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A cash crop, also called profit crop, is an agricultural crop which is grown to sell for profit. It is typically purchased by parties separate from a farm. The term is used to differentiate marketed crops from staple crop ("subsistence crop") in subsistence agriculture, which are those fed to the producer's own livestock or grown as food for the producer's family.
In earlier times, cash crops were usually only a small (but vital) part of a farm's total yield, while today, especially in developed countries and among smallholders almost all crops are mainly grown for revenue. In the least developed countries, cash crops are usually crops which attract demand in more developed nations, and hence have some export value.
Prices for major cash crops are set in international trade markets with global scope, with some local variation (termed as "basis") based on freight costs and local supply and demand balance. A consequence of this is that a nation, region, or individual producer relying on such a crop may suffer low prices should a bumper crop elsewhere lead to excess supply on the global markets. This system has been criticized by traditional farmers. Coffee is an example of a product that has been susceptible to significant commodity futures price variations.
Issues involving subsidies and trade barriers on such crops have become controversial in discussions of globalization. Many developing countries take the position that the current international trade system is unfair because it has caused tariffs to be lowered in industrial goods while allowing for low tariffs and agricultural subsidies for agricultural goods.[ clarification needed ] This makes it difficult for a developing nation to export its goods overseas, and forces developing nations to compete with imported goods which are exported from developed nations at artificially low prices. The practice of exporting at artificially low prices is known as dumping, [3] and is illegal in most nations. Controversy over this issue led to the collapse of the Cancún trade talks in 2003, when the Group of 22 refused to consider agenda items proposed by the European Union unless the issue of agricultural subsidies was addressed.
The Arctic climate is generally not conducive for the cultivation of cash crops. However, one potential cash crop for the Arctic is Rhodiola rosea , a hardy plant used as a medicinal herb that grows in the Arctic. [4] There is currently consumer demand for the plant, but the available supply is less than the demand (as of 2011). [4]
Cash crops grown in regions with a temperate climate include many cereals (wheat, rye, corn, barley, oats), oil-yielding crops (e.g. grapeseed, mustard seeds), vegetables (e.g. potatoes), lumber yielding trees (e.g. Spruce, Pines, Firs), tree fruit or top fruit (e.g. apples, cherries) and soft fruit (e.g. strawberries, raspberries).
In regions with a subtropical climate, oil-yielding crops (e.g. soybeans), cotton, rice, tobacco, indigo, citrus, pomegranates, and some vegetables and herbs are the predominant cash crops.
In regions with a tropical climate, coffee, [5] [6] cocoa, sugar cane, bananas, [6] oranges, cotton and jute are common cash crops. The oil palm is a tropical palm tree, and the fruit from it is used to make palm oil. [7] The impact of climate change on the ranges of pests and diseases –especially those of coffee, cocoa, and banana –is commonly underestimated. Limiting temperature rise to 1.5 °C (2.7 °F) is vital to maintaining productivity in the tropics. [6]
The examples and perspective in this section deal primarily with the English-speaking world and do not represent a worldwide view of the subject.(June 2012) |
Around 60 percent of African workers are employed in the agricultural sector, with about three-fifths of African farmers being subsistence farmers.[ citation needed ] For example, in Burkina Faso 85% of its residents (over two million people) are reliant upon cotton production for income, and over half of the country's population lives in poverty. [8] Larger farms tend to grow cash crops such as coffee, [9] tea, [9] cotton, cocoa, fruit [9] and rubber. These farms, typically operated by large corporations, cover dozens of square kilometres and employ large numbers of laborers. Subsistence farms provide a source of food and a relatively small income for families, but generally fail to produce enough to make re-investment possible.
