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Agricultural Trade, Global Value Chains and the Transition to Sustainable Food Systems Johan Swinnen International Food Policy Research Institute Brussels, Belgium | March 4, 2020 INFOPOINT SEMINAR

Agricultural Trade, Global Value Chains and the Transition

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Page 1: Agricultural Trade, Global Value Chains and the Transition

Agricultural Trade, Global Value Chains and

the Transition to Sustainable Food Systems

Johan Swinnen

International Food Policy Research Institute

Brussels, Belgium | March 4, 2020

INFOPOINT SEMINAR

Page 2: Agricultural Trade, Global Value Chains and the Transition

IFPRI @ World

Countries with significant research

IFPRI country program office

IFPRI regional office

IFPRI Headquarters

Page 3: Agricultural Trade, Global Value Chains and the Transition

IFPRI staff in DC Headquarters and outside HQ

IFPRI @ World

68%

46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Share of staff in DC Headquarters

206 230 254 284 275321 352 333 314 300 292 281

95116

123

183 202

211224 231 254 269 280 326

301

346377

467 477

532

576 564 568 569 572607

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Staff in DC

Staff outside DC

Page 4: Agricultural Trade, Global Value Chains and the Transition

IFPRI VISION

IFPRI MISSION

A world free of HUNGER and MALNUTRITION

To provide research-based policy solutions that sustainably reduce poverty

and end hunger and malnutrition.

Page 5: Agricultural Trade, Global Value Chains and the Transition

Global hunger is on the riseINDICATOR OF CHRONIC HUNGER (FAO)

822

10,8

5,0

7,0

9,0

11,0

13,0

15,0

17,0

300

400

500

600

700

800

900

1000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Pe

rce

nta

ge

Mill

ion

s

Number (Millions)

Prevalence (%)

Global undernourishment

(Millions and %)Regional undernourishment (%)

8,6

6,5

14,7

22,8

10,8

0

5

10

15

20

25

30

East andSoutheast

Asia

LAC South Asia Sub-SaharanAfrica

World

Pe

rcen

tage

2000 2005 2010 2015 2018

Page 6: Agricultural Trade, Global Value Chains and the Transition

Undernourishment in AfricaINDICATOR OF CHRONIC HUNGER (FAO)

Prevalence of undernourishment in

Africa (%)

Number undernourished in Africa

(millions)

199,7 196 199,8217,9

256,1

20

00

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

20

11

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Eastern Africa Middle Africa Northern Africa

Southern Africa Western Africa

0

5

10

15

20

25

30

35

40

45

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8Eastern Africa Middle Africa

Northern Africa Southern Africa

Western Africa Sub-Saharan Africa

Page 7: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Trade is key for sustainable

food security and nutrition

Trade can contribute to

• Food security

• Improving nutrition through diversification of food

baskets, producers, and suppliers

• Increasing productivity and sustainability by

facilitating diffusion of technology and innovation

• Giving poor farmers access to high value markets

• Stronger value chains, mitigating conflict, and to

higher quality and quantities of goods and services

Source: Martin and Laborde 2018

Page 8: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

0

10

20

30

40

50

60

70

80

1991 1996 2001 2006 2011 2016

No

min

al

rate

of

asis

tan

ce (

%)

OECD

-20

-10

0

10

20

30

40

50

60

70

80

1993 1998 2003 2008 2013

Non-OECD

Market Price Support

Coupled Subsidies

Decoupled Subsidies

Total Support

Large changes in trade distorting agricultural policies

Nominal Rates of Assistance (%) 1990-2016

Source: OECD and Laborde et al. 2019

Page 9: Agricultural Trade, Global Value Chains and the Transition

Agriculture andRural Development

CAP budget evolution and the proposal for the future

Source: DG AGRI.

