Global trade in agri-products to become important as climate change impacts production

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Photo courtesy: ADB

International trade in agricultural products will have an increasingly important contribution to feeding the planet, as climate change alters the ability of many regions to produce food, a new report by the UN’s Food and Agriculture Organization (FAO) said.

International trade rules established under the auspices of the WTO and newer mechanisms created under the Paris Agreement aimed at responding to climate change can be mutually supportive, argues The State of Agricultural Commodity Markets, 2018.

To achieve this, national agricultural and trade policies may need to be readjusted to help transform the global marketplace into a pillar of food security and a tool for climate change adaptation, the FAO’s report said.

Climate change will affect global agriculture unevenly, improving production conditions in some places while negatively affecting others – creating sets of “winners” and “losers” along the way, it pointed out.

According to the report, food production in countries in low latitudes — many already suffering from poverty, food insecurity and malnutrition — will be hardest hit, the report notes. Regions with temperate climates, on the other hand, could see positive impacts as warmer weather lifts agricultural output.

“International trade has the potential to stabilize markets and reallocate food from surplus to deficit regions, helping countries adapt to climate change and contribute to food security,” FAO Director-General José Graziano da Silva wrote in his introduction to the report.

“The uneven impact of climate change across the world and its implications for agricultural trade, especially for developing countries, underlines the need for a balanced approach to policies, which should enhance the adaptive role of trade, while supporting the most vulnerable,” he added.

Trade as a safety net

Many countries already rely on international markets as a source of food to meet their deficit, either due to high costs of agricultural production or when climate or other natural disasters undercut national food production, the report said.

For example, in Bangladesh, in 2017, the government slashed custom duties on rice to increase imports and stabilize the domestic market after severe floods saw retail prices of the stable grain soar by over thirty percent.

Similarly, South Africa – a traditional producer and net exporter of maize – recently increased imports to dampen the effect of successive droughts.

In general, FAO’s report says that open, predictable and fair international food markets are important for trade to help support food security and climate adaptation.

Prashant has worked in the publishing industry for 17 years. His keen interest in commodities developed while working for organisations such as like Thomson Reuters, Wolters Kluwer & McGraw-Hill eventually brought him here. In his free time, Prashant consults with businesses in the digital space.

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