The situation in which African nations export crops while a significant number of people on the continent struggle with hunger has been blamed on developed countries, including the United States, [8] Japan and the European Union.[ citation needed ] These countries protect their own agricultural sectors, through high import tariffs and offer subsidies to their farmers, [8] which some have contended is leading to the overproduction of commodities such as cotton, [8] grain and milk.[ citation needed ] The result of this is that the global price of such products is continually reduced until Africans are unable to compete in world markets, [8] except in cash crops that do not grow easily in temperate climates. [8]
Africa has realized significant growth in biofuel plantations, many of which are on lands which were purchased by British companies. [10] Jatropha curcas is a cash crop grown for biofuel production in Africa. [10] [11] Some have criticized the practice of raising non-food plants for export while Africa has problems with hunger and food shortages, and some studies have correlated the proliferation of land acquisitions, often for use to grow non-food cash crops with increasing hunger rates in Africa. [10] [11] [12]
Australia produces significant amounts of lentils. [13] [14] It was estimated in 2010 that Australia would produce approximately 143,000 tons of lentils. [13] Most of Australia's lentil harvest is exported to the Indian subcontinent and the Middle East. [13]
Italy's Cassa per il Mezzogiorno in 1950 led to the government implementing incentives to grow cash crops such as tomatoes, tobacco and citrus fruits. As a result, they created an over abundance of these crops causing an over saturation of these crops on the global market. This caused these crops to depreciate.
Cash cropping in the United States dates back to the colonial period with crops like tobacco, indigo, cotton and others farmed on massive scales on southern plantations primarily fueled by black slave labor, even after the end of slavery this system continued in some form with the share cropping system where farmers would live and work on large plantations for a share of the crop to sell themselves. Crash cropping of fruits rose to prominence after the baby boomer generation and the end of World War II. It was seen as a way to feed the large population boom and continues to be the main factor in having an affordable food supply in the United States. According to the 1997 U.S. Census of Agriculture, 90% of the farms in the United States are still owned by families, with an additional 6% owned by a partnership. [15] Cash crop farmers have utilized precision agricultural technologies [16] combined with time-tested practices to produce affordable food. Based upon United States Department of Agriculture (USDA) statistics for 2010, states with the highest fruit production quantities are California, Florida and Washington. [17]
Coconut palms are cultivated in more than 80 countries of the world, with a total production of 61 million tonnes per year. [19] The oil and milk derived from it are commonly used in cooking and frying; coconut oil is also widely used in soaps and cosmetics.
Approximately 70% of the world's food is produced by 500 million smallholder farmers.[ citation needed ] For their livelihood they depend on the production of cash crops, basic commodities that are hard to differentiate in the market. The great majority (80%) of the world's farms measure 2 hectares or less. [20] These smallholder farmers are mainly found in developing countries and are often unorganized, illiterate or have only basic education. Smallholder farmers have little bargaining power and incomes are low, leading to a situation in which they cannot invest much in upscaling their businesses. In general, farmers lack access to agricultural inputs and finance, and do not have enough knowledge on good agricultural and business practices. These high level problems are in many cases threatening the future of agricultural sectors and theories start evolving on how to secure a sustainable future for agriculture. Sustainable market transformations are initiated in which industry leaders work together in a pre-competitive environment to change market conditions. Sustainable intensification focuses on facilitating entrepreneurial farmers. To stimulate farm investment, projects on access to finance for agriculture are also popping up. One example is the SCOPE methodology, [21] an assessment tool that measures the management maturity and professionalism of producer organizations as to give financing organizations better insights in the risks involved in financing. Currently, agricultural finance is always considered risky and avoided by financial institutions.
Coca, opium poppies and cannabis are significant black market cash crops, the prevalence of which varies. In the United States, cannabis is considered by some to be the most valuable cash crop. [22] In 2006, it was reported in a study [23] by Jon Gettman, a marijuana policy researcher, that in contrast to government figures for legal crops such as corn and wheat and using the study's projections for U.S. cannabis production at that time, cannabis was cited as "the top cash crop in 12 states and among the top three cash crops in 30". [22] The study also estimated cannabis production at the time (in 2006) to be valued at US$35.8 billion, which exceeded the combined value of corn at $23.3 billion and wheat at $7.5 billion. [22]
An agricultural subsidy is a government incentive paid to agribusinesses, agricultural organizations and farms to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such commodities.
Subsistence agriculture occurs when farmers grow crops on smallholdings to meet the needs of themselves and their families. Subsistence agriculturalists target farm output for survival and for mostly local requirements. Planting decisions occur principally with an eye toward what the family will need during the coming year, and only secondarily toward market prices. Tony Waters, a professor of sociology, defines "subsistence peasants" as "people who grow what they eat, build their own houses, and live without regularly making purchases in the marketplace".
