Reserves and trade jointly determine exposure to food supply shocks

Abstract

While a growing proportion of global food consumption is obtained through international trade, there is an ongoing debate on whether this increased reliance on trade benefits or hinders food security, and specifically, the ability of global food systems to absorb shocks due to local or regional losses of production. This paper introduces a model that simulates the short-term response to a food supply shock originating in a single country, which is partly absorbed through decreases in domestic reserves and consumption, and partly transmitted through the adjustment of trade flows. By applying the model to publicly-available data for the cereals commodity group over a 17 year period, we find that differential outcomes of supply shocks simulated through this time period are driven not only by the intensification of trade, but as importantly by changes in the distribution of reserves. Our analysis also identifies countries where trade dependency may accentuate the risk of food shortages from foreign production shocks; such risk could be reduced by increasing domestic reserves or importing food from a diversity of suppliers that possess their own reserves. This simulation-based model provides a framework to study the short-term, nonlinear and out-of-equilibrium response of trade networks to supply shocks, and could be applied to specific scenarios of environmental or economic perturbations.

The Global Food‐Energy‐Water Nexus

“…Indeed, some nodes (i.e., countries) are starting to show the first episodic signs of instability, particularly in water‐poor and trade‐dependent countries (Suweis et al, ). This analysis of the long‐term response to shocks is in agreement with the short‐term propagation of perturbations in the trade network during a food crisis (Marchand et al, ; Puma et al, ; Tamea et al, ); both approaches have shown how the fragility of the coupled food‐demographic system has increased as an effect of the growing globalization of food through trade.…”

“…This phenomenon establishes long‐distance teleconnections and interdependencies between crop production areas and global demand (Rulli & D'Odorico, ). On the receiving end, the globalization of food markets and the vulnerability and exposure to food crises and climatic shocks (Marchand et al, ; Seekell et al, ) make transnational investments in agricultural land a strategic food security priority in order to gain resilience through diversification of the agricultural regions that importer and investor countries rely on. Interestingly, most target countries are endowed with productive agricultural land that in some regions require relatively small amounts of irrigation water (Figure ) and are not affected by aridification under climate change scenarios (Chiarelli et al, ).…”

“…Such an approach has been attempted by some partial equilibrium trade models (e.g., the International Model for Policy Analysis of Agricultural Commodities and Trade by the IFPRI) developed to support policymakers in reducing poverty and hunger (e.g., Godfray et al, 2016). Other models have been developed to investigate the short-term response to shocks (e.g., Puma et al, 2015;Tamea et al, 2016;D'Amour et al, 2016;Gephart, Rovenskaya, et al, 2016;Marchand et al, 2016). These models do not invoke equilibrium conditions, which could be hard to attain in the short-term response to an abrupt production shock.…”

Grain and Virtual Water Storage Capacity in the United States

“…Shocks are transmitted through global grain trade networks (Fair et al, 2017;Puma et al, 2015) and the entire food (Distefano et al, 2018;Ercsey-Ravasz et al, 2012) and virtual water (Tamea et al, 2016) trade networks. Recent work has shown that grain stores buffer production shortfalls, making them important to consider in assessments of food network reliability (Marchand et al, 2016). An empirical assessment of grain and virtual water stocks will enable future evaluations of shock transmission in the global food systems to add this component (Lant et al, 2018).…”

A framework for modelling the complexities of food and water security under globalisation

“…The global system of food production and trade is complex and drives interdependency among heterogeneous regions, meaning that socio-economic or environmental changes in one part of the globe can have cascading impacts for food and water security throughout the world (Fig. 1b) (D'Odorico et al, 2010;Marchand et al, 2016;Young et al, 2006). Equally, there is interdependency across sectors with Figure 1.…”