Agriculture and food in International Trade

Agriculture and food

A distinguishing feature of trade in food and agricultural products

is that imports represent a very small proportion of consumption –

on average, 95% of the food we eat is grown in the country where

we live. While this percentage is consistent across most countries,

there are a few exceptions. Small island states and Japan rely more

heavily on imported food, for example. There are two reasons why

most food is home-grown. First, most countries have an adequate

supply of farmers and farm land in good climatic zones or they

have the technology to overcome climatic deficiencies.

Second, unlike electronic products or other relatively small,

high-value goods, many agricultural and food products have a low

value for a given weight and are very bulky. The transport costs .

A convenient way to measure the importance of international trade is to

calculate the share of trade in GDP. International trade tends to be more

important for countries that are small (in terms of geographic size or

population) and surrounded by neighbouring countries with open trade

regimes than for large, relatively self-sufficient countries or those that

are geographically isolated and thus penalised by high transport costs.

Other factors also play a role and help explain differences in trade-to-GDP

ratios across countries. These include history, culture, trade policy,

the structure of the economy and the presence of multinational firms.