**1. Introduction**

In 1919, J. M. Keynes already expressed the wish that, "the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth... and reasonably expect their early delivery upon his doorstep" (Keynes and Volcker 1920, p. 50). What was once a courageous wish has now become reality. During Industry 4.0, especially due to the COVID-19 pandemic, many ordinary customers are accustomed to modern trade tools such as various e-commerce channels for ordering goods from different parts of the world, with delivery to their destinations (Mehrolia et al. 2020). Global supply chains and their potential are no longer surprising. The main point of interests become customer wishes, prices and terms of delivery. Shrinking trade restrictions between countries, which mainly consists of free trade agreements, technological opportunities and countries aiming to boost trade, have led to transactions with an increasing number of international trade partners and results in increasing chances and increasing business risk.

On the other hand, trade growth has affected the risk increase in the food sector. For example, after the horsemeat scandal in 2013, the importance of food safety has increased in Europe (Rieger et al. 2016). Cases of food scandals encouraged more research, which revealed more facts that are significant. The NAO (2013) reported, "Recent analysis of the components of a pizza, carried out for the Food Safety Authority of Ireland, found that pizza was made from 35 different ingredients that passed through 60 countries, on five different continents". Since 2013, globalisation is still growing. Countries are increasingly interlinked and processes are becoming more and more challenging to maintain. International trade regimes (e.g., import bans) and technical possibilities (e.g., border controls) cannot fully guarantee import security, thereby increasing the risk of unsafe food imports (Skuland 2020).

However, the risk of unsafe food imports is not the only one related to imports. Studies of the World Economic World Economic Forum (2019) revealed the world's most

**Citation:** Baranauskaite, Lina, and ˙ Daiva Jureviˇciene. 2021. Import Risks ˙ of Agricultural Products in Foreign Trade. *Economies* 9: 102. https:// doi.org/10.3390/economies9030102

Academic Editors: Michał Roman and Monika Roman

Received: 29 April 2021 Accepted: 22 June 2021 Published: 5 July 2021

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

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considerable potential risks (e.g., climate change risk) and identified the most significant risks affecting the whole world. The majority will affect the agro sector. The OECD (2020) notes that agricultural policymakers mainly focus on primary agrarian production problems. A food systems approach emphasises the possible effects of agricultural policies on nutritional and environmental outcomes. The results achieved by the world food system from the 1960s to the present show impressive achievements: the world's population has more than doubled and world food production has tripled. Thus, more food per person is provided at a lower price and achieved through increased productivity. It would be impossible to balance the population's nutritional needs with environmental well-being. Among other things, food systems provide a livelihood for those working in farms worldwide and the agro sector's food supply. Food systems depend on natural resources and must simultaneously contribute to environmental sustainability and people's livelihoods. The "triple challenge" is marked as a strike balance between food security and nutrition, ensuring people's livelihoods and ecological sustainability in pursuit of Sustainable Development Goals. There is no doubt that food systems face a daunting triple task that needs to be addressed urgently by seeking synergies between trade-offs and policy coherence challenges (OECD 2020).

Nevertheless, international trade is essential for all countries, especially for small ones since their economic development is based on international trade. It is noticeable that most policy measures promote exports (EC 2015), while imports are not encouraged (Moreno and García-Álvarez 2018; Van den Berg et al. 2017; Wymenga et al. 2013; Kulikov and Minakov 2018). Van den Berg et al. (2017) studies look at the link between imports and a firms' productivity. Although scientists note that the relations between the company's import and export performance are not fully explored, productivity is an intermediate factor in import– export relations. Wagner (2013) studies show that importing firms are more productive than non-importing firms are. The link between importing and productivity is manifold (Van den Berg et al. 2017).

While international trade is widely studied around the world, it does not address the risks related to it (Gervais 2018). The response to threats remains quite essential and responsible, ensuring stability and trade of each country. It is evident that import risks were previously analysed separately (Huang et al. 2017; Caccavale and Giuffrida 2020; Hyuha et al. 2017; Shmatko et al. 2020; Caccavale and Giuffrida 2020) or incorporated into global supply chains (Zhao et al. 2020; Behzadi et al. 2018; Laborde et al. 2020). The gap is noticeable in analysing import risks for a single country. Import risks can harm a country's trade and their managemen<sup>t</sup> can improve a country's trade performance.

