Agricultural Trade Policy Advice for the G-20 Leaders


The leaders of the G-20 major countries with 85 percent of the world’s GNP will have a heavy economic policy load to shoulder when they meet on April 2 in London, England. A recent report from the WTO that world trade is expected to decline by 9 percent on a volume basis in 2009 shows the depth of the problems. The International Food & Agricultural Trade Policy Council (IPC) provided the leaders ten key points to think about on trade and global food security. The IPC’s 35 members are geographically diverse in global agriculture, experienced in agricultural trade policy and reflect the food chain from producers to consumers.

Their first point is fundamental to agricultural and food trade policy, “the world’s largest and burgeoning population centers and remaining arable land are distributed unevenly.” According to estimates from the Food and Agriculture Organization (FAO) of the United Nations (UN) virtually all of the potentially arable farmland in South Asia and the Middle East/North Africa are already in use. This compares to the Latin America/Caribbean region and Sub-Saharan Africa where only 20-25 percent of the potentially arable farmland is in use. The IPC also pointed out that in the near future more than half of the world’s population will be living in urban centers. The vision by some people for all locally produced food does not square with the reality that most of the food for a metropolitan area like Tokyo, Japan with 30 million people must move substantial distances.

The second point is tied closely to the first one, “Only a few countries have sufficient available land, water resources and suitable climates to rely totally on their own production.” Pursuing self-sufficiency will come at the risk of environmental degradation and high costs for taxpayers and consumers. Even in a country like the U.S. where good farmland is relatively abundant, consumers choose to demand over $80 billion per year of imported food products. Some of those are products not produced at all or not in sufficient volumes in the U.S., like bananas and coffee, and others are seasonal imports like fresh fruits and vegetables in the wintertime. Some imports like wine, beef and some fruits and vegetables compete directly with domestic supplies throughout the year.

The ninth point that “export restrictions aggravate global food security concerns,” and the tenth point for “an exemption for humanitarian food aid purchases from export restrictions” fit with the first two. The 2008 experience with rice prices showed how government policies can create a panic even though supplies are adequate. Export taxes and other restraints were ignored in the Doha talks until the skewed market reactions in 2008. Exporters and importers have an obligation to maintain open markets in good times and bad. For humanitarian aid the issue is not one of export competition, but of helping poor countries and families.

The IPC’s third point is climate change. Agriculture is not at the center of that debate, but an open trade system could offset any impacts that may result.

The ongoing worldwide financial crisis is the fourth issue for the IPC. The increased international investment flows that began a few years ago as agricultural and food prices increased are now at risk. An open trading system would encourage private investments to continue to meet the growing demand in the urban markets mentioned in points one and two. While the hope is that markets would be open in developed and developing countries, reforms in either group would be positive.

The fifth point is directed toward developed countries use of export subsidies, trade-distorting domestic supports and higher tariffs for further processed products. These are used by almost all of the developed countries in the G-20. Making these changes in the midst of a worldwide recession will not be easy given that it could not be done when agricultural commodity prices were record high in 2007 and 2008. These changes will need to be part of a larger trade deal.

Having developed countries and emerging countries provide duty free and quota free access for all agricultural products from the 50 or so least developed countries is IPC’s sixth point. This idea was part of the Doha Round with most countries in favor, but will not have much short-term impact on trade or economic growth.

“Developing countries should not rely solely on high tariffs to compensate for policies that have neglected rural areas” is the seventh point offered by the IPC. They note that higher market prices from tariffs hurt poor consumers while doing nothing to improve the competitiveness of agriculture. This point causes as much heartburn for developing countries as number five does for developed countries.

The eighth point ties into the seventh point by recognizing that more open trade policies will not solve all of agriculture’s problems. “Aid for trade” initiatives need to be matched by international efforts for “Aid for Agriculture” programs to offset decades of under-funding of agriculture in many developing countries. Government economic and regulatory policies that starve industries of capital and new technology will undoubtedly result in producers that cannot compete in world trade. That is true in agricultural and non-agricultural markets.

The IPC ten point plan does not break new ground because the debate over agricultural and food trade is centuries old. What has been learned again in recent years is trade benefits producers with new income opportunities while providing consumers more choices at lower prices. Between those two outcomes government policies are sometimes positioned to protect one group or another. In other situations the lack of competitiveness is the unintended consequence of weak credit institutions that retard development or regulatory policies that prevent the use of modern technology, including biotechnology.

The 21st century realities of larger and more concentrated populations away from available agricultural production areas have made food trade more important than ever. The current crisis may provide the catalyst for real changes in trade policy.

Ross Korves

Ross Korves

Ross Korves served Truth about Trade & Technology, before it became Global Farmer Network, from 2004 – 2015 as the Economic and Trade Policy Analyst.

Researching and analyzing economic issues important to agricultural producers, Ross provided an intimate understanding regarding the interface of economic policy analysis and the political process.

Mr. Korves served the American Farm Bureau Federation as an Economist from 1980-2004. He served as Chief Economist from April 2001 through September 2003 and held the title of Senior Economist from September 2003 through August 2004.

Born and raised on a southern Illinois hog farm and educated at Southern Illinois University, Ross holds a Masters Degree in Agribusiness Economics. His studies and research expanded internationally through his work in Germany as a 1984 McCloy Agricultural Fellow and study travel to Japan in 1982, Zambia and Kenya in 1985 and Germany in 1987.

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