0,0%

0,1%

0,2%

0,3%

0,4%

0,5%

0,6%

0,7%

0,8%

0

10

20

30

40

50

60

70

801

98

01

98

11

98

21

98

31

98

41

98

51

98

61

98

71

98

81

98

91

99

01

99

11

99

21

99

31

99

41

99

51

99

61

99

71

99

81

99

92

00

02

00

12

00

22

00

32

00

42

00

52

00

62

00

72

00

82

00

92

01

02

01

12

01

22

01

32

01

42

01

52

01

62

01

72

01

82

01

92

02

02

02

12

02

22

02

32

02

42

02

52

02

62

02

7

as share of GDP

in billion EUR

Pillar II 2021-2027 proposal

Pillar I 2021-2017 proposal (excl. mkt)

Page 10: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Not everybody benefits – structural

adjustments

Trade liberalization is increasingly about

other policies than traditional tariffs etc

Complex interaction of trade (policies)

and environment / climate change

Not everybody agrees that free(er) trade is good

Why? Several reasons

Page 11: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Protests to protect local products and food standards

Page 12: Agricultural Trade, Global Value Chains and the Transition

Africa’s Agri-

Food Trade:

A Global

Perspective

Page 13: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

African economic

growth is reflected in

growing shares of world

agriculture and trade

+20%

+16%

Share in agricultural GDP Share in agricultural trade

Africa Share in World Agric. GDP & Trade (2005 – 2017)

Johan Swinnen, January 2020

Page 14: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Africa’s agri-food trade has fluctuated

African Agri-food Trade 2005-2017

Johan Swinnen, January 2020

Net Agricultural Exports (US$ Billion)

Page 15: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Africa’s agri-food trade and global food prices

African Agri-food Trade 2005-2017

Johan Swinnen, January 2020

100

120

140

160

180

200

220

240

FAO Food price index 2005-2017

Page 16: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Agri-food trade : moving up the value chain ?

Johan Swinnen, January 2020 Source: UNCTADstat 2020

0

5

10

15

20

25

30

35

40

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Mill

ion

s

Agricultural primary commodities

Resource-based manufactures: agro-based (Lall classification)

0

5

10

15

20

25

30

35

40

45

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Mill

ion

s

Agricultural primary commodities

Resource-based manufactures: agro-based (Lall classification)

IMPORTS to Africa (USD)

More PROCESSED

EXPORTS from Africa (USD):

More RAW MATERIALS

Page 17: Agricultural Trade, Global Value Chains and the Transition

26.563

67.769

102.822

140.116

-

20.000

40.000

60.000

80.000

100.000

120.000

140.000

160.000

1998 2000 2002 2004 2006 2008 2010 2012

ton

s

CHOCOLATE imports in Africa

0

1000

2000

3000

4000

5000

6000

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

tons

World Africa Western Africa

COCOA exports

from Africa

MOVING UP THE VALUE CHAIN:

Cocoa processing (grinding) in

Africa: from 13% in 2005 to 17%

in 2010 to 21% in 2015

Page 18: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

EU is the main trade partner for African agri-food

But its share is declining

Johan Swinnen, January 2020

African agri-food EXPORTS to … (%) African agri-food IMPORTS from … (%)

0%

10%

20%

30%

40%

50%

60%

70%

Africa America EU Asia Other

0%

5%

10%

15%

20%

25%

30%

35%

40%

Africa America EU Asia Other

Source: UNCTADStat 2020

Page 19: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Which EU countries are the main trading partners

with Africa in agri- food ?

Johan Swinnen, January 2020

Top 10

importers of

African agric

Share of African

agricultural

exports (%)

Top 10 agricultural

exporters to Africa

Share of African

agricultural imports

(%)

Netherlands 8.58 Brazil 9.24

France 6.98 Russia 7.04

Spain 5.66 Argentina 5.87

United States 5.28 France 5.77

Germany 4.65 India 4.77

China 4.49 United States 4.39

United Kingdom 4.38 Indonesia 4.19

India 3.96 China 3.73

Italy 3.52 Malaysia 3.44

Belgium 3.26 Ukraine 3.33

Source: UNCTADStat 2020, Arican Agriculture Trade Monitor 2019

Page 20: Agricultural Trade, Global Value Chains and the Transition

Intra-Africa

Agri-food Trade

Integration

Page 21: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Intra-Africa agri-food trade is growing rapidlyRegional Economic Communities (RECs)

Johan Swinnen, January 2020 Source: Africa Agriculture Trade Monitor 2019

Agricultural trade within RECs

1998-2013Average annual trade growth within RECs,

1998-2013

Page 22: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Africa regional trade is growing rapidly but still relatively low in global perspective

BUT ! Significant

regional trade may

go unrecorded.

