Agricultural trade

The agricultural trade in the EU internal and intra-trade and of international trade and foreign trade involves the purchase and sale of agricultural products and raw materials such as cereals and oilseeds , processed products of the food industry such as cheese or sausages and for Agriculture necessary resources . These include, for example, seeds , fertilizers , animal feed or agricultural technology . Agricultural trade compensates for imbalances that arise spatially, temporally, qualitatively and quantitatively between the production of agricultural products and their processing or consumption . It is part of the agribusiness .

Share of agricultural imports from selected countries in global agricultural trade - 2014

Share of agricultural exports from selected countries in global agricultural trade - 2014

Meaning and functions

Agriculture, forestry and fishing in Germany had a production value of 60.09 billion euros in 2017, which is higher than the entire German textile, clothing and shoe industry with 22.9 billion euros, the paper industry with 38, 3 billion euros or the pharmaceutical industry with 49.5 billion euros.

Agricultural trade products both in EU internal trade and worldwide are u. a .:

Wheat is an important commodity
Oilseeds such as rapeseed (see picture) are traded worldwide
Feed is a means of production for agriculture
Fertilizer is an important resource
Export goods apples and pears
Sausages are among the processed goods of the food industry . Image: São Paulo, Brazil

Link in the agricultural value chain

Agricultural trade value chain

Agricultural trade is a link within the agricultural value chain . He has a double function both as a sales agent , for example in the grain business, and in the form of a service provider in the procurement business of agricultural products. This dual function developed particularly in the 19th century . In addition to bridging space and time, the trade in agricultural products also balances quality and quantities within the agricultural value chain, s. Work processes in the agricultural trade .

Companies that trade in agricultural products within a single market or worldwide are usually wholesalers . Agricultural trading companies that are not wholesalers and have retail functions have so far been more closely related to agriculture, see agricultural trade . Due to the structural change in agricultural trade with a concentration on larger corporate mergers, these differences are increasingly disappearing. In other words, agricultural trading companies at the wholesale level are also increasingly coming into direct contact with farmers, for example.

Agricultural trade as a link within the agricultural value chain therefore also affects issues in the upstream and downstream stages, such as structural changes in agriculture , climate or environmental issues or animal welfare in food production . Due to its balancing function as an intermediate stage between supplier and buyer, agricultural trade is becoming increasingly important, for example against the background of hunger in the world . "Hunger and malnutrition do not exist because food is scarce, but because it is not always available where it is needed." An expansion of agricultural trade, for example also through advancing digitalization and thus increasing global networking , promotes processes of a global division of labor and could ensure that regions where certain food is scarce are better supplied.

quality control

The quality assurance of the traded agricultural products is regulated on the one hand by legally anchored directives such as the EU regulation on quality regulations for agricultural products and food as well as on control systems introduced by the agricultural trade itself. These quality assurance systems formulate standards for hygiene and safety through specific requirements for transport, reception, storage and traceability. These include, for example, the European Grain Monitoring (EGM) introduced in 1999, the guidelines for quality assurance of production processes ( GMP ) or the European Code of Good Trading Practice (GTP), which COCERAL , the European umbrella organization for trading in grain, animal feed and other agricultural products, has developed . The GTP security concept applies to the entire European trade and logistics chain in the food and feed industry. The code contains requirements for feed and food safety and in particular covers the food chain in the field of grain and oilseeds. The concept is recognized by the Federal Office for Agriculture and Food (BLE) as an industry guideline.

Risk coverage

The production of agricultural raw materials depends on the season and the supply is subject to annual fluctuations, for example due to extreme weather conditions such as heavy rainfall or periods of drought . With increasing volatility (price fluctuations), risk management becomes more important. More and more often, for example, financing banks in the agricultural trade are demanding a corresponding risk management for company classification when granting loans. Trading systems such as commodity futures exchanges or forward contracts give farmers, traders and processors options for price hedging.

Financial market regulations are intended to prevent speculation in agricultural commodities and foodstuffs, such as the Financial Market Directive (MiFID) . Scientific analyzes suggest, however, that speculation does not have the influence on price developments on the world market that is ascribed to them. Accordingly, the retail sector is primarily determined by fundamental trends in demand and supply and the framework conditions for raw material extraction listed above.

