"The move towards 'open frontiers' implicit in the policies of liberalization and globalisation will undoubtedly affect the product mix and the input composition in agriculture sector in a significant way and the impact will vary from region to region, and from one section of agricultural producers to other ". Discuss in this context the issues which need to be addressed in the context of globalisation of agricultural sector.
Answers
Answer:
Recent globalization has been characterized by a decline in the costs of cross-border trade in farm and other products. It has been driven primarily by the information and communication technology revolution and—in the case of farm products—by reductions in governmental distortions to agricultural production, consumption and trade. Both have boosted economic growth and reduced poverty globally, especially in Asia. The first but maybe not the second of these drivers will continue in coming decades. World food prices will depend also on whether (and if so by how much) farm productivity growth continues to outpace demand growth and to what extent diets in emerging economies move towards livestock and horticultural products at the expense of staples. Demand in turn will be driven not only by population and income growth, but also by crude oil prices if they remain at current historically high levels, since that will affect biofuel demand. Climate change mitigation policies and adaptation, water market developments and market access standards particularly for transgenic foods will add to future production, price and trade uncertainties.
Keywords: globalization, trade costs, distorted incentives, agricultural protectionism, trade policy reforms
1. THE ISSUE
One of the most striking features of economic development is the relative decline in the agricultural sector in growing economies. Also typical for countries with above-average population density is a decline in their agricultural comparative advantage as capital accumulation and industrialization proceed. An export-led boom in another sector, or large prolonged inflows of foreign aid, also weaken the international competitiveness of a country's farm sector. Changes in consumption patterns (the slow growth in consumption of farm products and, in middle-income countries, the move away from grains and other staples and towards livestock and horticultural products) also alter the net trade situation of countries. However, whether that leads to a decline or a rise in the overall food self-sufficiency in and net exports of total agricultural products depends also on productivity growth in farming relative to non-agricultural production (Anderson 1987), and in trends in government assistance to farmers relative to producers of other tradables. In the past, price-distorting policies have gradually changed from disfavouring to favouring agriculture relative to other tradable sectors as per capita incomes grow (Anderson 2009); globally, productivity growth has been faster in the farm sector than in other sectors