Salvatore Capasso, Giovanni Canitano (a cura di)
Mediterranean Economies 2023
DOI: 10.1401/9788815411167/c5

5.Trade policy and food security in turbulent times
by Nora Aboushady and Chahir Zaki

Notizie Autori
Nora Aboushady Cairo University, Egypt (nora.aboushady@ feps.edu.eg).
Notizie Autori
Chahir Zaki Cairo University, Egypt (chahir.zaki@feps.edu.eg).
Abstract
This chapter analyses the role of trade policies in addressing food security. The MENA region faces huge challenges regarding this issue, dealing with supply chain disruptions and surges due to COVID-19 pandemic and the Ukrainian war. In addition, long-standing problems, such as population growth, climate change, land degradation and water deficiency furthermore increase food troubles in the region.
We are grateful to Professor Marco Zupi for his constructive comments on this chapter.

Introduction

Food security [1]
is a growing concern for low- and middle-income countries who must face increasing challenges related to the availability and affordability of food, but also related to its adequacy from a nutritional point of view. Hence, these countries must bear a double burden of malnutrition (the root cause of stunting and wasting) and overnutrition (in the form of increasing obesity and related chronic diseases).
Between 2005 and 2015, the share of the world population suffering from chronic food deprivation dropped from 14.5 per cent to 10.6 per cent [Barlow et al. 2020]. This is in part attributable to a long-term trend of declining food prices due to technological advances in agriculture that made food cheaper. However, this trend did not go uninterrupted by global food price shocks. For example, bad weather conditions in the mid-1970’s affected food supply and caused food prices to surge. Another {p. 142}
major shock was in 2006, where the spike in global food prices can be partially attributed to the depreciation of the dollar, causing rising costs in the production of basic foods for many developing countries whose currency is pegged to the dollar [FAO 2009]. After a partial recovery from this crisis between 2012 and 2019, two consecutive shocks from the COVID-19 pandemic and the Russian invasion of Ukraine had adverse repercussions on food security. In contrast to previous global price shocks, both recent crises affected both supply and demand of food, leading to widespread food supply chain disruptions, and a surge in food prices, and putting food security for food net-importing countries at stake.
The MENA region is one of the most exposed and most volatile regions to such global developments in the food market. It is among the largest food importers worldwide, with an average of more than 50 per cent of the calory consumption coming from imported food [Mandour 2021]. According to the most recent data, a proportion of 9 per cent of the total population in the MENA Region are undernourished [World Development Indicators 2020]. While a significant proportion of the undernourished population in the MENA region live in areas suffering from armed conflicts (such as Yemen and Syria), relatively politically stable MENA countries also suffer from the repercussions of food insecurity. Overall, MENA countries face a number of pressing challenges that undermine their potential to achieve food security, such as climate change, water stress, degrading arable lands, population growth, poor infrastructure and logistics, and high dependency on imports of staple grains and meat.
At the trade policy level, the sector in these countries remains relatively more protected than the manufacturing sector, with an average tariff rate of 14 per cent [2]
as per the World Development Indicators dataset, widespread non-tariff measures, and import monopolies.
Domestic price support policies also tend to limit efficiency and growth in agriculture.{p. 143}
Since food security is only achievable though a mix of domestic food production and imports from global markets, trade policy matters for food security. The objective of this chapter is therefore to investigate the linkages between trade policy and food security in the MENA region. In a first part of this chapter, we discuss the theoretical nexus between international trade, trade policy, and food security. Secondly, we overview the status of food security in the MENA region. In a third part, we analyze trends in trade policy between trade barriers and trade agreements. Later, we focus on the repercussions of the current global shocks (COVID-19 pandemic and the Russian war on Ukraine) on food security, before overviewing some of the longstanding structural issues that undermine the region’s potential to achieve food security. Finally, we conclude and provide several policy recommendations for enhanced food security in the region.

1. Why does trade (policy) matter for food security?

The literature on international trade, trade policy and food security suggests that trade in agricultural and food sectors can improve food security through several channels [Barlow et al. 2020; Smith and Glauber 2020; Martin 2017; Brooks and Matthews 2015; FAO 2015; Clapp 2014; Matthews 2014]. However, trade liberalization can also involve some risks to food security. Opportunities and risks are briefly discussed below.

