2018aoc new opportunities from participating in agro-food ... · agro-food gvc hubs: eu, china...
TRANSCRIPT
New opportunities from participating in agro-food
global value chains and the role of agricultural policies
Silvia Sorescu
Trade and Agriculture Directorate, OECD
Rural Revitalization Strategy
2018 China Outlook Conference
20-21 April, Beijing
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2 Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
Outline
• What are the new opportunities for linking rural areas to domestic and global markets? • Supply or value chains • The landscape of agro-food global value chains (GVCs) and the
place of China
• Getting the most out of GVCs participation: what is the role of policies? • Agricultural policies • Enabling environment for broad rural development
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What we mean by supply or value chains
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www.oecd.org/tad Trade and Agriculture Directorate
Organisation for Economic Co-operation and Development (OECD)
Global Value Chains – what are they?
Value chains: describe a production process for a final good Full range of activities from concept to final good Represent all the links between industries
Global value chains focus on the international linkages relate to trade But there are also significant domestic linkages and impacts on
domestic value added And products are often delivered to final demand Rising importance in trade globally Unbundling of demand and supply and/or tasks within supply Countries contribute parts instead of whole
Others’ and own policies influence outcomes collectively Greater interdependence
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How do we measure GVCs? Concept of backward and forward linkages
Backward linkages: buying from GVCs Measures the amount of foreign value added embodied in exports Comes through intermediate input usage Forward linkages: selling into GVCs Measures the amount of domestic value added that forms part of
another country’s exports Domestic value exported can be either direct (own exports) or indirect
(exports from other domestic industries that make use of the outputs produced, e.g. processing sector exports using agricultural production as inputs)
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6 Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
How to think about trade in value added
Country
A
Country
B Country
CValue-added (100)
Gross
exports (100)
Gross exports
(110)
Value-added (10)
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The landscape of agro-food GVCs and the place of China
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8 Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
China Japan ASEAN Canada USA India EU28 Sth America Africa
China 1860 5931 567 2478 591 9353 617 878
Japan 299 389 25 103 14 340 16 38
ASEAN 2953 772 212 1002 401 3476 193 532
Canada 573 191 279 1070 22 790 111 60
USA 3384 632 2065 1533 76 2658 353 387
India 1127 110 1479 76 336 1544 67 246
EU28 1409 405 1214 367 1123 163 377 1116
Sth America 3843 486 2351 408 1086 98 7900 830
Africa 990 118 901 115 386 146 4473 65
Agro-food GVC hubs: EU, China followed by ASEAN, USA
Column shows source of foreign value added in own exports: Buying from GVCs
Row shows how exported value added is used in other country exports: Selling to GVCs
What does the agro-food GVC landscape look like?
Source: OECD estimates.
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9 Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
China Japan ASEAN Canada USA India EU28 Sth America Africa
China 1860 5931 567 2478 591 9353 617 878
Japan 299 389 25 103 14 340 16 38
ASEAN 2953 772 5470 212 1002 401 3476 193 532
Canada 573 191 279 1070 22 790 111 60
USA 3384 632 2065 1533 76 2658 353 387
India 1127 110 1479 76 336 1544 67 246
EU28 1409 405 1214 367 1123 163 43776 377 1116
Sth America 3843 486 2351 408 1086 98 7900 830
Africa 990 118 901 115 386 146 4473 65
ASEAN and EU important linkages
For EU, GVCs are internal to the common market
Example: Who uses China’s agro-food exports as inputs into their own exports?
Source: OECD estimates.
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10 Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
China Japan ASEAN Canada USA India EU28 Sth America Africa
China 1860 5931 567 2478 591 9353 617 878
Japan 299 389 25 103 14 340 16 38
ASEAN 2953 772 5470 212 1002 401 3476 193 532
Canada 573 191 279 1070 22 790 111 60
USA 3384 632 2065 1533 76 2658 353 387
India 1127 110 1479 76 336 1544 67 246
EU28 1409 405 1214 367 1123 163 43776 377 1116
Sth America 3843 486 2351 408 1086 98 7900 830
Africa 990 118 901 115 386 146 4473 65
China sources globally, with key links to USA, South America and ASEAN
Example: Where does China source from for its own exports?
Source: OECD estimates.
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Organisation for Economic Co-operation and Development (OECD)
0
0.1
0.2
0.3
0.4
0.5
0.6
Other foodproducts
Vegetables, fruit,nuts
Other crops Pork & poultry Meat(Pork&Poultry)
Beverages andtobaccoproducts
Oilseeds Vegetable oils &fats
Wool & raw silk
China EU28 ASEAN USA World
How does China’s buying from GVCs compare with the rest of the world?
Backward linkages low for China’s main exports • Large
domestic market
• Policy
settings
Foreign value share (from all sectors) in gross export value
Source: OECD estimates.
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Organisation for Economic Co-operation and Development (OECD)
-0.25
0.25
0.75
1.25
1.75
2.25
2.75
3.25
Other foodproducts
Vegetables,fruit, nuts
Other crops Pork & poultry Meat(Pork&Poultry)
Beverages andtobaccoproducts
Oilseeds Vegetable oils &fats
Wool & raw silk
China EU28 ASEAN USA World
7
How does China’s selling to GVCs compare with the rest of the world?
For forward linkages much higher: • Exports
intermediates
• High amounts of indirect exports
Domestic value added in other countries’ exports as share of direct export value
Source: OECD estimates.
