Discuss the problems that independent farmers have to face with the increasing control of the global food market by large agricultural corporations. Describe the economic and ecological impacts resulting from the increasing global exchange of agricultural produce. Cite suitable examples to substantiate your arguments.With the globalization of agricultural, the competition of farming activities has increase greatly, from local or national scale, to a global scale competition, meaning with the advancement in transportation, their competitors no longer from neighborhood but all over the world. Large agricultural corporations benefit from the scales in economics in many ways and slowly invade and success the market of independent farmers.In general, the large agricultural corporation invade the market of independent farmers by having lower production cost. They can obtain the seeds and machines through bulk purchasing.
They also have lower total transport cost of feight rate then individual farmers. As Economic Rent (ER), meaning the net profit equals to the difference between market price and the sum of production cost and transport cost, therefore it is obvious that the large agricultural corporation have higher economic rent. They are in mass production, thus they can in turn lower their selling price to attract customers.
This raises their competitiveness and can expand their market by invading that of the independent farmers.The quality of individual farmers may not as high as that of They usually have a huge group of Research and develop department (R&D), which are highly specialize and can use the latest biotechnology to produce better seeds such as having the ability of high yielding, fast growing, pest, drought resistance. Their farming produces are with usually higher control of quality, because they have set the procedure to standardize every process in the production.They can are also specialize in producing machines which can be use for that specific farming areas to raise farm produce and carry out large scale survey to research market trends and demands. Individual farmers in comparison do not have such huge sum of human and capital resources to carrying out these researches.Large agricultural corporations also build up a brand name in the market with usually international reputation because it can spend huge sum of money advertising whereas individual farmers cannot do that and again lost their competitiveness.
Due to the reasons above the local costumers may prefer to buy import food rather than food produces by local independent farmers, and contributes to the decrease in independent farmers. The independent farmers are likely to lose their jobs, and they may like to sell their land to the large corporations or other urban developers.In China, for example, with its entry to the World Trade Organization (WTO) many of the import crops from the more developed countries such as wheat and corn production from the extensive commercial farming activities in the Prairies in USA are introduced. The Chinese consumers prefer the import goods as they found out the selling price of them are much cheaper and attractive in appearance. The market of the local independent farmers contacted and many of them lost their job.From the economic point of view, the increase dominance of large agricultural corporations would greatly increase the income of those transnational companies which is usually belongs to the MDCs, yet that of the farmers in LDC would greatly decrease.
The rich will be richer and the poor would be poorer. The problem of poverty in the LDCs countries may increase when many of the farmers loss their job and the employment rate increase. The salary tax income to the government has increase, thus also increase its financial burden.
The food supply in LDC may rely on the MDC and weaken its own agricultural base. If the production cost of the MDCs increases due to the increase in petroleum cost in making fertilizers or related products, the selling price may raise to that the LDCs citizens cannot afford, it may leads to short-term famine.From ecological point of view, the requirement of cheap and abundant food supply would increase.
In order to increase the production yields, more intensive farming methods need to be implemented. They are usually by increasing the amount of cultural input, like increase the amount of chemical fertilizers and pesticides. The soil become deteriorated and lost its regeneration capacity, farming activities can only be sustained with the presence of cultural input.More farmlands may also be needed. Thus more forests are exploited. The total size of rainforest in tropical regions decreases, together with the decreases in biomass and biodiversity, many natural habits of animals and insets are destroyed. The chance of desertification is also increased.