International Trade and Agriculture: Supporting Value Chains to Deliver Development and Food Security

EXECUTIVE SUMMARY

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This is the most recent of a series of papers outlining the policy priorities of the Global Harvest Initiative, a partnership united under the common goal of addressing hunger and food insecurity by sustainably closing the global agricultural productivity gap.

 

international trade in agricultureFeeding the world in 2050 when our global population is expected to reach over 9 billion is one of the most daunting challenges of our time. In the face of climate change, and with scarce land and water resources, we must rapidly address this challenge and lay in place the right frameworks to boost food production and freeze the environmental footprint of agriculture all along the food value chain. We must also unlock the potential of millions of small producers who could be part of the solution to feed the planet.

The Global Harvest Initiative (GHI) and its consultative partners take a holistic approach to increasing agricultural productivity worldwide in order to meet food security needs and respond to significant systemic factors, including urban and population growth, changing demand for food, climate change, and, ultimately, a rapidly developing, more interconnected global agricultural market. Increasing agricultural productivity essentially means growing more while using less land, water, energy, labor, and other inputs. To meet the demands of a growing world and changing diets, we must foster an appropriate policy enabling environment and harness innovation and technology to create sustainable food systems.

Trade_Paper_Summary
GHI’s five areas of policy focusinvesting in agricultural research and development, enhancing private sector involvement, embracing science- and information-based technology, strengthening and streamlining development assistance programs, and improving regional and global trade – are all critical, closely connected elements of closing the productivity gap.

Trade is an integral aspect of increased productivity and food security. All farmers – regardless of size – will only produce more when they see an available market. These decisions are no longer as local as they once were. With agricultural value chains becoming more complex, actions taken in far off capitals – and regional and international institutions as well – will have an impact on the rural small farmer more than ever before. The laws and regulations governing the different aspects of value chain development, many of which are part of trade agreements and institutions, also directly tie into market opportunity and productivity.

The potential gains associated with increased trade and easier movement of goods and services are becoming increasingly clear. Trade has now become a significant component of food security efforts and the broader agricultural development agenda. As the following paper will illustrate, fully unlocking the power of trade to deliver development and food security benefits will require a deeper dive into the particular issues that are necessary for spurring innovation and opening up value chains. Lowering tariff and non-tariff barriers to trade will continue to be a priority, as will approaching the rules and regulations around agriculture in a holistic, market-driven way.

A strong enabling environment – with transparent and well-implemented laws, regulations, and trade policy – is central to value chain development. One of the biggest challenges in creating this enabling environment will be closing the gap between the system on the books and the realities in the market. This applies to domestic and regional laws and regulations, implementation of trade agreements, and transparent regulatory systems alike.

There are positive developments taking place at the intersection of trade, agriculture, and food security, but trade needs to be further integrated and better used as a tool for market development and productivity enhancement. In order to open markets effectively and to the benefit of all, innovation from both the public and private sectors will be increasingly important, as will creative and practical ways to combine the two.

The findings in the attached paper, which were produced in consultation with companies engaged in global agricultural trade as well as other sector experts, discuss a number of the elements necessary to this holistic system-wide approach to promoting agricultural value chain development through trade. The key findings of the paper include the following:

  • Consistent, transparent, and science-based frameworks for regulating food safety, along with reliable processes for administering sanitary and phytosanitary (SPS) rules, are critical to value chain development and increased agricultural trade;
  • Legal and regulatory issues play a significant role at all stages in value chain development – including inputs, production, processing, transport, and end markets – and many of these issues are covered by trade rules and disciplines;
  • Trade policy instruments can help foster the development of reliable systems for moving goods – including food, inputs, and equipment – and services through necessary legal and policy infrastructure and appropriate trade facilitation interventions;
  • A stronger focus on services will be increasingly important to agricultural trade, with laws and regulations needed that can support open systems for transport and distribution services; financial services; and wholesale, retail, franchising, and other services;
  • In places like sub-Saharan Africa where so many markets are small and landlocked, regional integration and harmonization of laws and regulations will be critical to agricultural growth, and particular focus should be placed on how laws and regulations are being implemented in practice;
  • Adequate and equitable intellectual rights protection is becoming increasingly important as technology, information sharing, and communication play an even larger role in value chain development;
  • With agricultural markets becoming more and more global, inward-looking policies – including forced localization – will need to be handled carefully so that they do not pose a threat to agricultural development and food security; and
  • There is a widespread need for commercially-focused capacity building designed to facilitate market development and generate regulatory reform in the agricultural sector.

The above issues should all be addressed through a variety of trade policy vehicles, including the Trans-Pacific Partnership (TPP) negotiations, the US-EU Transatlantic Trade and Investment Partnership, the US-East African Community (EAC) Trade and Investment Partnership, the World Trade Organization (WTO) Doha Round and Bali Ministerial, existing free trade agreements (FTAs), and regional efforts and ongoing discussions under the US Trade and Investment Framework Agreements (TIFAs).

As an overarching finding, improved systems for collecting and sharing data will play a key role in improving agricultural productivity. While aspects of this are outlined in the attached, GHI and its consultative partners are developing plans for better mapping and understanding untapped potential along value chains and the factors that affect this potential. For example, GHI is working with the New Markets Lab (which houses TransFarm Africa) to assess the impact of the legal, regulatory, and policy environment in developing markets on value chain development. More analysis and collaboration in this area will allow for promising approaches in trade and agricultural development to be brought to scale.

Overall, the 21st century will require a trade policy that is forward-looking and innovative in order to take advantage of future market opportunities. Trade can and should impact individuals positively, add value economy-wide, and deliver broader food security and development benefits. Addressing the areas outlined above and discussed in more detail in the attached paper – individually and as part of a system-wide approach – could yield sizeable gains.This paper presents a more detailed discussion of how to do so, tying these issues into a number of current trade discussions. We hope that it will provide the foundation for a fruitful discussion on trade going forward.

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Trade Policy Paper Cover