May 2022
Throughout time global trade has developed around specialization: Do what you do best and trade for the rest. This is particularly true in agriculture commodities. However, where food is concerned, most countries have sought for some degree of food security in the name of national security. That desire for food security necessitated various regimes designed to protect domestic farmers against cheaper imported commodities.
Examples include tariffs, quotas, import licensing schemes and even direct subsidies paid to farmers. And no country is immune.
However, tough decisions must be made during trade negotiations, often resulting in phased tariff reductions (such as Korea’s 40% phase out of beef tariffs over 15 years).
Today’s bold new world of soaring prices and potential scarcity has sent a conflicting signal. Governments that have spent the last 50 years trying to keep “cheap food” out of their country are facing the alternate dilemma: sourcing adequate supplies of affordable food for their people.
This could result in a reversal of policy, particularly in those poorer nations more susceptible to food inflation and social instability. Poorer nations feel food inflation first. Can they outbid richer nations in times of need? Time will tell, but some trade barriers may fade for now. – Brett Stuart