The agricultural futures markets play an important role in the pricing mechanisms on cash markets . Forward contracts are also widespread when trading in agricultural commodities such as grain and oilseeds. The farmer thus secures a fixed forward for part of the future harvest or a price linked to an index (premium contract). This form of bilateral business is not carried out via a trading platform.

Structures and trade flows

Agricultural products are shipped worldwide in similar containers (Image: Yorktown Express container ship at the container terminal in Bremerhaven)

A large number of bilateral and multilateral free trade agreements have been concluded over the past few decades . The most important multilateral agreements are currently under the umbrella of the World Trade Organization , which has more than 160 member countries and is therefore a global organization. The forerunner of the WTO was the General Agreement on Tariffs and Trade - GATT for short . This was an attempt after the Second World War to significantly reduce tariffs worldwide. Trade agreements often go beyond the mere trade in goods and also include non-tariff aspects (e.g. trade bureaucracy such as applications, licenses, notifications, discriminatory or disproportionate safety, environmental or health-related regulations for products or quantitative restrictions).

**Products in import-export to and from Germany 2015**
rank	Products	import	rank	Products	export
in billions of euros
1	Oilseed and -Products	8.4	1	Cereals, products, baked goods	9.1
2	Meat and -products	6.9	2	Meat and -products	9.0
3	Milk and -products	6.2	3	Milk and -products	8.7
4th	Cereals, products, baked goods	5.9	4th	Cocoa -products	4.7
5	Fresh fruit, tropical fruits	5.3

Trade policy remains the responsibility of the individual nation states as well as the EU. There are a large number of bilateral trade agreements that also include agricultural trade. Negotiations at EU level are mainly conducted by the EU Commission . This consults the individual EU member states in the voting process. The most important international agreements are usually negotiated within the WTO.

Agricultural trade in the EU internal market

The trade balance from 2014 shows that the EU-28 is the largest single market in the world . In 2014, the share of agricultural exports from all Member States to other EU countries was 73%.

The largest agricultural producers in the EU include France and Germany, followed by the United Kingdom, Spain and Italy. Germany's most important partners in agricultural foreign trade are the EU countries. In 2015, 76% of total agricultural exports went to EU partner countries and almost 24% to third countries. 68% of imports also come from the EU. As of 2015, German agriculture generated more than 25% of its sales revenue from agricultural exports. As in previous years, France ranks first with exports with 12% (5.7 billion euros) and Italy with 11% (5.2 billion euros).

The following table shows the five largest grain producers within the EU:

The countries of the EU-28 form the largest single market in the world

**Harvest production in the EU-28 for cereals, 2014-2016, in area / 1000 ha**
countries	2014	2015	2016
EU-28	:	57,431.61	:
France	9,591.69	9,575.54	9,545.04
Poland	7,485.00	7,511.80	7,542.10
Germany	6,468.60	350.40	6,355.70
Spain	6,313.11	6,195.86	6,228.52 *
Romania	5,443.97	5,466.47	5,206.28
Italy	3,392.95	3,048.18	3,213.62

(* = provisional)

Agricultural trade in the EU's foreign trade

In 2016, the EU was one of the largest exporters in the world with a share of 15.9% of world trade (exports and excluding internal EU trade) . China's share in world trade was 16.5% and the USA's share was 11.4%. In 2014, EU imports accounted for 15.5% of world trade (USA 16.6%, China 13.5%). For example, the export share of wheat in world production between 2013 and 2015 averaged 21.9% for wheat and 31.2% for oilseeds.

The EU's negotiating partners are traditional trading partners and competitors among industrialized countries. The most important EU trading partners for exports are the USA, China and Switzerland. When it comes to imports , these are China, the USA and Russia.

**Foreign trade of the EU-28 with third countries in 2014 and 2015**
**in billions of euros, including goods from the agricultural and food industries**
countries	import	export	balance	import	export	balance
Third countries, in total
2014	1,692.2	1,702	10.7	104.2	121.9	17.7
2015	1,727.0	1,789.3	62.2	113.3	129.2	16.0
% Change compared to the previous year	2.1	5.1		8.7	6.0
United States
2014	209.3	311.6	102.2	10.3	16.4	6.0
2015	249.1	371.2	122.1	12.0	19.4	7.4
% Change compared to the previous year	19.0	19.1		15.8	18.5
Russia
2014	182.4	103.2	−79.2	1.5	9.1	7.6
2015	136.1	73.7	−62.4	1.4	5.64	4.1
% Change compared to the previous year	−25.4	−28.4		−5.4	−38.6
China
2014	302.1	164.6	−137.5	4.7	7.4	2.8
2015	350.6	170.3	−180.2	5.2	10.3	5.2
% Change compared to the previous year	16.0	3.5		10.6	39.0
Developing and emerging countries ( FAO definition )
2014	961.4	881.4	−80.0	73.9	64.5	−9.3
2015	1007.9	928.5	−79.4	79.9	71.3	−8.5
% Change compared to the previous year	4.8	5.3		8.1	10.5

