International Trade of Agricultural Commodities + Food

Question 1

how is the food supply managed in developed countries?

Answer 1

through retail outlets.

• many processed foods
• local growing season became irrelevant (since we can get food from anywhere in the world)

Question 2

which type of staples are dominating our calory intake?

Answer 2

grain- and rice-based foods

Question 3

what is the primary resource of animal feed?

Answer 3

grain (soybean, maize)

Question 4

what are important energy sources in processed foods?

Answer 4

vegetable oils - soybean, palm, rapeseed, sunflower

Question 5

define the trends of per-capita availability of foods depending on the level of development (high-income, middle-income, and low-income)

Answer 5

high income: near saturation levels (almost same levels of all types of food)
middle income: growing income per capita is increasing the animal products consumption
low income: mostly just staples (grain, rice)

Question 6

what are the uses of agricultural commodities? (4 main groups with subgroups)

Answer 6

(everything depends on demographics, income, prices, and preferences, which in turn affect total utility)
1. food
- crop
- livestock
- fish
2. feed
(depending on animal product demand)
(depending on livestock production systems, which depend on policy and other factors like tech)
3. biofuels
(depending on transport fuel demand, economic activity, and policies)
4. other (fibres and biobased products)

Question 7

what are the 1st generation of biofuels and what is their trend currently?

Answer 7

coarse grains, oilseeds.
they are currently in decline and are being replaced with 2nd generation biofuels (agricultural residues, enzyme treatment)

Question 8

which countries drive the biofuel demand? why?

Answer 8

Asian middle-income countries.
they implemented policies with 3 objectives:
1. support commitments to reduce CO2 emmissions
2. reduce dependency on imported fossil fuels
3. create additional demand for feedstock crops to support domestic production

Question 9

what are the EU levels of expense on food and non-alchoholic beverages? (1st, 2nd, 3rd, …)

Answer 9

2nd highest expense, staying stable overall (but shifts in product characteristics)

Question 10

which key commodity group demand has risen the most in the past 9 years? (due to per capita demand, not population growth)

Answer 10

vegetable oil

Question 11

which part of the world (/country) has had the highest demand of fresh dairy in the past 9 years?

Answer 11

india

Question 12

which part of the world (/country) has had the highest demand of cereals in the past 9 years?

Answer 12

sub-saharan africa

Question 13

what is the current challenge of agricultural output growth?

Answer 13

how to meet the demand for a growing population, along with a rise in food consumption (higher calorie intake)

Question 14

what is the current trend of undernourished population, obese population, and food waste?

Answer 14

undernourished popoulation remains the same, while obesity and food waste levels are increasing

Question 15

what is the actual ‘food problem’

Answer 15

it is not about output (supply meeting demand), but about distribution of the current output

Question 16

what has been the recent trend (past 2 years) for livestock and where has it been seen the most?

Answer 16

it’s been exponentially increasing, mostly in China and Asia Pacific (mostly other countries, but also India)

Question 17

what have been 3 recent developments regarding land use?

Answer 17

• area of cereals + oilseeds still increasing (deforestation to get ‘virgin land’)
• area of soybean increased the most (mainly Brazil and Argentina)
• area of maize increased (use for animal feed and ethanol)

Question 18

how is (or could be) demand met with the same area (land) used?

Answer 18

with increasing yields = productivity growth, increasing unit output per hectare of land/animal unit.
done with improving technologies, fertilization, irrigation, GMOs

Question 19

what is the problem of increasing yields as means of meeting the demand?

Answer 19

they are highly dependent on the climate, i.e. natural environment (fluctuating rainfall seems to be the biggest problem)

Question 20

has the world agriculture sector reached the limits of growth in either land area or productivity (yields)?

Answer 20

not everywhere - there are still parts of the world where agriculture 4.0 could be implemented.
additionally, sustainable intensificaiton is the way forward (vertical farming, lab-grown meat, algae, new tech)

Question 21

def primary agricultural commodities. what has been their trend?

