Globalization's effects on world agricultural trade, 1960-2050

Abstract

Recent globalization has been characterized by a decline in the costs of cross-border trade in farm and other products. It has been driven primarily by the information and communication technology revolution and-in the case of farm products-by reductions in governmental distortions to agricultural production, consumption and trade. Both have boosted economic growth and reduced poverty globally, especially in Asia. The first but maybe not the second of these drivers will continue in coming decades. World food prices will depend also on whether (and if so by how much) farm productivity growth continues to outpace demand growth and to what extent diets in emerging economies move towards livestock and horticultural products at the expense of staples. Demand in turn will be driven not only by population and income growth, but also by crude oil prices if they remain at current historically high levels, since that will affect biofuel demand. Climate change mitigation policies and adaptation, water market developments and market access standards particularly for transgenic foods will add to future production, price and trade uncertainties.

Figure 1.

Real international food price index, 1900–2008 (1977–1979 = 100). The deflator used is the price of manufactured exports to developing countries from the five largest HICs (France, Germany, Japan, the UK and the USA). Author's compilation using data from Pfaffenzeller et al. (2007), updated from 2004 with data from www.worldbank.org/prospects. Solid line, real food price index.

Figure 2.

Nominal rates of assistance to agriculture in HICs and European transition economies and in developing countries, 1955–2004 (per cent, weighted averages). The European transition economies is denoted by the World Bank as ECA, its acronym for (Central and Eastern) Europe and Central Asia. From Anderson (2009, ch. 1), based on estimates in Anderson & Valenzuela (2008). Black line, HIC and ECA; dashed line, HIC and ECA, including decoupled payments; grey line, developing countries.

Figure 3.

Nominal rates of assistance to exportable, import-competing and all covered agricultural products (covered products only, and the total also includes non-tradables), HICs and developing countries, 1955–2007. (a) Developing countries. (b) HICs plus Europe's transition economies. From Anderson (2009, ch. 1), based on estimates in Anderson & Valenzuela (2008). Black lines, import competing; grey lines, exportables; dashed lines, total.

Figure 4.

Nominal rates of assistance to agricultural and non-agricultural sectors and relative rate of assistance, developing countries and HICs, 1955–2004 (per cent, production-weighted averages across countries). (a) Developing countries. Dashed line, RRA; black line, NRA non-agricultural tradables; grey line, NRA agricultural tradables. (b) HICs. Black line, NRA agriculture; grey line, NRA non-agriculture; dashed line, RRA. The RRA is defined as 100 * [(100 + NRAag^t)/(100 + NRAnonag^t) − 1], where NRAag^t and NRAnonag^t are the percentage NRAs for the tradable parts of the agricultural and non-agricultural sectors, respectively. From Anderson (2009, ch. 1), based on the estimates in Anderson & Valenzuela (2008).