Crops like wheat and barley are very labor-intensive to cultivate; instead, farmers turn to cash crops like sugarcane, citrus, oil, and other fruit and vegetable crops. The conversion to cash crops is called “residual-output farming.” Because it decreases the number of farmers producing cash crops, it decreases the amount of agricultural land on which cash crops can be grown.
In China, for example, millions of farmers are converting from growing cash crops like wheat and corn to more valuable crops like sugarcane, chickpeas, cotton, and sunflowers. More than 95 percent of cultivated land in China was used for growing crops in the 1950s. As a result, China became a net importer of grain and grain products, and the nation relied on external sources of food.
This expansion into cash crops created a vast agricultural surplus that China is now trying to sell on the international market, enabling it to develop economically. For example, China’s farmland used for growing corn provides about 70 percent of the global supply of sugarcane.
If China can sell these crops to buyers in Africa and the Middle East, it can grow crops in its own agricultural areas and decrease imports, making its economy more self-reliant. However, there are a lot of financial barriers that prevent China from doing this effectively. For example, most of its farmers are still involved in cash crops like wheat, while its cash crops like oil and soybeans have a lot of money behind them.
The growing of crops for export is actually good for farmers in many ways. It allows them to export crops that are too small to sell to a domestic market. For example, farmers in sub-Saharan Africa produce more than 1 billion tons of cotton annually. China may grow more cotton, but it is unlikely to buy all of it. Instead, African farmers will continue to grow cotton in their home fields and turn it into cash crops like cotton. African farmers also sell rice, but their rice does not have the same financial value as rice from the U.S. and Australia.
Supplies are not keeping up with the growing demand
The annual food demand in the U.S. is about 60 percent of the population. In comparison, the production of food by farmers (plus other domestic and international food crops) is only about 15 percent of the food demand. While the growth of crops and grains is the main reason for the increasing demand for food in the U.S. and other countries, supplies of these crops are not keeping up with the demand.
For example, in the U.S., corn prices have been meager since 2005, while the demand for corn has been increasing. As a result, farmers are switching to other crops. For example, the corn-for-fuel industry uses corn, but it uses more than 2 million tons of corn each year for biofuels.
Another example of supply-demand imbalances is the soaring prices of soybeans in recent years. Soybean production in the U.S. has been growing rapidly because the demand for protein has been increasing, particularly in China. As a result, the prices of soybeans have risen dramatically in recent years. Chinese farmers produce more than 50 million tons of soybeans each year, and this number is expected to grow by another 3 to 4 million tons. In the U.S., farmers grow the crops, but this supply still falls short of the growing demand.
China has always been a highly competitive country. In the U.S. market, numerous industries compete for consumers. Because of these intense markets, companies have learned to compete based on low prices, value, and convenience. These companies may provide low prices to their customers for everything they need, but their prices are sometimes competitive.
Companies such as Wal-Mart and McDonald’s buy many products from each other and compete for sales. Wal-Mart has developed a strategy to manage costs and supply; McDonald’s has focused on growing markets and growing profits. So, as a result, Wal-Mart and McDonald’s may not offer meager prices to their customers; instead, they may have value and convenience in different ways.
Now, China is trying to become more competitive in the global markets in many ways. If China can sell its cash crops to countries in Africa, this may help China’s farmers to survive and grow crops for sale at a reasonable price. In the meantime, China can continue to buy crops from foreign farmers and other countries. This will continue to drive up prices in the international markets. In addition, a stronger international market will give farmers in China more opportunities to sell their crops in China, which will allow them to become more successful and get more income.
Also, Chinese agriculture is one of the fastest-growing industries. As a result, farmers will continue to grow crops to export them. While the demand for crops is increasing, the supplies are not growing as quickly, so the prices of crops will continue to rise. In addition, the prices of agricultural products such as rice are expected to rise significantly in the next several years. By helping farmers, the government may provide better prices and financial security to farmers and other agricultural producers in China.
How is this possible? The international agricultural market, especially the cash-crop market, has grown rapidly in recent years. International agricultural trade between countries has grown tremendously over the past 20 years. If farmers are growing crops to export their crops, they can sometimes earn much more than the farmers in China. In addition, farmers from China are selling their crops to other countries that have cash-crop markets. For example, during a recent field trip to Africa, I talked with farmers from Mali.
These farmers grow some crops, such as corn and soybeans, but some of their crops also have good prices because of the demand for cash crops from foreign countries. Even farmers in Mali benefit from China’s rise in the international agricultural markets. By selling their crops to other countries, these farmers can get cash from selling their crops at very high prices, and they can use that cash to grow more crops, which will help them continue to have financial stability.
This is a new model for many countries, including China. While the international agricultural markets are growing, some countries still rely on assistance from overseas markets. Offering financial support to farmers in developing countries may help them survive and grow crops and crops for export. As the international agricultural markets continue to grow, farmers in countries like Mali will continue to earn money from selling their crops. By growing crops to export, farmers in Mali may not become extremely wealthy, but they will continue to have income and a solid future for their families.
Even though international agricultural markets have grown, many farmers in other countries struggle to make enough money to survive. To help these farmers, the Chinese government has developed agricultural programs that help them to make some cash. For example, the Agriculture and Rural Affairs Administration of China (ARAC) has provided financial assistance to farmers in China by offering financial aid.
Although farmers in many countries are not receiving any financial aid from the government, farmers in China’s assistance may help them survive and grow crops to export. Also, the Chinese government has helped farmers to grow crops that have a higher value. Growing crops for export will help farmers grow crops to sell in a way that is profitable and helps them earn money. This is one of the reasons why cash crops have increased so much in China.
Additionally, China’s rise in the international agricultural markets has led to many changes for farmers in China. For example, farmers are now making more cash by growing cash crops such as higher price crops. These crops include crops that have a lot of demand and crop products that have a high demand.
Cash crops such as cash grains have very high price values, so farmers in China have a great incentive to grow them. In addition, the Chinese government encourages farmers to grow these crops, which may help increase the number of farmers in China.
In China, farmers and other farmers have become much more successful due to China’s rise in the international agricultural markets. As countries continue to grow in the global agricultural markets, farmers in other countries will likely have the opportunity to become more successful. Growing crops for export can help farmers in many countries get financial assistance and make more money. This may help farmers in China, Mali, and other countries survive and grow crops.
China’s growing cash crop market has had a huge impact on many countries, including Mali. By helping farmers around the world, the Chinese government will be helping many.