The purpose of this article is to identify the main risk groups for imports that need to be examined in the context of trade in agricultural products in the country and to adapt them according to their importance for the managemen<sup>t</sup> of international trade. Research focuses on the macro-level risks without going into micro risks incurred vis-à-vis enterprises. Analyses of the scientific literature and Multicriteria decision methods are used. The risk groups set out in this article could help to manage a country's argo trade. Current work introduces a new imports risk assessment framework, CIRA, contributing to the systematic approach to a country's international trade risks management. The case of Lithuania is used.

#### **2. Literature Analysis**

Import risks are analysed by researchers from a variety of perspectives and for different purposes. Some articles identify risks and seek solutions to mitigate them (e.g., Zobov et al. 2017, etc.). Other articles identify, assess and provide recommendations to reduce risks (e.g., Welburn et al. 2016, etc.). Since the agricultural sector provides everyday products that affect the quality of life, it is the cornerstone of each country. Despite this, the farm sector is analysed as a risky and sensitive sector (Novickyte 2019 ˙ ). The risk of production is identified as one of the highest (Hardaker et al. 2015). It is noticeable that low cost and price competition is decreasing worldwide and it remains dominant in those sectors where the

main factors involved in production are natural resources and low-skilled labour, which is relevant to the agricultural and food sector (Drozdz 2018).

The literature analysis reveals five types of import-related risks: (1) food security, (2) food quality (food safety risks), (3) risks for natural resources (risk of uneven distribution of natural resources due to the trade), (4) risks for the labour market and (5) risk of stable supply.

Many scientists devoted their research to import security risks (Huang et al. 2017; Caccavale and Giuffrida 2020; Hyuha et al. 2017, etc.). Import security risks are risks related to importing a sufficient quantity of food at affordable prices and in the required period. Despite all the risks, imports are organised for three purposes: import to produce, to re-export and import to consume. It is important to manage all these flows of goods to achieve their trade objectives. Feng et al. (2016) confirmed complementarity between imports and exports. They noticed that product improvement through technology and quality development depends on imported raw materials. It has been observed that all companies that have expanded their imports of intermediate raw materials have grown their export volumes, but the distribution of benefits remains uneven. The distribution depends on the source of import, industry intensity and the conditions of the company's ownership.

The most significant impact was observed when imports were made by private sector producers rather than by non-traders. Comparing import sources showed that intermediate costs from higher-income countries were more beneficial and facilitated exports to more demanding and profitable G7 markets. Van den Berg et al. (2018) examined the link between imports and firms' productivity, where productivity is an intermediate factor in importexport relations. Scientists note that the connection between the company's import and export performance has not ye<sup>t</sup> been fully explored (Van den Berg et al. 2018). Wagner (2012) research shows that importing firms are more productive than non-importing because importers themselves enter international and global supply markets and buy higher quality intermediate products at lower costs, which contributes to the competitiveness of their products. Moreover, participation in the international network provides opportunities to purchase more innovative technological products and to obtain foreign suppliers' tactics (Van den Berg and Van Marrewijk 2017).

Some authors analyse factors of one risk type, e.g., demand risks (Hyuha et al. 2017) or logistics (Shmatko et al. 2020). Others analyse risk factors along the entire supply chain (Zhao et al. 2020; Behzadi et al. 2018) or key risks to global food security (Laborde et al. 2020). Some studies cover all or several food groups and some studies examine the risks of only one food product (e.g., rice, cereals, etc.). The country's food security is a critical factor for governments that do not produce enough available food in their own countries. The reasons may range from insufficient natural resources for agricultural production: mountain areas, soil, water pollution and growing population (such as China, Korea, Japan, etc.). Analyses by Hyuha et al. (2017) showed that the determinants of import demand in the context of food security and concluded that one can control import demand by managing the following main factors: population growth, domestic production, prices in the country and countries domestic consumption. The research shows that the governmen<sup>t</sup> could be self-sufficient and save foreign exchange costs if it controls high population growth and increases domestic production through high-yielding technologies by supporting farmers to increase domestic food production and by stabilising prices.

