Acash crop, also calledprofit crop, is anagriculturalcrop which is grown to sell for profit. It is typically purchased by parties separate from afarm. The term is used to differentiate a marketed crop from astaple crop ("subsistence crop") insubsistence agriculture, which is one 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 indeveloped countries and amongsmallholders almost all crops are mainly grown for revenue. In theleast developed countries, cash crops are usually crops which attract demand in more developed nation, and hence have some export value.
Prices for major cash crops are set in internationaltrade markets withglobal scope, with some local variation (termed as "basis") based onfreight costs and localsupply 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 abumper 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 ofglobalization. Manydeveloping countries take the position that the current international trade system is unfair because it has causedtariffs to be lowered in industrial goods while allowing for low tariffs andagricultural 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 asdumping,[3] and is illegal in most nations. Controversy over this issue led to the collapse of theCancún trade talks in 2003, when theGroup of 22 refused to consider agenda items proposed by theEuropean Union unless the issue of agricultural subsidies was addressed.
TheArctic climate is generally not conducive for the cultivation of cash crops. However, one potential cash crop for theArctic isRhodiola rosea, a hardy plant used as amedicinal 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 atemperate 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 asubtropical climate, oil-yielding crops (e.g.soybeans),cotton,rice,tobacco,indigo,citrus,pomegranates, and somevegetables andherbs are the predominant cash crops.
In regions with atropical climate,coffee,[5][6]cocoa,sugar cane,bananas,[6]oranges,cotton andjute are common cash crops. Theoil palm is a tropical palm tree, and the fruit from it is used to makepalm oil.[7] The impact ofclimate change on the ranges ofpests anddiseases – 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]
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Around 60 percent of African workers are employed in the agricultural sector, with about three-fifths of African farmers beingsubsistence farmers.[citation needed] For example, inBurkina 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 ascoffee,[9]tea,[9]cotton,cocoa, fruit[9] andrubber. 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 theUnited States,[8]Japan and theEuropean Union.[citation needed] These countries protect their own agricultural sectors, through highimport tariffs and offer subsidies to their farmers,[8] which some have contended is leading to theoverproduction 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 inbiofuelplantations, 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 oflentils.[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'sCassa 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 todepreciate.
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. Cash cropping of fruits rose to prominence after thebaby 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 uponUnited States Department of Agriculture (USDA) statistics for 2010, states with the highest fruit production quantities areCalifornia,Florida andWashington.[17]
Coconut is a cash crop ofVietnam.[18]
Coconut palms are cultivated in more than 80 countries of the world, with a total production of 61 million tonnes per year.[19] Theoil andmilk derived from it are commonly used in cooking and frying; coconut oil is also widely used insoaps andcosmetics.
Approximately 70% of the world's food is produced by 500 millionsmallholder 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 andcannabis are significantblack 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] byJon 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]
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.