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Getting the most out of GVCs participation
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www.oecd.org/tad Trade and Agriculture Directorate
Organisation for Economic Co-operation and Development (OECD)
Getting the most from GVCs
What is ‘success’ in GVCs? GVC participation creates economic opportunities for agricultural
producers, but also for other sectors rural economy Getting into GVCs opens doors to new markets GVCs can have ‘feedback’ benefits Participation is linked with higher levels of productivity Employment effects
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www.oecd.org/tad Trade and Agriculture Directorate
Organisation for Economic Co-operation and Development (OECD)
Getting the most from GVCs: enhancing domestic value added
Participation indicators only provide some indirect evidence on benefits Domestic value added generated provides a more direct link Domestic value added represents the return from being involved It represents the returns to labour and capital, along with taxes paid to
governments (but less subsidies) It picks up the benefits to the entire economy from the activity
Both within the sector and to all who contribute
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www.oecd.org/tad Trade and Agriculture Directorate
Organisation for Economic Co-operation and Development (OECD)
Where is value added created in agro-food in China: final $1
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
China USA Japan EU Brazil … World
Services Industry Food Agriculture
High share of agriculture compared with selected economies
Less processing in food consumption compared with some
Source: OECD estimates.
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17 Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
Significant employment effects for some economies
0%
10%
20%
30%
40%
50%
60%
70%
80%
Wool Raw milk Other animals Cattle Other crops Plant fibres
Sugarcane Oilseeds Veg & Fruit Other grains Wheat Paddy rice
Share of total agricultural workforce returns from GVC participation
Source: OECD estimates.
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What is the role of policies?
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Policies are particularly important for GVC participation
-0.04 -0.02 0 0.02 0.04
Distance
GDP/capita
Tariffs charged
Ag Land (sq. km)
SPS charged (L1)
TBT charged (L3)
RTA export share
RTA import share
Finance
Primary edu
Transport infrast.
Food safety
Ag R&D intensity
FDI (inflow)
Customs
Backward
-0.5 0 0.5 1
GDP/capita
Ag R&D intensity
Tariffs faced
TBT faced (L2)
SPS faced (L1)
Distance
RTA import share
Finance
Food safety
RTA export share
Transport infrast.
Primary edu
Customs
Ag Land (sq. km)
FDI (outflow)
Forward
Market size increases domestic sourcing and shift to final products
Trade facilitation important
Trade policies important
So too are aspects of the enabling environment
Effect on standardised coefficients: direction of effect is important, not size
Source: OECD estimates.
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Organisation for Economic Co-operation and Development (OECD)
What influences outcomes: Domestic Value Added creation
Effect on standardised coefficients: direction of effect is important, not size
4.0
-0.4 -0.2 0 0.2 0.4 0.6 0.8 1
FDI (inflow)
Tariffs charged
SPS charged (L1)
GDP/capita
Distance
RTA export share
RTA import share
Finance
Food safety
Tariffs faced
SPS faced (L1)
Primary edu
Ag Land (sq. km)
TBT charged (L3)
Transport infrast.
Ag R&D intensity
TBT faced (L3)
FDI (outflow)
DVA
Imports important for export value creation
Complex effects of NTMs
Robust enabling environment also important
Source: OECD estimates.
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www.oecd.org/tad Trade and Agriculture Directorate
Organisation for Economic Co-operation and Development (OECD)
Agricultural policies potential impacts
General services to agriculture Infrastructure Agricultural innovation and
knowledge systems Marketing and promotion Inspection and control Public stockholding
backward linkages forward linkages
Payments to individual producers including: related to output market price support variable input use
can forward linkages
but at the cost of domestic value added
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Organisation for Economic Co-operation and Development (OECD)
Composition of public policy support to agriculture matters
Percentage of GDP, by country, 2014-16
Source: 2017 OECD PSE/CSE/GSSE database.
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www.oecd.org/tad Trade and Agriculture Directorate
Organisation for Economic Co-operation and Development (OECD)
Levels of support to individual producers continue to
vary widely across countries
Percentage of gross farm receipts
Source: 2017 OECD PSE/CSE database.
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Organisation for Economic Co-operation and Development (OECD)
Support targeting individual agricultural commodities the largest component of support to farmers across countries
Single commodity support, all countries
Source: 2017 OECD PSE/CSE/GSSE database.
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Organisation for Economic Co-operation and Development (OECD)
China’s level of support is unequal across commodities
Source: 2017 OECD PSE/CSE database.
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Organisation for Economic Co-operation and Development (OECD)
Payments increasingly tied to specific production practice but further efforts warranted
Percentage of gross farm receipts
Source: 2017 OECD PSE/CSE/GSSE database.
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Organisation for Economic Co-operation and Development (OECD)
Support to general services continues to vary across countries
Share of GSSE in total support (%), 1995-97 to 2014-16
Source: 2017 OECD PSE/CSE/GSSE database.
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Organisation for Economic Co-operation and Development (OECD)
Composition of support to general services in China
Share of components in GSSE (%), 2001-16
Source: 2017 OECD PSE/CSE/GSSE database.
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What policy packages to benefit from these new opportunities while addressing pressing challenges?
The enabling environment for agriculture matters
access to education, capital and physical infrastructure
functioning of goods, services, land and labour markets
Greater efforts into supporting key general services for the agricultural
sector
sector-specific infrastructure (including marketing)
agricultural knowledge and information system
Rebalancing the portfolio of agricultural support to reflect priorities for
long-term productivity growth, sustainability and competitiveness in
the sector
coherence with agri-environmental policy objectives: encouraging the
adoption of environmentally friendly production practices
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