Global Trade Trends: Market and Economics in Agriculture

Introduction In recent decades, global trade has become an increasingly important driver of economic growth and development, particularly in the agricultural sector. As countries have liberalized their trade policies and integrated their markets, the flow of agricultural products across borders has expanded rapidly, creating new opportunities and challenges for farmers, agribusinesses, and consumers around the world.

At the same time, the global agricultural market has been shaped by a complex array of factors, including changing consumer preferences, technological innovations, environmental pressures, and geopolitical tensions. Understanding these trends and their implications is critical for policymakers, industry leaders, and other stakeholders seeking to navigate the dynamic landscape of global agricultural trade.

Evolution of Agricultural Trade Policies

The WTO and Agricultural Trade Liberalization

One of the most significant developments in global agricultural trade in recent decades has been the establishment of the World Trade Organization (WTO) in 1995. The WTO is an international organization that provides a framework for negotiating and implementing trade agreements among its member countries, to promote free and fair trade in goods and services.

Under the WTO's Agreement on Agriculture (AoA), member countries committed to reducing trade barriers and subsidies in the agricultural sector, to create a more level playing field for farmers and exporters around the world.

The AoA established rules and disciplines on three main areas of agricultural trade policy:

  • Market access: The AoA required member countries to convert non-tariff barriers, such as quotas and import bans, into tariffs and to reduce those tariffs over time. It also established minimum access requirements for imported agricultural products.
  • Domestic support: The AoA categorized domestic agricultural subsidies into three "boxes" based on their level of trade distortion, and required member countries to reduce or eliminate the most trade-distorting subsidies (the "amber box") over time.
  • Export subsidies: The AoA prohibited the use of export subsidies for agricultural products, except for a limited number of products and under certain conditions.

While the AoA represented a significant step towards agricultural trade liberalization, its implementation has been uneven and controversial. Many developing countries have argued that the agreement favors developed countries, which have larger agricultural subsidies and more advanced agricultural sectors. Some countries have also criticized the slow pace of reform and the loopholes and exemptions that allow certain subsidies and trade barriers to persist.

Regional Trade Agreements and Preferential Trade Arrangements

In addition to the WTO, global agricultural trade has also been shaped by a proliferation of regional trade agreements (RTAs) and preferential trade arrangements (PTAs) in recent years. RTAs are reciprocal trade agreements between two or more countries that reduce or eliminate trade barriers among the participating countries, while PTAs are unilateral trade preferences granted by one country to another, often based on historical, political, or development considerations.

Some examples of major RTAs and PTAs affecting agricultural trade include:

  • The North American Free Trade Agreement (NAFTA), which liberalized trade in agricultural products among the United States, Canada, and Mexico, was recently renegotiated as the United States-Mexico-Canada Agreement (USMCA).
  • The European Union (EU), has a common agricultural policy (CAP) and a single market for agricultural products among its member states, as well as preferential trade agreements with many developing countries.
  • The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), is a free trade agreement among 11 countries in the Asia-Pacific region, including major agricultural exporters like Australia, Canada, and New Zealand.
  • The African Continental Free Trade Area (AfCFTA), is a recently launched trade agreement among 54 African countries aimed at boosting intra-African trade and economic integration, including in the agricultural sector.

RTAs and PTAs can have significant impacts on agricultural trade flows and market access, creating new opportunities for exporters in the participating countries while also raising concerns about trade diversion and discrimination against non-participating countries. They can also create complex and overlapping rules and standards that can be challenging for farmers and agribusinesses to navigate.

Trade Facilitation and Non-Tariff Measures

In addition to reducing tariffs and other traditional trade barriers, global agricultural trade has also been influenced by efforts to facilitate trade and address non-tariff measures (NTMs) that can impede the flow of goods across borders. Trade facilitation refers to measures that simplify and harmonize international trade procedures, such as customs clearance, border inspections, and documentation requirements, to reduce the time and costs of trading.

The WTO's Trade Facilitation Agreement (TFA), which entered into force in 2017, is a major global initiative aimed at streamlining trade procedures and reducing red tape in international trade. The TFA includes provisions on transparency, predictability, and cooperation among customs authorities, as well as technical assistance and capacity building for developing countries.

