Analytical Reports

LDC Trade Report 2023: Improving food security

More than 60% of the population of LDCs (least developed countries) is exposed to food insecurity—twice as much as in other developing countries and six times as much as in developed countries. Trade can improve people’s access to food, but it can also spread the consequences of shocks, such as conflict, climate change or shifts in international prices or trade policy. In a context of global uncertainties, this report assesses the role of trade for food security in LDCs and outlines policy options for greater resilience.

Trade improves the food supply of LDCs…

With a lower per capita production of food than other countries, LDCs rely to a great extent on imported food. Overall, 14% of the supply of food in LDCs is sourced from net imports. In addition, for most LDCs, the supply of food is more varied than food production. This means that imports increase both the amount and the diversity of food available in LDCs.

…but makes them more vulnerable to shocks.

However, a high level of food imports also bears risks: fluctuating global commodity prices or the sudden adoption of new trade policies can have detrimental effects on the nutrition of the world’s poorest.
That is particularly the case if sectors that contribute significantly to food security are dependent on imports. In LDCs, cereals, vegetable oils and sugar represent 64% of calories available. At the same time, large shares of the supply of cereals, vegetable oils and sugar in LDCs are sourced through imports, making LDCs trade dependent for food security.
The high concentration of suppliers aggravates the situation: with over 40% of these key LDC food imports originating in one of three main partners, supply chain disruptions can quickly provoke a domestic nutrition crisis.

In the first half of 2022, the food supplies of LDCs experienced strong negative impacts
In a context of already rapidly increasing food and fertilizer prices, the outbreak of the war in Ukraine in early 2022 unleashed a series of effects on food markets that threatened food security in LDCs through several channels.
First, a large part of LDC imports of wheat products (30%) and sunflower seed oil (37%) stems from the Russian Federation or Ukraine. The war caused a direct disruption in these key supplies.
Second, even if mostly sourced from other partners, foods for which the Russian Federation or Ukraine are large players in international markets experienced steep increases in prices.
Third, rounds of sanctions and counter sanctions were followed by the adoption of new temporary trade measures. Globally, over 40 measures affecting the trade of food were implemented and remain active, adding further pressure on food prices.
Fourth, Belarus and the Russian Federation are large players in international markets of fertilizers, as well as key suppliers of fertilizers for LDCs. For example, they represent 44% of Mauritanian fertilizer imports. This implies disruptions and increased prices for vital inputs to the local production of food in LDCs.
During the first half of 2022, the value of LDC food imports increased by 13%, while food prices experienced a 25% surge, signaling a substantial decrease in the quantity of food imported by LDCs, according to the data currently available.

Mixed outlook for 2023, with leveling food and fertilizer prices
While data for the second half of 2022 is still not widely available, there are some signs of relief: the implementation of the UN-led Black Sea Grain Deal, the continuous decrease in food prices after peaking in the first half of the year and a similar descent in fertilizer prices.
However, still elevated food prices (39% above pre-pandemic levels) and continued high prices for fertilizers (133% above pre-pandemic levels) and energy suggest that a combination of low yields of domestic production and high prices of imported food will remain a challenge for the availability and affordability of food in LDCs.
Safeguarding food security in LDCs requires a wide, coordinated range of policies—such as stockholding systems, biofuel policies, enhancement of agricultural productivity, support of climate change adaptation and mitigation and access to finance—hand-in-hand with trade policies.

To increase the resiliency to food trade shocks, LDCs can consider: ƒ
  • Improving food market access for food imports LDCs continue to impose significant tariffs on essential food items, such as cereals and vegetable oils. In addition, ITC business surveys on non-tariff measures show that LDC food importers still face significant inspection delays and high fees and charges. In the midst of food crises or price spikes, LDCs can mitigate the impact on food availability and affordability by facilitating imports and re-evaluating remaining tariffs.
  • Tapping into alternative sources of supply A limited number of suppliers provide LDCs with large shares of essential food items, making them vulnerable to disruptions and sudden policy changes. To address this, LDCs could consider establishing diversified sourcing strategies, incentivizing the production and exports of food products, and supporting the integration to regional agrifood value chains. Regional integration initiatives—such as the African Continental Free Trade Area (AfCFTA)—provide an opportunity to improve food markets access and tap into alternative sources of supply, as they offer a chance to review tariffs, streamline procedures, revise regulation and coordinate responses.

In addition to policies LDCs can consider themselves, the international community also plays a key role
Cooperation at the multilateral level is critical to strengthen intra-regional trade, improve market information, and avoid the use of export restrictions that can further fuel world prices and harm third countries—especially poor net food-importing countries.