1.1. Trade policy and improved food security

The literature highlights four main ways through which trade can positively affect food security. International trade can make food more accessible by enabling products to flow from surplus to deficit areas, balancing the surplus of net food exporting countries with the demand of net food importing countries. Open markets therefore help attenuate domestic food supply volatility because the risks associated with pooled production on global markets are typically lower than those associated with one country’s domestic food production. By ensuring stable supply, international trade can also make food more affordable {p. 144}at the domestic level. Because global food supply is usually more stable than countries’ local food supply, an increase the supply of food from imports must result in lower domestic food prices because of the mechanisms of supply and demand. Considering the actual climate changes, fluctuations in food production are also likely to be higher at the domestic level than at the global level. Thus, more open trade policies are becoming increasingly necessary to ensure smooth access to food.
By increasing access to global food markets, a wide variety of food products are also made available and diverse nutritional diets are accessible. Hence, open trade policies do not only allow for cheaper food and increased food supply, but also for increased food diversity. This helps improve food utilization, i.e. an improved intake of nutrients.
Liberalization of trade in food and agricultural products generates productivity gains, since production shifts from more costly, less efficient food suppliers to more efficient suppliers.
This happens at the domestic level as local producers are exposed to competition from international suppliers, and at the international level due to the overall increased competition in the global food market. Moreover, trade liberalization in agricultural inputs generates productivity gains through better access to seeds, new equipment, and modern technologies.
Increased competition also provides an incentive for investment and innovation, generating new ideas and new plant varieties that could positively contribute to better food utilization and could have important implications for reducing poverty and hunger, particularly in developing countries with high rates of rural poverty.
Trade liberalization can also improve access to food by raising the incomes. On the one hand, more open trade policies allow domestic producers to access a larger (global or regional) market, where they would receive typically higher prices for their exports compared to prices they would receive in the absence of trade. On the other hand, open markets raise the revenue of importers who pay lower prices than in the presence of trade restrictions (like tariffs, for example). Moreover, increased gains from competitiveness and specialization create more jobs and increase economic growth. Such gains would result in higher per-capita incomes and would reduce the share of food expenses {p. 145}in total consumption, providing a buffer against threats to food insecurity if incomes fall or if food prices rise [Martin 2017; Kerr 2012]. Another consequence of higher income is the generation of additional government revenues through tax collection. These additional revenues would allow governments to increase their funding of social safety nets for the poor [Clapp 2014; Smith and Glauber 2020], and guarantee – inter alia – better access to food by disadvantaged households.

1.2. Trade policy and potential risks for food security

Open trade policies in food and agriculture also come at a cost. Trade liberalization often translated into a shift in agricultural production from key staple foods to cash crops, a transition which can threaten food security in developing countries. For example, most African countries continued to rely heavily on the exports of cash crops to finance their post-independence import substitution and industrialization policies, which increased their vulnerability to fluctuations in global demand and prices of their exported crops [Aboushady, Roy and Zaki 2022]. Overall, net food importer countries may face increased food import dependencies and an increased risk of food supplies being interrupted by global shocks, such as economic crises, climate change and crop losses, pandemics, and wars. Over the last two years, for example, the global shock was exacerbated by the surge in fertilizer prices [3]
, making it increasingly challenging for middle- and low-income countries to maintain agricultural productivity, competitiveness, and revenues from exports, which further threatened their food security [IFPRI 2022].
Moreover, food security at the country (macro) level does not automatically imply food security at the household (micro) level. Access to food by households across countries with different income levels is largely determined by physical and socio-economic conditions, and while countries can be food secure, households may not [FAO 2015; Barlow et al. 2020]. For smallholder farmers,
{p. 146}for example, focusing on cash crops limits the allocation of the available land to the production of subsistence vegetables and key staple foods, increasing their dependency on local market conditions [Hashmiu, Agbenyega and Dawoe 2022]. Access to food may also be challenging for households that lose from trade liberalization, such as smallholders along the food value chain who were previously protected and -unable to withstand the competition- see their incomes decline after trade liberalization; or households whose incomes are generated in non-competitive sectors; or those whose incomes are too volatile to bear local and global food price fluctuations. Drawing on a global analysis of microdata spanning 132 countries in the 2014-2017, Barlow et al. [2020] found that, in low-income countries, poorer households were more likely to be food insecure despite liberal trade policies. Persistent structural challenges, including labour market rigidities and poor infrastructure (among others) tend to undermine the effects of liberalization. Moreover, the increased availability of- and access to food may not always be positive from a utilization point of view. Thus, food security at the macro-level does not necessarily ensure the quality and nutritious content of food, but, to the contrary, may lead to unhealthy changes in diets and insufficient intake of micronutrients because of the affordability of alternative unhealthy food options.
Note
[1] The FAO’s definition of food security was agreed at the 1996 World Food Summit. It suggests that food security exists when «all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life» [FAO 2001]. The FAO definition of food security implies that people can only be considered as food secure when sufficient food is available, they have access to it and it is well utilised (i.e. their absorption translates into improved nutritional outcomes). A fourth requirement is stability across those three dimensions over time, which means the ability to manage risks effectively [Brooks and Matthews 2015]. Food security is also at the core of the SDGs. More specifically, SDG 2 is to «end hunger, achieve food security and improved nutrition and promote sustainable agriculture», while Target 2.2 is to «end all forms of malnutrition» [FAO 2015].
[2] This tariff refers to the simple average of the most favored nation one. It is important to note that there is a large variance of tariffs between countries with Egypt having the highest tariff of 38 per cent (average of 2015-2020) and Bahrain the lowest (5 per cent).
[3] The Russian invasion of Ukraine resulted into a sharp increase in the price of natural gas used in the production of ammonia, a base material for fertilizers. For more details, see IFPRI [2022].