The main negotiating goal of the EU is agreements with emerging countries and, for example, the Least Developed Countries (LDCs, German least developed countries). For the latter, simplified access to the EU market should be made possible. These countries often still protect their markets with high tariffs and non-tariff trade barriers. The least developed countries in the EU have completely duty-free and quota-free market access for their goods. Protective tariffs fall within the scope of agricultural subsidies . Agreements with the ACP countries (African, Caribbean and Pacific countries and regions) are in force. Negotiations with Canada, Vietnam, Singapore and other countries have been concluded and must be ratified. The EU's external trade balance in agricultural and food products was balanced in 2013 and 2014 and amounted to around 118 billion euros each.

According to the Federal Ministry of Agriculture (BMEL), exports of agricultural and food products to third countries (…) rose by around 1 billion euros to 16.2 billion euros last year. At 6.5%, the increase was significantly higher than that of intra-trade. Until 2012, Russia was the most important destination for German agricultural exports to third countries. Due to the trade restrictions, Russia is currently only fifth among the third countries. Around a quarter of German agricultural exports went to third countries, according to the BMEL. Ten years earlier, the share of agricultural exports to third countries was just 16.9%. The most important countries for German foreign trade outside the EU in 2015 were Switzerland (1.8 billion euros), followed by the USA (1.7 billion euros). A significant increase in foreign trade can be seen in exports to Saudi Arabia (+ 56.9%) and the People's Republic of China (+ 45.3%). These countries are third and fourth among the most important third countries. In 2015, the value of agricultural exports to the People's Republic of China was around 27 times higher than 10 years earlier.

73% of German agricultural imports from non-EU countries come from a developing country or emerging market . In terms of the structure of goods, a very large proportion of the exports are food goods, some of which are highly processed products. Unprocessed agricultural products such as grain only account for around 10% of the export value.

International agricultural trade

The agricultural trade markets are characterized by increasing liberalization and expansion of international trade, expansion of foreign direct investments and cross-border financial flows. This is also reflected in international trade agreements. In the context of globalization , international agricultural trade is increasingly taking on the balancing of quantities, for example between Central European weather-related favorable locations and regions with strong population growth or crisis regions. As a result, cross-border trade has increased significantly over the past thirty years. According to the Johann Heinrich von Thünen Institute , Federal Research Institute for Rural Areas, Forests and Fisheries, “today compared to 1960, three times the amount of agricultural products is produced worldwide, but six times as much is traded”. The globalization of economic and trade relations over the past decades has also deepened the global division of labor.

A key indicator for explaining international economic developments is the comparison between world trade and world national product. Up until the financial and economic crisis of 2008, world trade grew on average twice as fast as world production, not least because of the constantly increasing number of new players. For example, between 1990 and 2000 the annual growth in value of global exports averaged 6%.

The following table shows the 20 largest wheat producers worldwide. In total, they produce 85.1% of the total.

**The largest wheat producers worldwide (2014)**
rank	country	Quantity (in t )	rank	country	Quantity (in t)
1	China People's Republic People's Republic of China	126.208.400	11	Turkey Turkey	19,000,000
2	India India	95,850,000	12	Iran Iran	106,000,000 *
3	United States United States	55.147.120	13	Kazakhstan Kazakhstan	12,996,900
4th	Russia Russia	59,711,382	14th	United Kingdom United Kingdom	16,606,000
5	France France	38.950.202	15th	Poland Poland	11,628,670
6th	Canada Canada	29,280,800	16	Egypt Egypt	9,279,804
7th	Germany Germany	27,784,700	17th	Argentina Argentina	9,315,049
8th	Pakistan Pakistan	25,979,399	18th	Spain Spain	6,471,400
9	Australia Australia	25,303,037	19th	Romania Romania	7,584,814
10	Ukraine Ukraine	24.113.970	20th	Italy Italy	7,141,926
	world	729.012.175