As international trade unites all countries and all countries are largely bound by the ideas of free trade and the work of international institutions such as the WTO, the prosperity of some countries depends on the possibilities provided by others. In many cases, the well-being of one country can be a threat to the well-being of other countries and this is particularly noticeable in the context of food security. Some countries lack food resources and others export those resources for financial gain. Many scientists analyse the dependence risk of food import (Huang et al. 2017; Caccavale and Giuffrida 2020; Hyuha et al. 2017; etc.). Often, the most significant threats are due to the capabilities and actions of

large countries. According to Huang et al. (2017), China will manage its import security risks and will not be at risk of the growing demand for food in the world in the foreseeable future. Among other things, imports of feed and certain specific foods (say soybean, bread, dairy products and sugar) could provide an opportunity for many exporting countries to expand their production and export to the Chinese market. Caccavale and Giuffrida (2020) analysed food security indexes (e.g., the Global Hunger Index (GHI), the Global Food Security Index and the Ending Rural Hunger Index) and proposed a new composite food security index, rendering it possible to measure the country's food security. Yu et al. (2019) dealt with the "triple high phenomenon" in China's cereals sector, where a high level of domestic production at that time did not result in a decrease in imports even when the stocks were high. A group of scientists analysed import security risks by analysing import substitution possibilities (Zobov et al. 2017). They stated that one can achieve the goals of import substitution only through the modernisation of production and the introduction of innovative technologies in the food industry. Khanal et al. (2018), by analysing trends in import and domestic production demand, found that product selection priorities differ between countries. The local population in some countries prefer local products (e.g., milk and tomatoes) to imported products.

Food quality risks (food safety risks) due to the health effects of imported food are examined by many scientists (Welburn et al. 2016; Herrera-Herrera et al. 2019; Attrey 2017; Ruhm 2016; Smith et al. 2017; Pietrzyck et al. 2021, etc.). The researchers analyse the safety of imported food for health by taking into account many aspects: countries of origin, products groups, qualitative parameters and trend of irregularities. Each country seeks to protect the health of its population by controlling the quality of imported food. Importing and exporting countries often have different systems and procedures for food inspection and certification. Compliance with quality requirements is a significant goal for many countries wishing to export. Welburn et al. (2016) analysed US food import risk infringements detected under the Operational and Administrative System for Import Support (OASIS) of the Food and Drug Administration (US FDA). Risks differ by product type (e.g., among fish products, vegetables or dairy products groups), type of infringement, economic factors (GDP) of the country and by the country of origin. Herrera-Herrera et al. (2019) investigated the content of heavy metals in fish from Colombia. Smith et al. (2017) analysed infectious risks related to importing to the US. The Attrey (2017) study showed that food quality control measures during inspections are effective and create confidence in the safety and quality of food supply. However, according to the authors, quality requirements can sometimes be an obstacle to international trade in food products. Increasing focus on the introduction and implementation of trade-distorting rules and regulations is making trade more difficult. Focusing on tightening the rules opens the opportunity to bypass the purpose of trade. As recommended by the WTO, cooperation in exporting and importing countries is becoming a cornerstone to ensure smooth and secure trade. Existing control systems should be set up following the approved guidelines.

Further studies analysed food safety from another perspective. Otero et al. (2018), looking at obesity problems and stated that food choices are structurally conditioned by income inequality and food supply offer. According to this study, people eat what huge oligopolistic food producers offer together with distributors. Moreover, the neoliberal position of a state creates the conditions for the market situation. Researchers have proposed a neoliberal diet risk index to assess people's risk of wholesome food. The index expands the limitations of existing measures, which usually hides the inequalities within countries.

Resource use risk is understood as the risk of unequal distribution of natural resources due to international trade in agricultural products. This risk focuses on the sustainable use of limited natural resources (e.g., water and soil) to produce food products and the distribution of emissions due to trade between countries. It is recognised that agriculture is linked to the use of natural resources. Different countries have an uneven approach to natural resources. Moreover, the production of both basic foods and all other food products requires various resources. For example, some countries lack suitable soil, others lack water or lack fertiliser. In the course of trade, there is a risk that available economic resources will be over-exploited. The Zhu et al. (2019) study assesses the potential of China's water resources for agricultural production by the water stress index. They note that the processing industry can participate in the development of innovative technologies to address declining resources. Gemechu et al. (2016) analysed the risks of the supply and the sustainable supply of raw materials differentiated by countries according to import patterns. Bach et al. (2016, 2017) addressed pollution issues due to the global changes in industry and technical logic. A demand for abiotic resources has led to the increased pollution of natural resources, such as water and soil.

