International agricultural trade shows resilience in the world

International trade and global value chains for food and agricultural products demonstrated resilience to the shock caused by Covid-19, especially in the case of staple foods, according to a report by the World Trade Organization (WTO).

Despite little change in global agricultural trade in the first half of 2020 compared to the same period in 2019, the pandemic had pronounced short-term effects on trade patterns for agricultural and food products.

World import values ​​and the number of trade flows declined sharply in April and May 2020, but recovered in June.

Although the disruption in international trade in staple foods such as cereals, oilseeds or fruits and vegetables remained minimal, in terms of products affected by the change in consumption patterns (for example, beverages and food). fish) and non-food products (eg cotton, tobacco, live plants and cut flowers) saw a steeper decline in trade values ​​during the first months of the pandemic.

International Trade

Recent FAO projections confirm weakening demand growth over the next decade.

This Organization expects per capita consumption of many commodities to remain unchanged on a global scale, making population growth the main driver of increased consumption.

Efficiency improvements in agricultural and livestock production are also expected to meet the projected increase in demand, which will keep agricultural prices adjusted for inflation at approximately their current levels.

International trade will continue to be essential for food security in food-importing countries, as well as for rural livelihoods in food-exporting countries.

FAO simulations indicate that, in the short term, the measures taken around the world to contain the Covid-19 outbreak have repercussions for the demand and supply of agricultural products. The pandemic will continue to generate uncertainty in the markets.

Inflation

According to medium-term projections, the prices of the main agricultural commodities will continue to remain flat until 2029, as increases in demand are expected to be met through improvements in production efficiency.

Prices adjusted for inflation are projected to fall in 2020, then recover until 2026 and finally resume their downtrend.

Faced with the confirmation of a new wave of the pandemic, which is hitting developing countries particularly hard and is forcing new confinements and restrictions on high-income countries, the timing and magnitude of the global economic recovery is unknown. .

In the area of ​​international trade, although some countries imposed trade restrictions with the aim of reducing the possible adverse effects of the pandemic on their national agricultural markets, fortunately most of these measures were temporary and did not last long.

For the WTO, experience in past crises has taught us to avoid trade-restrictive measures, as they tend to generate uncertainty in markets and can cause sudden price spikes and increased price volatility.

They can also lead to a loss of confidence in world markets, especially for importing countries.

The OMG indicated that it is important that governments avoid resorting to these types of measures and, instead, guarantee the opening of markets and the fluidity of commercial exchanges.

This is essential for the proper functioning of agri-food supply chains.