The COVID pandemic, supply chain disruptions and war have raised awareness of the fragile nature of global agriculture trade.

The COVID pandemic, exacerbated by the disruptive supply chain bottlenecks at ports and the Ukraine crisis, also made the world aware of the fragile nature of the global agriculture and food trade.

Indeed, the recent G-20 summit in Bali, Indonesia, emphatically called for updating global agriculture food trade rules, and for facilitating agriculture trade aimed at preventing malnutrition and hunger. This resolve was contained in the G-20 Bali Leaders’ Declaration at the conclusion of the summit, calling for “an accelerated transformation towards sustainable and resilient agriculture and food systems and supply chains”. The Declaration also underscored “the importance of not imposing export prohibitions or restrictions on food and fertilizers in a manner inconsistent with relevant WTO provisions”.

The world’s top four agriculture producing countries—China, India, the US and Brazil—share the advantages of large populations, ample land area, and climate zones suitable for growing a variety of crops, though there are also differences in the role food production plays in their economies.

There are incongruities about these four top agriculture countries. China is ranked as the world’s largest grain producer, yet it has become increasingly dependent on food imports over the years. India’s crops are consumed, mostly, locally. The US continues to be the world’s top food exporter, thanks to high crop yields and well-developed agricultural infrastructure. Brazil is the fourth-largest food producer but also the second largest importer.

China the World’s Largest Ag Importer

China was by far the world’s leading agricultural producer with 2020 annual output valued at $1.56 trillion, $1.5 trillion of which was food, according to the Food and Agriculture Organization (FAO) of the United Nations.

Agricultural output includes both food and non-food products. Examples of non-food agricultural goods include silk, rubber, wool, cotton, and tobacco.

China’s agricultural production – it has the world’s largest population at 1.45 billion and is slightly ahead of India’s 1.41 billion – has declined from full self-sufficiency in 2000 to relying on imports of more than 23% of its food requirements by 2020. Declining soybean output, rising grain imports, and the continuing loss of farmland to industrial and urban development were blamed.

China surpassed the US and the EU in 2019, to become the world’s leading importer of agricultural products, with imports valued at $133.1 billion, driven by rising demand for land-intensive crops like soybeans, sorghum, and cotton, as well as meat, dairy, fruit, and vegetables.

India Ag Output Tops $400 billion

India, the world’s second-most populous country, recorded the second-highest agricultural output at $403.5 billion in 2020. Of that total agricultural output, $382.2 billion was attributable to food production.

India is the world’s largest producer of milk, jute, and pulses (a class of legumes that includes dry beans, lentils, and chickpeas). The country is also the world’s second-largest producer of rice, wheat, sugarcane, fruit, vegetables, cotton, and groundnuts

Nevertheless, India remains heavily reliant on subsistence agriculture as it has the lowest per capita income of the four countries. Because of inefficient use of limited resources, particularly water, it depends on seasonal monsoons and crop yields below the global average.

Despite challenges, India remains the world’s largest exporter of refined sugar and milled rice. It is a major exporter of rice, cotton, soybeans, and meat.

U.S. World’s Leading Ag Exporter

The U.S. ranked third in 2020 agricultural output at $307.4 billion—$306.4 billion of which was food — despite employing a small fraction of the agricultural workforce of China or India. Corn, soybeans, dairy, wheat, and sugar cane were the top five US agricultural commodities in value terms.

The US was by far the leading global agricultural exporter in 2020 with exports valued at $147.9 billion. In 2021, US exports increased to a record $177 billion, driven by a 25% increase in exports to China at $33 billion. Canada, Mexico, and Japan are also major importers of US agricultural products.

Brazil was the world’s fourth-ranked agricultural producer in 2020 with output valued at $135.8 billion. $125.3 billion of Brazil’s agricultural output is food. Brazil’s agricultural export value of $85.2 billion in 2020 ranked it third after the US and the Netherlands. China absorbed more than $30 billion of Brazil’s agricultural exports that year.

Global Ag Trade Trajectory

According to WTO data, the value of global agriculture exports in 2020 was 3.7 times higher in nominal terms than in 2000, while the share of agriculture in total merchandise trade value rose from 6.3% in 2000 to 8.5% in 2020.

The COVID and supply chain disruptions have indeed impacted the global agriculture trade but equally devastating has been Russia’s February 24 invasion of Ukraine which became known as “Europe’s food basket”.

Agriculture researchers say that about a quarter of the world’s most fertile soil, known as Chernozem - the soil is rich in organic matter - is located in Ukraine. More than 65% of Ukraine’s arable land has Chernozem deposits, making it ideal for farming. Ukraine, emerged as a major exporter of grains and cereals, including corn.

As Russian shelling and airstrikes damaged roads and cut off Black Sea ports, shipments of Ukrainian wheat were disrupted, leading to a global price spiraling of both wheat and flour.

Middle Eastern experts point out, for instance, that prices of the region’s staple flatbread, made from flour, skyrocketed following Ukrainian wheat supply disruptions.

The FAO has said that global food prices are now at their peak since 1974 after adjustment to inflation.

Ukraine is the world’s largest exporter of sunflower oil and a major supplier of corn, barley, and rye, among other grains.

However, soil erosion and climate change are also impacting “highly productive areas of the country, such as the Steppe area in the south, which currently produces 50% of the grain for Ukraine,” the World Bank says.

Agriculture trade is a key revenue-generating source for smaller countries whose economies rely on exports. The Netherlands serves as an example of an agriculture trade dependent economy backed by research institutions and public-private partnerships between science, industry, and government. It is the second largest exporter of agricultural products after the US.

Netherlands has pioneered cell-cultured meat, vertical farming, seed technology and robotics in milking and harvesting, creating innovative techniques with reduced water usage and lower carbon and methane emissions. The country, with good connectivity in Europe and beyond, has a well-developed infrastructure, logistics and distribution network.

Nevertheless, the Dutch also face challenges. Their success in greenhouse industry was due, largely, to the availability of cheap energy. This is no longer the case as energy gas prices have risen in Western Europe. Also, the Dutch government’s pledge to halve nitrogen emissions by 2030, would mean a dramatic reduction in the number of animals raised in the country.

2023 Outlook US Ag Exports

US farm exports are expected to decline to $190 billion this fiscal year, down 4% from the record set in just-ended fiscal 2022, as economic growth slows in most countries, according to a recent forecast by the US Department of Agriculture (USDA). Soybeans, the top agricultural export item, as well as cotton and corn would see the largest declines, jointly falling by 7%.

“The global economic outlook for calendar year 2023 remains uncertain due to inflation, changing monetary policy conditions, and trade disruptions caused by the Russian invasion of Ukraine,” said the USDA in its quarterly Outlook for US Agricultural Trade. Global economic growth was forecast at 2.7%, down from 3.2% in 2022.

US exports touched a record $196.4 billion in the fiscal year that ended on Sept. 30, 2022. The Ukraine war has driven commodity prices higher amid strong global demand for food and agricultural products.

China, the leading customer, would buy $34 billion of agricultural exports, compared to the record $36.4 billion last year, said USDA analysts, primarily, due to resurgent competition from Brazil and Argentina for soybean sales.

For the third time in five years, food and agricultural imports would exceed exports, creating an agriculture trade deficit, said the USDA. Imports were forecast at $199 billion, with fruits, vegetables, nuts, beer, wine, and distilled spirits providing nearly half of the shipments.

Indeed, FAO’s report released on Nov. 11 said that global food imports could head for a record high this year. Food import costs globally are projected to reach nearly $ 2 trillion this year or even higher than previously expected.