How can WTO rules and regulations contribute to food security?

Geneva, July 2008

Ralf PetersTrade Negotiations and Commercial Diplomacy Branch

Division on International TradeUNCTAD, Geneva

United Nations Conference on Trade and DevelopmentUnited Nations Conference on Trade and Development

ralf.peters@unctad.org

Annual price movements

0

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007

MeatDairyCerealsOilsSugar

Source: David Vanzetti and Ralf Peters, UNCTAD estimates with ATPSM

2007/08 rice prices

0100200300400500600700800900

1000

Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July

Source: USDA. Thai grade B

Contributing factors to food crisis• Short term factors

– Rising oil prices– Increase of bio-fuels– Supply shortages: drought – Speculation– Export restrictions– Lack of market structures that ensure fair competition

• Medium/long term factors – Population growth – Changing diet in emerging countries– Falling stocks– Weak agricultural sector in developing c. and LDCs

Impacts

• Net seller or buyer– Poor spend large share of income on food and are

often net buyers– Risng food prices increases poverty (WB 2008)– Food bill doubled in low income food deficit DCs

LDC food imports

1005100

1010015100201002510030100

Cereals

Vegeta

ble Oils

Dairy

Meat

Sugar

Total

$m

20072008

~40% increase

Source: FAO

WTO provisions and food security

• Tariffs• Export restrictions • Special products• Safeguards• Domestic Support

Can Doha solve the crisis?

• Liberalization of agricultural sector • Rising world prices• Domestic prices may fall (not LDCs)• Shift in production to developing countries

Change in productionFull liberalisation

-20.00

-15.00

-10.00

-5.00

0.00

5.00

10.00

Lives

tock

Bovinem

eat

Poultry

Milk, co

nc.

Wheat

RiceMaiz

eSug

ar, ra

w

Sugar,

refin

ed

Oilseed

s, tem

p.

Oilseed

s, tro

p.

Chan

ge in

% WorldDevelopedDevelopingLDC

Source: David Vanzetti and Ralf Peters, UNCTAD estimates with ATPSM

Change in global productionFull liberalisation

World

-2.50

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

Lives

tock

Bovinem

eat

Poultry

Milk, co

nc.

Wheat

RiceMaiz

eSug

ar, ra

wSug

ar, re

fined

Oilseed

s, tem

p.Oilse

eds,

trop.

Chan

ge in

%

Source: David Vanzetti and Ralf Peters, UNCTAD estimates with ATPSM

Results • Change in Production

– Production in developed countries mostly falling – Production in developing countries mostly increasing;

but e.g. in case of wheat from low base– World production increasing or slightly decreasing;

but changes small • Self sufficiency increasing in DCs but world

production not always increasing – But scenario too ambitious– Doha mostly about squeezing out the water (tariffs in DCs

and DS in developed)

Recommendation • Doha contribution limited

– But should continue• Developing countries

– Investment in agriculture to increase productivity– Research and development– Temporarily subsidising inputs to increase production

• Developed countries– Reduce or eliminate trade distorting subsidies– Careful with bio-fuels– Technology transfer– Support DCs (ODA for Agriculture dropped by 65% in 20

years)

Note: This publication has been made available by CSEND with the agrement of the author.

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