A smallholding or smallholder is a small farm operating under a small-scale agriculture model. Definitions vary widely for what constitutes a smallholder or small-scale farm, including factors such as size, food production technique or technology, involvement of family in labor and economic impact. There are an estimated 500 million smallholder farms in developing countries of the world alone, supporting almost two billion people. Smallholdings are usually farms supporting a single family with a mixture of cash crops and subsistence farming. As a country becomes more affluent, smallholdings may not be self-sufficient. Still, they may be valued for providing supplemental sustenance, recreation, and general rural lifestyle appreciation. As the sustainable food and local food movements grow in affluent countries, some of these smallholdings are gaining increased economic viability in the developed world as well.
The history of agriculture in India dates back to the Neolithic period. India ranks second worldwide in farm outputs. As per the Indian economic survey 2020 -21, agriculture employed more than 50% of the Indian workforce and contributed 20.2% to the country's GDP.
In the United States, the farm bill is comprehensive omnibus bill that is the primary agricultural and food policy instrument of the federal government. Congress typically passes a new farm bill every five to six years.
The main economic products of Malawi are tobacco, tea, cotton, groundnuts, sugar and coffee. These have been among the main cash crops for the last century, but tobacco has become increasingly predominant in the last quarter-century, with a production in 2011 of 175,000 tonnes. Over the last century, tea and groundnuts have increased in relative importance while cotton has decreased. The main food crops are maize, cassava, sweet potatoes, sorghum, bananas, rice, and Irish potatoes and cattle, sheep and goats are raised. The main industries deal with agricultural processing of tobacco, tea and sugar and timber products. The industrial production growth rate is estimated at 10% (2009).
Agriculture is still an important sector of Turkey's economy, and the country is one of the world's top ten agricultural producers. Wheat, sugar beet, milk, poultry, cotton, vegetables and fruit are major products; and Turkey is the world's largest grower of hazelnuts, apricots, and oregano.
Agriculture in Ghana consists of a variety of agricultural products and is an established economic sector, providing employment on a formal and informal basis. It is represented by the Ministry of Food and Agriculture. Ghana produces a variety of crops in various climatic zones which range from dry savanna to wet forest which run in east–west bands across Ghana. Agricultural crops, including yams, grains, cocoa, oil palms, kola nuts, and timber, form the base of agriculture in Ghana's economy. In 2013 agriculture employed 53.6% of the total labor force in Ghana.
Agriculture in Ethiopia is the foundation of the country's economy, accounting for half of gross domestic product (GDP), 0
Agriculture in Haiti describes the tortured agricultural history of an island nation once described as the "Pearl of the Antilles". The Taíno people were the farming inhabitants of the island when the Spanish first visited in the late 15th century. The Taino died out from European diseases and exploitation and were replaced with imported African slaves. In the 18th century, Haiti became a country of large plantations, especially of sugar cane, owned by Europeans and worked by hundreds of thousands of slaves. The slaves revolted in 1791 and gained independence from France. The plantations were broken up and the land was distributed to former slaves who primarily engaged in subsistence agriculture with coffee as their most important cash crop and as Haiti's most important export.
Angola is a potentially rich agricultural country, with fertile soils, a favourable climate, and about 57.4 million ha of agricultural land, including more than 5.0 million ha of arable land. Before independence from Portugal in 1975, Angola had a flourishing tradition of family-based farming and was self-sufficient in all major food crops except wheat. The country exported coffee and maize, as well as crops such as sisal, bananas, tobacco and cassava. By the 1990s Angola produced less than 1% the volume of coffee it had produced in the early 1970s, while production of cotton, tobacco and sugar cane had ceased almost entirely. Poor global market prices and lack of investment have severely limited the sector since independence.
Uganda's favorable soil conditions and climate have contributed to the country's agricultural success. Most areas of Uganda have usually received plenty of rain. In some years, small areas of the southeast and southwest have averaged more than 150 millimeters per month. In the north, there is often a short dry season in December and January. Temperatures vary only a few degrees above or below 20 °C but are moderated by differences in altitude.
World food prices increased dramatically in 2007 and the first and second quarter of 2008, creating a global crisis and causing political and economic instability and social unrest in both poor and developed nations. Although the media spotlight focused on the riots that ensued in the face of high prices, the ongoing crisis of food insecurity had been years in the making. Systemic causes for the worldwide increases in food prices continue to be the subject of debate. After peaking in the second quarter of 2008, prices fell dramatically during the late-2000s recession but increased during late 2009 and 2010, reaching new heights in 2011 and 2012 at a level slightly higher than the level reached in 2008. Over the next years, prices fell, reaching a low in March 2016 with the deflated Food and Agriculture Organization (FAO) food price index close to pre-crisis level of 2006.
