By Peter Ungphakorn
POSTED APRIL 26, 2022 | UPDATED APRIL 26, 2022
Countries should avoid reacting hastily to the food security challenge posed by the war in Ukraine and avoid worsening the crisis, experts warned in a World Trade Organization (WTO) seminar today (April 26, 2022).
Presenting a grim picture for many countries, several speakers urged governments to keep trade flowing, not to take short term measures that could increase volatility and not to turn inward.
That was among several messages heard in the seminar, with a number of implications for WTO members and their efforts to modernise the rules of international agricultural trade.
Below are five takeaways from the seminar. The morning sessions were on the record. Some of the speakers are identified here. The afternoon sessions were under the Chatham House Rule and speakers are not identified.
Continue reading or jump to:
1. The situation is grim. Don’t make it worse | 2. Inputs are important too | 3. The WTO’s agenda only covers part of the problem | 4. The farm talks won’t help much in the short term | 5. No sign of positions narrowing in the agriculture negotiations
See also the programme, video of the morning session
The impact of the war in Ukraine in 2022 is now well-known: a crisis in supply, prices and food security in many countries. This contrasts with the 2020–21 responses to the COVID-19 pandemic when trade restrictions were short-lived and agricultural trade was more resilient than some other sectors. But the trend was already worsening in some parts of the world because of economic problems and conflict elsewhere.
The UN Food and Agriculture Organization (FAO), International Grains Council, World Food Programme, and others presented a lot of details globally and for specific countries.
The discussion included the components of food security: availability, access, affordability, utilisation and stability.
One of the points raised was that the world is producing enough food. The problem is inequality, which prevents the food from being supplied to everyone at affordable prices.
Getting the facts and the detail right matters, said Marion Jansen of the Organization for Economic Cooperation and Development. Ukraine and Russia supply 30% of world exports of wheat. That is well known. But less attention has been paid to the fact that they only account for about 6% of global production. Reacting to the 30% figure and not the 6% would be misplaced and increase volatility, she warned.
Trying to ensure food security by turning inward and focusing on the short run can backfire, she and other speakers warned. The World Food Programme’s policy recommendations were typical:
- Keep trade flowing and minimise disruptions to supply chains
- Avoid ad hoc policy reactions, export restrictions and import subsidies
- Exempt humanitarian assistance from export restrictions, taxes and distortions
- Strengthen market transparency to provide timely information
And so on.
The go-to source for international information on agricultural trade is now the multi-agency Agricultural Market Information System (AMIS), hosted by the FAO. But the Ukraine war has exposed a gap in its data.
AMIS focuses on agricultural products. The war has disrupted supplies of fertiliser and related products from Ukraine and Russia, and increased energy costs. Several speakers said this was also affecting agricultural production and trade, and food security.
The FAO said AMIS was considering adding inputs such as fertiliser to its data.
Another speaker said countries should be more transparent so AMIS can also compile data on food stocks.
It’s probably fair to say that the largest share of the seminar’s time was spent describing global and national problems. Some of it was linked clearly to policy responses, but not all of it, and not always within the scope of the WTO.
The WTO deals with international trade. The experiences shared by speakers throughout the day covered the full spectrum of challenges confronting agriculture. Those outside the WTO’s direct scope included the need to increase productivity, improve access to water, or deal with climate change.
(This is similar to the discussion of the policy response to the COVID-19 pandemic.)
The second largest share of the time was spent on areas of current, regular, routine WTO work. In other words not so much on negotiations to develop new WTO rules.
This included current WTO disciplines on export restrictions, keeping supply chains open, avoiding destabilising reactions, improving transparency (though better notifications to the WTO) so that export restrictions and other policies can be monitored better, and the role of buffer stocks.
Part of that did overlap with the third activity: the agriculture negotiations, which have a higher profile but are essentially deadlocked.
Planning for the seminar began before Russia invaded Ukraine. The original intention was to allow officials and experts to discuss food security in the hope that this would help move the deadlocked negotiations forward.
Some speakers did speak of the prospect of an outcome from the negotiations by the time WTO ministers meet in June. The truth is the negotiations show little sign of delivering anything concrete in the next two months.
The one decision ministers might be able to agree on is to exempt the World Food Programme from export restrictions. But after months if not years of discussion, agreement is still blocked by two countries, understood to be India and Tanzania.
The best that can be hoped from the negotiations is to improve the rules for the medium to long term. We cannot expect any agreement with immediate impact.
Just how much deadlocked members are was shown by the discussion over “public stockholding for food security.”
The problem here is now well-known. It is not about stockholding for food security as such. The problem is the much narrower question of how the stocks are acquired. If the government sets the prices for buying into its stocks, this is considered to be trade-distorting domestic support under WTO rules. The resulting concern is how the released stocks might impact other countries’ markets.
Speakers showed no signs of moving away from positions that have been held for years. Some insisted that their countries do need to purchased at government-set prices rather than at market prices when they build up the stocks.
“That right [to hold stocks] is not disputed,” one speaker replied. But “those public stockholding programmes should not damage other countries’ food security or cause distortions.”
Valeria Piñeiro of the International Food Policy Research Institute also accepted that buffer stocks are needed but said governments “are not great” at handling them. Buying and selling on the market is better, she suggested.
The closest the seminar ever got to a proper discussion about this was when one participant heard that Japan’s public stockholding switched in the 1990s from government-set prices (which were said to have turned into chaotic annual debates) to buying and selling at market prices, by tender. The participant wanted to know more. The answer was short. The moment passed.
This subject is crucial for two reasons. One is because it is itself deadlocked. The other is because some proponents are resisting agreement on anything else if there is no agreement on this.
Linked to it is a proposal for a “special safeguard mechanism” that would make it easier for developing countries to raise tariffs to protect their markets temporarily. This was mentioned briefly, with some saying it was needed for food security, and others warning that it could worsen food security by creating instability.
Several speakers from all sides of the debate did agree that domestic support disciplines need to be reformed so that entitlements are more equal and cause less distortion.
But as Costa Rica’s ambassador Gloria Abraham Peralta, who chairs the negotiations, said in November 2021: “Despite the broad agreement on the need to address trade-distorting domestic support, the views of members have continued to differ sharply.”
P.S. As is often the case in WTO meetings, Ukraine and Russia did exchange words, but not as strongly as has been reported in WTO committee meetings. Ukraine blamed Russia’s invasion for the disruption to supplies. Russia denied that it was to blame. A few speakers briefly condemned Russia for the invasion.
Updates: none so far
Ukraine cornfield | Eugene Mykulyak, Unspalsh licence