- ➔ Trade forms an integral part of our agrifood systems and it is indispensable for addressing nutritional objectives. In economics, the love of variety is an important determinant of gains from trade. Nutrition science adds to this finding. Dietary diversity is key for the adequacy of micronutrient supply.
- ➔ Trade promotes the diversity of food supply significantly. In 2020, on average, trade increased the diversity of foods available for consumption twofold. This effect is stronger for net-food-importing than for export-oriented countries.
- ➔ Between 2010 and 2020, the average supply per capita of essential micronutrients increased across countries. Those countries that are more open to trade achieved higher levels of adequacy of nutrient supply.
- ➔ Nutrient density appears to be an important determinant of food prices. The higher the micronutrient content in a food, the higher its price in the global market. For example, fruits and vegetables are rich in nutrients, fibre and water but less energy-dense, which makes them relatively expensive when prices are measured on a per calorie basis.
- ➔ Trade openness is associated with higher food trade volumes and lower food prices. A lower level of import tariffs is associated with lower prices for both nutritious foods and energy-dense foods with low nutritional value.
How does trade promote the diversity of food supply?
One of the most direct pathways in which trade affects nutrition is through its effect on the diversity of foods available in a country. Agroclimatic conditions and natural resource endowments can, to a large extent, determine the quantity and diversity of food production. As not all foods can be sufficiently produced in all regions of the world and at all times of the year, the diversity of foods a country can produce is often limited. Trade is an important means to promote the availability and accessibility of more diverse foods. Higher food diversity in diets can lead to improved nutrient adequacy and ensure human health.114
The natural resources necessary for agricultural production such as land and water are unevenly distributed across countries and climatic conditions vary widely. Some countries can produce only a small range of products, while others possess abundant natural resources and produce a large variety of foods. For example, China, one of the largest countries in the world by area, produced around 320 different items in 2020, as compared with Kiribati, a small island developing state that produced only 15 different terrestrial food items. By participating in global food markets, most countries in the world would export foods that they can produce in abundance and import foods that can be more efficiently produced in other countries. This exchange fosters food trade globally and, at a country level, increases the overall diversity of foods available all-year-round.
In economics, the love of variety is an important determinant of the gains from trade.115, 116 In nutrition science, dietary diversity is a good predictor for micronutrient adequacy,117 and strong associations have been found between the diversity of foods available for consumption and nutrition outcome indicators. Higher levels of diversity of national food supplies are associated with a lower prevalence of child stunting, wasting and underweight. While the prevalence of overweight increases with the availability of food and calories, it is found to be independent of the diversity of foods available for consumption.118
A body of literature has investigated the relationship between trade and the diversity of foods available for human consumption. Between the beginning of the 1960s and 2013, global trade in crops expanded, a process that has been identified as the main driver of the diversity of the supply of crop products globally. Although within countries, crop production diversified only marginally, the diversity of crop products available for consumption increased rapidly through trade.119 Another study suggests that, as a result of increased trade, a higher diversity of foods available within countries meant that both food and nutrients were more equally distributed in 2010 as compared with 1970.120
Nevertheless, the extent to which trade improves the diversity of foods available for consumption in a country depends on its integration in global markets. In fact, for low-income countries, which are less integrated in international trade, the diversity of foods produced is a strong predictor of the diversity of foods supplied for consumption. In middle- and high-income countries, food supply diversity was shown to be independent of production diversity, with trade being the main factor contributing to the diversity of foods available for consumption.121 However, since trade can improve the availability and accessibility of all foods – that is, foods that support a healthy diet and energy-dense foods high in fats, sugars and/or salt– the effects on nutritional outcomes can be mixed and depend on the interplay of a multitude of factors including income, relative prices of foods and consumer preferences, which all shape the demand for food.
A simple measure such as the number of food items produced and supplied for consumption in a country clearly shows the impact of trade on the diversity of foods available (Figure 3.1).r While the number of food items produced is constrained by natural resource endowments and various other factors, the number of items available for consumption is much higher. In 2020, countries produced an average of 120 different food items, while the number of food items available for human consumption amounted to an average of 225 (out of 445 items considered in this analysis).
FIGURE 3.1Share of food items produced and supplied in all food items, 2010 and 2020, percent
SOURCE: Authors’ own elaboration based on Engemann, H., Jafari, Y. & Zimmermann, A. (forthcoming). Diversity of food supply across countries and the impact of international trade – Technical note for The State of Agricultural Commodity Markets 2024. Rome, FAO.
