Cash crop

A cash crop or 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 subsistence crops, 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, 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. A cash crop or 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 subsistence crops, 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, 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 commodity 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. 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, 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. There is currently consumer demand for the plant, but the available supply is less than the demand (as of 2011). 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), 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) and some vegetables and herbs are the predominant cash crops. In regions with a tropical climate, coffee, cocoa, sugar cane, bananas, oranges, cotton and jute (a soft, shiny vegetable fiber that can be spun into coarse, strong threads), are common cash crops. The oil palm is a tropical palm tree, and the fruit from it is used to make palm oil. Around 60 percent of African workers are employed in the agricultural sector, with about three-fifths of African farmers being subsistence farmers. 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. Larger farms tend to grow cash crops such as coffee, tea, cotton, cocoa, fruit and rubber. These farms, typically operated by large corporations, cover tens 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, Japan and the European Union. These countries protect their own agricultural sectors, through high import tariffs and offer subsidies to their farmers, which some have contended is leading to the overproduction of commodities such as cotton, grain and milk. The result of this is that the global price of such products is continually reduced until Africans are unable to compete in world markets, except in cash crops that do not grow easily in temperate climates.