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STORY HIGHLIGHTS
Policies that affect trade and markets can have consequences for progress in all five action areas under SDG 2.
Policymakers should recognize they may need to make difficult trade-offs between SDG 2 priorities, or between SDG 2 and other goals.
In 2015, world leaders agreed 17 ambitious Sustainable Development Goals (SDGs) as part of the 2030 Agenda for Sustainable Development – including SDG 2 on ending hunger, achieving food security and improved nutrition, and promoting sustainable agriculture. Policies affecting trade and markets are key to achieving progress, but often require policymakers to take tough decisions on trade-offs.
Recent estimates indicate that nearly 690 million people – or 8.9% of the world’s population – are undernourished. Food systems also face environmental challenges, including poor soil health, greenhouse gas (GHG) emissions, biodiversity loss, poor water management, and pollution. Worse still, the number of people facing severe food insecurity has been rising since 2015, with the economic slowdown among factors exacerbating hunger and malnutrition.
With just ten years to go before the target of ending hunger and malnutrition is due to be reached, and as policymakers consider how best to recover from the COVID-19 pandemic, now is an opportune time to review progress – and look at how policies on trade and markets can help.
Five targets spell out areas for action under SDG 2. They cover: 1) ending hunger and ensuring access for all people to safe, sufficient, and nutritious food all year round; 2) ending all forms of malnutrition; 3) doubling the agricultural productivity and incomes of small-scale food producers; 4) ensuring sustainable food production systems; and 5) maintaining the genetic diversity of seeds, plants, and animals.
Policies that affect trade and markets can have consequences for progress in all five areas. Recognizing this, SDG 2 contains three further targets on means of implementation, two of which focus explicitly on improving how markets function. SDG 2b commits countries to “correct and prevent trade restrictions and distortions in world agricultural markets,” while SDG 2c says they will “adopt measures to ensure the proper functioning of food commodity markets.”
Measures that can affect trade and markets include border measures, such as tariffs, export restrictions, and non-tariff measures, and “behind-the-border” domestic support measures, such as input and output subsidies, market price support, and public investment. The same policy measure can have widely varying implications for different SDG targets, depending on whether a country is a net exporter or importer, whether it is a big or small producer or consumer, and depending on how policies are designed and implemented. The consequences of policy measures might also vary over time, both at home and – through their trade impacts – abroad.
It is therefore important to identify areas in which trade-offs may exist between competing policy objectives, and ways in which the SDGs can be pursued. Policymakers should recognize they may need to make difficult trade-offs between SDG 2 priorities, or between SDG 2 and other goals.
For example, cutting tariffs on foodstuffs could help achieve SDG targets 2.1 and 2.2 on ending hunger and malnutrition, by diversifying the supply of healthy food and lowering prices for poor consumers. But producer livelihoods could also be undermined by competition from cheaper imported foods, thereby affecting SDG target 2.3. Without adequate environmental protection, progress on sustainability could be compromised too (SDG target 2.4).
Food export restrictions are another example. When food prices rise, governments sometimes ban or tax exports to suppress domestic price increases, potentially supporting SDG targets 2.1 and 2.2. However, over time, such measures can disincentivize future investment, and can immediately harm poor consumers in food-importing countries, thereby compromising progress on these same SDG targets.
Among domestic support measures, governments often employ input and output subsidies as well as market price support measures to improve agricultural productivity and lower production costs, potentially helping achieve SDG target 2.3. However, these measures can unfairly disadvantage farmers in other countries, result in inefficient allocation of resources, and exacerbate environmental pressures, affecting SDG targets 2.3 and 2.4 as a consequence.
Existing rules on agricultural domestic support at the World Trade Organization (WTO) set no limit on “green box” payments that are considered to cause only minimal trade distortion. These include public investments in infrastructure, storage facilities or rural roads. Government support for research and extension services is also covered – types of investment associated with especially positive outcomes for productivity, nutrition, and food security.
These types of public goods payments represent a “win-win” solution, delivering benefits across multiple SDG 2 targets – and would help deliver on the third means of implementation target. SDG 2a commits countries to “increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks.”
At the WTO, governments took an important step forward at the 2015 Nairobi Ministerial Conference when they agreed to end agricultural export subsidies – identified explicitly as a commitment under SDG 2. Governments should now go beyond this relatively narrow indicator of progress to deliver on the broader target set out in SDG 2b. Doing so could help ensure trade policies contribute to fast-tracking progress on the food and agriculture components of the 2030 Agenda, while also ensuring trade supports the COVID-19 recovery.
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This article, written by Jonathan Hepburn, Senior Policy Advisor, IISD, and Georgios Mermigkas, Economist, Markets and Trade Division, FAO, is based on a longer publication by the Food and Agriculture Organisation of the UN (FAO), ‘Trade and Sustainable Development Goal 2: Policy Options and their Trade-Offs.’