Refined indicators

suggest that intra-

African trade may

be higher than

reported(Bouet, Cosnard, and Laborde 2017)

Johan Swinnen, January 2020 Source: Africa Agriculture Trade Monitor 2019

Intra-regional trade as share of total agricultural trade 2000-2013

Page 23: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Factors affecting regional trade

1. Tariff levels within RECs are

relatively low

But: overlapping membership complicates

harmonization and coordination within

RECs

2. Deficient trade infrastructure

3. Costly non-tariff measures

Safeguards, SPS standards, technical

barriers to trade (TBTs), IP measures,

rules of origin, etc.

Johan Swinnen, January 2020 Source: Africa Agriculture Trade Monitor 2019

1,9

3,8

2,6

1,6

5,6

6,9

3,8

6,9

11,4

8,4

11,2

0 2 4 6 8 10 12

COMESA

SADC

AMU

ECCAS

EAC

ECOWAS

All Intra-Africa imports

COMESA for Common Market for Eastern and Southern Africa, SADC for

Southern Africa Development Community, AMU for Arab Maghreb Union,

ECCAS for Economic Community of Central African States, EAC for East

African Community, ECOWAS for Economic Community of West African States

Tariffs on intraregional imports

versus all imports, 2015

Page 24: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020Johan Swinnen, January 2020 Source: Bouët, Cosnard and Laborde, 2017

0% 200% 400% 600% 800%

Mayotte

Namibia

Comoros

Djibouti

Senegal

Centr. Af.r R.

South Africa

Burundi

Gambia, The

Chad

Algeria

Average Import Duty

Average Ad-Valorem NTM

Cost of Time to Import(Border)Cost of Time to Import(Documentary)Border costs to import

Documentary costs to import

Components of import

cost - 2004/2013

0% 50% 100% 150% 200%

Sudan

Mayotte

Mauritius

Mali

Ethiopia

Sierra Leone

Chad

South Africa

Namibia

Cote d'Ivoire

Angola

Congo DR

Average Export Duty

Export restrictions

Cost of Time to Export(Border)Cost of Time to Export(Documentary)Border costs to export

Documentary costs to export NTMNTM

Components of export

cost - 2004/2013

Border and trade costs are key obstacles

to intra-African trade integration

Page 25: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Unlocking potential for intra-regional trade expansion

Invest in transport and communications infrastructure

Address non-tariff measures (NTMs) with increased technical assistance

and more transparency

Simplify SPS standards and rules of origin

Advance promising integration initiatives

Free Trade Areas: COMESA, SADC, EAC, etc

ECOWAS-North Africa initiative

Africa Continental Free Trade Area: Could soften impact of global trade

conflicts on African economies

Johan Swinnen, January 2020 Source: Africa Agriculture Trade Monitor 2019

Page 26: Agricultural Trade, Global Value Chains and the Transition

Trade, climate

change and food

systems

Page 27: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Climate change impacts vary widely – by crop,

region, and emissions scenario

Change in potential average yields for corn, potatoes, rice, and wheat in 2050

Source: National Geographic, based on IFPRI analysis

Page 28: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Trade is crucial for climate adaptation and mitigation

Climate-induced yield changes

generate large price movements and

adjustments in acreage and trade

Poorer countries likely to bear

larger share of costs from climate

impact on agriculture

• Net food importers (Asia, MENA)

• Limited adaptation through trade due

to high trade costs and specialization

in crops with little trade (SSA)

Source: Gouel and Laborde 2018

Market adaptations rely significantly on an international trade system

allowing large reallocations of trade flows

Page 29: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Agricultural and trade policies affect climate changeBut, again, the impact is complex