NTMs, on the other hand, refer to policy measures other than tariffs that can affect trade, such as sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), and other regulatory requirements. NTMs can be important tools for protecting public health, safety, and the environment, but they can also be used as disguised trade barriers that discriminate against imports or create unnecessary obstacles to trade.

The WTO's SPS and TBT Agreements provide rules and guidelines for the application of NTMs in international trade, to ensure that they are based on scientific evidence, are not more trade-restrictive than necessary, and do not discriminate against imports. However, the implementation of these agreements has been challenging, particularly for developing countries that may lack the capacity and resources to comply with complex and varying standards across different markets.

Impact of Trade on Agricultural Production and Prices

Trade and Agricultural Productivity

One of the key ways in which trade can impact agricultural production is through its effects on productivity and efficiency. By exposing farmers to international competition and providing access to new markets, trade can create incentives for farmers to specialize in crops or products in which they have a comparative advantage, adopt new technologies and production methods, and achieve economies of scale.

Studies have shown that countries that are more open to trade tend to have higher levels of agricultural productivity and efficiency than those that are more closed or protected. For example, a study by the World Bank found that countries that liberalized their agricultural trade policies in the 1980s and 1990s experienced faster growth in agricultural productivity than those that maintained high levels of protection.

However, the relationship between trade and agricultural productivity is not always straightforward or positive. In some cases, trade liberalization can lead to the displacement of small-scale or subsistence farmers who are unable to compete with cheaper imports or who lack access to the resources and technologies needed to improve their productivity. Trade can also create environmental pressures, such as the overexploitation of natural resources or the expansion of monoculture production systems, that can undermine the long-term sustainability and resilience of agricultural systems.

Trade and Agricultural Prices

Another way in which trade can impact agricultural production is through its effects on prices. By connecting farmers to global markets and exposing them to international supply and demand factors, trade can influence the prices that farmers receive for their products, as well as the prices that consumers pay for food and other agricultural goods.

In theory, trade liberalization should lead to the convergence of agricultural prices across countries, as the removal of trade barriers allows prices to be determined by global supply and demand rather than by domestic policies or market distortions. This can create opportunities for farmers in countries with a comparative advantage in certain products to receive higher prices for their exports, while also providing consumers with access to a wider variety of products at lower prices.

However, in practice, the impact of trade on agricultural prices can be more complex and variable. Agricultural prices are influenced by a wide range of factors beyond trade, including weather conditions, production costs, exchange rates, and government policies. Trade can also create price volatility and uncertainty for farmers, particularly in developing countries that may be more vulnerable to global market shocks and fluctuations.

Moreover, the benefits and costs of trade-induced price changes can be unevenly distributed across different groups of farmers and consumers. For example, while trade liberalization may benefit larger-scale or export-oriented farmers who can take advantage of new market opportunities, it may harm smaller-scale or subsistence farmers who are unable to compete with cheaper imports or who lack access to the resources and infrastructure needed to participate in global value chains.

The Role of Global Value Chains

In recent decades, global agricultural trade has been increasingly characterized by the rise of global value chains (GVCs), in which different stages of production and processing are carried out in different countries before the final product reaches the consumer. GVCs have been driven by factors such as advances in transportation and communication technologies, the growth of multinational agribusiness companies, and the increasing demand for processed and value-added agricultural products.

GVCs can offer both opportunities and challenges for farmers and agricultural producers in developing countries. On the one hand, participating in GVCs can provide access to new markets, technologies, and skills, as well as the potential for higher and more stable prices for their products. On the other hand, GVCs can also create risks and vulnerabilities, such as dependence on a limited number of buyers or suppliers, exposure to price and quality standards set by lead firms, and limited value capture and upgrading opportunities.

To maximize the benefits and minimize the risks of participating in GVCs, farmers and agricultural producers in developing countries may need support in areas such as market intelligence, quality and safety standards, logistics and infrastructure, and collective action and bargaining power. Governments and development partners can play a role in providing this support, as well as in creating an enabling policy and institutional environment for GVC participation and upgrading.

Role of Emerging Markets and Developing Countries

The Rise of Emerging Markets

One of the most significant trends in global agricultural trade in recent decades has been the rise of emerging markets, particularly in Asia and Latin America. Countries such as China, India, Brazil, and Indonesia have become major players in the global agricultural market, both as producers and consumers of agricultural products.

