Chapter 13 - PATTERNS AND PRACTICES OF AGRICULTURAL PRODUCTION

Pages 339 - 356

13.1 AGRICULTURAL PRODUCTION REGIONS

Agricultural practices are influenced by such economic forces as the costs of materials, land, and labor; the availability of capital (money or other assets); the impacts of government policies; and ultimately, consumer preferences or what people want to eat or consume, also known as market demands.

Economic forces help to distinguish subsistence agriculture from commercial agriculture. Most subsistence agriculture occurs in rural Africa and parts of Asia and Latin America, where connections to the global market are limited and farmers have less access to credit and financial capital. 

Many subsistence farmers live in poverty and do not have the economic resources to pay for labor or expensive machinery. Most often labor costs, either the farmer’s own time spent tending to the land or wages for hired workers, are low relative to the costs of machinery.

Most commercial farming takes place in core and semi-peripheral countries with the  infrastructure in place to access and supply the global market.

Infrastructure: the fundamental physical and organizational systems that support a society's functioning

Modern farm equipment, advanced technologies, and large plots of land are all characteristic of commercial agriculture. 

Commercial farmers maximize their income by purchasing a high level of external inputs. The impact of all of these costs can make commercial agriculture an expensive business. Therefore, it is important to have access to capital, which is easier to obtain in core countries than peripheral countries.

Dual agricultural economy: situation within a country where two distinct agricultural sectors exist, with one sector utilizing modern technology and commercial practices, while the other remains more traditional and subsistence-based.

In these areas, subsistence farms where food is grown for farmers to consume. They exist next to commercial operations that cultivate a crop to sell and often export to core countries where demand for the crop is high.

Countries like Zimbabwe and Africa have a dual agricultural economy, Farmers who have the resources to invest in equipment, land, and materials participate in commercial agriculture while those who don’t do subsistence.

In most instances, the costs of materials and labor are relative to the size of the farm. However, large-scale farming can be more cost-effective when fixed costs are spread over a greater area and lower bulk prices are negotiated for inputs, like seed or fertilizer.

For example, farmers often receive a bulk discount when buying a large quantity of pesticides to spread over several hundred acres of land. As a result, the cost of the pesticide per acre is reduced. Therefore, expenses are less per unit of output.

This is an example of economies of scale.

Agribusiness - a large-scale commercial farming operation that encompasses the entire food production process, including the production, processing, and distribution of agricultural products, often involving ownership by large corporations and integration of different steps in the food industry

Commercial farmers, large and small, are just one part of the agribusiness system, which has grown substantially over the last century

Before the 20th century, farmers were typically self-sufficient small businesses, but as farm machinery, fertilizers, pesticides, genetically modified organisms, and smart technologies have made agriculture more efficient and specialized, farmers have become much more dependent on food manufacturers, distributors, and marketers. In fact, many farms are controlled by the producers, processors, and retailers who are part of the agribusiness system, which will be described in more detail later in this chapter.

TECHNOLOGY AND INCREASED PRODUCTION

With new technology, production has increased by a lot in farming. Modern equipment, improved fertilizers and pesticides, and new types of seeds all allow farmers to create higher yields. 262% more food with 2 percent fewer inputs than farmers in 1950!

scientists have taken the natural process of hybridization to intentionally create hybrid grains, fruits, and vegetables, in which different varieties of plants are bred to enhance desired characteristics and improve disease resistance

Hybrids: intentionally creating varieties of plants, grains, fruits, and vegetables to enhance desired characteristics and improve disease resistance

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Some hybrids can grow in extreme temperatures or wet or dry conditions. For instance, seed technologies have helped corn and wheat become more frost tolerant, allowing growers to plant seeds sooner in cooler temperatures and harvest crops later.

Pests and weeds can ruin farms and destroy crops. Since the 1960s, the use of pesticides, including herbicides and insecticides, around the world has increased considerably and led to higher crop yields.

Though these pesticides and herbicides can be harmful, they are needed for the continued production of food.

Herbicides are chemicals that are toxic to weeds and unwanted plants.

Pesticides: a substance used to kill, repel, or control pests, which are organisms that are harmful to plants, animals, or human

Farmers can plant and harvest several more acres of land in a shorter period of time with modern tractors and combines, for example. Advances in irrigation have also provided better agricultural conditions, which increases yields.