Emissions from agriculture and land use change have contributed up to a

third of total GHG emissions – but with large commodity differences

Source: Mamun, Martin, and Tokgoz 2019; Laborde et al. 2019

Emissions from Agriculture and Land Use relative to Other Emissions, 2010

RiceOther

CerealsMilk

Ruminant

meatPigmeat Poultry Total

Crop residues 1.5 3.6 0 0 0 0 5.1

Enteric

fermentation0 0 11 30.5 0.6 0 42.1

Manure 0 0 6.2 16.8 3.7 2.9 29.6

Pesticides 0.2 0.8 0 0.1 0 0 1.1

Rice cultivation 12.6 0 0 0 0 0 12.6

Synthetic

Fertilizers2.4 6.5 0 0.7 0 0 9.6

Total 16.7 10.9 17.2 48.1 4.3 2.9 100

Emissions by commodity & source (% of agric. emissions)

Page 30: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Producer Assistance, $bn, 2016-18

Market Price

Support; 201

Coupled Subsidies;

178

Decoupled Subsidies;

66

General Services ;

105

0

5

10

15

20

25

30

%

Import Tariffs, 2016-2018

Trade protection and coupled support is concentrated in emission-intensive commodities

Source: Laborde et al. 2019

Page 31: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020 Source: Laborde et al. 2019

Win-Win or Trade-Off in economic & environmental effects?

Market

distortions Emissions

Market Price Support ++ +/-

Coupled Subsidies + ++

Decoupled Subsidies 0* 0*

General Services - - or --

IFPRI research shows heterogenous impacts of

trade liberalization and agricultural policy reform

Page 32: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Support policy reforms for sustainable food systems

Decoupling agricultural subsidies is good for

both markets and the environment

Design policies to address challenges or

externalities associated with trade by targeting

policy to the immediate source of the problem

Address environmental impacts with resource

management policies, rather than limiting trade, to

address overexploitation of resources and biodiversity

loss

Support trade opening with active policies and

strong institutions for cooperation and

coordination

Photo: CIAT

Source: Martin and Laborde 2018

Page 33: Agricultural Trade, Global Value Chains and the Transition

Trade, standards

and value chains

Page 34: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Rapid Growth of Food Standards in Trade and Value Chains

0

5000

10000

15000

20000 SPS notifications to WTO

Public

Regulations

GlobalGAP certifications

Private

Standards

Page 35: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Food Standards: a new form of protectionism ?

Are food standards non-tariff barriers (NTBs)

which have grown as tariffs have been constrained by

international trade agreements ?

Page 36: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Complaints (STCs) against SPS at WTO

Complaints against SPS measure of Complaints submitted by

Country Number % Country Number %

EU 78 18.0 EU 88 20.3

USA 47 10.8 USA 87 20.0

Japan 29 6.7 Argentina 47 10.8

China 28 6.5 China 34 7.8

Australia 18 4.1 Canada 31 7.1

Brazil 16 3.7 Brazil 30 6.9

Indonesia 14 3.2. India 22 5.1

South

Korea13 3.0 Australia 12 2.8

Canada 12 2.8 Chile 12 2.8

Mexico 12 2.8 Mexico 12 2.8

Page 37: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Studies show:

• Standards can be

BARRIERS to trade and

to poverty reduction…

• Standards can be

CATALYSTS to trade

and poverty reduction … 0

100

200

300

400

500

600

1995 2000 2005 2010 2015

Africa Latin America Asia

Growth of Fruit and Vegetable Exports

1995-2017 (1995=100)

Impact of food standards and regulations is complex

Page 38: Agricultural Trade, Global Value Chains and the Transition

A simple value chain model

Input/Technology Company

Farmer

Processor

Consumer

PRODUCT

(Processed)Finance

Finance

Finance

PRODUCT

(Technology & Inputs)

PRODUCT

(Raw Material)

Page 39: Agricultural Trade, Global Value Chains and the Transition

Value chain innovation

Technology Company

Farmer

Processor

Consumer

Processed productFinance

Finance

TECHNOLOGY

& INPUTS

Raw

Material

Page 40: Agricultural Trade, Global Value Chains and the Transition

Studies show that:• Value chain innovations can contribute importantly to farmers’ access to

finance and inputs and to technology transfer

• Smallholder integration is mixed

• Contract enforcement problems are very serious

• Organization of the value chain is endogenouso to market imperfectionso to enforcement institutionso to nature of the commodity (incl standards)o to nature of the technology

• Benefits for the poor can come through 3 channels:

o Access to inputs and markets

o Efficiency premia for poor suppliers

o Employment opportunities for poor households

Page 41: Agricultural Trade, Global Value Chains and the Transition

Comparative Illustration:

