The significance of agricultural input trade in global food production

During the last 40 years, we have seen that despite a doubling of global population, agricultural production has expanded faster still, suggesting that global food security has increased. The volume of cereals production has more than doubled and world meat production has more than quadrupled, for example. The traded volumes of food products have been expanding even more rapidly than world’s output. Since 1960, each 1 percent increase in food output has been accompanied by 3 percent trade increase. Consequently, the economic value of food products traded worldwide has increased almost thirtyfold since the 1960s to equal over USD 1,020 billion by 2010. In other words, agriculture’s worldwide dependence on trade has been increasing in spite of the impediments to agrifood trade erected over the years by national governments. Trade expansion in agricultural commodities and food products has been accompanied by significant increases in agricultural input trade, such as fertilizers, pesticides, farm machinery, feedstuffs and genetic material. This paper attempts to increase our understanding of the structure and characteristics of international trade in agricultural inputs and to provide a historical perspective on the extent and direction of global trade in agricultural inputs. A general discus sion of the factors which influence the magnitude and changes of agricultural input trade flows is also included. Global trade in agricultural inputs occupies a special niche in the discussion and analysis of international agricultural trade. Trade in agricultural inputs arises partly because of the geographic disparity between agricultural input manufacturing and mining activities and the production of agricultural commodities. Just as the location of agricultural cropland and the production of agricultural commodities are unevenly distributed around the world, so is the production of agricultural inputs. The specific agricultural inputs examined here are fertilizers, pesticides, feedstuffs and agricultural machinery. The empirical analysis of the study will be conducted with a sample of annual data that cover international trade flows in agricultural inputs from 1961 to 2009. Volume and value statistics by country on imports and exports of fertilizers, pesticides, agricultural machinery and foodstuffs are obtained from FAOSTAT and COMTRADE, supplemented with individual country sources as required to fill gaps. The results show that expansion of the global food market has resulted in a reshuffling of resources over the entire globe, providing food and livelihood possibilities where they may have been previously limited, unavailable or untenable (e.g. food provision to cities, or the development of animal production through imports of feed inputs). This market expansion has been accompanied by significant increases in agricultural input trade, such as fertilizers, pesticides, farm machinery, and genetic material. The major exporters of fertilizers are those countries with energyrich resources or mineral reserves. In the case of pesticides and farm machinery, the major developed countries of North America and Western Europe tend to be major input exporters. This is due to their manufacturing infrastructure and heavy commitment to public and private research and development expenditure.