Globalization has significantly changed agricultural trade, and markets are more connected and capable of delivering economic opportunity and food security now than ever before. While the market itself is the physical representation of trade, the rules governing the market are a key factor in productivity, investment, and overall food security. The system of rules and regulations governing trade and market activity, the “enabling environment” for short, directly affects how much farmers in a country will be able to produce and how food will be stored, processed, and sold.
In most cases individual countries cannot meet their own food security needs and must import food and inputs (such as seed, fertilizer, and agrochemicals) from elsewhere. However, as food moves across borders, the rules become even more complex and can sometimes halt trade in food entirely.
Just as the nature of markets has changed, so has the system of rules governing the market. Informal systems, with unwritten understandings of how to conduct trade, have turned into more structured regulatory systems within and between countries. Agricultural trade is increasingly subject to formal rules at multiple levels: national, regional, and international. This includes the disciplines through the World Trade Organization (WTO) on which the debate around agricultural trade is often focused. Yet, the policies and regulations that perhaps impact the market most are shaped at the national and even local levels.
As the rules surrounding agricultural value chains and trade in food have become more comprehensive
and precise, the connection between the enabling environment and the actual people it is meant to serve has become more tenuous. Issues such as traceability, technology, transport, and food loss are all governed by an increasingly complex system of policies and regulations that spans the globe; it is often difficult to bridge the needs at the farm with the requirements of international markets. The stakeholders involved in global food security have also diversified. Developed country trading partners, such as the United States, play a prominent role in international agricultural markets through private enterprise and foreign aid. It is important that the transfer of capacity and innovation is built into food security approaches in a way that fuels two-way development going forward.
In today’s environment, the link between policies and people is more important than ever before, calling for a new approach to agricultural policy and regulation. How should trade and market rules be approached in the context of food security? This study will explore the different dimensions of trade that contribute to food security—including better access to safe and nutritious food, improvements in productivity-increasing technology, availability of storage and transport services, and generation of diverse income streams for farmers, enterprises, and countries alike—examined through the lens of the policy and regulatory environment that shapes the market. In contrast to top-down policy discussions, the study takes a bottom-up approach that follows the opportunities and challenges facing different stakeholders—farmers, consumers, innovators, traders, and developed and developing countries—that are part of the global system for trade in food.
To highlight connections in the market from production through export, the study focuses on several value chains that illustrate more diverse opportunities and challenges for food security and trade, both from a market and a policy perspective: beans in Kenya, rice in India, and horticulture (fruits and vegetables) in both Kenya and India. It also showcases innovations, best practices, and areas for further emphasis.
A team from New Markets Lab (NML), a law and development center, and the Center for Strategic and International Studies (CSIS) Global Food Security Project traveled to Kenya and India over a two-week period in the summer of 2017 and met with farmers, donor programs, government and private-sector leaders, and other stakeholders to gather insight on the issues impacting trade and food security from the farmer up through international markets. These consultations combined with research conducted by NML resulted in broad recommendations for U.S. policymakers to consider so that the United States could best support food security, market-based regulation, mutually beneficial trade, and economic development.
These recommendations come at a critical time, as each of the 12 Feed the Future focus countries, including Kenya, is currently developing strategic plans under the new phase of the global hunger and food security initiative. (India is considered an aligned country.) Further, the implementation plan for the U.S. Global Food Security Strategy, which was submitted to Congress in October 2017, emphasizes the need to address the entire agricultural and food system, including trade, and underscores the importance of facilitating change in the enabling environment to strengthen markets.
Place income generation and market diversification at the core of food security efforts. This would include complementing the existing emphasis on grains with a greater focus on fruits and vegetables and less commercialized crops, such as beans, that hold promise for farmers in food-insecure areas. Efforts to diversify could also address changing consumer preferences and nutrition needs and provide opportunities for trading partners such as the United States.
Focus on the practical aspects of making regional trade work, especially in sub-Saharan Africa. In particular, implementation of regional rules and standards needs to be strengthened in areas important to food security and trade, such as regional standards and rules on inputs (seed and fertilizer), transport, storage, and crossborder trade.
Implement market and regulatory approaches that can leapfrog gaps in agricultural markets and food security systems. These include farmer aggregation models, contract farming approaches, food traceability systems, pest and disease management, and agricultural financing approaches.
Strengthen exchange of technology and know-how through both trade and donor assistance. This could include expanding the reach of technological solutions to address market and productivity challenges, and increasing focus on the corresponding regulatory environment at both the enterprise and institutional levels.
Support new models for improving market-based regulation that put the needs of farmers, consumers, and market innovators first. These stakeholders tend to be left out of the policymaking process, and policy measures and legal approaches (which could incorporate technological solutions) could be prioritized to ensure that their needs are incorporated into the system. At the policy level, it is time to launch a food security initiative at the WTO, and it should be a focus at the upcoming Eleventh WTO Ministerial Conference (MC11) in Argentina in December 2017.
Katrin Kuhlmann is a senior associate (non-resident) at CSIS’s Global Food Security Project. This article is an extract from a larger report.