It is hard for subsistence farmers to get access to machinery and their economies of scale are much smaller than corporate owned farms.

A cooperative is a system in which farmers combine their resources to produce, market, and sell their crops. 

The amount of capital farmers have impacts their ability to operate and expand their farms. Capital, in turn, can impact a farm’s productivity. 

Capital includes not only the money to purchase materials and equipment to make improvements but also a farmer’s buildings, equipment, and animals. The more mechanized, the better the output and profits will be.

Large-scale farms often have more cash capital than small-scale farms, whose capital is found in their equipment, land, buildings, and for some, livestock.

POLICIES AND PREFERENCES

Government policies and consumer demand both greatly impact agricultural practices.

Most governments do intervene with payments to farmers for growing certain crops or for not growing others, place regulations on agricultural imports and exports, or establish price supports in the form of crop purchases made by the government at a guaranteed price

The amount of money paid by the government to farm in a certain way or produce a certain amount has a big impact on agribusiness.

Today excess corn, in particular, is used as feed for animals, for ethanol fuel, and for producing high fructose corn syrup—an inexpensive sweetener made from corn found in most processed foods. As a result, processed foods have become less expensive than fresh fruits and vegetables, directly impacting the food choices available to consumers.

Governments continue to control the supply of certain crops by enacting quotas, or the amount farmers can produce and sell.

For instance, quotas are used in Canada in the dairy and poultry industries to keep prices of these goods stable and guarantee farmers a steady income.

Additionally, farmers will produce more of the products that are in demand. Like in 2020 before the superbowl avocados were demanded and then millions were made.

While government incentives and price controls help farmers, it is ultimately consumers who drive the market in commercial agriculture. 

In general, farmers will look to the market to determine what and how much to plant of the most sought after crops each season.

13.2 THE SPATIAL ORGANIZATION  OF AGRICULTURE

Family farms represent the vast majority of farms worldwide. However, these small family-owned enterprises account for less of the share of the world’s total farmland.

According to the Food and Agriculture Organization of the United Nations (FAO), approximately 84 percent of farms worldwide are smaller than five acres, and these small farms operate about 12 percent of the total farmland. Meanwhile, approximately 16 percent of farms worldwide are larger than five acres and represent 88 percent of the world’s farmland.

The vast majority of farmland is controlled by core countries where commercial agriculture is more prevalent. While subsistence farms are in the periphery.

Recent trends are hurting the family farm and causing a shift in the spatial organization of agriculture. 

The overall population across the world is shifting away from rural areas and into urban areas. Many from younger generations see the amount of time and hard work established farmers devote to rural agriculture just to earn a very small profit. 

Therefore, fewer people are interested in or willing to take on the challenges that come with farming. Additionally, the farming population is aging. Farmers who were once prosperous are retiring or dying without successors in place.

Another challenge some farmers face is rising costs. It’s hard to upkeep a farm especially when there is very little profit. For example, when corn production is high, the price of corn decreases. Farmers make little, if any, profit when agricultural prices fall drastically. 

If another farmer or a corporation offers a struggling farm owner a tremendous amount of money for the land, it might be an offer that is hard to resist.

Over time, such offers reduce the number of individual farm operations. The result is a shift from small family-operated farms to large corporate-controlled, vertically integrated agribusiness operations.

Vertical integration occurs when a company controls more than one stage of the production process.

When a company manages all aspects of their business operations, from production to processing to shipping and then to selling, it helps reduce costs, improve efficiencies, and increase profits.

However, family-farms lack the ability to practice vertical integration. 

Examples of vertically integrated agribusinesses include orange juice, chickens, cereal, and French fries. Some fast-food restaurant companies use vertical integration, which has allowed them to offer products at prices lower than the competition. 

McDonald’s has complete control over its agricultural sources, its own processing facilities, distribution centers, transportation systems, and the land that the restaurants occupy.

The rise of agribusiness has led to the establishment of a complex network that connects places of production with distribution to consumers. This network is called a  commodity chain.

Commodity Chain: a series of steps that a company goes through to produce and distribute a product or service

Numerous people in many regions have a hand in producing and distributing agricultural products. 

