Farming efforts produce a wide range of crops, but there are different types of farming that dictate how it is carried out and whether there is money to be made for both farmers and investors. Though cash-crop farming and subsistence farming often involve their same crops, their intentions are very different.
Cash-crop farming
Cash-crop farming is the practice of growing crops to be sold for a profit. Cash crops run the gamut from grains to fruits to vegetables, and they're grown for the purpose of making money. Cash crops can be consumed directly or processed into other products, such as sugar and biofuel. These crops can be sold domestically or exported to other countries.
In developed countries, almost all crops are grown for the purpose of generating revenue. In countries that aren't as developed, cash crops usually consist of those that draw demand in other, more developed countries and therefore have a degree of export value.
Prices for major cash crops are set in global commodities markets, with factors such as shipping costs and local supply and demand playing a major role. A country or region relying on a specific crop may suffer from lower pricing in the event that a similar crop elsewhere produces a remarkably large quantity, resulting in excess global supply. One such example is coffee, a cash crop that has been historically vulnerable to substantial commodity price fluctuations.
Subsistence farming
While the purpose of cash-crop farming is to generate a profit, subsistence farming is the practice of producing crops to feed a farmer's own family or livestock. Those who engage in subsistence farming often take pride in their ability to be highly self-sufficient, growing just enough to meet their own personal needs with little left over for trade. In subsistence farming, planting decisions are made based on a family's needs, whereas in cash-crop farming, farmers plant strategically to capitalize on demand and market prices. While some farmers grow crops for the sole purpose of feeding their families, others engage in both cash crop and subsistence farming.
Investment potential
Cash-crop farming can be profitable not just for farmers, but also for outside investors. Cash-crop farmers often need capital for up-front costs as such seed, fertilizer, land, and farming equipment, and agricultural corporations often depend on stockholders to provide the capital they need to support large-scale production.
Concerns over cash-crop farming
Critics of cash-crop farming have argued that the pressure to produce crops with a higher potential for profit can cause farmers to overwork their land and abuse natural resources. Furthermore, in some cases, outside investors can influence a farm's production cycle to the point where it shifts from subsistence farming to cash-crop farming.
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