The State Of Agricultural Commodity Markets 2022

The In Brief version of the FAO flagship publication, The State of Agricultural Commodity Markets 2022, contains the key messages and main points from the publication and is aimed at the media, policy makers and a more general public.

The State of Agricultural Commodity Markets 2022 (SOCO 2022) discusses how trade policies, based on both multilateral and regional approaches, can address today’s challenges for sustainable development. Trade policies in food and agriculture should aim to safeguard global food security, address the trade-offs between economic and environmental objectives, and strengthen the resilience of the global agrifood system to shocks, such as conflicts, pandemics and extreme weather. The report discusses the geography of trade, analysing food and agricultural trade and its patterns across countries and regions, its drivers and the trade policy environment. Comparative advantage, trade policies and trade costs shape the patterns of trade in food and agriculture. When comparative advantage plays out in the global market, trade benefits all countries. Lowering tariff barriers and reducing trade costs can promote trade and economic growth. Both multilateral and regional trade agreements can facilitate the process of making trade an avenue for growth but the gains of trade are distributed unevenly. When global environmental impacts, such as climate change, are considered, a multilateral approach to trade can help expand the reach of mitigation measures.

The State of Agricultural Commodity Markets 2020 (SOCO 2020) aims to discuss policies and mechanisms that promote sustainable outcomes – economic, social and environmental – in agricultural and food markets, both global and domestic. The analysis is organized along the trends and challenges that lie at the heart of global discussions on trade and development. These include the evolution of trade and markets; the emergence of global value chains in food and agriculture; the extent to which smallholder farmers in developing countries participate in value chains and markets; and the transformative impacts of digital technology on markets. Along these themes, SOCO 2020 discusses policies and institutions that can promote inclusive economic growth and also harness markets to contribute towards the realization of the 2030 Agenda and its Sustainable Development Goals.

This book argues that the viability of many observed market and non-market interventions in agricultural products worldwide depends considerably on the underlying behaviour of the relevant commodity markets. Many of these policies have had distortive impacts, resulting in much discussion and controversy in the context of the World Trade Organization (WTO) Doha Round of trade negotiations.

This book examines the issue of price volatility in agricultural commodities markets and how this phenomenon has evolved in recent years. The factors underlying the price spike of 2007-08 appear to be global and macroeconomic in nature, including the rapid growth in demand by developing countries, the international financial crisis, and exchange rate movements. Some of these factors are new, appearing as influences on price volatility only in the last decade. Although volatility has always been a feature of agricultural commodity markets, the evidence suggests that volatility has increased in certain commodity markets. A growing problem is that agricultural price shocks and volatility disrupt agricultural markets, economic incentives and incomes. With increased globalization and integration of financial and energy markets with agricultural commodity markets, the relationships between markets are expanding and becoming more complex. When a crisis such as a regional drought, food safety scare or a financial crisis hits a particular market, policy-makers often do not know the extent to which it will impact on other markets and affect producer, consumer and trader decisions. Including contributions from experts at the World Bank, the Food and Agriculture Organization of the United Nations, the USDA, and the European Commission, the research developed throughout the chapters of this book is based on current methodologies that can be used to analyze price volatility and provide directions for understanding this volatility and the development of new agricultural policies. The book highlights the challenges facing policy makers in dealing with the changing nature of agricultural commodities markets, and offers recommendations for anticipating price movements and managing their consequences. It will be a practical guide for both present and future policy-makers in deciding on potential price-stabilizing interventions, and will also serve as a useful resource for researchers and students in agricultural economics.