In most countries, the diversity of production has not changed significantly over time. Across countries, the average number of different food items produced remained stable between 2010 and 2020, reflecting the role of natural resource constraints in shaping the composition of food production. However, the average number of different food items available for consumption increased significantly between 2010 and 2020. In 2010, on average, the number of foods available for consumption was almost 60 percent higher than those produced domestically. In 2020, this had risen to almost 90 percent, indicating that trade could, on average and across countries, increase the diversity of foods available for consumption around twofold.
Among the countries with the lowest diversity of foods available in 2020 were many Small Island Developing States, especially in Oceania such as Kiribati and Nauru, in Latin America and the Caribbean such as Dominica and Saint Kitts and Nevis, and in Africa such as Cabo Verde and the Comoros. Countries with the highest diversity of foods available for consumption in 2020 included China, a large country that produces a high number of foods, and Bahrain and Oman, small countries that face significant agroclimatic and natural resource constraints in food production and that achieve high levels of diversity through trade.
Similar diversity patterns can be found when food items are classified by processing level. At all processing levels, the diversity of food items available for consumption is much higher than that of foods produced domestically (Figure 3.2). Globally, in 2020, the cross-country average of unprocessed and minimally processed foods produced and supplied to be available for consumption was 89 and 152 items, respectively. While every country produces unprocessed and minimally processed foods, their large dispersion around the global average reflects wide differences in natural resource endowments and climatic zones. For example, in 2020, the minimum number of unprocessed and minimally processed foods produced was 11 (Kiribati), while the maximum number was 222 (China).
FIGURE 3.2Global distribution of food items by processing level: Production and availability for consumption, 2020
SOURCE: Adapted from Engemann, H., Jafari, Y. & Zimmermann, A. (forthcoming). Diversity of food supply across countries and the impact of international trade – Technical note for The State of Agricultural Commodity Markets 2024. Rome, FAO.
At higher processing levels, there are fewer food items; nevertheless, a similar pattern emerges with trade and, more specifically, imports resulting in the diversity of foods available for consumption being higher than that of foods produced domestically. In 2020, on average, countries imported up to twice as many different unprocessed and minimally processed food items and different processed culinary items as they produced. Since not every country has a well-developed food processing industry, in the same year countries imported nearly three times as many different processed and ultra-processed foods as they produced. Trade led to consistently higher diversity in foods available for consumption as compared with foods produced domestically at all processing levels.
Similar patterns hold when food items are classified according to food categories (Figure 3.3). For most food categories, the diversity of foods available for consumption is shown to be much higher than that of production. In 2020, and in most food categories, trade resulted in the average country supplying around twice as many different foods than it produced.
FIGURE 3.3Global distribution of food items by food category: Production and availability for consumption, 2020
SOURCE: Adapted from Engemann, H., Jafari, Y. & Zimmermann, A. (forthcoming). Diversity of food supply across countries and the impact of international trade – Technical note for The State of Agricultural Commodity Markets 2024. Rome, FAO.
Trade barriers can hinder the exchange of foods and thus food diversity across countries. A study on trade and food diversity in Eastern Europe and Central Asia found that, between 1996 and 2013, trade barriers reduced the diversity of foods available in countries in the region including that of fruits and vegetables.122 A global study of 151 countries during the period 1980–2007, suggests that trade openness was associated with higher dietary diversity as indicated by the share of dietary energy supply derived from non-staple foods.123
A study conducted for this report shows that, on average, between 2010 and 2020, trade openness contributed to the diversity of foods available for consumption, measured in terms of the number of food items and other diversity metrics.124 Broadly, higher levels of trade openness were found to be associated with higher diversity of food supply (Figure 3.4). Although high diversity of foods can also be attained by countries with relatively lower levels of trade openness, those that are very open to trade consistently feature a high diversity of foods available for consumption. Nevertheless, the interplay of comparative advantage and specialization in production can also affect food supply diversity (see Box 3.1).
FIGURE 3.4Relationship between trade openness and diversity of food supply, 2020
SOURCE: Adapted from Engemann, H., Jafari, Y. & Zimmermann, A. (forthcoming). Diversity of food supply across countries and the impact of international trade – Technical note for The State of Agricultural Commodity Markets 2024. Rome, FAO.
