Rome - Shocks to the world's increasingly interconnected food and agricultural markets are growing in frequency and intensity, and evidence suggests there are effective policy measures that can mitigate and shorten their impact, according to a new flagship report released today by the Food and Agriculture Organization of the United Nations (FAO).

With the value of food and agricultural trade up fivefold since 2000 to about $2 trillion, and with more and more countries integrated into trade networks, bolstering their resilience in the face of disruptive shocks is a global concern. Crafting supportive policy frameworks, which require international cooperation, has demonstrably positive effects in curbing the price and hunger consequences of shocks, according to research presented in the new edition of The State of Agricultural Commodity Markets (SOCO) 2026.

Fewer and shorter-lived export restrictions during the COVID-19 pandemic, for example, led to only 8 percent of globally traded calories being impacted, down from 16 percent during the 2007-08 period when a confluence of shocks triggered a sharp spike in food commodity prices.

SOCO 2026 examines how global food and agricultural markets can absorb disruptions and restore market equilibrium in the wake of shocks ranging from disasters or extreme weather episodes, socioeconomic crises and conflicts, to biological and technological events. Trade, by enabling food to arrive quickly where it may suddenly be needed, is critical, and the report analyzes how trade network characteristics, intensity and policy environment can bolster its ability to address hunger and restore market stability.

"All countries can benefit from stronger international cooperation, well-functioning and integrated trade networks, and greater trust in the multilateral trading system," FAO Director-General QU Dongyu wrote in his foreword to the report. "Conversely, all countries stand to lose from fragmentation, uncertainty and declining cooperation," he added, highlighting how that is especially the case for the world's poorest.

The report's launch event featured a panel discussion bringing together Krisztina Bende, the Permanent Representative of Switzerland and the Chairperson of FAO's Committee on Commodity Problems, Bassam Rady, Egypt's Permanent Representative to FAO, Emma Hatcher, Australia's Deputy Permanent Representatives to FAO, and Boubaker Ben-Belhassen, Director of FAO's Markets and Trade Division. FAO Chief Economist Maximo Torero concluded the event.

Key messages of SOCO 2026

-- Global food and agricultural markets are exposed to a range of shocks, including extreme weather events, economic and financial disturbances, geopolitical tensions and conflicts, pandemics, and energy price fluctuations, and these disruptions can be systemic.

-- Better connectivity within the trade network strengthens buffering capacities in the face of shocks - countries that can source food from more trade partners are generally more resilient to shocks.

-- When major producers implement export restrictions to protect their domestic markets, they transfer instability to global markets and contribute to increased food insecurity worldwide.
-- Following a shock, export volumes across bilateral trade links decline significantly, with the effects fading within a period of six months.

-- Shock-triggered food commodity price spikes can have a persistent impact and are not matched by downward price movements.

-- Food stocks are an integral component of resilience strategies. While maintaining large buffer stocks to stabilize domestic prices has proven to be highly costly and fiscally unsustainable, smaller emergency food reserves, integrated into social protection safety nets targeting the needy and vulnerable, can effectively address food insecurity without distorting markets.

New evidence

SOCO 2026 presents several findings based on original research that sheds light on the relatively understudied area of the shock reaction dynamics related to food markets.

Notably, they show global food trade relatively resilient, typically adjusting to shocks within months. That resilience does not depend only on the structure of global markets and trade, but equally on the policy choices.

Nevertheless, this adjustment entails wide food price movements that can be persistent, posing food security risks, particularly for low-income net food-importing countries.

Globalized markets mean that major shocks do generate significant effects in domestic markets. The report analyzed the average velocity and magnitude at which weather shocks affecting world prices for wheat, maize and rice propagate and pass through to local markets. While specific factors can vary, wheat markets tend to be the fastest to normalize, while for rice, disruptions last longer and price movements are greater, reflecting the low trade-intensity of the global rice market.

Countries that rely heavily on a limited number of exporters face heightened risks and are especially vulnerable. An exercise, based on monthly trade data from all countries in the world during the 2007-2024 period, found that, for a food-importing country, being connected to exporters with many trade links - for example trade hubs - can moderate the effects of a shock.

Changes in trade policies contributed substantially to the increases in world prices of staple foods during the 2007-08 global food price crisis. Insulating policies and reactive border protection rates are estimated to explain about 45 percent of the increase in the world rice market and 30 percent of that for wheat.

A scenario simulating the impact of a strong warm-phase of El Niño shock affecting multiple countries suggests that export restrictions add 21.4 million people to those pushed into hunger initially due to the shock.

Notably, and with FAO's constant advocacy, countries imposed fewer and shorter export restrictions on food commodities during the COVID-19 pandemic, significantly mitigating food insecurity risks.

As global food markets come under increasing pressure from geopolitical tensions, conflicts and weather extremes, international cooperation and policy coordination can contribute to a swift adjustment in trade and limit the incidence of food price spikes, strengthening resilience, the report notes.