Cash Crops Cash Crops Explanation History Economics Activity

Cash Crops

Cash Crops Explanation History Economics Activity!

Cash Crops - Explanation Cash Crop = An agricultural crop which is grown for profit Different from subsistence crops, which are used to feed the producer’s livestock or grown as food for the producer’s family

Cash Crops - History In earlier times, cash crops were only a small part of a famer’s yield Now, almost ALL crops are mainly grown for revenue Why…. ? ? ? Past Reason: During the Age of Imperialism, European nations needed raw materials. They encouraged/forced nations to develop cash crop plantations to grow peanuts, palm oil, cocoa and rubber. These products displaced the food crops grown by farmers to feed their families

Cash Crops - Economics Another Past Reason: Let’s go back to WWI & WWII…. .

WWI & WWII A world war is a war that affects most of the world's most powerful and populous countries WWI: 1914 -1918 Allies: Based on the Triple Entente of the United Kingdom (its colonies), France and Russia Central Powers: Originally the Triple Alliance of Germany, Austria-Hungary and Italy

WWI & WWII WWI Causes: Imperialism & Alliances Over 9 million killed Results: League of Nations was created European nationalism spawned by the war The breakup of empires Repercussions of Germany's defeat Problems with the Treaty of Versailles

WWI & WWII (1939 -1945) Allies: UK (and its dominions), USA, France, Poland, the USSR… and more Axis: Nazi Germany, Italy, Japan Over 70 million killed – the deadliest conflict in all of human history Results The League of Nations turned into the United Nations… where the great powers that were the victors of the war—the United States, Soviet Union, China, the United Kingdom, and France—became the permanent members of the United Nations Security Council Israel was created

Post WWI and WWII Agreements and Organizations TRIED TO CREATE PEACE & STABILITY

United Nations “An international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace” Founded in 1945 after WWII Three specialized agencies: IMF (was arranged at Bretton Woods) World Bank WTO

IMF Provides financial assistance to countries in financial trouble Provides loans and/or organizational management In return, it demands domestic reforms in the name of structural adjustment programs (SAPs) The emphasis is almost always on capitalist ideas/programs… Very controversial…

World Bank Provides loans at preferential rates to member countries and grants to very poor countries Loans or grants for specific projects are often linked to wider policy changes in the sector or the economy… Often criticized at being a US or Western tool for imposing economic policies that support Western interests… Faulted for undermining the national sovereignty of recipient countries through various SAPs…

WTO General Agreement on Tariffs and Trade (GATT) Purpose: To regulate international trade World Trade Organization (WTO) Followed & extended GATT’s rules Promotes lower trade barriers Helps negotiate trade and business disputes

WTO Fundamental principles of trading: Free of discrimination: One country cannot prefer a particular trading partner above others within the system, nor can it discriminate against foreign products and services. Freedom: Fewer trade barriers and less tariffs Predictable: Foreign companies and governments know that trade barriers will not be raised arbitrarily and that markets will remain open Greater competition Go easy on the poor: More accommodating for less developed countries, giving them more time to adjust, greater flexibility, and more privileges.

The European Union

The European Union A supranational political and economic union of 25 sovereign democratic countries Defining Element: Common Currency Makes travel and trade much easier A ‘force for peace and democracy’ Taken in countries from the former Iron Curtain Countries must be willing to give up sovereignty (politically and economically)…

EU Policies Furthering Example: and improving their single market Free trade Problems? Greece: Massive overspending Spain: Housing bubble (House prices rose 44% from 2004 to 2008 and since the bubble burst they have fallen by a third) Now: Euro Crisis

NAFTA Free Trade Agreement between Canada, US, and Mexico Free Trade: A policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports) or quotas Established in 1994 Eliminates duties on most goods Works to reduce subsidies and promote fair competition between all countries

NAFTA… Problems? Lack of autonomy! Forced to trade & use goods against its will! Gas additive that is harmful was banned by the Can. Gov’t. Taken to court by company and had to pay $13 million and repeal ban!

NAFTA… Problems? Maquiladoras What are they? Manufacturing operations in a free trade zone (FTZ), where factories import material and equipment on a duty-free and tariff-free basis for assembly, processing, or manufacturing and then export the assembled, processed and/or manufactured products, sometimes back to the raw materials' country of origin = USED FOR CHEAP LABOUR How is NAFTA involved? Non-NAFTA materials imported into Mexico for assembly/processing are subject to the same duties as if they were permanently exported to Mexico

Cash Crops - Economics Why did Cash Crops get so popular…. ? ? ? Trade liberalization!!! Economic freedom = peace!

Cash Crops - History A Current Reason: 1950 s & 60 s: Governments and encouraged recently independent African nations to borrow huge amounts of money… 1970 s & 80 s: Economic downturn… many African countries were unable to repay even the interest on their loans. The World Bank imposed a "solution" : increase cash crops! Cash crops would be sold on the international market and the income would help to repay the national debt and pay for cheaper imported food. Result: disaster!!! In some countries, such as Tanzania, many were forced to grow coffee rather than food

Cash Crops - History OVERALL REASONS Imperialism Trade liberalization World Bank lending & corruption

Video Time!

Activity! Research and find evidence that supports that having a onecrop economy makes people vulnerable. Include the following examples: Can cause environmental damage: Soil degradation in America due to tobacco cultivation Can be too vulnerable to crop diseases: The Irish potato famine Can be too vulnerable to world economics: Fluctuations in the world price for a product Can be too vulnerable to natural disasters: Hurricane Mitch in Honduras