Around the globe agribusiness continues to be a key economic driver. Whether dealing with large-scale commodity production or local differentiated products, food is necessary for us all. The world’s population is becoming more conscious of how food is produced, packaged and delivered. The future of global agriculture is closely tied to trade, and international access for agricultural products continues to dominate trade negotiations.
Agricultural production is varied around the world, owing to a number of factors including development, climate and natural resources, access to technology and markets. Global agricultural output is shifting from high-income countries such as the United States of America to middle-income countries such as China, India and Brazil. Investments in research, both public and private, are changing production and productivity in this sector. In the next 50 years we can expect to see a greater importance on research, production and trade with the middle-income countries (Alston and Pardey, Agriculture in the Global Economy, Journal of Economic Perspectives, Vol. 28, No. 1, Winter 2014).
Continued developments and changes abound in regional trade agreements that are posed to change the face of global agriculture in a significant way. The now defunct Trans-Pacific Partnership (TPP) has been replaced by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) following the withdrawal of the United States from the TPP. At the time of writing, the CPTPP was awaiting ratification by several member states. Also at the time of writing, the Regional Co-operation in Asia and the Pacific is being negotiated to create trade access between 16 member states in Asia, Australia and New Zealand. These 16 states represent 46 per cent of the global population, and impacts on agriculture will be extensive as vast markets will be opened to trade.
The Transatlantic Trade and Investment Partnership, a proposed trade agreement has between the European Union and its 28 member states, and the United States was put in jeopardy in early 2017 as the initial positions taken by the new administration in the United States rejected such large-scale trade agreements. However, in June 2017, the US indicated that it remained open to a free trade pact with the EU and in 2018 there was a resumption of talks, the outcome of which remain uncertain.
In the background to these mega trade agreements is the World Trade Organization (WTO). Since 2000 the WTO has been negotiating agricultural trade reform to the WTO Agriculture Agreement to address subsidies and high trade barriers with a stated overall aim to establish fairer systems of trade to improve the livelihoods of farmers. Negotiations take place by session of the Agricultural Committee of the WTO.
The significance of these large-scale trade agreements for agriculture comes into focus when we look at the value of agriculture globally. World agriculture and agri-food exports in 2014 was valued at C$1.45 trillion. The largest exporter was the European Union, representing 42.9 per cent of exports in 2014, followed by the United States at 12 per cent and Brazil at 6.3 per cent. The European Union also was the largest importer of agriculture and agri-food products, representing 44.4 per cent of the world imports, followed by the United States at 9.6 per cent and China and 9.3 per cent (Agriculture and Agri-Food Canada, An Overview of the Canadian Agriculture and Agri-Food System 2016).
Other trends in the agri-food sector include the increasing vertical integration of food supply chains, national and international standards for food certification and production, and traceability of foods. The consolidation of global agri-food businesses continues to generate a lot of attention in the agriculture space and will influence agriculture in years to come. In 2018, Bayer completed its takeover of the United States based Monsanto, which followed the merger of DowDupont in 2017.
Challenges in the sector include changing consumer preferences in relation to meat and dairy products, climate change, changes in primary production that drive towards more large-scale production and away from the family farm model, and concerns about food security. All of these challenges are influencing policy development around the world.
The challenges to the agri-food sector are addressed in each country through the development of policies and laws in a wide range of areas. Land use controls, export or import controls, food safety, food labelling, production controls, environmental protection laws, and many other areas must be considered when advancing an agri-food business anywhere in the world. It is our hope that this publication will assist people in understanding the landscape when they are considering doing business in a new country.