Optimal Trading and Shipping of Agricultural Commodities
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Our globalised agricultural system provides cheaper food for all at the same time as it allows countries with a significant agricultural economy to benefit from exports.
An outbreak of protectionism affecting the key food commodities — or fertilizers — could lead to price shocks, ecological damage, and the undermining of food security for some of the most vulnerable populations. Since the Second World War, and especially in the last three decades, the global trade of goods has rapidly optimal trading and shipping of agricultural commodities. Every country in the world is dependent, to a greater or lesser extent, on trade to fulfil its overall food needs.
Examination of the networks of trade in the major commodities reveals multifaceted interdependencies, with production concentrated in a handful of countries exporting to many, some of which in turn export it onwards. Globalization has significant benefits, both in terms of access to food that can be grown more efficiently and cheaply elsewhere, or those — especially fruit and vegetables — that may be seasonal but which we want year-round. In a stable world, optimal trading and shipping of agricultural commodities makes sense for a country to grow the few things they are best suited to produce, export optimal trading and shipping of agricultural commodities they can at a competitive advantage, and import what they cannot grow as well.
This in turn leads to efficiencies and price reduction. Through trade, therefore, our globalized system provides cheaper food for all. It also allows countries with a significant agricultural economy to export and benefit from this. Trade, in monetary terms, is dominated by high value horticultural crops, then oilseeds and then cereals. Trade volumes are dominated by flows of soy from the Americas to China and in terms of calories, trade is dominated by the major commodity crops: The amount, and type, of food trade is both growing and changing every year.
For example, the global demand for meat and dairy is driving a rapidly evolving growth in livestock feed which includes oilseeds like soya, fodder crops and concentrated feed. It is now the most traded agricultural commodity, dominated by flows from Brazil, the US and Argentina to China. Of course, a country that imports high-protein feed permits a volume of feed supply greater than the local constraints on feed production would otherwise enable.
This allows for the expansion of meat and dairy production, which then further stimulates exports in meat and dairy products. The rapid expansion of soy production has led to widespread land conversion for those countries where there is a comparative advantage. This new land often converts forests to fields, such as has occurred in the Brazilian Amazon. This forest clearance has a variety of consequences for delivery of the range of ecosystem services that forests supply — carbon storage, production of rainfall, livelihoods for indigenous people, as well as providing a hotspot for biodiversity.
Conversion of forest to agriculture is also optimal trading and shipping of agricultural commodities a significant contributor to the global greenhouse gas balance sheet: A product embodies all the resources used to produce it: Purely in terms of resource, a country with an abundance of supplies may have a competitive production advantage over a country where that resource is scarce.
These can be viewed for the majority of agricultural trade flows in the Chatham House Resource Trade Database. Flows illustrated are those between the 10 largest producer- and consumer-nations of embodied land in global trade in non-livestock agriculture. This is 32 per cent of the total embodied land traded. As growing demand puts more pressure on production systems, access to the strategic resources of land and water will become more acute, perhaps exacerbated by changing dynamics of water supply through climate change.
To produce a green bean requires about a gallon of water, and a kilo of beef requires about tonnes. Flows illustrated are those between the 10 largest producer- and consumer-nations of embodied green and blue water in global trade in non-livestock agriculture. This is 38 per cent of the total embodied water traded.
A recent study shows that about 11 per cent of food trade - mostly exports from Pakistan, the US and India - has embodied non-renewable groundwater used in irrigation, providing some long-term food security risks for those countries that rely on the trade. This trade growth is partly taking advantage of cheap transport - it is very cheap to ship from the US to China due to the imbalance of trade: Countries with less access to water can make it go optimal trading and shipping of agricultural commodities by importing goods from countries which have greater access to water for production purposes.
A good example of this occurs in the Middle East, with countries like Israel. Cross-border trade is dynamic optimal trading and shipping of agricultural commodities space and time. Changes in production, such as caused by weather, geopolitics and government policies, interact with the market to change prices and availability.
