Impact of Productivity Growth in Crops and Livestock on World Food Trade Patterns

World food trade patterns have changed in the last 40 years with the share of world trade comprised of bulk commodities falling, and the share of world food trade comprised of processed commodities rising. These changes have been driven by a combination of supply and demand forces. On the demand side, world demand for livestock products and more highly processed food products has been rising more rapidly than that for bulk products. This increasing demand can either be met from domestic production or from foreign production – in the latter case resulting in increased international trade. The extent to which the increased demand can be met from domestic production depends importantly on the rate of productivity growth in the various components of the farm and food sector. This is why the relative rates of productivity growth in crops and livestock is also believed to be an important factor in determining the changing composition of trade . This study seeks to understand to what extent productivity growth in crops and livestock has affected world food trade patterns. We do so by first estimating total factor productivity growth in crops and livestock over the past four decades. The results show that productivity growth in crops has been larger in developed countries. However, non-ruminant productivity growth in developing countries has been larger. By incorporating these estimates into a back-casting exercise with the GTAP general equilibrium model, we hope to understand how these differential productivity growth rates have influenced the composition of world food trade.