As climate change reshapes agriculture around the world, the international trade of agricultural products will be even more important to feed the growing global population, according to a new UN Food and Agriculture Organization (FAO) report which identifies wher global harvests will rise and fall by 2050 and the “winners” and “losers” in farming as the planet warms in the coming years. 

It points out how West Africa and India will likely see agricultural production fall while Russia, Canada and the US are expected to increase their agricultural output over the next 32 years, for example. 

Open, predictable and fair global food markets can help strengthen climate change response efforts and contribute to fighting hunger, says the new report The State of Agricultural Commodity Markets, 2018, which examines the relationship between agricultural trade, climate change and food security.

With climate change poised to alter significantly the ability of many world regions to produce food, it is expected that international trade in agricultural products will have an increasingly significant contribution to feeding the planet and responding to climate-related hunger flare-ups.

The report details how climate change will have significant implications for agriculture and food security. Farmers in different parts of the world can expect yields to either rise or fall over the next three decades.

By the middle of this century, higher average temperatures, changes in precipitation, rising sea levels, an increase in the frequency and intensity of extreme weather events, as well as the possibility of an increase in damage from pests and disease, are expected to affect crop and livestock production, as well as fisheries and aquaculture.

This impact will be uneven across regions and countries. In low-latitude areas, wher most developing and least developed countries are located, agriculture is already being adversely affected by climate change, specifically, by a higher frequency of droughts and floods. For developing countries, climate change could exacerbate the food security challenges they already experience, it says. 

For instance, farming yield could fall by as much as 2.9 percent in West Africa and 2.6 percent in India, the reports says, while in higher latitude regions, rising temperatures are projected to result in increases in agricultural production, for example, in Canada (2.5 percent) and the Russian Federation (0.9 percent).

Most tropical regions are likely to experience production losses due to rising temperatures while production in temperate regions is expected to benefit from warmer climates and longer growing seasons. 

The report also says that agricultural production may even become profitable in areas wher this is currently not the case, such as cereal production in marginal areas of Finland.

“South Asia and sub-Saharan Africa, particularly West Africa, are among the most vulnerable regions to climate change. In these regions, national economies depend on agriculture for a significant share of GDP and employment,” says the report. “At the same time, small-scale family farmers have little access to innovative technologies and inputs, which limits their capacity to adapt to a changing climate.”

“Differences in access to markets and technologies across countries and within countries are likely to exacerbate the effects of climate change. Indeed, uneven climate change effects in combination with differences in adaptation capacity may give rise to a growing divide between developed and developing countries.”

Readjusting trade policies 
International trade rules established under the WTO and newer mechanisms created under the Paris Agreement aimed at responding to climate change can be mutually supportive, argues the report. 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, it says. 

This is because 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.

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.

According to FAO Director-General José Graziano da Silva, to prevent economic and food security gaps between developed and developing countries from widening even further, we must look to international trade. 

“We must ensure that the evolution and expansion of agricultural trade are equitable and works for the elimination of hunger, food insecurity and malnutrition,” he says. 

“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.”

“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.”

For that to happen, however, “wide-ranging policy actions are necessary,” the FAO Director-General added. Trade policies that promote well-functioning global markets, combined with climate-smart domestic measures, investments and social protection schemes are needed.

Trade as a safety net
Many countries already rely on international markets as a source of food to meet their deficit. This can be due to the high costs of agricultural production like countries with limited land and water resources or when climate or other natural disasters undercut national food production.

For example, in Bangladesh, in 2017, the Government slashed customs 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, FAOs report says that open, predictable and fair international food markets are essential for trade to help support food security and climate adaptation.

However, while better-integrated markets reinforce the adaptive role of trade to climate change, for countries already highly reliant on food imports, it would deepen that dependence, the report notes. Thus the importance of considering national priorities and objectives.

Additional policy options
Beyond market integration measures, an even wider range of non-distortionary policy approaches exist that could be used to better harness agricultural trade to help farmers build up their resilience, boost farm output, support food security, and reduce the food sectors greenhouse gas emissions.

At the national level, these include spending more on research and development and on agricultural extension services to encourage the use of climate-smart approaches by farmers. Expenditures on environmental program and ecosystem services that reduce the negative effects of emissions from agriculture also would not affect trade.

Especially in developing countries at risk of climate change, support to farmers will be vital in helping them become competitive and achieve a better balance in export and import performance, notes the report. 

All of these options could be aligned with WTO rules as well as with newer commitments made under the Paris Agreement – there is no fundamental conflict between climate change policies under the agreement and multilateral trade rules, the report says.

Recent trends in global agricultural trade
The report also provides an overview of the performance of the international agriculture trading system in recent years and the direction in which it is headed.

While fast agricultural trade growth between 2000 and 2008 gave way to contractions during 2009-2012 and then to sluggish growth ever since, the bigger picture is that in value terms agricultural trade grew significantly between 2000 and 2016 – from US$570 billion to US$1.6 trillion.

Much of this was driven by economic expansion in China as well as increased global demand for biofuels.

Notably, the profile of emerging economies in global agricultural trade has increased dramatically, with rising per capita incomes and reduced poverty levels. This has boosted food consumption and imports and led to gains in agricultural productivity, driving up food exports, not only to markets in the industrialized world but also to other countries in the Global South.

Indeed, while traditional food exporting giants like Europe or the US remain top agricultural exporters in value terms, newcomers are challenging their supremacy, according to FAO. 

Brazil increased its share in global food trade from 3.2 to 5.7 percent between 2000 and 2016. China leaped ahead of Canada and Australia to become the worlds fourth most important agricultural exporter, and Indonesia and India increased their agricultural exports enough to place them among the worlds top ten biggest food exporters (8th and 10th, respectively).

Over the same period, the combined share in the total export value of the US, the European unio, Australia and Canada declined by ten percentage points.