has been quick to recognize the value of international trade in food for global food security, and to issue calls, as well as take concrete action, to protect the global food supply chain from disruption.
I hope that this will remain the case.