The term "
cash crop" is used to differentiate "crops which generate revenue for the producer through their sale or export" from subsistence crops used by the producer as food for his or her family or livestock.
In developing nations,
cash crop exports are a major source of foreign exchange. However, "even when harvests are good and prices favourable, the purchasing power of
cash crops rarely keeps pace with the price of manufactured goods or grain." They are an unstable and unreliable source of income. Production and prices are open to disruption by natural forces or manipulation of commodity markets by richer consumer nations. For example, when a country such as Honduras, where bananas amount to 70% of export earnings, is devastated by hurricanes, its main source of national income collapses.
(adapted from Crump, A.,
The A-Z of World Development: A Unique Reference Book on Global Issues for the New Century, Oxford, New Internationalist Publications, 1998, pp. 7, 8, 46 and 47)
Cash Crops and Development
Reliance on
cash crops has a deep impact on the social fabric of developing countries. Critics even see them as a "major cause of world hunger," notably because they use up land that could be used to grow food locally. Richer landowners tend to buy out smaller farmers holding the best farmland, leaving peasant farmers with marginal land for subsistence crops. For example, "during the devastating famine in the African Sahel in the 1970s and 1980s, production of
cash crops for export actually increased."
(adapted from Crump, A.,
The A-Z of World Development: A Unique Reference Book on Global Issues for the New Century, Oxford, New Internationalist Publications, 1998, pp. 7, 8, 46 and 47)
Cash Crops and Agribusiness
Cash crops are closely associated with agribusiness, which can also have negative social and economic consequences. Indeed, agribusiness firms frequently make farmers assume all the risks of production despite the fact that agriculture is often subsidized by the state.
In addition, agribusiness firms are often guilty of dumping:
"Subsidies help to artificially reduce the price of produce to a level which farmers from developing countries may not be able to match. This surplus food can then be dumped as cheap produce in developing countries, where it competes unfairly with local farmers' produce, driving many of them out of business."
Agribusiness also relies heavily on agrochemicals and monoculture in order to maximize yields, and such practices have detrimental consequences on the soil and on the environment in general.
(adapted from Crump, A.,
The A-Z of World Development: A Unique Reference Book on Global Issues for the New Century, Oxford, New Internationalist Publications, 1998, pp. 7, 8, 46 and 47)
"Many governments set prices to farmers for
cash crops, and they may also set fixed or minimum prices for certain food crops. Prices for
cash crops are often set below realistic market levels, or taxes may be deducted from them to assist in government revenue collection. These reductions can have serious effects in reducing farmers' incentives to produce."
(Ker, A.,
Farming Systems, visited 2009-04-05)
Banana Wars
Commercial interests in
cash crops can also give rise to international disputes. This was the case in 1934, when the United States sent troops into banana-producing countries in Latin America; this incident led to the creation of the term
banana war. Later, the term was expanded to apply to conflicts based on economic, rather than military, measures implemented by some countries, such as the recent tariffs imposed by the European Union on some banana imports.
These tariffs provide some degree of protection from competition to two groups of producers: suppliers in Africa and the Caribbean, and those in Spain, Greece, and Portugal. These groups benefit from Europe's tariff-free access to about three quarters of a million tonnes of their bananas, whereas bananas imported to Europe from other suppliers - mainly in Latin America – are subject to a tariff that was introduced in January 2006.
This dispute involves several Latin American countries as well as the United States (many US companies such as Chiquita run plantations in South and Central America). The EU has long been internally divided over the issue; some countries, such as Germany, would prefer a nearly unrestricted market so that their consumers could get the best bananas at the lowest prices.
(adapted from the British Broadcasting Corporation (BBC),
Banana War, 2006, visited 2009-04-05)
International Negotiations
In 2004, former UN Secretary General Kofi Annan assessed the international situation concerning agriculture:
"More than anything else, we need a poor-friendly deal on agriculture. No single issue more gravely imperils the multilateral trading system, from which all benefit so much."
In his estimation, such understanding, if it leads to real measures, could make
cash crops fairer on a global scale.
These issues as well as the conditions in which agriculture takes place in developing countries continue to be a source of concern for the international community. As such, in November 2001, a declaration made at the Fourth Ministerial Conference in Doha, Qatar, provided the mandate for negotiations on agriculture. This mandate was then refined by work in Cancun in 2003, Geneva in 2004, and Hong Kong in 2005, but as of 2006, negotiations were at a deadlock due to the failure of EU and US negotiators to agree on the depth of cuts that should be applied to their agricultural tariffs and subsidies, and to developing countries' subsequent refusal to open up their markets to industrial goods and services. More recently, the declarations made in Davos in January 2007 seem to point to the possible reopening of these negotiations.
(adapted from EurActiv,
Davos Brings Global Trade Deal ‘in Sight', 2007; the International Trade Forum in Davos,
Doha Progress Fuels Debate, 2004, visited 2009-04-05)
The Role of Women
"Women are generally more interested than men in reviving traditional crops: they prefer to play it safe by planting a variety of food crops rather than relying on a single
cash crop. Women also understand the dietary and medicinal benefits of different grains and for generations, have selected and preserved seeds from one season to another."
(International Development Research Centre (IDRC),
‘Crops of Truth': Conserving Agricultural Biodiversity in Andhra Pradesh, India, 1998, visited 2009-04-05)