17 September 2018: The 2018 edition of the State of Agricultural Commodity Markets report of the Food and Agriculture Organization of the UN (FAO) investigates what agricultural and trade policies countries can use to support adaptation of agriculture to climate change, safeguard food security, and reduce emissions from agriculture.
Climate change affects agriculture and its impacts are likely to be more severe in countries of low latitudes that are already at risk of food insecurity than in countries with temperate climates. Trade in agricultural commodities can help balancing the these uneven effects. Countries can mitigate the risk of food insecurity due to temporary production shortfalls through food imports. In the longer term, they can use international trade polices to improve resilience by specializing on less vulnerable crops and thereby adjusting agricultural production to climate risks across countries.
The Paris Agreement on climate change recognizes this “adaptive role” of agricultural trade, next to the need to mitigate greenhouse gases (GHG) from agriculture. International trade in agricultural commodities therefore is an important part of the Koronivia Joint Work on Agriculture initiated at the 23rd meeting of the UNFCCC Conference of the Parties in November 2017.
Domestic support policies and policies for food security can support adaptation and mitigation without distorting trade.
FAO’s State of Agricultural Commodity Markets report argues that addressing all targets of SDG 2 (End hunger, achieve food security and improved nutrition and promote sustainable agriculture) requires addressing hunger and malnutrition simultaneously with reducing poverty (SDG 1) and climate action (SDG 13). It provides an in-depth analysis of how domestic support policies and policies for food security can support adaptation and mitigation without distorting trade and thus without violating provisions of the World Trade Organization (WTO) Agreement on Agriculture (AoA).
According to the publication, policies and measures that meet WTO criteria, include investments in innovative technologies and their adoption, supporting “climate-smart” agricultural practices that increase production and resilience while reducing GHG emissions or increase carbon sequestration, and spending on environmental programmes and ecosystem services that minimize trade distortions. The publication further explains that “climate-smart support” to farmers should aim to improve the comparative advantage of a country’s production system considering the impacts of climate change. Countries would thus specialize on producing less vulnerable crops to remain competitive and achieve a better balance in trading agricultural commodities.
On measures to incentivize mitigation, the report highlights the use of a carbon tax on domestic agricultural production combined with corresponding tariffs on imported products with a high carbon footprint. It notes, however that such measures must comply with WTO criteria for waivers or exemptions to the non-discrimination principle. Alternatively, countries may opt to label food products with low carbon footprint aiming to influence consumer preferences.
The State of Agricultural Commodity Markets report provides an annual update of the performance of the international agricultural trading system. The 2018 edition shows, among other trends, that global trade in agriculture has tripled in value between 2000 and 2016 from US$570 billion to US$1.6 trillion. Much of the expansion was driven by increasing production in China and other emerging economies and growing international trade in biofuels. China and Brazil, for example, are now among the worlds top food exporting countries next to traditional exporters such as Canada, the US and Australia. [FAO Press Release] [UN News Release] [Publication: The State of Agricultural Commodity Markets: Agricultural Trade, Climate Change and Food Security]