Agricultural commodity chains begin with inputs such as land, seeds, fertilizers, and animals all tended to  by farmers to produce a crop. After cultivation and harvest, the crop is processed, packaged, and then transported  to wholesalers and retailers. Eventually, the end result is  a finished commodity that is marketed to consumers.

There are many factors that go into this process like the weather, ;abpr ,arlet. Government policies and trade.

The commodity chain for orange juice reveals that the product changes hands several times during the process.

First, orange growers manage, harvest, and sell the fruit. (Some growers are small farms that sell their fruit to a fruit handler or a cooperative, where farmers pool their resources to produce, market, and sell their produce.) Fruit processors take the fruit and produce either packaged juice or concentrate. Processors that produce packaged juice then market and sell it.  Bulk processors that produce frozen concentrated orange juice work on distributing it and marketing it to stores and consumers at the end of the commodity chain. Consumers often have a choice among multiple, competing orange juice products.

Economic Hardships:

When supply is high, prices go down—this is the function of the law of supply and demand. At times of high production success, prices can drop so low that production costs are higher than the value of the product. This can be catastrophic for farmers. If coupled with a devastating loss of crops due to weather events, farmers can go bankrupt and lose their farms.

Some solutions to rising costs of production have been for the U.S. federal government to provide low-cost loans, insurance, and payments called  farm subsidies to some farmers and agribusinesses. Farm subsidies originally started during the Great Depression of the 1930s to help struggling farmers and to make sure there was enough food being produced for American consumption.

In theory, subsidies continue to this day to protect all farmers and owners of farmland. But studies have shown that this isn’t the case. 

Small family operations, the ones that need the help perhaps more than large farms, aren’t seeing the money. Instead, the highest quantity producers of commodities like corn, soybeans, wheat, cotton, rice, and sugar are benefiting the most.

 In fact, one study revealed that the largest 15 percent of farm operations receive 85 percent of the subsidies. The benefits of the farm subsidies are debatable. There are many proponents on both sides of the argument.

The United States government currently pays out about $20 billion each year in farm subsidies. Congress legislates this complex process.

Another factor affecting prices of crops is the use of government  tariffs. A tariff is a tax or duty to be paid on a particular import or export. 

Tariffs can affect trade between countries and can bring about a trade war, in which countries try to negatively impact each other’s trade.

Tariffs raise the price of imported goods, making them more expensive to purchase than goods made within the country. Therefore, domestic producers of soy, for example, are given a price advantage, making soy imports less competitive. Consumers, however, face higher prices for products that contain soy as a result of the tariffs.

Imposing tariffs and engaging in such  a trade war can greatly disrupt established commodity chains, lower the price of farm products, and cause farmers to lose business.

13.3 THE VON THÜNEN MODEL

Johann Heinrich von Thünen was a German farm owner with an interest in the geography and economics of farming. In 1826, he wrote a book about observations he had made regarding the spatial patterns of farming practices in his community. 

He found that specific types of agriculture took place in different locations surrounding the market, or center where business took place in a city or town. 

A pattern of intensive rural practices close to the market and extensive rural practices farther from the market emerged. 

In his book, von Thünen suggested that a farmer decides to cultivate certain crops or raise certain animals depending on the distance between the farm and the market. Based on this principle, the  von Thünen model  hypothesizes that perishability of the product and transportation costs to the market each factor into a farmer’s decisions regarding agricultural practices.

The Von Thunen Model: a theory that explains how land is used for agriculture based on its distance from a market

The model has four distinct concentric rings representing different agricultural practices. In the center is a core representing the market. 

The first ring outside the core represents intensive farming and dairying. The perishability of milk products and produce, like berries, lettuce, or tomatoes, makes it critical that they are produced close to the market and transported and sold within a limited time frame. These products cost more to transport, so having them produced closer to the market is a cost-saving measure. And even though this land is more expensive (remember bid-rent theory from Chapter 12), the products have a greater value and consumers will pay a higher price for them. For example, a farmer with land close to the market might choose to raise chickens and produce eggs for sale, because the transportation costs would be low and the fragile, perishable eggs would arrive at the market in a shorter amount of time while still fresh.

The next ring represents forests. In the 19th century, timber and firewood were important commodities used for heating, cooking, and building. Wood is heavy and bulky, so its weight would make it expensive to transport. Producing wood close to the market reduces transportation costs.