Benin is predominantly a rural society, and agriculture in Benin supports more than 70% of the population. Agriculture contributes around 35% of the country's gross domestic product (GDP) and 80% of export income. While the Government of Benin (GOB) aims to diversify its agricultural production, Benin remains underdeveloped, and its economy is underpinned by subsistence agriculture. Approximately 93% of total agricultural production goes into food production. The proportion of the population living in poverty is about 35.2%, with more rural households in poverty (38.4%) than urban households (29.8%). 36% of households depend solely upon agricultural (crop) production for income, and another 30% depend on crop production, livestock, or fishing for income.
Agricultural land is typically land devoted to agriculture, the systematic and controlled use of other forms of life—particularly the rearing of livestock and production of crops—to produce food for humans. It is generally synonymous with both farmland or cropland, as well as pasture or rangeland.
The Agricultural Development and Marketing Corporation, usually known as ADMARC, was formed in Malawi in 1971 as a government-owned corporation or parastatal to promote the Malawian economy by increasing the volume and quality of its agricultural exports, to develop new foreign markets for the consumption of Malawian agricultural produce and to support Malawi's farmers. it was the successor of a number of separate marketing boards of the colonial-era and early post-colonial times, whose functions were as much about controlling African smallholders or generating government revenues as in promoting agricultural development. At its foundation, ADMARC was given the power to finance the economic development of any public or private organisation, agricultural or not.
The Native Tobacco Board, or NTB, was formed in Nyasaland in 1926 as a Government-sponsored body with the primary aim of controlling the production of tobacco by African smallholders and generating revenues for the government, and the secondary aim of increasing the volume and quality of tobacco exports. At the time of its formation, much of Nyasaland's tobacco was produced on European-owned estates, whose owners demanded protection against African tobacco production that might compete with their own, and against the possibility that profitable smallholder farming would draw cheap African labour away from their estates. From around 1940, the aim of the NTB was less about restricting African tobacco production and more about generating governmental revenues, supposedly for development but still involving the diversion of resources away from smallholder farming. In 1956, the activities, powers and duties of what had by then been renamed the African Tobacco Board were transferred to the Agricultural Production and Marketing Board, which had powers to buy smallholder surpluses of tobacco, maize, cotton and other crops, but whose producer prices continued to be biased against peasant producers.
Contract farming involves agricultural production being carried out on the basis of an agreement between the buyer and farm producers. Sometimes it involves the buyer specifying the quality required and the price, with the farmer agreeing to deliver at a future date. More commonly, however, contracts outline conditions for the production of farm products and for their delivery to the buyer's premises. The farmer undertakes to supply agreed quantities of a crop or livestock product, based on the quality standards and delivery requirements of the purchaser. In return, the buyer, usually a company, agrees to buy the product, often at a price that is established in advance. The company often also agrees to support the farmer through, e.g., supplying inputs, assisting with land preparation, providing production advice and transporting produce to its premises. The term "outgrower scheme" is sometimes used synonymously with contract farming, most commonly in Eastern and Southern Africa. Contract farming can be used for many agricultural products, although in developing countries it is less common for staple crops such as rice and maize.
Agriculture is the main part of Tanzania's economy. As of 2016, Tanzania had over 44 million hectares of arable land with only 33 percent of this amount in cultivation. Almost 70 percent of the rich population live in rural areas, and almost all of them are involved in the farming sector. Land is a vital asset in ensuring food security, and among the nine main food crops in Tanzania are maize, sorghum, millet, rice, wheat, beans, cassava, potatoes, and bananas. The agricultural industry makes a large contribution to the country's foreign exchange earnings, with more than US$1 billion in earnings from cash crop exports.
Cotton in Malawi is an important part of the agricultural history of Malawi. Cotton is not indigenous to the country, but was introduced into warmer lowland areas no later than the 17th century. Production in the late pre-colonial and early colonial period was limited but, from the early 20th century, it has been grown mainly by African smallholders in the south of the country. For a brief period during the First World War, cotton was the most valuable export crop, and it has remained an important earner of foreign exchange.
Dumping, i.e. bringing a product onto the market of another country at a price less than the normal value of that product is condemned but not prohibited in WTO law.