Sometimes this dynamic is very fast, causing the rapid evolution of policy and market responses, leading to food price spikes, and a myriad of impacts on society. Sometimes, they play out in a slower way, in response to more gradually emerging changes.
For some crops - for example soy and tree nuts like almonds - the majority of production is exported. Imagine a world where the US administration honours in full its campaign promises, perhaps imposing tariffs on goods from China, including on non-agricultural produce like steel; while at the same time dismantling NAFTA. The global community would potentially retaliate in kind, leading to high tariffs on US exports.
Under WTO rules such tariffs can be substantial on agricultural produce. Such changes in tariff structure would undoubtedly lead to a reconfiguration of global agricultural trade.
Optimal trading and shipping of agricultural commodities is currently the number one destination for US agricultural produce, with close to half of US soybean exports ending up there primarily for animal feed and vegetable oil. If China were to introduce countermeasures in response to any US action, or if Chinese consumers were to boycott US supply, even if sold at a loss, then this could result in significant reductions in this bilateral trade flow.
This has consequences that may play out in a variety of ways. Second, if China can maintain its volume of supply from the world market with reduced direct sourcing from the US then others, like Europe, would be likely to have to adapt to this, which may result in changes in volumes and prices to that market.
Optimal trading and shipping of agricultural commodities, if demand for non-US exports among China and other importers is sustained, then there could be significant intensification of agriculture among alternate producers such as Brazil to increase supply. The consequence of a rise in protectionist policies on a optimal trading and shipping of agricultural commodities scale is likely to manifest itself as a significant upwards driver of prices.
In the short-term, in well-supplied markets, prices may fall if producers face barriers to selling their produce, but optimal trading and shipping of agricultural commodities stocks are lower and harvests poorer protectionism is likely to be a strong upwards driver of prices, as witnessed during the and food crises.
In turn, these price signals are likely to translate into more intensive production. Protectionism in the US could therefore be a triple setback for the potential of meeting the Paris climate agreement: Furthermore, given the relationship between food price inflation and national food security, and the ability for these factors to interact to destabilize weak democracies, a sudden US reconfiguration of trade through an aggressive imposition of tariffs or withdrawal from NAFTA has the ability to create widespread systemic effects on the food system.
Is there an optimal balance between these risks and rewards, and how might this change with external changes e. While some people may advocate domestic economies being self-sufficient, it is difficult to imagine how this could be possible: How, in the modern world, could self-sufficient agricultural production occur without reliance on the market for items supporting that production? Too much self-sufficiency in agriculture perhaps loses the economic and idiosyncratic risk-mitigation benefits from global trade, while maintaining the exposure risks through reliance on trade in inputs.
However, it is also necessary to recognize the risks that trade brings in order to ensure that global and local food systems maintain their resilience in the face of disruptions. Mitigation of Climate Change. BioScience65 3 Water Use in our Food Imports. Farming and Water Report 3. Global Food Security programme. Groundwater depletion embedded in international food trade.
Nature UK agricultural trade values are from resourcetrade. Defra report slightly differing but compatible values for food, including processed foods rather than agricultural goods.
Likely effects of a trade war for U. Washington Post20 October Wary of Protectionism, U. Protectionist rhetoric casts shadow over agricultural marketsFinancial Times28 March Assessing the evolving fragility of the global food systemEnvironmental Research Letters10 2, p Further modernisation of the CAP — why, what and how? A tractor plowing a field near Worms, Germany. Food security, trade and its impacts. Contents Global food trade Embodied resources Will the rise of protectionism disrupt trade relationships?
Systemic risks from the food system Footnotes. Global food trade Since the Second World War, and especially in the last three decades, the global trade of goods has rapidly increased. Growth and changes in food trade The amount, and type, of food trade is both growing and changing every year. Embodied resources The rapid expansion of soy production has led to widespread land conversion for those countries where there is a comparative advantage.
Tree cover loss pink and gain purplewith Brazilian Amazon land cover types. Will the rise of protectionism disrupt trade relationships? Global consequences The consequence of a rise in protectionist policies on a global scale is likely to manifest itself as a significant upwards driver of prices.