BOX 3.1Net trade position and the diversity of food supply
While openness to trade is generally seen as being conducive to a higher diversity of foods available in a country, certain causal channels could also imply the opposite effects. Trade openness allows for a variety of foods to be imported, thus increasing the diversity of foods available to consumers. At the same time, for a country trade openness can shape agricultural production in line with its comparative advantage, thus fostering economic growth but promoting specialization in the production of some crops or animal source foods destined for exports, which may reduce the diversity of foods produced domestically.155
For example, a study points out that while more imports resulted in significant increases in the diversity of foods available in most countries in the world during the period 1987–2013, food production diversity with regard to protein declined in some major exporting countries such as Argentina, Brazil and the United States of America, as well as in some regions such as Eastern Europe and Central Asia.156
Another study found that, in the beginning of the 1960s, countries with a larger share of exports in total production were more specialized, often showing a lower diversity in crop production. While deepening their export position over time, some of the major crop exporting countries including Argentina, Brazil, Malaysia, Paraguay and the United States further reduced their production diversity by 2011–2013, while Australia and Canada increased it.157 This suggests that the impact of specialization on the diversity of foods produced by exporting countries is highly context- and location-specific, depending on the comparative advantage of producing a specific food relative to another.
The study carried out for this report identified a weak association between the net trade position of a country and its food supply diversity (Figure 3.5).
FIGURE 3.5Relationship between net trade position and diversity of food supply, 2020
SOURCE: Adapted from Engemann, H., Jafari, Y. & Zimmermann, A. (forthcoming). Diversity of food supply across countries and the impact of international trade – Technical note for The State of Agricultural Commodity Markets 2024. Rome, FAO.
Large net exporters of food can have slightly lower levels of food supply diversity relative to food net importers.
For example, in 2020, the net food importing countries Bangladesh, Japan and Kuwait consistently featured a higher diversity of food supply than the net exporters of food and agricultural products (in value terms) Sri Lanka, Uganda and Uruguay (Figure 3.6). In all three net importing countries, and especially in Bangladesh and Kuwait both with rapidly growing food imports, the diversity of food supply increased strongly between 2010 and 2020, while those of the net exporters remained relatively unchanged.
FIGURE 3.6Diversity of food production and supply in selected countries, 2010 and 2020
Sri Lanka, Uganda and Uruguay strongly focus on the export of agricultural raw commodities. The main agricultural export products of Sri Lanka are tea and spices, Uganda exports coffee, cocoa and tea, and Uruguay is a major exporter of beef and soybeans.
These patterns suggest that, irrespective of production diversity, countries that focus on food imports achieve higher levels of supply diversity, while this is not a priority in export-oriented countries, especially major net exporting countries in Latin America and the Caribbean, which experienced fast growth of their agricultural exports in the last decades and exhibit relatively low levels of food supply diversity as compared with other countries.
BOX 3.2Data on trade, production and supply of food
The quantitative analyses in this report draw on a multitude of data sources, with the main one being FAOSTAT. To express trade in macronutrients and micronutrients, FAOSTAT’s bilateral trade data of the years 2000–2021 have been converted into energy and nutrient values using a newly developed global nutrient conversion table.158 Trade flows have been aggregated into eight food categories (see Box 2.1) and four processing levels (see Box 2.2). The same conversions have been applied to FAOSTAT’s Supply Utilization Accounts in the years 2010–2020.
FAOSTAT includes detailed trade, production and supply data for terrestrially produced foods, while similar data for aquatic products are provided by FAO’s FishStat database. This report focuses on terrestrially produced foods. Stylized facts on trade in aquatic products are provided in Box 2.3.*
Although only items qualifying as foods are considered in the analyses, it is not possible to separate import/export flows and domestic production in terms of use such as food, animal feed, industry, biofuels and other non-food uses.** Overall food trade, as well as the shares of specific food categories and processing levels,*** should therefore be interpreted as upper bounds in Part 2. As prices of non-food items are usually lower than those of foods, average import prices of the same categories can be understood as lower bounds in Part 3.
NOTES: * Limitations in data availability and compatibility at the time of preparing this report precluded the full consideration of aquatic products in the quantitative analyses. ** A current FAO work programme aims to disentangle the shares of domestic production and trade flows by their end uses. *** This effect may apply to various categories, notably to staple foods and pulses, seeds, and nuts, and processing levels, notably unprocessed and minimally processed foods.
