Food for Thought: How Should We Secure Global Trade in Agriculture?

The Russian invasion of Ukraine has significantly disrupted global trade in agriculture, causing ripple effects worldwide, particularly throughout the Middle East and Sub-Saharan Africa. In Africa, a confluence of factors, including the conflict in Ukraine, has increased hunger by 20 percent. These effects have led to fears that the crisis will plunge regions already affected by historic levels of food insecurity into even deeper distress. The invasion has also led to fears that global food prices will increase beyond March 2022 prices, the highest on record, leading to further record highs and potential political unrest.

Recently, the G20 met in Bali and released a statement emphasizing the importance of avoiding export restrictions on food and fertilizers. It issued support for an “open, transparent, inclusive, predictable, and non-discriminatory, rules-based agricultural trade based on WTO rules,” in light of a World Trade Organization (WTO) report that revealed export restrictions were on the rise.

Q1: How has the Russian invasion of Ukraine impacted global agriculture trade?

A1: Russia is known for its commodity-based export economy, and Ukraine has historically maintained strong agricultural exports. Together, Russia and Ukraine account for a quarter of the global grain supply. The tensions in the regions have disrupted wheat and sunflower oil production, as well as the production of fuel and fertilizers . Global fertilizer prices spiked as well due to disruptions in potash and nitrogen. Russia and Belarus account for 40 percent of global potash production and Russia accounts for 20 percent of the world’s nitrogen, causing an uptick in the global price of fertilizers. Prior to the war, 25 countries relied on Russia and Ukraine for at least 50 percent of their wheat imports. During Russia’s blockade of the Black Sea, the United States and the European Union accused Russia of “exporting starvation.”

The effects of the Russian invasion of Ukraine throughout the global agricultural trade, in part a result of international institutional failure, have led to steep food prices and acute hunger crises. According to the Food and Agriculture Organization of the United Nations (FAO), 20–30 percent of land for winter crops in Ukraine will remain unsown this year. Countries around the world are already reeling from the disruption to the global grain trade. Tunisia, for example, has seen significant upticks in the cost of food. Its reliance on Ukraine and Russia for 56 percent of its wheat endangers its stability for the foreseeable future.

Q2: What problems do export bans produce?

A2: Since the onset of this crisis, 25 countries have implemented export restrictions on food items, equal to roughly 8.95 percent of the associated share in the global trade of calories. While not all these new barriers are a direct response to the Ukraine crisis, a significant portion is related to the trade of grains. For example, wheat is subject to restrictions in 13 countries, and corn faces export barriers in 10 countries.

After Russia invaded Ukraine, India announced it would sell wheat on the global markets, seeking record shipments abroad when prices they could fetch globally were higher than the government-imposed price. In May, however, India announced an export ban on wheat due to extreme weather that significantly increased local prices. While they are not considered a major wheat exporter, they are one of the largest wheat producers in the world, and global buyers had been depending on an increase in supply from India to backfill shortages from Ukraine.

India is not alone in this protectionist approach to food security. Other governments have also restricted food exports. Malaysia has banned chicken exports, and Indonesia temporarily suspended exports of palm oil. Argentina did not impose an outright ban, but in March it increased export taxes on soybean oil and meal products as well as decreased the wheat export limit, citing increasing inflationary factors.

In 2007–2008, the world faced a similar global food crisis as grain prices rose astronomically in a short period of time. At its peak, the cereal price index was 2.8 times higher in 2008 than in 2000. Rice prices increased 150 percent that same year. Many factors contributed to this crisis, such as an increase in oil prices, excessive speculation of food commodity prices, and widespread droughts in major grain-producing regions.

Only one-quarter of global food consumption depends on international trade, but trade plays a vital role in price stabilization and can dilute the effects of supply and demand shocks. During the 2007–2008 crisis, ensuing food export bans exacerbated the effects of the crisis, and it was later estimated that food export restrictions were responsible for 40 percent of the increase in prices during that crisis.

