Trade, value chains and food security

Executive summary A new literature has recently emerged aimed at describing the competitiveness of a country and its industries by looking specifically at production of value added, as well as level of integration into, global value chains (GVCs). The emergence of GVCs and new trade patterns suggests revision of strategies aimed at fostering competitiveness and of trade and development policies that can directly or indirectly affect food security (FS). This paper aims at presenting possible directions of research for investigating the relationship between trade and food security by taking into account the role of production fragmentation and the degree of participation of farmers in the different stages of the GVCs. To this end, it first introduces the issue of global value chains by providing definitions and characteristics, with a specific focus on the agrifood industry. A brief review of the state of art of empirical analysis on the issue and a synopsis of recent GVC case studies are also provided. Case studies on GVCs based on detailed micro data for a single product provide detailed examples of the multiple stages involved in moving a product from the farm gate to the consumer and of the discrepancy between gross and valueadded trade. Successively, the paper presents two lines of research: the first at the macro level, deals with the emerging literature on tracing the value added of countries’ trade flows. In recent years there have been several initiatives and efforts that have tried to address the measurement of trade flows in the context of the fragmentation of world production, tracing the trade value added by combining inputoutput tables with bilateral trade statistics and proposing new indicators (such as the GVC participation and position indicators). The interpretation of these indicators and results for individual countries in the temporal, geographic and industry dimensions is still a work in progress and poses new challenges to scholars and policy experts. However, even if the available data are not very detailed, they enable the domestic content exports to be distinguished from foreign content exports for individual countries as well as for where the countries are located in the value chain. The second line of research, at the micro level, makes use of the new household panel data, with a strong focus on agriculture and rural development. The use of household surveys could make it possible to assess the implications of participating at different stages of the value chain through the comparison of food security levels for households characterized by similar traits but with different involvement in the chain. The case of Ugandan maize is presented as a first attempt to analyse the relationship between farmers’ food security and their level of participation and position in the agrifood value chain. The paper concludes by emphasizing how the materialization of GVCs and the change in the trade paradigm require a new set of policies able to attenuate or overcome the current domestic constraints and allow small and medium-sized producers to become more competitive and participate in national and international value chains in a sustainable manner. Accompanying policies may help to maximize the expected benefits and minimize the risks stemming from value chain participation. The design of these policies would greatly benefit from the availability of relevant indicators at a detailed level for the agriculture and food sectors.