The third ring is devoted to grains and cereal crops like rye, wheat, and barley—favored grains in 19th-century Germany. These crops are less perishable and not too bulky or heavy, so they can be grown farther from the market. The grain or cereal farmer could profitably raise and transport these crops to market. The land here, farther from the market, is less expensive and allows for less intensive agriculture.

Finally, the ring farthest away from the market in the von Thünen model is where livestock production occurs.  Land is less desirable here and therefore less expensive. Farmers can buy or rent large pieces of land for extensive agricultural activities such as ranching. In the early 1800s, animals were walked to the market for sale, so transportation costs were not high.

All models are based on assumptions, and no model accounts for every exception or deviation that takes place in real-life situations. Von Thünen made assumptions (listed in the box) based on the realities of the early 19th century. Most of his assumptions don’t apply to today’s world. 

Many cities have multiple centers of business, not just one. An isolated state that has not been influenced by outside cultures or events no longer exists. In fact, the influence of modern industrialization, technology, and government policies has dramatically altered agricultural systems around the world.

 Some governments have introduced policies that favor the growing of certain crops over others, which influences what farmers grow. However, despite the enormous changes over time, the model can still be loosely applied to contemporary agricultural production, especially when it comes to the role of transportation influencing patterns of production

There are also new changes like refrigeration, time-space compression, and that change the way agriculture is and the model doesn’t account for today.

13.4 AGRICULTURE AS  A GLOBAL SYSTEM

Agriculture, like other economic activities, has become globally integrated and organized, often connecting peripheral countries with core countries.

No one country produces all of the food that its population consumes. 

Either a country’s climate isn’t conducive to growing certain foods, like bananas that require a tropical climate, or it is less expensive to import foods from a country that specializes in growing certain foods efficiently and in a high-quality manner.

Global supply chains , which are the same as commodity chains but on a global scale, enable the delivery of a product between two different countries.

Global supply chains: enable the delivery of a product between two different countries.

As  these global networks (like global supply chains) have grown more complex, many regions of agricultural production and consumption have become increasingly interdependent.

Commodity Chain: a series of steps that involves gathering resources, making them into goods, and selling them to consumer

The processes for commodity agricultural products happen in many different countries for different reasons, like production in peripheral countries where labor is cheap.

International trade can be vital to a country’s economy, and many rely on exports for financial stability. 

Some peripheral countries struggle with developing and maintaining export economies and end up becoming dependent on a single export:  cash crop - a crop that is produced for its commercial value.

This dependency on one export can have negative consequences. Alternatively, though, if supply of a cash crop is limited, countries specializing in the crop can reap profitable rewards.

The specialization of one product creates a reputation and a demand for production. However, the reliance on a single commodity is risky, and it’s unhealthy for an economy. 

Changes in world markets due to supply and demand issues can disrupt a country’s economy that relies on one export. 

Issues such as dramatic demand loss, storms destroying crops, droughts, and more can all destroy a country’s economy who relies on a cash crop.

Not only can storms, droughts, and extreme temperatures cause crop failure and lead to a decline in a country’s exports and revenue, but a trade war can erupt between trade partners, causing the costs of trading goods to fluctuate. 

Each of these scenarios can bring uncertainty to a country’s economy. In fact, any disturbance in the supply chain can impact the financial stability of a country or region.

Infrastructure:

Participating in the global agricultural system means having the infrastructure, or networks and facilities, in place to efficiently produce and distribute crops and livestock.

Infrastructure includes communication systems; sewage, water, and electric systems; and most importantly roads and transportation for exporting goods.

take, for example, the vegetables grown in the rural Netherlands. In order to get them to a city in Canada, the proper roads, seaports, ships, and all the communication systems necessary to hand off the vegetables to each party in the chain must be in place and function accordingly.

Countries need to build and maintain their infrastructure if they want a strong agricultural system. Sometimes core countries provide financial support to peripheral countries to improve their infrastructure, which is mutually beneficial.

Railroads and waterways are efficient ways to transport agricultural commodities. Most products traded internationally move by sea

Many countries use trains and railways to move goods within their country and to neighboring countries on shared rail systems, an example being Eurasia (largest landmass with both Europe and Asia), where there are four interconnecting rail systems across the landmass.

