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The State of Agricultural Commodity Markets 2020

Agricultural markets and sustainable development: Global value chains, smallholder farmers and digital innovations

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Last updated date 04/03/2021, see corrigendum

 FAO. 2020. The State of Agricultural CommodityMarkets 2020. Agricultural markets and sustainable development: Global valuechains, smallholder farmers and digital innovations. Rome, FAO.

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    Book (series)
    The State of Agricultural Commodity Markets 2022
    The geography of food and agricultural trade: Policy approaches for sustainable development
    The State of Agricultural Commodity Markets 2022 (SOCO 2022) discusses how trade policies, based on both multilateral and regional approaches, can address today’s challenges for sustainable development. Trade policies in food and agriculture should aim to safeguard global food security, address the trade-offs between economic and environmental objectives, and strengthen the resilience of the global agrifood system to shocks, such as conflicts, pandemics and extreme weather. The report discusses the geography of trade, analysing food and agricultural trade and its patterns across countries and regions, its drivers and the trade policy environment. Comparative advantage, trade policies and trade costs shape the patterns of trade in food and agriculture. When comparative advantage plays out in the global market, trade benefits all countries. Lowering tariff barriers and reducing trade costs can promote trade and economic growth. Both multilateral and regional trade agreements can facilitate the process of making trade an avenue for growth but the gains of trade are distributed unevenly. When global environmental impacts, such as climate change, are considered, a multilateral approach to trade can help expand the reach of mitigation measures.
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    Sustainable Agricultural Mechanization for Africa
    Equipping small-scale farmers to boost sustainable agricultural productivity
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    Mechanization and related innovations are crucial if the world is to transition to sustainable agriculture. Digital tools and platforms are driving mechanization service provision along the value chain. In 2018, FAO and the African Union launched the Framework for Sustainable Agricultural Mechanization for Africa (SAMA), setting out a long-term vision and national and regional priorities, emphasizing cooperation with the agricultural machinery industry. Interventions aim to move smallholders from hand tool-based labour to innovative technologies. Sustainable mechanization cuts working time, relieves labour shortages, raises productivity and encourages youth into agriculture, creating jobs. It aids efficient use of agricultural resources, helping to mitigate the effects of climate change by reducing harmful emissions and increasing farmer resilience. Better access to tools and technologies allows farmers to leapfrog from subsistence to market-oriented farming, boosting the sector. Increased mechanization does not necessarily mean big investment in bulky machinery. It should focus on sustainable production through conservation agriculture, promoting and scaling up innovations and appropriate technologies (digital tools and precision equipment) and bolstering national capacity to promote progress towards sustainable agriculture and socioeconomic development. FAO is boosting the capacity of African smallholders and hire services to develop businesses that use and provide mechanization services. The initiative aims to upscale practices and improve smallholders’ inclusive technological access, particularly the poor, vulnerable, women and youth, in locations where it is needed most. It will have significant impact on all aspects of sustainability, from agricultural production and income generation to policy and trade.
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    Policy brief
    Innovative contract farming arrangements in Asia and the Pacific 2022
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    Although informal transactions are still the norm in Asia and the Pacific, contractual agreements are on the rise, especially for high-value agricultural commodities. As contract farming arrangements grow in number and become more sophisticated, a series of innovations are emerging to enhance their inclusion and efficiency. The nature of these innovations can range widely – from the adoption of digital technologies, to new governance mechanisms and novel regulations. Governments in the region face the challenge to further mainstream contract farming while ensuring inclusiveness and fairness. Recent government interventions are targeting areas such as introducing gender sensitive regulations leading to the increased participation of women in economic transactions, facilitating insurance to reduce contract farming risks related to weather-based agriculture or natural disasters, utilizing third-party verification systems to combat power abuse, and promoting sustainable public-private partnerships that enhance inclusion and equity. The discussed policy measures can contribute to facilitating the shift towards more structured market channels that provide farmers the opportunity to integrate into modern and more complex agrifood value chains that serve remunerative markets. Nonetheless, governments should ensure that those interventions are able to create a suitable enabling environment to potentially lead to contractual arrangements that are fair to all value chain actors, including smallholder farmers.

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