Only a few studies analysed the labour market import risk. Adda and Fawaz (2020) evaluated the impact of import competition on the labour market and the health of US workers and found that import shocks harm human employment, income and human health. They determined that imports had harmful effects on human physical and mental health, especially in areas where there is intense survivability competition. As a result, it has been observed that access to health care in those areas has declined, rendering the disease more severe. Then, more patients were hospitalised for their treatment. The impact of imported products on the market has led to an increase in the mortality of manufacturing workers. Lang et al. (2019), by examining the growth of imports from China, also found a negative impact in those areas on employment, income and health of the population.

Colantone and Stanig (2018) revealed the impact of globalisation on the results of the EU elections. The author examined the impact of Chinese imports on different regions and the results of their votes. According to the study, support for nationalist and isolationist parties for radical-right parties increased due to a stronger import shock. This reflects the results of the regional elections as revealed by the analysis of individual voting choices. Therefore, import risk can have a direct impact on the country's governance.

The increase in regional trade agreements (RTAs) reflects the growing need for such contracts in the last decades. The WTO's attempt to secure free trade agreements is limited (Hoekman 2019) and not all countries are well willed and equally treatable (e.g., usage of non-tariff barriers). Governments tend to benefit and gain specific advantages of trade using a variety of instruments. There are also different commercial reasons. It was found that, according to factors contributing to the increase in RTAs analysis, the usage of common languages and the influence of distances play an essential role. On the other side, geographical indication does not play a significant role in regional trade agreements (Jámbor et al. 2020). Moreover, it has been proven that countries trade with each other based on the size of their GDP, population, cultural affinity, institutional support and physical proximity (Jindˇrichovská 2020). The main reasons for trade often lie outside trade in agro products. Countries are promoting trade and seeking to maximise benefits, which does not always have a positive impact on the agro sector of the country.

Therefore, in order to improve risk managemen<sup>t</sup> performance, there is a need to manage many supply chain risks effectively and efficiently. Many scientists (Zhao et al. 2020; Behzadi et al. 2018; Hyuha et al. 2017; Nyamah et al. 2017, etc.) analysed supply chain risks. Risks and uncertainty in supply chains are becoming increasingly relevant as food supply chains become more complex, especially in times of shocks such as pandemics. The interest in assessing vulnerabilities of supply chains, disruptions and disturbances increased. Some scientists analyse threats, crises and robustness effects. The analysis of supply chains includes many risks, such as output risk, market risks (covering both supply and demand risks), uninterrupted supply risk and substitutability of output as a factor in reducing output risk. For food security purpose, researchers analyse different risk factors and group them into different risk types. For example, Ho et al. (2015), by summarising literature of various supply chain risks, divide risk factors into macro-risks, micro-risks (demand, manufacturing and supply risks) and different types of flow (information, transportation and financial risks). Nyamah et al. (2017) and later Zhao et al. (2020), by analysing the entire supply chain risk factors, divide all factors into nine risk groups: demand-side risks, supply-side risks, biology and environmental risk, weather-related risks, managemen<sup>t</sup> and

operational risks, logistical and infrastructural risk, policy and regulatory risks, political risks and financial risks. The authors also assess the critical risk factors found throughout the supply chain, which include the primary material source to the end consumer regardless of how many countries are involved in the supply chain. The COVID-19 pandemic has led to the stronger managemen<sup>t</sup> of supply chain risks and more risk studies on food supply chains (Laborde et al. 2020; Sharma et al. 2020; Aday and Aday 2020; Jablonski et al. 2021). The revealed period of the pandemic showed that not only food supply companies but also different industries are closely connected. Any disruption in one part of the supply chain breach affects disruptions throughout the global supply chain (Aday and Aday 2020). Technological development enabled the use of advanced strategies and technologies for supply chain risk management, such as machine learning and big data (Ivanov et al. 2019; Baryannis et al. 2019).

To summarize, all risk factors posed by imports were divided into eight risk groups according to their nature. The framework including CIRA's main risk groups and their primary factors are presented in Table 1.


**Table 1.** Groups of food import risk and their factors (created by authors, 2021).
