Cash crop
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In agriculture, a cash crop is a crop which is grown for money. The term is used to differentiate 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 the developed countries, almost all crops are mainly grown for cash. In non-developed nations, cash crops are usually crops which attract demand in more developed nations, and hence have some export value.
In many tropical and subtropical areas, jute, coffee, cocoa, sugar cane, bananas, oranges and cotton are common cash crops. In cooler areas, grain crops, oil-yielding crops and some vegetables predominate.
Prices for major cash crops are set in commodity markets with global scope, with some local variation (called 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.
Issues involving subsidies and trade barriers on such crops have become controversial in discussions of globalization. Many developing nations 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 high 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 developing 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.
Agribusiness, with its high-capital-investment and industrial-scale agricultural practices, very often skews production towards cash crops and away from anything that is consumed locally or which cannot be preserved, shipped and sold abroad. When used in conjunction with practices which seek to maximise crop yield and which favour monoculture, increasing reliance on cash crops tends to have adverse, long term environmental consequences. The prevalence of cash crops also makes ethical consumerism difficult, as production practices cannot easily be determined at a remove.
