The invasion of Ukraine has pushed sovereign states to reflect on the types of governments with which they trade. Recently, many democratic governments have been assessing their sources of non-renewable natural capital trade – notably oil & gas as well as metals & ores. In this blog, Planet Tracker focuses on the trade of key renewable agricultural exports such as cereals, meat, dairy and seafood and maps their sources by political systems. Most exposed to disruption from non-democratic states are cotton, fish and cereals, in descending order. Meat could be vulnerable if feedstock supplies were impacted. Details may be viewed in the Politics of Nature Dependent Trade dashboard.
(Note: definitions of government types are taken from the Economist Intelligence Unit’s (EIU) 2021 Democracy Index – please see below for further explanation)
Key takeaways – High level:
- Between 2010 and 2019, nature dependent exports accounted for 40% of total annual world trade.
- Over this period on average 36% of nature dependent exports originated from non-democratic regimes.
- 25% of renewable commodities were sourced from 90 non-democratic states with an average annual export value of USD 602 billion.
- Oil and gas exports were financially much more important, valued at over 2.5 times that of the top seven major crops (identified by the FAO) combined.
Key takeaways – Commodity specific:
- Cotton, the largest of the agricultural products by value, averaging USD 260 billion annually, is the most dependent on non-democratic countries. China alone accounts for 30% of this trade.
- Meat (beef, pork, poultry & sheep) averaged USD 152 billion of exports annually. It has less than a 10% reliance on non-democratic states. However, there is an indirect dependency on feedstock supplies.
- Fish matches meat exports in value but has three times the dependency on non-democratic states. The two most notable fish exporters were China and Viet Nam.
- Although cereals (wheat, maize and rice) are 77% reliant on democratic states, they demonstrate the disruption that just one or two states, such as Russia (6% of exports) and Ukraine (5%) can have on supply chains.
- Oilseed (soybeans & vegetable oils) production appears well embedded among democratic states with the largest EIU defined non-democratic country accounting for only 3% of exports.
- Dairy products (milk, cheese & butter) are well insulated from non-democratic governments.
- Sugar, the smallest of the food commodities with yearly average exports of USD 42 billion, has 20% dependency on non-democratic states but with no dominant countries.
To view the natural capital and political mapping data in more detail, please visit the Politics of Nature Dependent Trade dashboard.
Definitions and Methodology
Defining natural capital
Natural capital can be defined as the world’s stocks of natural assets which include geology, soil, air, water and all living things.1 It is from this natural capital that humans derive a wide range of services, often called ecosystem services, which make human life possible.
Natural capital can be divided into renewable sources – e.g. crops – and non-renewables – e.g. fossil fuels. In this note we focus on renewables although we recognise that as far as the capital markets are concerned there is more financial value tied up in non-renewable sources. Between 2010 and 2019 (inclusive), the average annual value of nature dependent global exports, inflated to 2019 values in US Dollars, was USD 7.4 trillion, but was heavily weighted to non-renewables at USD 5.0 trillion (67%).
Key renewable agricultural commodities
Planet Tracker has used the key agricultural commodities identified by the OECD-FAO in ‘Agriculture and food markets: Trends and prospects’ report.2 These are cereal, cotton, dairy, fish, meat, oilseed and sugar. Biofuels were excluded.
Planet Tracker examined each country’s or territory’s export data based on goods categories identified by UN Comtrade, a repository of official international trade statistics3, as provided by CEPII’s BACI dataset.4 We analysed this dataset and classified all exports into those dependent on nature, which included both renewable and non-renewable resources, and those which were not.
Identifying the political systems
Planet Tracker has used the Economist Intelligence Unit’s (EIU) Democracy Index.5 It covers 165 independent states and two territories. The countries not covered in the EIU, but covered by Comtrade, were excluded from this analysis. Their share in total world exports is minimal. For the commodities presented in the dashboard, the largest share of world exports from such countries was for fish, at 3%.
The Democracy Index is based on five categories: electoral process and pluralism, functioning of government, political participation, political culture and civil liberties. Based on scores on a range of indicators within these categories, each country is then classified as one of four types of regime:
- full democracy
- flawed democracy
- hybrid regime
- authoritarian regime
Planet Tracker has classified full democracy and flawed democracy as ‘democratic’ and hybrid regime and authoritarian as ‘non-democratic’.