Trade and Markets

Among the losers of global trade - and its ongoing liberalisation - are low-income countries, and the poor in the countryside.
Small and traditional rural livelihoods are being confronted with unfair competition from large, world market oriented agricultural companies.
The terms of international agricultural trade, which dictate this competition, emerged in the colonial era of the 19th century. Today they are regulated by the World Trade Organisation (WTO) and a large number of bilateral and multilateral trade agreements. Their declared objective is to increase and liberalise international trade through the elimination of tariffs and trade restrictions. The conditions of global agricultural trade would have to be radically changed if the aim of providing basic food for everyone through sustainable production is to be achieved.

Dominance of International Trade

Only those who are able to sell their products at an adequate price produce more than their family or community consumes. Only under these circumstances is a family able to contribute to feeding other people and make provisions for hard times.
The first precondition for this is access to markets. The second requirement is the possibility to invest and handle the risks associated with the investment. Millions of farmers, especially women, fail to comply with these basic prerequisites. Local, regional and national markets remain closed to them, with the necessary infrastructure, protection from competition and systematic development all missing.
It is often easier for cheap finished products from industrialised countries, such as milk powder, to gain access to the markets in the South than it is for products that come from the region itself. Not only do industrialised nations subsidise their own exports; they also frequently make use of tariff escalation for imported goods, with import tariffs increasing depending on the degree of processing that has occurred. This allows industrialised countries to import cheap raw materials, while setting higher tariffs for meat and preserved food to protect their own industries. This prevents many countries in the South from developing their own processing industry and creating jobs.

Development of Producer and Retail Prices

Producer prices for agricultural commodities have steadily decreased over the past decades, and with that, so too has the income of the majority of farmers. At the same time, the share of available income which urban populations spend on food has also decreased (although these figures differ globally). The predicted increase of agricultural and food prices on the world market did not automatically improve the situation of food producers. This is due to the fact that their share in retail prices is decreasing for the benefit of retailers and processors, as well as for producers of seeds, fertiliser, pesticides and machinery. >>more

Facts & Figures

With agri-food exports reaching €120 billion in 2013, the EU became the world's number one exporter of agricultural and food products, followed by the US with €115 billion worth of exports. Final products for direct consumption made up two thirds of the EU’s exports. The top ranking product in EU agri-food imports in 2013 was coffee with imports worth €7.4 billion. Other popular imported products were oilcakes from soybeans (€7.2 billion), soybeans (€5.6 billion) and palm oil (€4.5 billion).

Africa has turned from a net exporter of agricultural products to a net food importer. In 1980, agricultural trade was balanced with both exports and imports at about $14 billion. In 2007, imports reached a record high of $47 billion, yielding a deficit of around $22 billion. By 2023, Africa's trade deficit in volume terms will increase to 44 million tonnes for wheat and 18 million tonnes for rice. Asia is expected to exhibit a trade deficit for all commodities except rice, vegetable oils and fish.

In 2009, out of 153 developing countries, 92 depended on commodities for at least 60% of their export earnings. Dependency was particularly high in Western and Central Africa, where commodities made up 95% of exports. Commodity dependence in developing regions rose 20% between 1999-2001 and 2009-2011.

The world’s ten largest food and beverage companies (Associated British Foods, Coca-Cola, Danone, General Mills, Kellogg's, Mars, Mondelez, Nestlé, PepsiCo and Unilever) collectively generate revenues of more than $1.1 billion a day. However, none of the companies has committed to paying a fair price to farmers, nor are they committed to fair business arrangements with farmers.

With combined sales reaching $753 billion, the top ten retail food companies accounted for around 10.5% of all groceries bought worldwide in 2009. The top three supermarket retailers (Walmart, Carrefour, Schwarz Group) control 48% of the revenues earned by these top ten retail food companies. With combined sales of $387.5 billion, the ten biggest food and beverage processing firms control an estimated 28% of the global market for packaged food products.

Subsidised EU milk causes unfair competition to poor farmers in Bangladesh according to a recently released ActionAid report. An example of this advantage can be seen in the way that the European dairy giant Arla Foods profits from EU-subsidised milk powder sales to Bangladesh, giving it a huge advantage over local producers. In 2010, the EU exported 378,000 tonnes of skimmed milk powder to developing countries, mainly in Africa and the Middle East.

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Videos: Trade and Markets

Trade Justice: Alternative Visions from the Global South

How Fairtrade is standing up for the world's banana farmers

Graphics

  • UNEP Income distributionUNEP Income distribution
  • Market concentrationMarket concentration
  • UNEP Market shareUNEP Market share
  • UNEP Agricultural liberalisationUNEP Agricultural liberalisation
  • Cost of coffee from farm gate to coffee shop in UgandaCost of coffee from farm gate to coffee shop in Uganda
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Unterstützer von www.weltagrarbericht.de biovision Verlag der Arbeitsgemeinschaft bäuerliche Landwirtschaft e.V. Demeter Greenpeace Forum Umwelt und Entwicklung Eine Welt Stiftung Die Grünen, Europäische Freie Allianz Evangelischer Entwicklungsdienst NABU - Naturschutzbund Deutschland e.V. Misereor Deutsche Gesellschaft für internationale Zusammenarbeit Zukunftsstiftung Landwirtschaft in der GLS Treuhand Zukunftsstiftung Landwirtschaft in der GLS Treuhand
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