United Nations Conference on Trade and Development
Multi-Year Expert Meeting on Commodities and Development
8-9 February 2021, Geneva
Trends in Global Agriculture
By
Holger Matthey, Senior Economist, Markets and Trade Division, FAO, Rome
The views expressed are those of the author and do not necessarily reflect the views of UNCTAD.
UNCTAD Multiyear Expert Meeting on Commodities
and Development
12th Session
Trends in Global Agriculture
Holger Matthey
Senior Economist
Markets and Trade Division, FAO
TABLE OF CONTENTS
- Covid-19: impacts and policy responses
- Current agri-food market situation
- Medium term risks and implications
- Concluding remarks
COVID-19: IMPACTS AND POLICY RESPONSES (1/3)
Due to the measures implemented to contain the spread of COVID-19, disruptions were
reported at all stages of food supply chains
• Shortages in agricultural labour due to
restrictions on travel and movement of people
(especially migrant workers)
• Transport restrictions, impeding farmers’ access
to input and output markets
• Lower capacity utilization of processing
facilities, shutdowns and part closures (including
due to limited capacity for food safety inspection)
• International distribution and logistics
disruptions
COVID-19: IMPACTS AND POLICY RESPONSES (2/3)
Countries aimed to address both supply and demand side policy objectives through trade and
related policy interventions. Observed trade trends may be explained by the fact that trade restrictions
were generally short-lived, complemented by measures to boost imports, production, and TF
MEASURES TO LOWER IMPORT
TRADE RESTRICTIONS DOMESTIC MEASURES AND TF
BARRIERS
• A limited number of countries • Several countries lowered import • Producer support measures provided
imposed trade related restrictions barriers, mainly in the form of to ensure production
(very few import restrictions) suspending import tariffs and in
limited cases, raising TRQs • Some countries provided logistics
• Many of the export bans have been and marketing support to support the
transformed into export quotas, • Selected countries also lowered supply chain
and most of them have been Technical Barriers to Trade
already repealed • Several countries increased
(TBT) measures to facilitate domestic food procurement targets,
• Most export restrictions were availability of critical food items and/or increased imports to build
introduced by countries in Eastern national reserves, ensure availability
Europe and Central Asia • Most measures are temporary,
put in place in March/April lasting • Some implemented ceiling prices,
• Import restrictions mainly at most until the end of 2020 some expanded food distribution
addressed trade of live animals programmes to ensure economic
access
COVID-19: TRADE IMPACTS AND POLICY RESPONSES (3/3)
Global cooperation and coordination in policies, market transparency, trade-related procedures has
been critical
POLICY COMMITMENTS AND TRADE RELATED PROCEDURES AND
MARKET TRANSPARENCY
COORDINATION REGULATIONS
Ministerial declarations and Strengthening international Digital solutions in the application
commitments, focusing on market transparency and of SPS measures (e.g. ePhyto:
avoiding export and import governance mechanisms to Argentina, Chile); customs
restrictions; keeping food supply ensure that policy and stock procedures
chains alive (addressing logistics management decisions are based Temporary acceptance of electronic
bottlenecks, workers’ movement on timely and credible data and copies of SPS certificates (e.g.