3 Cases of SSA Horticultural Exports to EU

Small-

holders

Industry

structure

High value

exports to

EU

Madagascar

green beans

100%

contract

Monopoly yes

Senegal

green beans

Mixed &

changing

Competition yes

Senegal

cherry

tomatoes

0% Monopoly yes

Page 42: Agricultural Trade, Global Value Chains and the Transition

1. F&V exports from Madagascar

100% smallholders + monopoly

• Rapid growth

o 100 farmers in 1990

o 10,000 small farmers on contract in 2005

• Major technology (fertilizer) adoption effects

• Important productivity spilloversoRice productivity increased by 70%

oLength of lean periods falls by 2.5 months

- (with contract: 1.7; without contract: 4.3 months)

Page 43: Agricultural Trade, Global Value Chains and the Transition

0%

10%

20%

30%

40%

50%

60%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Employed

Contract

Participation

% household

participation in

region

2. Green Bean Exports from Senegal: Small & large farms + competition

Page 44: Agricultural Trade, Global Value Chains and the Transition

0%

10%

20%

30%

40%

50%

60%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Employed

Contract

Participation

0

1000

2000

3000

4000

5000

6000

7000

Total sample Non-

participants

Agro-industrial

employees

Contract

farmers

Averag

e h

ou

seh

old

in

co

me (1,000 F

C

FA

)

Total household income Income from farming

Income from agr. wages Income from non-agr. sources

% household

participation in

region

HH Income

2. Green Bean Exports from Senegal: Small & large farms + competition

Page 45: Agricultural Trade, Global Value Chains and the Transition

3. Tomato exports from

Senegal:

Large farms + monopoly

Worst Case Scenario ?

1. Very stringent standards

2. Poor country

3. Complete exclusion of

smallholders

4. Extreme VC consolidation

5. Foreign owned multinational

Page 46: Agricultural Trade, Global Value Chains and the Transition

3. Tomato exports from Senegal: Large farms + monopoly

Worst Case Scenario ?

• Strong employmentgrowth: 40% of households in theregion employed

• Strong positiveincome and anti-poverty effects at HH and regional level

(Static estimates)

Poverty (%)

Page 47: Agricultural Trade, Global Value Chains and the Transition

Employment effects

• Especially important for the poorest (no

land) and for women

Page 48: Agricultural Trade, Global Value Chains and the Transition

What about

domestic VC & staple foods ?

• Tom Reardon, Chris Barrett: “In developingcountries 80%-90% of agriculture suppliesdomestic VCs, not export VCs ….”

• In poor countries (eg SSA and India), value chain innovations seem initially concentrated in high-value VC

• But things are changing …

Page 49: Agricultural Trade, Global Value Chains and the Transition

49

Dairy in India 2008 - 2016

• The “largest agric sector

in the world”

• India is the largest milk

producer in the world

• 70 million rural

households produce milk

• Strong income growth =>

big increase in demand

for milk in India

Page 50: Agricultural Trade, Global Value Chains and the Transition

50

0

20

40

60

80

100

120

140

160

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

index

Milk Consumption (% growth since 2002 )

All India Andhra Pradesh Punjab

Punjab

– 2008: 1000 households

– 2015: 870 households

+ series of new farms

Andhra Pradesh

– 2010: 1000 households

– 2016: 928 households

Dairy in India 2008 - 2016

Page 51: Agricultural Trade, Global Value Chains and the Transition

51

Increases in technology adoption(% HH in Punjab)

0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8

Share of crossbred cows

Use of improved feed

Hygiene index

2008 2015

Source: Burkitbayeva, Janssen & Swinnen (2019)

Page 52: Agricultural Trade, Global Value Chains and the Transition

Hygiene index and VC channels

Punjab dairy 2008-2015

2015: 80% have

0.6 Hygiene Index

2008: 20% have

0.6 Hygiene Index

Page 53: Agricultural Trade, Global Value Chains and the Transition

Dairy in India(Punjab & AP)