( * = estimated )

history

Human spread to America around 40,000 years ago

The trade in agricultural goods developed with the transition of humans as nomadic hunters and gatherers to sedentarism . This is linked to the management of agricultural land and animal husbandry for the purpose of producing, processing and storing food.

colonization

The period of colonialism began with the Spanish and Portuguese voyages of discovery at the beginning of the 16th century. The spice markets were first explored by shipping. With the development of inland shipping , trade in agricultural goods experienced a boost. Other European countries also increasingly sought colonial possession. In the 18th and 19th centuries, England had conquered the world's oceans. Between 1800 and 1913, world trade increased 25-fold, growing much faster than world production. Advances in marine engineering, e.g. For example, the advent of steamships, larger types of ships, ships made of steel and inland waterway transport, improved roads and the development of the railroad made it possible to cover longer distances.

19th - 21st century

Via Imperii and Via Regia are ancient trade routes

The political, economic, technological and social influences of the 19th century and recurring famines gave new impulses to the development of agricultural trade within the agricultural value chain. The expansion of international transport routes led to an increase in cross-border freight traffic and largely ended autarky, for example in the German grain markets. In addition, there was an increase in the amount of goods, which is attributed on the one hand to significant increases in productivity in agriculture and on the other hand to the changed eating habits, primarily due to the increased prosperity of the population. In this way, agricultural trade also achieved a new status for agriculture.

The Ochsenweg ran from the Cimbrian Peninsula from Viborg in Denmark to Wedel in Schleswig-Holstein and was an important route for cattle from the 16th to 18th centuries.

Until the 20th century, international trade, or foreign trade , was regulated by bilateral treaties , primarily characterized by mercantilism with high customs duties and restrictions on foreign trade. After the Second World War there were the first multilateral treaties such as the General Agreement on Tariffs and Trade ( GATT ). The establishment of world trade rounds is intended to regulate the increasingly internationalized trade structures. In the years after the Second World War, the supply situation in large parts of Europe was so dramatic that the European Economic Community (EEC) and its members, now the European Union (EU), founded the Common Agricultural Policy (CAP) in 1958 . The aim was to provide the population with an adequate supply of inexpensive food and to reduce dependence on imports . In 1992 the agricultural sector was first included in the world trading system.

The Uruguay Round of the GATT was concluded in 1993 and included agricultural trade more closely in the GATT regulations. Reducing internal support, dismantling tariffs and dismantling export subsidies were the commitments the EU made at the time. As a result, EU agricultural trade has now been largely liberalized following the removal of tariff import barriers and the abolition of export subsidies. However, international agricultural trade is still partly regulated by non-tariff trade barriers.

The WTO round that began in Doha in 2001 has not yet been concluded and is being continued regularly, most recently in Nairobi in December 2015.

Web links

Individual evidence

↑ Federal Ministry of Agriculture and Food, 2014 monthly reports http://www.bmel-statistik.de//fileadmin/daten/AHB-0011010-2014.pdf

↑ Situation report 2018/19, 1.1 Economic importance of the agricultural sector. Ed .: German Farmers' Association (DBV), 2019 https://www.bauernverband.de/11-wirtschaftliche-bedeutung-des-agrarsektors-807276

^ Riessen, C., 2008: Structural change processes in the trade chain for grain. Opportunities and risks for agricultural grain production. Saarbrücken, VDM-Verlag, p. 46

↑ Plug, O. / Plug, OA / Elles, A. / Weschke, H.-D. / Kliebisch, C., 2010: Marketing for food and agricultural products., 4th edition., Frankfurt am Main, DLG-Verlag, p. 328

↑ Understand agricultural exports. Facts and background. Ed .: Federal Ministry of Food and Agriculture (BMEL), 05 Export Coordination Office, Berlin, 2016, p. 5 http://www.bmel.de/SharedDocs/Downloads/Broschueren/Agrarexporte-verhaben.pdf?__blob=publicationFile

