World Trade Patterns in Food

Just finished reading a report on….

New directions of trade for the agri-food industry:
a disaggregated approach for different income
countries, 1963–2000
Rau´ l Serrano • Vicente Pinilla
Received: 4 October 2013 / Revised: 19 March 2014 / Accepted: 25 April 2014
The Author(s) 2014. This article is published with open access at Springerlink.com

Here is the summary…

This new process of market integration was far removed from the pattern ofcomplementarity developed throughout the first globalization. Both total trade andtrade in agricultural products and food have become progressively concentrated onthe exchange of goods among developed countries. Nations which historically weremore dependent upon the export of agricultural products and food saw theirtraditional market shares fall, while the more developed countries increased theirexchanges. Thus, the regions most dependent on the export of agricultural products(Africa and Latin America) witnessed a fall in their share of world agriculturaltrade.1 Moreover, some of these countries not only saw their exports decline inrelative terms, but also experienced a sharp deterioration in the ratio of agriculturalexports to imports. Thus, Africa and Asia became net importers of agriculturalproducts where they had once been net exporters. By contrast, the high-incomenations, and in particular Europe, increased their share of world agricultural trade.

This is not accidental, not is a matter of policies…  in essence, "free trade agreements" work inasmuch as they disrupt trade patterns to the benefit of some and detriment of others.

The developing countries have depended on exports to their traditional markets,which is to say Old Europe and rich North America. However, this position hasprogressively changed. The agricultural exports of developing countries to countriesof similar income have significantly increased. These already represented 31 percentof total agricultural and food exports by 1990, a figure which increased to 38 percentat the end of the last century. This new trade pattern, with an increasing importanceon the direction of South–South flows, is common to all the developing regions, andthis is possibly related to the growth of the so-called emerging economies,increasing market liberalization and the success of some trade agreements amongdeveloping countries from the 1990s on.3

Of course China plays a big role in this, and it is natural for poor countries to trade with poor countries, but the interesting part is growth.  In spite of being crowded out, these countries are growing.   Or… because of being crowed out, not being the subject of "agreements" they are doing better.  That would be my hypothesis.

Lastly, the governments of the more developed countries supported agriculturemore than any other sector. By contrast, in the developing countries, it is habitualfor inward-looking policies to discriminate in favor of industry as regardsagriculture. Within agriculture, the sector oriented toward the production offoodstuffs for the domestic market received greatly support than the export market-oriented production (Anderson 2009).

Here we go again…  sectors subject to policy get hammered, that which is let alone, thrives.

Merely in the 1990s, the Uruguay Round of GATT was able to produce a certainliberalization of the markets in agricultural products and a reduction of protection-ism. From that point on, and also as a consequence of the dynamism of the Asiancountries and of the stimulation of RTAs among developing countries, a new patternemerged in the exchanges of agricultural products, defined by the boom in tradeamong the economies of the South.

This study then gets busy with econometric models that are Greek to me.  But afar all that, here is a conclusion:

To explain the concentration of trade among developed countries, our gravitymodel has underlined that RTAs such as the EU, EFTA or NAFTA havesignificantly encouraged agricultural trade among developed countries. In contrast,the developing countries were faced with highly protected markets and a relativeinitial failure in their attempts to liberalize their regional markets.

The world trade in food is in flux.  There are some verbs trance anomalies pursuant to the policies, some unsustainable and inviting disruption or better yet, correction.  One can see it in the trade data analysis.  Pick a product area, and start nosing around.

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