The growth of emerging markets has been driven by factors such as population growth, rising incomes and urbanization, and changing consumer preferences and diets. As these countries have become more affluent and integrated into the global economy, they have seen a rapid expansion of their middle classes and a growing demand for higher-value and processed agricultural products, such as meat, dairy, and packaged foods.

At the same time, many emerging markets have also become significant agricultural exporters, taking advantage of their natural resource endowments, low labor costs, and improving productivity and infrastructure to compete in global markets. For example, Brazil has become the world's largest exporter of soybeans, sugar, and coffee, while China is the world's largest producer and consumer of pork and a major importer of soybeans and other feed grains.

The rise of emerging markets has had significant impacts on global agricultural trade flows and market dynamics. On the demand side, the growth of these countries has created new opportunities for agricultural exporters in developed and developing countries alike, as well as challenges in meeting the evolving preferences and standards of these markets. On the supply side, the increasing competitiveness of emerging market producers has put pressure on traditional agricultural exporters and raised concerns about issues such as environmental sustainability, labor standards, and food safety.

The Challenges and Opportunities for Developing Countries

For many developing countries, particularly those in Africa and Southeast Asia, agricultural trade represents both a challenge and an opportunity for economic growth and development. On the one hand, these countries often face significant constraints in terms of infrastructure, productivity, and market access that can limit their ability to compete in global markets and benefit from trade. On the other hand, agriculture remains a key sector for employment, income generation, and food security in many developing countries, and trade can provide a pathway for diversification, value addition, and poverty reduction.

To realize the potential benefits of agricultural trade, developing countries may need to address a range of supply-side and demand-side challenges. On the supply side, this may involve investments in areas such as research and development, extension services, irrigation and transportation infrastructure, and standards and certification systems. It may also require policies and institutions that support the competitiveness and resilience of small-scale farmers and agribusinesses, such as access to credit, insurance, and market information.

On the demand side, developing countries may need to focus on diversifying their export markets and products, as well as on meeting the evolving quality, safety, and sustainability standards of global buyers and consumers. This may involve strategies such as value chain development, product differentiation, and branding, as well as partnerships and alliances with other countries and private sector actors.

At the same time, developing countries may also need to manage the potential risks and trade-offs associated with greater integration into global agricultural markets, such as exposure to price volatility, competition from imports, and displacement of traditional livelihoods and food systems. This may require policies and social protection measures that help to buffer against shocks and support the resilience and adaptability of rural communities and households.

South-South Trade and Regional Integration

Another important trend in global agricultural trade in recent years has been the growth of South-South trade and regional integration among developing countries. South-South trade refers to trade between developing countries, as opposed to trade between developed and developing countries (North-South trade). Regional integration refers to the process of increasing economic cooperation and coordination among countries within a particular geographic region, often through trade agreements, common markets, and other institutional arrangements.

South-South trade and regional integration can offer several potential benefits for agricultural development and food security in developing countries. By increasing trade and investment flows among countries with similar levels of development and agroecological conditions, these initiatives can help to build regional value chains, promote technology transfer and knowledge sharing, and increase the competitiveness and bargaining power of small-scale farmers and agribusinesses.

For example, the African Continental Free Trade Area (AfCFTA), which was launched in 2019, aims to create a single market for goods and services across 54 African countries, to boost intra-African trade and accelerate economic growth and development. The AfCFTA is expected to have significant impacts on the agricultural sector, by reducing trade barriers, harmonizing standards and regulations, and promoting value addition and diversification.

Similarly, the Association of Southeast Asian Nations (ASEAN) has established a range of initiatives to promote regional cooperation and integration in the agricultural sector, such as the ASEAN Integrated Food Security Framework and the ASEAN Food Safety Network. These initiatives aim to address common challenges such as food insecurity, climate change, and sustainable resource management, while also promoting trade and investment in the region.

However, realizing the potential benefits of South-South trade and regional integration in the agricultural sector may also require addressing a range of challenges and barriers, such as inadequate infrastructure, limited institutional capacity, and divergent national interests and priorities. It may also require complementary policies and investments in areas such as education, health, and social protection, to ensure that the benefits of trade and integration are broadly shared and inclusive.