↑ Definition of the international division of labor, Gabler Wirtschaftslexikon - ( Memento of the original from September 21, 2017 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2
↑ Regulation (EU) No. 1151/2012 of the European Parliament and of the Council of November 21, 2012 on quality regulations for agricultural products and food
^ Association of German Mills (VDM): Quality and Security http://www.muehlen.org/ernaehrung/qualitaet-und-sicherheit/
↑ Good Trading Practice (GTP) Archived copy ( memento of the original from April 15, 2017 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. PHPSESSID = 080f3f11ca03662ec237d25824da3826 @1@ 2

↑ World Agricultural Report 2016 - Agriculture at a Crossroads, International Assessment of Agricultural Knowledge, Science and Technology for Development, IAASTD http://www.weltagrarbericht.de/themen-des-weltagrarberichts/spekulation-mit-lebensmittel.html

↑ Price volatility and speculation in the markets for agricultural commodities. Ed .: Federal Ministry of Agriculture and Food (BMEL), June 2015 http://www.bmel.de/SharedDocs/Downloads/Broschueren/EckpunktepapierPreisvolatilitaet.pdf?__blob=publicationFile

↑ Situation report 2016/17. 7.1 Agricultural prices and agricultural commodity markets, publisher: Deutscher Bauernverband (DBV), 2016, p. 201 http://www.bauernverband.de/71-agrarpreise-und-agrarrohstoffmaerkte

↑ Adämmer, Philipp / Bohl, Martin T. / Ledebur, Ernst-Oliver von: The importance of agricultural futures markets as a hedging instrument for German agriculture, 2014, study on behalf of the Federal Agency for Agriculture and Food for the Federal Ministry of Food and Agriculture (BMEL) , Johann Heinrich von Thünen Institute, 2014, published in Thünen Report 14: https://www.thuenen.de/media/publikationen/thuenen-report/Thuenen-Report_14.pdf

↑ Häring, Norbert : Agrarspekulation, Handelsblatt, Nachrichten, 2013 http://www.handelsblatt.com/politik/konjendung/oekonomie/nachrichten/agrarspekulation-ist-die-spekulation-mit-nahrungsmittel-gar-nicht-schlecht/7696196. html

↑ Adämmer, Philipp / Bohl, Martin T. / Ledebur, Ernst-Oliver von: The importance of agricultural futures markets as a hedging instrument for German agriculture, 2014, study on behalf of the Federal Agency for Agriculture and Food for the Federal Ministry of Food and Agriculture (BMEL) , Johann Heinrich von Thünen Institute, 2014, published in Thünen Report 14: https://www.thuenen.de/media/publikationen/thuenen-report/Thuenen-Report_14.pdf

↑ Understand agricultural exports. Facts and background. Ed .: Federal Ministry of Food and Agriculture (BMEL), 05 Export Coordination Office, Berlin, 2016, p. 6 http://www.bmel.de/SharedDocs/Downloads/Broschueren/Agrarexporte-verhaben.pdf?__blob=publicationFile

↑ See: Market studies and country reports by the Federal Ministry of Agriculture and Food (BMEL) https://www.agrarexportfoerderung.de/marktstudien-und-laenderberichte/

^ Opinion of the European Economic and Social Committee on the subject of the importance of agricultural trade for the future development of agriculture and agriculture in the EU in the context of securing world food. Rapporteur Volker Petersen. In: Official Journal of the European Union . 2015, p. 5.

↑ Situation report 2016/17. 7.2 Agricultural foreign trade, publisher: German Farmers' Association (DBV), 2016, p. 206 http://www.bauernverband.de/72-agraraussenhandel-683401

↑ German agricultural foreign trade 2015. Data and facts. Ed .: Federal Ministry of Food and Agriculture (BMEL), Section 424 “Sales Promotion, Quality Policy”, 2015 http://www.bmel.de/SharedDocs/Downloads/Broschueren/Agraraussenhandel2015.pdf?__blob=publicationFile

↑ eurostat http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=apro_acs_a&lang=en

↑ Situation report 2016/17. 7.2 Agricultural foreign trade, publisher: Deutscher Bauernverband (DBV), 2016, p. 206 http://www.bauernverband.de/72-agraraussenhandel-683401 http://www.bauernverband.de/72-agraraussenhandel-683401

↑ eurostat, 55/2015 - March 27, 2015: International trade in goods in 2014. http://ec.europa.eu/eurostat/documents/2995521/6760208/6-27032015-AP-DE.pdf