Given that Ukrainian exports account for 10 percent of the global wheat and corn trade and two-thirds of the world’s sunflower meal, the global community cannot afford the implementation of policies that would further restrict the trade of food. As Germany’s food and agriculture minister said, "If everyone starts to impose export restrictions . . . that would worsen the crisis.”

Q3: What role do multilateral forums and the WTO play in promoting global food security and agricultural trade?

A3: In 2008 the crisis was painful for the developing world; however, world leaders were occupied with the global financial crisis and missed an opportunity to establish a multilateral framework that would reduce the effects of future food shortages. Because pressures from an increasingly tense geopolitical environment and a warming climate then led to profound changes in the global agricultural system, the international community should preempt some of the most dire shocks of this evolving environment by creating an international structure through which countries can diplomatically resolve issues relating to crop failure and food insecurity.

As world leaders face a food crisis once again—due to what the United Nations Population Fund (UNFP) described as the “Three C’s”—Covid-19, climate change, and regional conflicts—leaders have an opportunity to establish new rules for the future. The G7 announced $4.5 billion to address global food security this June. Furthermore, at the Global Food Security Summit on the sidelines of the UN General Assembly, Secretary of State Antony Blinken discussed the convergence of these issues and underlined the staggering number of people experiencing acute food insecurity. President Biden also announced $2.9 billion in new assistance to address global food insecurity at the UN General Assembly.

WTO deputy director-general Jean-Marie Paugam noted in July 2022 remarks at the Annual Conference of the WTO Chairs Program (WCP) that food security, climate concerns, and trade had historically been treated as separate, but that the current global landscape is resulting in a clear overlap:

If we want to succeed, and we need to succeed in embracing agricultural trade reform tomorrow, I bet that we will need to devise a creative way of renewing discussions on agriculture in the WTO. One way to start could be to look at the two ‘non-trade concerns’ from the Uruguay Round: food security and the environment, which have become central to agricultural policies today.

The WTO now has a historic opportunity to build on its Agreement on Agriculture by capitalizing on the current momentum behind the need for trade that rewards sustainability and increases resiliency. Several plurilateral negotiations—which consist of smaller groups of countries and are therefore more agile—have materialized at the WTO in recent years, including several that deal directly with climate change and sustainability issues. For example, the Trade and Environmental Sustainability Structured Discussions (TESSD) plurilateral, which has over 55 cosponsors, seeks to accelerate discussions on environmental trade and decarbonization.

Overall, the WTO has the capacity to build an even more robust framework for the future that seeks to resolve two interrelated issues: food security and climate change.

Although some have argued that the world is likely to move to a system of mini-lateral deals that could cover specific food security issues (for example, India announced in June that it would export wheat to the United Arab Emirates only for domestic consumption) mini-lateral deals will prove ineffective for combating a systemic implementation of controls on food exports because they concentrate food supply sources in the hands of a few countries. Only a multilateral solution will effectuate policies that facilitate a functioning global food trade.

Separate from the mini-laterals, the United States has included language on food security in the recent negotiations on the Indo-Pacific Economic Framework (IPEF). This multilateral economic arrangement is wide in scope on trade and investment matters. Short of offering market access concessions, however, the countries will come under increased scrutiny to deliver concrete outputs, one of which could include action on food security. For example, the IPEF ministerial statement on trade indicated that the partners would work in concert to “avoid unjustified prohibitions or restrictions on food and agricultural exports.”

Q4: What steps has the Biden administration taken to fortify global food supply chains?

A4: The war in Ukraine and the Covid-19 pandemic have highlighted weaknesses in the global food system. The Biden administration has taken a stronger stance on food security issues than the previous administration. Food security has been examined as both an international challenge for national security but also as a domestic supply chain risk. In July 2022 Congress directed the intelligence community to investigate food security issues stemming from the war in Ukraine.

