Agriculture and Globalization

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Table of Contents

The Degree of Globalization of Agriculture and its Evolution        2

Figure #1        3

Agricultural Competitive Advantages in Canada        4

Tables and Figures        6

Figure #2        6

Table #1        6

Works Cited        7

The Degree of Globalization of Agriculture and its Evolution

 Agriculture is defined as “the science or practice of farming, including cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool, and other products” (agriculture, n.d.), however, agriculture has changed significantly since the 1960s. There are two key elements of change that have occurred since the 1960s, the first being the changes in the structure of the agricultural markets on a global level (Anderson, 2010).  

        The first element is the changes in technology and the costs of trading. Beyond the barriers that were set up by the government there are natural barriers that can cause problems for the agriculture industry; transportation and communication costs affect the prices of products that are exported and imported around the world. For example, the cost to transport some farm products can become expensive as many products are big and oddly shaped along with the fact that many consumers want their food to be fresh without the use of sprays or antibodies makes shipping costs rise constantly, which then in turn increases the price of the product.

        Even though transportation costs seem to rise, communication costs are falling thanks to the ICT (Information and Communications Technology) revolution. The ICT revolution started at the end of the twentieth century, and has since helped many countries remove the government legislation and laws of the agriculture market. With this revolution “it has been lowering long-distance communication costs enormously, especially the cost of rapidly accessing and processing knowledge, information and ideas from anywhere in the world” (Anderson, 2010). Therefore, if consumers want to know if their nectarines from California were raised with the use of product enhancing steroids, they would be able to find out with just a click of a button.

        The second element of change in the agricultural industry is the trade distortions and policy reforms (Anderson, 2010). The agriculture industry has been affected by the distortionary government policies and since the 1950s, “world agriculture has been characterized by the persistence of high agricultural protection in developed countries, by anti-agricultural and anti-trade policies of developing countries” (Anderson, 2010). This statement goes to show that in the middle of the twentieth century the high-income countries (HICs) dominated the agricultural sector over the low-income countries (LICs) and middle-income countries (MICs), and made sure that they were the ones on top helping to aid global inequality and poverty in the LICs.

        The situation only got worse in the 80s when North America, Europe, and Japan’s agricultural protection was at its highest and food prices were at their lowest on the international level in 1986. While the US and Europe were at war over agricultural exporting, many under-developed countries were lowering their farming incomes because of the high taxes on exports created by the HICs, all the while helping them make a higher profit and overvaluing their own dollar. All this means that there was an over-production in the high-income countries and an under-production in the low-income countries who needed it more, along with the fact that there was less international trade of farm products as there would be under free trade. This is evident in figure #1:[pic 4]

Figure #1

“Real international food price index, 1900-2008 (1977-1979=100) the deflator used is the price of manufactured exports to developing countries from the 5 largest HICS (France, Germany, Japan, the UK and the USA). Updated from 2004 with data from www.worldbank.org/prospects. Solid line, real food price index.” (Anderson, 2010)

        If the HICs would have focused more on free trade with all the countries, including the MICs and LICs, the volume of the farm products that could have been traded would have been more than double what it was. However, in the past 50 years the HICs and the LICs have changed the trade policies, which has helped in the rise of farm product trade in an international setting.