2008-2016

• Significant technology adoption

• Limited VC innovations despite significant market growth

• Very limited VCD with smallholders

• VCD concentrated in emerging (new class of) larger farmers

Page 54: Agricultural Trade, Global Value Chains and the Transition

LICOS 54

VCD is rapidly growing

in an emerging new dairy sector

• Large-scale

• Closer to urban areas

• Better educated farm managers

• Fully integrated and vertically coordinated in modern dairy chains through

• Information provision

• Improved access to finance– Provision of loans for dairy equipment

– Provision of loans for herd size extension

– Facilitating bank loans

• Intermediary between farms and technologycompanies

Page 55: Agricultural Trade, Global Value Chains and the Transition

Location Herd

size

%

crossbre

d cows

Milk

buyer

Procureme

nt contract

Milking

machines

Land size

Farm 1 Outskirts of Amritsar 165 100% Verka no yes 15 acres

Farm 2 Outskirts of Amritsar 122 100% Verka no yes 60 acres

Farm 3 Rural area in Amritsar 90 100% private dairy no yes 45 acres

Farm 4 Outskirts of Ludhiana 150 99% Verka no yes 10 acres

Farm 5 Outskirts of Ludhiana 160 100% PDFA no yes 70 acres

Farm 6 Outskirts of Moga 130 100% Nestlé no yes 60 acres

Farm 7 Rural area in Ludhiana 105 98% private dairy no yes 50 acres

Farm 8 Rural area in Mansa 70 100% households no yes /

Farm 9 Rural area in Mansa 93 97% Nestlé no yes /

Farm 10 Rural area in Hoshiarpur 70 93% private dairy no no 30 acres

Farm 11 Rural area in Firozpur 103 98% Nestlé no yes 30 acres

The emerging class of (new) modern dairy farms fully integrated in VC (Punjab 2015)

Page 56: Agricultural Trade, Global Value Chains and the Transition

New empirical evidence from

dairy development in Africa

IFPRI / PIM

Page 57: Agricultural Trade, Global Value Chains and the Transition

Milk in Uganda 2006-2018

Consumption Exports

Source: Van Campenhout et al (2019)

Page 58: Agricultural Trade, Global Value Chains and the Transition

Adoption of cross-bred cows in

Uganda 2008-2018

Source: Van Campenhout et al (2019)

Page 59: Agricultural Trade, Global Value Chains and the Transition

Services offered

by milk collection centers

Source: Van Campenhout et al (2019)

Page 60: Agricultural Trade, Global Value Chains and the Transition

DAIRY CONSUMPTION in ADDIS (Ethiopia)

-

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

US

D/c

apita

Liquid milk expenditures (2016)

-

1,0

2,0

3,0

4,0

5,0

6,0

2005 2011 2016

US

D/c

apita

Dairy consumption ($) per capita

Source: Minten et al (2019)

Page 61: Agricultural Trade, Global Value Chains and the Transition

DAIRY PROCESSING

COMPANIES in ETHIOPIA

0

5

10

15

20

25

30

35

To

tal n

um

be

r o

f d

air

y p

roce

ssin

g

co

mp

an

ies

Source: Minten et al (2019)

Page 62: Agricultural Trade, Global Value Chains and the Transition

GROWTH OF COMMERCIAL FARMS 2007-2017

0

1

2

3

4

5

6

Rural Suburban

Farms with more than 25 cows (per woreda)

2007 2017

Source: Minten et al (2019)

Page 63: Agricultural Trade, Global Value Chains and the Transition

DISTANCE TO CITY AND TECHNOLOGY ADOPTION

– PRE-MIXED FEEDS

Source: Minten et al (2019)

Page 64: Agricultural Trade, Global Value Chains and the Transition

Future potential of VCD

for poverty reduction• Private sector:

o strongest growth in high value sectors (with innovation requirements andpotential)

oMany of the models observed in East Europe in the 1990s are now developing in higher vl poorer countries, such as SSA

• Public/Private/NGO sector

oMuch of the CSR & NGO programs include VC-type elements

o How can one make VCD work in staple food markets ? (80-90% of poorcountries’ agriculture)

Page 65: Agricultural Trade, Global Value Chains and the Transition

Example:VCD model for SSA food staple sourcing

• Special purpose vehicle (SPV) to source staplefoods by WFP in East Africa

• Joint project with World Bank, input supplying companies and re-insurance companies

