The State of Agricultural Commodity Markets: Key Messages

Report Theme: Agricultural Trade, Climate Change and Food Security

• The role of emerging economies in global agricultural markets has increased since 2000. Growing income per capita and reduced poverty boosted food consumption and imports, while increases in agricultural productivity led to growing exports. 
• Developing countries are increasingly participating in international markets. South–South agricultural trade has also expanded significantly. For Least Developed Countries, agricultural imports have grown faster than exports. 
• Climate change will affect world regions unevenly. It is already affecting vulnerable countries and will pose a major threat to their food security. 
• Agricultural trade can help in adapting to climate change and in ensuring food security. It can support adaptation efforts by stabilizing markets and reallocating food from surplus to deficit regions. 
• In principle, there is no fundamental conflict between climate change policies and multilateral trade rules. Various provisions of the WTO can accommodate the implementation of climate-related policies of the Paris Agreement. 
• There is scope for countries to pursue environmental protection objectives under WTO rules. However, the interpretation and application of these rules with regard to the treatment of identical food products that differ solely in their carbon footprint remains untested. An internationally agreed definition of carbon footprint could facilitate the implementation of policies for climate change adaptation and mitigation. 
• Discussions should be pursued at the juncture of the Paris Agreement and the WTO agreements to strengthen their mutually supportive approach. This can contribute to reducing agricultural emissions globally. 
• Many government measures can promote adaptation, mitigation and food security and have no or minimal distortionary impact on trade. These include research and development, extension, training, technical assistance and investments that can all promote the adoption of climate-smart agriculture practices. 
• Appropriate incentives may nevertheless be necessary to further facilitate adaptation and mitigation in agriculture. Some types of subsidies can promote large-scale adoption of climate-smart agriculture practices, but discussions may have to focus on their potential impact on production and trade. 
• Agricultural insurance will be increasingly necessary to protect against climate risk, but its cost is likely to rise. 
• Emergency humanitarian food reserves at the regional level can promote adaptation to climate change and contribute to food security. 
• Trade can contribute towards improving food security. In the short term, trade can provide a mechanism for addressing production shortfalls due to extreme weather events. In the long term, it can contribute towards adjusting agricultural production in an efficient manner across countries. 
• Trade could support mitigation efforts and contribute to reducing global agricultural GHG emissions. Consensus on how to define and calculate carbon footprint and measures to facilitate trade in low-carbon footprint products would be helpful.
• Carbon labelling could help to shape consumer preferences, contributing to the transition to a low-emissions economy. This would require an internationally-recognized approach in setting the related standards. 
• Climate change could result in a considerable increase in the uncertainty surrounding sanitary and phytosanitary (SPS) threats. This would hinder trade especially for developing countries, unless appropriate risk assessment, surveillance, monitoring, diagnostics and border infrastructure are in place. 
• Additional costs associated with labelling and standards could place a burden particularly on family farmers and small-scale food processors in developing countries. 

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