Links between international trade, local food production, and household living standards: Empirical insights from West Africa

Abstract

Sustainable food production, responsible consumption, poverty reduction, and decent living standards are important global objectives reflected in the United Nations’ Sustainable Development Goals (SDGs). In achieving these goals, agricultural trade plays a major role. Research has shown that benefits from trade liberalization include poverty alleviation, decreasing food prices due to production advantages and competition, and an increased variety of and access to food products. In the light of continuing poverty and food insecurity in low- and middle-income countries, imports and exports are crucial as they offer income gains for producers and improved access to affordable and nutritious foods for consumers. Trade bans or protectionist policies on the other hand can lead to income losses and higher food prices. However, not all population segments necessarily benefit from trade. A large share of the population in developing countries relies on agricultural production for their income, meaning that they may potentially benefit from higher food prices associated with trade restrictions. Results in the existing literature on the overall impact of agricultural trade on low- and middle-income countries are predominantly positive, but the existing trade-offs between liberalization and protectionism and the important distributional effects in different population segments are not yet sufficiently brought into the equation. This dissertation contributes to the literature by examining the links between international agricultural trade, local food production, household consumption, and living standards using three case studies in West Africa. The dissertation addresses gaps in the literature regarding measures to improve the conditions of trade, as well as consequences of market-distorting trade barriers on production, consumption, and welfare in developing countries. The results of the three essays illustrate the opposing effects of trade on producers and consumers in West Africa and also emphasize how diverse the effects are for different income groups. Essays two and three show that imported food products are relevant for consumption in Ghana, especially among the poor. In both sectors, domestic net producers are affected adversely by cheap imports, confirming the trade-off described in the public discourse. However, the results imply that simply reducing imports would not improve the overall situation, as the majority of households are net consumers. Other support measures for producers would make more sense economically and socially. One such measure for export-oriented producers could be sustainability standards like the Fairtrade certification scheme. It tries to improve the conditions of trade for low- and middle-income countries, strengthen producers through networks and higher market prices, and improve farmers’ living standards by enabling participation in lucrative export markets. As chapter one shows, Fairtrade succeeds in several of those aspects. Other measures that also address production for the domestic market could be technical or infrastructure support. This dissertation concludes that agricultural trade is important in providing access to food and securing availability of sufficient nutrients in food-insecure contexts. To offset adverse effects of trade and support producers in being competitive, a fair setting that respects social and environmental issues is crucial and sustainability standards can help create such a setting.