Supply chains work best when trade partnerships are stable, reciprocal, and understood by all parties. Any kind of instability can rock the trade boat, but perhaps the biggest threat to a supply chain is political instability. 

Political instability can affect global supply chains with varying degrees. 

An example being with Brexit, where the UK leaving could have major implications for Britain's agricultural supply chain. As the UK imports lists of what they eat from EU countries,With the EU’s border system, imports travel seamlessly between member states. However, with Brexit, the supply chain could become broken.

Worldwide Agricultural Trade

The volume of agricultural trade has grown steadily over the past three decades, driven by a growing population and technological advances. 

Countries export and import agricultural goods depending on growing conditions and food preferences. The food net exporters ship out is greater in value than the food they import, and the food net importers bring in is greater in value than the food they export.

History of Global Supply Chains

Global supply chains can trace their roots back to European colonial and imperial networks between the 16th and 18th centuries. 

European cities became markets for exotic foods from every corner of the world. While building new colonies across the globe, European powers dictated which crops would be grown on their newly acquired lands, often growing agricultural products that had become popular in the markets back home. This resulted in patterns of monocropping.

Monocropping: the agricultural practice of growing the same single crop year after year on the same plot of land

Monocropping was also a way that a controlling country could have exclusive control over (monopolize) the dependent country’s economy. 

Egypt, under British occupation, grew massive quantities of cotton; in West Africa, it was cocoa; and in South Asia, it was tea. The British had complete control over these countries' economies.

Some former colonies today are still economically tied to the country that once colonized the area.  Often, the former colony (now usually a peripheral country) receives aid from a former colonizer (a core country) that is in a position to continue the same unequal trade relationships of the past that once benefited the colonizer.

As a result, the peripheral country is economically dependent on the core country that uses its natural resources and labor to inexpensively produce an export commodity. This is an example of neocolonialism, as the country gained independence it didn’t have the economy to compete in the global market, and therefore became reliant on its old colonizer. 

Global agricultural trade is growing and changing every year. New countries in the periphery and semi-periphery are becoming leading agricultural exporters and importers, like China, who used to be in the periphery but is now a core country.

Agricultural trade has also increased between peripheral and semi-peripheral countries due to population growth in both.

Preferences

As global agricultural trade increases, consumers gain access to a variety of foods. New foods are introduced to regions, and information about different foods spreads. 

This can influence food preferences and alter the patterns of production and consumption. The popularity of a food dictates increased importation of it. Farmers adapt to changes in consumption and demand.

There is a rise for plant-based foods, which has lead to an increase in the production of vegetable proteins (lentils, hemp seeds, seitan, nuts, beans, etc)

Fair Trade

The  fair trade  movement is a global campaign to fix unfair wage practices and protect the ability of farmers to earn a living.

Fair trade aims to improve the lives of farmers and workers in peripheral and semi-peripheral countries by providing more equitable working and trading conditions.

The movement works to increase incomes paid directly to the farmers by paying an above-market fair price provided they meet certain standards and regulations. Fair trade also provides price guarantees that limit damages if farmers face devastating challenges due to environmental or social issues, and it helps farmers access global markets.

To put the fair trade label on a product, the producers must be a small farm that engages in a democratically operated cooperative, and they must follow basic health, environmental, safety, labor, and human rights regulations.

Products are priced higher both as a result of this certification and because they are often higher quality or organic. Consumers pay more money for products that are fair trade certified, supporting the belief that the producers have a basic right to fair wages and living conditions.

Millions of small-scale producers are a part of the fair trade movement, and their products are everywhere. The most widespread and well-known fair trade product is coffee. Hundreds of thousands of coffee farmers have benefited from fair trade.

Studies are measuring the actual impact of fair trade. Reports show that fair trade relationships are benefiting farmers. Because of fair trade, cooperatives are improving their agricultural productivity and it has helped farmers get out of debt and live a better life economically.

However, there are reports that even though cooperatives are benefiting, the workers they hire may not be seeing  the same level of aid, and poverty still exists in many areas. Critics also argue the individual farmers are left out despite needing the most assistance. They also argue that in peripheral countries new corporate plantations may move in, negatively affecting small farming cooperatives.