and safety): information Australia, Brazil, Chile, South Africa,
G20 Ministerial Statement Agricultural Market Russia)
APEC Joint Ministerial Information System
Declaration Establishment of regional corridors
(AMIS): an inter-agency
African Agriculture (e.g. CEFTA Green Corridors System)
platform launched by the
Ministers Declaration G20 in 2011 and housed at
Joint Statements: FAO (WTO is member)
FAO/WHO/WTO (30 March) and FAO market monitoring
FAO/IFAD/WB/WFP (21 April) and outlook work
TABLE OF CONTENTS
- Covid-19: trade impacts and policy responses
- Current agri-food market situation
- Medium term risks and implications
- Concluding remarks
AGRI-FOOD MARKET SITUATION (1/2) – PRICES
The FAO Food Price Index (FFPI) recorded a seventh consecutive monthly increase in
December, up 2.3% from November, 3.1% y/y; drivers include firmer prices of several products
and slide in US$
• Internationally traded commodities are FAO Food Price Index: Monthly, Nominal, 2014-2016=100
priced in US dollars; typically, inverse 110.0
105.0
relationship between commodity prices 100.0
and the value of the dollar 95.0
90.0
85.0
Jul-19
Jul-20
Jun-19
Jun-20
Nov-18
Nov-19
Nov-20
Apr-19
May-19
Apr-20
May-20
Dec-18
Aug-19
Aug-20
Jan-19
Feb-19
Mar-19
Sep-19
Dec-19
Jan-20
Feb-20
Mar-20
Sep-20
Dec-20
Oct-18
Oct-19
Oct-20
• By May 2020, the US$ rally against
nearly all other major currencies came
Nominal Broad Dollar Index, Jan 2006=100
to halt 125
120
• In recent months, the slide in the US$ 115
110
has been supportive to trade and 105
prices
Jul-19
Jul-20
Jun-19
Jun-20
Nov-18
Nov-19
Nov-20
Apr-19
May-19
Apr-20
May-20
Dec-18
Aug-19
Aug-20
Jan-19
Feb-19
Mar-19
Sep-19
Dec-19
Jan-20
Feb-20
Mar-20
Sep-20
Dec-20
Oct-18
Oct-19
Oct-20
Source: FAO Food Price Index (http://www.fao.org/worldfoodsituation/foodpricesindex/en/) and US Federal Reserve
(https://www.federalreserve.gov/releases/h10/summary/jrxwtfb_nm.htm)
AGRI-FOOD MARKET SITUATION (2/2) – CEREALS
Despite a cut in world cereal production projection, this year’s forecast output remains at an all-
time high
• Heading towards another record production (2 700
million tonnes),up 1.6% y/y, despite cuts to production
forecasts:
• for coarse grains (-10.1 million tonnes), mainly
maize driven by EU, Ukraine, USA;
• for wheat (-2.3 million tonnes), driven by Ukraine,
Argentina
• Encouraged by higher prices, farmers are expected to
expand plantings in key producing regions, e.g. EU
• Utilization expected to reach 2 745 million tonnes, up
1.9% y/y). For wheat, driven by consumption in the EU;
for rice, by global food use
• Stocks forecast in 2021 lowered by 13.6 million
tonnes to 876 million tonnes, but still 0.5% above
opening levels
Source: FAO Cereal Supply and Demand Brief: http://www.fao.org/worldfoodsituation/csdb/en/
SUMMARY: FOOD MARKETS IN 2020/21
• Similar to the situation during the second half of the 2019/20 season, food markets are
expected to confront important uncertainties beyond their own fundamentals also in
2020/21.
• Macro economic concerns, in particular weak economic growth prospects, developments
in energy and currency markets, along with continuing trade tensions, not to mention
uncertainties associated with African swine fever and the desert locust, constitute major
challenges to overcome.
• However, current prospects continue to point to generally well supplied markets, at least
for most basic foodstuffs.
• … resulting in prices to remain generally stable, albeit mostly at higher levels than in the
previous season.
10
TABLE OF CONTENTS
- Covid-19: trade impacts and policy responses
- Current agri-food market situation
- Medium term risks and implications
- Concluding remarks
MEDIUM-TERM RISKS AND IMPLICATIONS (1/4)
FAO-OECD MEDIUM TERM OUTLOOK: COVID SCENARIO VS. BASELINE PROJECTION
COVID-19 SCENARIO ASSUMPTIONS
GDP TRADE COSTS
ENERGY COSTS
• 2020 and 2021: Globally, • Higher trade costs for both 2020 and 2021 due
• Reflected in crude oil prices:
-4.4% in 2020 and +5.2% in to limited capacities at customs, ports, airports;
36 USD/barrel in 2020 and 40
2021; advanced countries additional health protocols; limited operations of
in 2021;
GDP shrinks more than sea and air transportation
• Return to pre-COVID
world average; for countries
medium-term evolution from
with COVID coming later,
2023; 2022 smooths recovery
LABOUR COSTS
2021 recovery less than
50% of 2020 losses • Restrictions on movement limiting availability
• L-shaped recovery: all BIOFUEL DEMAND of workers or increasing levels of part-time/
countries return to their pre- rotational work
• Lockdown measures low
COVID growth rates after
demand for fuels for EXCHANGE RATES
2022 or 2023, but not
transportation biofuel markets
resuming the pre-COVID • Countries fluctuating foreign exchange to
• Fossil fuel demand expected
levels of expected output adapt to shocks in current account balances
to recover to pre-COVID
levels from 2022; 2021 serving • For 2020, assumes June FER; for 2021, return
INFLATION as partial recovery to pre-COVID expected growth*
MEDIUM-TERM RISKS AND IMPLICATIONS (2/4)
FAO-OECD MEDIUM TERM OUTLOOK: COVID SCENARIO VS. OUTLOOK PROJECTION
Compared to the outlook projection, agricultural production (especially livestock) expected to
slow down due to COVID-19, both in the short term (2020/21) and medium term (2029)
Net value of crop production ($Bil), Net value of Livestock production($Bil),
% difference COVID scenario vs OECD-FAO agricultural outlook % difference COVID scenario vs OECD-FAO agricultural outlook
2021 2029 2021 2029
1.50 0.00
1.00 -0.50
0.50 -1.00
0.00 -1.50
-0.50 -2.00
-1.00 -2.50
-1.50 -3.00
-2.00 World Asia Pacific Europe and Central Asia
World Asia Pacific Europe and Central Asia
Latin America and Caribbean North America Sub-Saharan Africa Latin America and Caribbean North America Sub-Saharan Africa
• Over the short-term, production response reflects changes in demand for agricultural commodities (e.g. decrease
of income, trade restrictions), and to higher labour costs (particularly relevant for meat and other labour-intensive sectors)
• Meat production is expected to be at levels lower than 2019, more evident in regions with intense meat production (e.g.