Both the State Department and the U.S. Agency for International Development (USAID) have been calling for a greater response to food security. Also highlighting the connection between climate issues and instability around the world. Special Envoy for Global Food Security Cary Fowler stated a need to focus on the Three C’s of Covid-19, conflict, and climate, and their effects on world food systems right now. Similarly, in October 2022 at a speech in Iowa, USAID administrator Samantha Power outlined a strategy released jointly with U.S. Department of Agriculture that prioritized the United States’ leadership in generating sustainable solutions to food insecurity:

Today, as we stare down a global food crisis and as we have to anticipate more climate- induced pressure on food production in the future, it is clear that we must learn the lessons of the past, and tailor and scale our methods to the world that we now face. A world where climate change is wreaking havoc on crop production. A world where agriculture, itself, can be a leading source of environmental stress.

Even before the global strain of the Ukrainian crisis, a National Intelligence Estimate on the implications of climate change mentioned the impact of food security as a driver of instability abroad. The report stated that shifts in energy, food, and water security can “exacerbate poverty, tribal or ethnic intercommunal tensions, and dissatisfaction with governments, increasing the risk of social, economic, and political instability.” The recent DNI Global Trends Report for 2040 includes scenarios where environmental degradation exacerbates food and water insecurity globally. They look at the challenges poor countries face with the costs of global warming disproportionately falling on the developing world. This not only threatens human life but also can contribute to political violence, conflict, and state collapse.

In a more domestically oriented decision, on November 10, 2022, Biden signed a National Security Memorandum (NSM-16) to strengthen the resilience of U.S. food and agriculture. This build upon the executive order in February 2021 to strengthen all critical supply chains, including agriculture. This executive order aims to identify threats to U.S. food security, but it is important to note that export bans are not a policy option.

Q5: What does the current crisis in Ukraine indicate about the future of global food supply chains?

A5: The Russian invasion of Ukraine and the ensuing food crisis highlights the fragility of the international system and underscores the urgent need for new dialogues within the international trade architecture to ensure that the global community is prepared for future shortages and that it has the diplomatic and legal mechanisms in place to distribute the impact of multiple crises in a more decentralized way, thereby decreasing the acuteness of crises on the world’s most vulnerable populations. Without significant changes to the global trade architecture, it is likely that countries, amid increasing political and economic pressure, will implement additional export restrictions that will reduce resiliency and increase inflationary pressures. The G20 recently stated that there is a “need to update global agricultural food trade rules and to facilitate trade in agricultural and food products, as well as the importance of not imposing export prohibitions or restrictions on food and fertilizers in a manner inconsistent with relevant WTO provisions,” yet 44 percent of the current food restrictions originate in G20 countries.

The effects of climate change, including wildfires, droughts, and flooding, will continue to threaten agricultural production in traditional breadbaskets. As Cornell economics professor Christopher Barrett notes, “the world needs orderly trade regimes to absorb the shocks that inevitably occur, especially as climate change progresses.” To reduce the potentially disastrous consequences during the transition to a new global agricultural map, the global community should establish the frameworks to manage this transition rather than resorting to an autarkic system in which protectionist barriers exacerbate world hunger and lead to more widespread conflict.

With climate change accelerating and the likelihood of continued instability in Ukraine, the risks to the global food supply are profound. The fallout from the Russian invasion of Ukraine highlights a tragic shortcoming of the global system to institute policies that would more evenly distribute the effects of crises. Launching a new plurilateral negotiation on agricultural trade and food security would learn from these mistakes while capitalizing on the current momentum behind plurilateral negotiations.

Emily Benson is a senior fellow with the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Elizabeth Duncan was an intern with the Scholl Chair at CSIS.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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Emily Benson
Director, Project on Trade and Technology and Senior Fellow, Scholl Chair in International Business

Elizabeth Duncan

Intern, Scholl Chair in International Business