Challenges and Opportunities for the Global Agricultural Trade System

Climate Change and Environmental Sustainability

One of the major challenges facing the global agricultural trade system in the coming decades is the impact of climate change and environmental degradation on agricultural production and trade. Climate change is expected to have significant impacts on agricultural productivity, water availability, and land use patterns around the world, with particularly severe consequences for developing countries and small-scale farmers.

At the same time, agriculture is also a major contributor to greenhouse gas emissions and other environmental impacts, such as deforestation, soil degradation, and biodiversity loss. As concerns about climate change and sustainability have grown, there has been increasing pressure on the agricultural sector to adopt more sustainable and resilient production practices, as well as to reduce its environmental footprint.

These challenges have important implications for global agricultural trade, as they may affect the comparative advantages and competitiveness of different countries and regions, as well as the costs and risks associated with agricultural production and trade. For example, countries that are more vulnerable to climate change impacts, such as droughts, floods, and sea-level rise, may face increasing constraints on their agricultural production and export capacity, while countries with more resilient and sustainable agricultural systems may gain a competitive advantage in global markets.

To address these challenges, the global agricultural trade system may need to evolve in ways that prioritize sustainability, resilience, and adaptation, while also ensuring food security and livelihoods for farmers and rural communities. This may involve a range of strategies and innovations, such as:

  • Promoting sustainable and climate-smart agricultural practices, such as agroforestry, conservation agriculture, and precision farming, through trade incentives, standards, and partnerships.
  • Developing and scaling up new technologies and business models, such as digital agriculture, supply chain traceability, and climate finance, can help to mitigate risks and create value for farmers and consumers.
  • Strengthening international cooperation and coordination on issues such as climate change adaptation, biodiversity conservation, and sustainable land and water management, through trade agreements, multilateral institutions, and multi-stakeholder initiatives.
  • Supporting the capacity and resilience of small-scale farmers and rural communities, through investments in infrastructure, extension services, social protection, and other enabling conditions for sustainable and inclusive agricultural development.

Technology and Innovation

Another major trend shaping the future of global agricultural trade is the rapid pace of technological change and innovation in the agricultural sector. In recent years, there has been a proliferation of new technologies and business models that are transforming the way that agricultural products are produced, processed, and traded around the world.

Some examples of these technologies and innovations include:

  • Precision agriculture: The use of sensors, drones, and other digital tools to optimize crop management and resource use, based on real-time data and analytics.
  • Biotechnology: The development and commercialization of new crop varieties and traits, such as drought tolerance, pest resistance, and nutritional enhancement, through genetic engineering and other techniques.
  • E-commerce and digital platforms: The use of online marketplaces, mobile apps, and blockchain technologies to connect farmers and buyers, improve supply chain efficiency and transparency, and create new market opportunities.
  • Vertical farming and urban agriculture

Technology and Innovation (continued)

  • Vertical farming and urban agriculture: The development of indoor and vertical farming systems that can produce high-value crops in urban and peri-urban areas, using advanced technologies such as hydroponics, LED lighting, and climate control.
  • Alternative proteins: The growth of plant-based, insect-based, and cell-based protein products as sustainable and healthy alternatives to conventional animal proteins, with potential implications for global feed and livestock markets.

These technologies and innovations offer both opportunities and challenges for global agricultural trade. On the one hand, they can help to increase productivity, reduce costs and risks, and create new value-added products and services that can differentiate producers and exporters in global markets. On the other hand, they can also disrupt traditional supply chains and business models, create new barriers to entry and competition, and raise new concerns about intellectual property rights, data privacy, and consumer acceptance.

To harness the potential benefits of these technologies and innovations for global agricultural trade, policymakers and stakeholders may need to adopt a range of strategies and approaches, such as:

  • Investing in research and development, infrastructure, and human capital to support the adoption and diffusion of new technologies and innovations in the agricultural sector, particularly in developing countries and among small-scale farmers.
  • Developing and harmonizing standards, regulations, and trade rules to ensure the safety, quality, and sustainability of new agricultural products and technologies, while also promoting innovation and competition.
  • Promoting public-private partnerships and multi-stakeholder collaborations to share knowledge, resources, and risks associated with the development and scaling of new technologies and business models in the agricultural sector.
  • Addressing the social and economic impacts of technological change and innovation on farmers, workers, and communities, through policies and programs that support skills development, social protection, and inclusive growth.