Asia Pacific)
MEDIUM-TERM RISKS AND IMPLICATIONS (3/4)
FAO-OECD MEDIUM TERM OUTLOOK: COVID SCENARIO VS. BASELINE PROJECTION
Global per capita daily caloric availability (food demand) in 2020 and 2021 is projected to be
lower than in 2019 (baseline projection predicted higher); decrease is higher for meat and dairy
Daily per capita caloric availability (kcal),
• Compared to baseline projection, decrease % difference COVID scenario vs OECD-FAO agricultural outlook
expected to be higher for meat and dairy in
2021 2029
middle-income countries with higher meat 0.00
consumption (e.g. in Asia Pacific, Latin America and
Caribbean) -0.50
• In the medium term (2029), food demand globally -1.00
is expected to increase compared to 2020 and 2021
-1.50
but still remain lower than baseline projections,
with differences by region; LDCs in Sub-Saharan -2.00
Africa are particularly affected
-2.50
• In African LDCs, staples are expected to remain World Asia Pacific Europe and Central Asia
the main food category in diets Latin America and Caribbean North America Sub-Saharan Africa
TABLE OF CONTENTS
- Covid-19: trade impacts and policy responses
- Current agri-food market situation
- Medium term risks and implications
- Concluding remarks
CONCLUDING REMARKS (1/2)
• COVID-19 led to significant disruptions to food supply chains; despite these shocks,
overall, agri-food trade and global value chains proved resilient, although some
products were affected more than others (e.g. meat and dairy vs. cereals)
• Policy makers responded by imposing export and import restrictions, lowering import
barriers, and/or using domestic measures; trade restrictions were generally short-
lived
• Compared to past food price crises, e.g. 2007/08, market fundamentals are different
today: while the FAO Food Price Index has been rising over the last five months, prices
remain below peak levels; cereal markets are well supplied, and global stocks to use ratio
relatively high compared to historical levels
• Going forward, based on current projections of the impacts of COVID-19 on economic
growth, energy markets, trade and labour costs, both agricultural production and
demand are expected to slow down, with implications for LDCs
CONCLUDING REMARKS (2/2)
We are currently witnessing a resurgence of COVID-19 cases and containment measures globally. It is
important to avoid trade restricting measures, as these can exacerbate disruptions in both the
demand and supply side, with detrimental effects on most countries worldwide
Many countries trade more
than 35 percent of their food
through global value chains;
disruptions can therefore
cascade through the value
chain with detrimental
impacts affecting multiple
countries
Source: FAO State of Agricultural Commodity Markets 2020: http://www.fao.org/publications/soco/en/
MORE ON GLOBAL FOOD AND AGRICULTURAL MARKETS:
FAO’s World Food Situation Portal serves as the main digital gateway to
food market assessments, including the FAO Food Outlook, the FAO Food
Price Index as well as a host of links and Commodity-specific bulletins/link,
including: the FAO Cereal Supply and Demand Brief, the FAO Dairy Market
Review, the FAO Meat Market Review, the FAO Rice Market Monitor, the
FAO Rice Price Update, the Monthly News Report on Grains and the
Oilcrops Monthly Price and Policy Update. Up-to-date information on
policy developments is also published on a regular basis through the
Commodity Policy Developments tool. 18
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