Answer 21

= the first link in the food chain

their alternative uses have been rising in importance (for energy, fibres)

Question 22

which agricultural commodities are most traded internationally? (6)

Answer 22

skim milk powder, whole milk powder, soybean, vegetable oil, sugar, cotton

Question 23

what are the predicted levels of international trade of agricultural commodities? why are they like that?

Answer 23

it will still expand for most types (except e.g. pork and biofuels), but much MUCH slower than in the last 9 years.
that’s because of slower demand growth in China + lower global demand in biofuels

Question 24

what are the average concentration rates in agr. comm. export markets? what do they mean?

Answer 24

these concentration rates tell us how many exporters there are in the market - how many participants there are.
generally, almost all markets have a concentration rate over 70%, except the fish market. the highest are soybean, pork, and maize.

Question 25

which AC (agr. comm.) are mostly consumed in the country of origin? why?

Answer 25

staples (rice, grains), due to strong tariff protections in those countries (Far East)

Question 26

which AC are almost fully exported?

Answer 26

soybeans (e.g. Argentina, US)

Question 27

are the price elasticities of supply (and demand) low or high? why?

Answer 27

high - price is very elastic.
international trade of AC has been slowing down, which means lower volumes going through it. any change in international supply quickly shows on prices

Question 28

what accelarates the slowing down of international AC trade?

Answer 28

political or trade disputes (Russia, US vs China), unexpected disruptions (covid)

Question 29

state two different non-tariff measures that present a barrier to international trade.

Answer 29

1. SPS = Sanitary and phytosanitary measures (food safety

2. TBT = technical measures (labeling, marking, and packaging measures to prevent contamination)

Question 30

what are countries doing to increase their food security? what is it also called?

Answer 30

self-sufficiency, food sovereignitiy

• limiting import into their countries (e.g. tariff increase)
• investments in agriculture
• increase of export tax (export restrictions)

Question 31

do all countries have established systems to control the agricultural sector?

Answer 31

yes, but in very different ways - depends on the natural environment, food safety, country resilience, politics (liberal vs protectionist)

Question 32

which countries work liberally in terms of the agricultural sector and which protectionistically?

Answer 32

liberal: new zealand, australia, brazil, russia
protectionist: japan, korea, norway, switzerland, US, EU

Question 33

what are the current reforms happening in the agriculutural sector? why?

Answer 33

• again trade barriers are being introduced (tariffs, bans, etc.)
• green policies may affect the global trade
  influenced by bilateral trade agreements (not multilateral!)

Question 34

which part of the agri-food chain is the most concentrated?

Answer 34

agro-chemicals, veterinary products, and traded seeds.

in terms of players: traders, processors, and retailers (farmers have weak position)

Question 35

def food dollar

Answer 35

widely used indicator that provides almost no indication of the level of competition on the market (bad bc we need that info)

Question 36

state 4 consequences of covid on the agri-food markets

Answer 36

1. stressed food supply chains (input bottlenecks bc of labour shortages, transport disruptions - border controls)
2. rapid shifts in consumer demand (food-away-from-home market collapsed)
3. remarkable resilience of food chains (flexible suppliers, alleviations of unnecessary restrictions)
4. risks to food security (systemic risks in lower-income countries)

Question 37

what are the expected trends of commodity prices in the future?

Answer 37

they are expected to follow a declining trend (as they have for about 50 years). however, unpredicted shocks like harvest failures or demand shocks could interrupt that trend

Question 38

which commodities will experience the quickest fall in real prices in the next 9 years?

Answer 38

rice, pork, and beef

Question 39

which additional risks do the AC markets face in the future (apart from the traditional risks)? (on the supply side) (5)

Answer 39

• spread of deseases
• growing resistance to antimicrobial substances
• policy changes regarding new plant breeding techniques
• increasingly likely climate change crises
• disruptive innovation (moving from fossil-based to bio-based)

Question 40

which additional risks do the AC markets face in the future (apart from the traditional risks)? (on the demand side) (3)

Answer 40

• evolving diets (health, sustainability)
• policy changes in response to increasing obesity
• future trading agreements between the major players (US, China)