Geopolitical Tensions and Trade Disputes

A third major challenge facing the global agricultural trade system in the coming years is the rise of geopolitical tensions and trade disputes among major agricultural exporters and importers. In recent years, there has been a growing trend towards protectionism, unilateralism, and regionalism in global trade policy, driven by factors such as economic nationalism, security concerns, and domestic political pressures.

Some examples of these geopolitical tensions and trade disputes in the agricultural sector include:

  • The U.S.-China trade war: The escalating tariffs and trade restrictions between the world's two largest economies have significantly disrupted global markets for soybeans, pork, and other agricultural products.
  • The U.S.-EU trade disputes: The ongoing disagreements between the United States and the European Union over issues such as agricultural subsidies, food safety standards, and geographical indications, have hindered the prospects for a comprehensive trade agreement between the two regions.
  • The Brexit process: The uncertainty and potential trade barriers associated with the United Kingdom's withdrawal from the European Union, could affect agricultural trade flows and standards between the two parties and with other countries.
  • The growing influence of China: The increasing economic and political power of China in global agricultural markets, through its strategic investments, trade agreements, and development initiatives in Africa, Asia, and Latin America, have raised concerns about food security, sustainability, and geopolitical influence.

These geopolitical tensions and trade disputes can create significant risks and uncertainties for global agricultural trade, by disrupting supply chains, increasing costs and barriers, and undermining the rules-based multilateral trading system. They can also exacerbate existing inequalities and vulnerabilities in the global food system, particularly for developing countries and small-scale farmers that may have limited bargaining power and resilience to trade shocks.

To mitigate these risks and promote a more stable, inclusive, and sustainable global agricultural trade system, policymakers and stakeholders may need to pursue a range of strategies and initiatives, such as:

  • Strengthening the rules-based multilateral trading system, through reforms and negotiations at the World Trade Organization and other international forums, to address key issues such as agricultural subsidies, non-tariff barriers, and special and differential treatment for developing countries.
  • Promoting regional and plurilateral trade agreements that can provide a more flexible and targeted approach to agricultural trade liberalization and cooperation, while also ensuring coherence and compatibility with multilateral rules and norms.
  • Enhancing transparency, dialogue, and trust-building among major agricultural trading partners, through regular consultations, information sharing, and joint initiatives on issues of common interest, such as food security, climate change, and sustainable development.
  • Supporting the capacity and resilience of developing countries and small-scale farmers to participate in and benefit from global agricultural trade, through aid for trade, technical assistance, and other forms of international cooperation and partnership.


Global trade trends in agriculture are shaped by a complex interplay of economic, technological, environmental, and geopolitical factors, which create opportunities and challenges for farmers, agribusinesses, and consumers around the world. While trade liberalization and integration have contributed to significant growth and transformation in the global agricultural sector in recent decades, they have also raised new questions and concerns about the sustainability, inclusivity, and resilience of the global food system.

To address these challenges and opportunities, policymakers and stakeholders in the global agricultural trade system may need to adopt a more holistic, collaborative, and adaptive approach that takes into account the diverse needs, interests, and capacities of different countries and stakeholders. This may involve a range of strategies and initiatives, such as:

  • Promoting sustainable and inclusive agricultural practices and technologies that can increase productivity, reduce environmental impacts, and create new value-added products and services, while also supporting the livelihoods and resilience of small-scale farmers and rural communities.
  • Strengthening the rules-based multilateral trading system and promoting regional and plurilateral trade agreements that can provide a more stable, transparent, and equitable framework for agricultural trade, while also addressing key issues such as subsidies, non-tariff barriers, and special and differential treatment for developing countries.
  • Enhancing international cooperation and partnerships on issues such as climate change, food security, and sustainable development, through multi-stakeholder initiatives, knowledge sharing, and capacity building, to support the transition towards a more sustainable, resilient, and inclusive global food system.
  • Investing in research, innovation, and infrastructure can help to harness the potential benefits of new technologies and business models in the agricultural sector, while also mitigating the risks and challenges associated with technological change and disruption.

By pursuing these strategies and initiatives, the global agricultural trade system can play a crucial role in achieving the Sustainable Development Goals and creating a more prosperous, equitable, and sustainable future for all.