How policies shape global food and agriculture value chains

Abstract

This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD countries. The publication of this document has been authorised by Ken Ash, Director of the Trade and Agriculture Directorate. This paper and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

Influencing GVCs through Agro-Food Policy and Reform

“…Past work on agro-food GVCs has identified a number of policy influences on GVC participation and domestic value added generation. In particular, less distorting trade policies have been associated with greater GVC participation and higher domestic returns from participation ( Figure 3) (Greenville, Kawasaki and Beaujeu, 2017a). Tariffs on imports and those faced on exports reduce participation in GVCs.…”

“…However, not all non-tariff measures are found to have the same effects, pointing to the mix of trade-creating and diverting effects of such policies. Complex domestic arrangements that create problems for international suppliers negatively affect the domestic value added generated from exports (Greenville, Kawasaki and Beaujeu, 2017a). On the other hand, some technical barriers to trade have a positive effect by creating the necessary rules and trust to underpin trade, creating confidence in markets and supply.…”

“…Policies that lead to productivity-enhancing investments in the agro-food sector are also found to contribute to greater levels of GVC participation and domestic returns from that participation ( Figure 3). Transport infrastructure, education levels and agricultural R&D are all positively related to participation (backward for agricultural R&D) and domestic value added creation from GVC participation (Greenville, Kawasaki and Beaujeu, 2017a). Beyond these, other factors such as the ability to meet private standards are also important for a subset of countries.…”

“…Agro-food global value chains (GVCs) appear to have a different structure compared with GVCs for industrial goods, particularly in that the former have a much higher proportion of intermediates bound for foreign processing before being consumed by final demand (the final consumer) (Greenville, Kawasaki and Beaujeu, 2017a;Greenville, Kawasaki and Jouanjean, 2018). 1 Past work has explored the policy influences on agro-food GVC participation and found that a country's trade and domestic agricultural policy settings can be an important influence on participation and the benefits obtained (Greenville, Kawasaki and Beaujeu, 2017a). Trade and domestic agricultural policies have the potential to have global effects on the distribution of agricultural activity and trade (OECD, 2016), but for individual countries, the impact will depend on their actions, those of other countries, and, importantly, on domestic factor markets.…”

OECD-FAO Agricultural Outlook 2017-2026 (Summary in Icelandic)

“…Further, the development of GVCs has meant that domestic trade restrictions effective act as a tax on exports (Greenville, Kawasaki and Beaujeu, 2017;Lopez-Gonzalez, 2016; OECD, 2015d), harming the development of several sectors (Jouanjean, Gourdon and Korinek, 2017 forthcoming). A more distorted international market place will work against the region's future growth, for agricultural and non-agricultural sectors alike.…”