WFP

Technology

Company

Finance

World Bank

Special

ProjectFarms

ReInsurance

Company

Page 66: Agricultural Trade, Global Value Chains and the Transition

Voluntary Sustainability Standards (VSS)

(incl. FairTrade etc)

CASE : Certification in coffee in Ethiopia

Study by Bart Minten and colleagues from IFPRI &

LICOS (Bart Minten, Mekdim DerejeErmias Engida

Seneshaw Tamru )

66

Page 67: Agricultural Trade, Global Value Chains and the Transition

VSS Certification in Coffee

Globally:

• VSS rapidly taking off (4% in 2005, now 20%)

• Coffee leading agricultural commodity in VSS

In Ethiopia:

• VSS low and slow

• Coffee most important export product : 25% of its forex earnings

• 4 million coffee farmers

0

2

4

6

8

10

12

14

16

18

20

2005 2010 2015

%

Ethiopia World

Page 68: Agricultural Trade, Global Value Chains and the Transition

Why low uptake of VSS certification ?

• Transmission of VSS premium to farmer = 30%

• Average coffee farmer in Ethiopia, if all coffee certified: income increase with 7.5 USD (per year !) oWith 100% premium transmission, increase of 20

USD per year…

• Impact of certification on coffee producers’ welfare is small.

• Combined with implementation costs : low adoption of Fair Trade in Ethiopia

Page 69: Agricultural Trade, Global Value Chains and the Transition

Some final

points

Page 70: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

Food Security Portal provides

tools for timely responses to

address food insecurity

Food Price Watch and the Excessive

Food Price Variability Early Warning

System

Food Crises Risk Monitor

Early Warning Hub

Foresight and other tools

Data and tools to monitor food security crisesespecially in the context of climate uncertainty

Page 71: Agricultural Trade, Global Value Chains and the Transition

Report Launch: April 7, 2020

Page 72: Agricultural Trade, Global Value Chains and the Transition

Increased Attention to Food Systems

UN Food Systems Summit 2021

Mobilizing commitment to create systems that are:

Climate resilient

Sustainable

Inclusive

Page 73: Agricultural Trade, Global Value Chains and the Transition

What are Food Systems?

Food systems collect “all the elements (environment, people, inputs, processes, infrastructures, institutions, etc.) and activities that relate to the production, processing, distribution, preparation and consumption of food, and the output of these activities, including socio-economic and environmental outcomes” – HLPE 2017

Ideal food systems are nutrition-, health-, and safety-driven, productive and efficient (and thus able to deliver affordable food), environmentally sustainable and climate-smart, and inclusive.

Page 74: Agricultural Trade, Global Value Chains and the Transition

What are the benefits of creating inclusive food systems?

Better integrating marginalized people into national food systems achieves inclusive economic growth.

Increasing household incomes reduces absolute poverty and improves access to service.

Inclusive food systems can break the intergenerational cycle of poverty, hunger, and malnutrition.

Inclusion can help reduce global and national inequalities.

Inclusion is a moral imperative!

Page 75: Agricultural Trade, Global Value Chains and the Transition

Johan Swinnen, March 2020

2018 Global Food Policy Report, Chapter 3: The Free Flow of Goods and Food Security

and Nutrition -- by Will Martin and David Laborde, 2018

Swinnen et al, 2015, Quality Standards, Value Chains and International Development,

Cambridge University Press.

Reforming Agricultural Support for Improved Environmental Outcomes

-- by Abdullah Mamun, Will Martin, Simla Tokgoz, 2019

Modeling the Impacts of Agricultural Support Policies on Greenhouse Gas Emissions

from Agriculture -- by David Laborde, Abdullah Mamun, Will Martin and Valeria Piñeiro, 2019

The Crucial Role of International Trade in Adaptation to Climate Change

-- by Christophe Gouel, David Laborde, 2019

2017 ReSAKSS Annual Trends and Outlook Report, Chapter 5: Trade, climate change, and

climate-smart agriculture – by Beliyou Haile, Carlo Azzarri, Jawoo Koo, Alessandro de Pinto, 2017

For more details and information