Leverage Trade Policy to Tap Future Food Markets
By Lisa Moon and Andrea Durkin
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Agri-Pulse and The Chicago Council on Global Affairs are teaming up to host a monthly column to explore how the U.S. agriculture and food sector can maintain its competitive edge and advance food security in an increasingly integrated and dynamic world.
Africa and Asia will be the world's biggest future food markets. Three trends are driving much of their growth: more mouths to feed, an expanding middle class, and migration to cities. Right now, the U.S. market share in these regions ranges from 10 to 25 percent. But a shift in our trade policy could increase our share.
U.S. trade policy has traditionally focused on bulk commodities for export, with great results. Productive U.S. corn, wheat, and soy fields have provided a more reliable and affordable supply of grains to people across the world for decades. Yet demand for most U.S. grains is stagnating, while consumers are craving more produce, animal products, and processed foods. To allow America's food producers and businesses to access these new markets, the U.S. should devote robust attention to regulatory and food standard harmonization, promote trade facilitation, and help shape Asia and Africa's retail environment.
Twenty first century consumers are eating more meat, eggs, dairy, fish, fruits and vegetables. Working urbanites are seeking out these products in prepared meals that offer speed and convenience. Between 1995 and 2013, U.S. dairy exports climbed by 400%. The value of the global market for fruits and vegetables is skyrocketing and is expected to reach $2.3 trillion by 2017. Processed agriculture production now represents 60% of total exported agricultural goods worldwide.
At the same time, to keep pace with this burgeoning demand, food regulations and standards in emerging markets are proliferating and increasingly complex. These standards are essential to animal, plant, and human health, but when imposed inconsistently and without scientific basis, they can pose serious obstacles to food trade.
The upgrading and evolution of food safety systems by governments has a ripple effect through the agriculture value chain from the retailer to the grower. Suppliers must compete not only on price but also timely delivery of safe, high quality products that must often undergo a variety of inspections and certifications. If they do, they can crack new markets and often garner a premium, but when those standards, requirements and certifications vary widely from market to market, those gains are limited or foregone.
U.S. agriculture and trade policy should promote efficiencies in global food regulation by expanding opportunities for collaboration among regulatory and customs authorities. This is a challenge requiring creativity, persistence and resources. But strategic U.S. agriculture and trade initiatives would generate more opportunities to achieve regulatory coherence in new markets for U.S. products, new platforms for alleviating disruptions to trade, and new forms of engagement to raise the ability of governments to manage food approvals, inspections and surveillance efficiently and fairly. The Trans-Pacific Partnership and the renewal of the African Growth and Opportunity Act are good opportunities to begin tackling these challenges.
For American agriculture and food to be successful in future markets of growth, we must also go beyond the border with our agriculture and trade policies. Middle-and low-income countries are revolutionizing their food supply chains: more than 2.5 billion small scale farmers are demanding better seed, fertilizers, and crop treatments; food processing rates are skyrocketing; transportation and logistics systems are being built out; and food retail schemes are becoming more sophisticated. This food supply chain revolution will require innovation and know-how. And the American agriculture and food sector has both.
To position the U.S. to provide leadership in both regulation and supply chain transformations, we have to make it easier for companies to do businesses in middle- and low-income countries. Gains can be made by leveraging USTR and USDA to increase the capacity of emerging regulatory systems and support infrastructure developments. We have a stake in reducing the complexity and costs of regulatory systems that prevent farmers from securing adaptive, high-yielding seeds and effective fertilizers and in promoting trade facilitation agreements to ensure food can be moved cheaply, safely, and efficiently across borders. We also have a stake in advancing rule of law and strengthening infrastructure. American agriculture must weigh in to support trade policies that lay the foundation for its future markets.
Andrea Durkin is the Principal of Sparkplug, LLC and author of the recent Chicago Council on Global Affairs' report Grow Markets, Fight Hunger: A Food Security Framework for U.S.-Africa Trade Relations. Lisa Moon is Vice President, Global Agriculture & Food at The Chicago Council where she directs its global food security project, including the report Healthy Food for a Healthy World: Leveraging the Agriculture and Food Sector to Improve Global Nutrition released today.