International Journal of Humanities Social Science and Management (IJHSSM)
Volume 4, Issue 2, Mar.-Apr., 2024, pp: 372-376 www.ijhssm.org
The Impact of Globalization on Agricultural Trade and Its Effect
on Local Farmers
Dr. Pardeep Rathee
Dept. Of Geography, C.C.A.S. Jain Girls College, Ganaur, Haryana
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Date of Submission: 04-03-2024 Date of Acceptance: 17-03-2024
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Abstract decline in transaction costs. Improvements in the
The trade in agricultural products has been management of intricate logistical processes, as well
significantly impacted by globalisation in recent as the development of more effective means of
years, which has resulted in significant changes in communication and transportation, have in turn
the ways that farmers throughout the world interact made this possible. The amount of trade and capital
with consumers and one another. Investigations are flows has also increased as a result of a systematic
conducted into how globalisation has affected lowering of trade and investment obstacles. As a
agricultural trade, with a focus on the effects on result of this operation, the overall income of those
home farmers. One of the most significant effects of who participated has increased significantly.
the globalisation of agricultural trade is the increase Generally speaking, the incorporation of a smaller
in competitiveness on a global scale. Because trade market into a larger, more competitive market has
barriers have been reduced and transportation increased producers' returns on investment and
efficiency has increased, farmers from different given consumers access to a greater range of
countries may now compete more successfully with products at lower prices.
one another in international markets. As a result,
prices have changed, and local farmers are under The term "globalization" refers to the
more pressure to increase productivity while ongoing process of rapid economic integration that
lowering costs. Another impact of globalisation on takes place on a global scale and is made possible
agricultural commerce is the rise of large by decreased transaction costs and decreased
multinational corporations as industry leaders. barriers to the free flow of capital and products, as
These companies, which frequently have greater revealed by Anderson's (2010) study on the effects
resources and better access to international markets of globalization on world agricultural trade. Its
than small-scale local farmers, contribute to an even manifestations include the world's economies
greater concentration of wealth and power in the becoming more integrated, trade flows increasing
hands of a small number of major players. swiftly, capital movements increasing, and
Keywords: Globalization, Agricultural Trade, production becoming more internationalized—often
International Competition, Multinational organized both within and across multinational
Corporations, Local Farmers, Efficiency corporations. A significant portion of the reason
why globalization has been possible is the sharp
I. Review of literature decline in transaction costs. Improvements in the
(FAO 2003) conducted research Reduced management of intricate logistical processes, as well
transaction costs and fewer restrictions on the free as the development of more effective means of
flow of capital and goods are what enable the communication and transportation, have in turn
ongoing process of rapid economic integration made this possible. The amount of trade and capital
known as "globalization" to take place on a global flows has also increased as a result of a systematic
scale. This was discovered through globalization in lowering of trade and investment obstacles. As a
the food and agriculture industries. Its result of this operation, the overall income of those
manifestations include the world's economies who participated has increased significantly.
becoming more integrated, trade flows increasing Generally speaking, the incorporation of a smaller
swiftly, capital movements increasing, and market into a larger, more competitive market has
production becoming more internationalized—often increased producers' returns on investment and
organized both within and across multinational given consumers access to a greater range of
corporations. A significant portion of the reason products at lower prices.
why globalization has been possible is the sharp
| Impact Factor value 7.52 | ISO 9001: 2008 Certified Journal Page 372
International Journal of Humanities Social Science and Management (IJHSSM)
Volume 4, Issue 2, Mar.-Apr., 2024, pp: 372-376 www.ijhssm.org
(Nugroho et al., 2021) examined how II. Introduction
economic globalization affected agricultural value Economic globalization (EG) increases the
added in developing nations and found that various degree to which national economies around the
nations use various indices to gauge how economic world are interdependent due to the growth in
globalization has affected their own economies. This international money flows and commerce in goods
alludes to the myriad consequences—both favorable and services. Nonetheless, many countries still
and unfavorable—that will arise from its execution, approach the EG's implementation warily or
especially with regard to the agriculture industry. reluctantly. At first, EG added to the problems that
This industry is still the main source of income for developed countries faced. They can now more
many developing countries. These countries only effectively adapt to shifting conditions and create
generate modest amounts of income since they policies that work in the present era. Meanwhile,
haven't been able to optimize their agricultural EG's consequences would be detrimental to the
value-added (AVA). Under this strategy, it is the least-developed countries' economic progress. Not
duty of developing countries to employ EG to to mention the impact it has on agriculture, one of
increase agricultural export revenue and enhance the most significant sectors in developing countries.
farmer welfare. Further than that single study, no Some countries had traditional agricultural systems
further research has been conducted to examine the that produced grains and supported small-scale
impact of EG on AVA in developing countries. farmers in the past. Since EG only prioritizes
Therefore, the goal of this study is to ascertain how business, the only industries growing as a result of it
variables including exchange rates, FDI inflows, are economically advantageous agriculture and rural
total agricultural export values, agricultural import tourism. This makes it more difficult to effectively
levies, and fertilizer imports impact agricultural conserve biodiversity and leads to the loss of
value added (AVA) in developing countries. The indigenous and local knowledge regarding
panel data method is used to assess the impact of biological and agricultural diversity.
this project in 17 developing countries from 2006 to
2018. The research's conclusions show that rising The Complex Impacts of Economic Globalization
FDI inflows and the value of agricultural exports are on Agriculture and Sustainability
positively correlated with rising AVA in developing The financial sector's globalisation, a part
countries. This research indicates that the EG has a of the EG, has contributed to the rise in public debt,
positive impact on developing countries; both in the short and long term. Globalisation of
nonetheless, careful implementation of the EG is trade first raises governmental debt but reduces it
necessary to achieve sustainable development goals. over time. Economic growth (EG) is a key
The impact of economic globalization on component that leads to fluctuations in prices and
agriculture in poor nations was examined by creates uncertainty in the market. This aspect
Nugroho and Lakner (2022): According to an pertains to the agricultural sector. This undeniably
assessment, during the past 40 years, economic affects the food security of individuals with lower
globalization (EG) has been progressively incomes and disrupts the agro-food cycle and
increasing in emerging countries. The good and bad economy. Swisher et al. argue that EG contradicts
effects that EG may have on a sector do not exempt the core concepts of sustainable agriculture. This is
the agriculture sector. The aim of this research is to because it prioritises sourcing products from nearby
examine the impact of EG on agriculture in farms, decreasing reliance on supporting local
developing countries. By conducting a systematic ecosystems and economies. Additionally, there are
review (SR) on 64 papers that were sourced from accusations that EG exacerbates growing inequality
Scopus and the Web of Science (WoS), this goal and considerably promotes the negative impact of
was successfully achieved. EG has had an impact on agriculture on child work, worsening the issue. EG
a variety of agricultural aspects in developing is responsible for causing environmental
nations, including: i) the product, the supply chain, destruction. Unsustainable use of natural resources
and food security; ii) commerce; iii) elements in developing countries is believed to be the root
relating to the economy, society, and politics; and cause of this issue. The increasing demand for
iv) technology and research and development agricultural products has led to substantial
(R&D). In this paper, we propose several ways to deforestation. Deforestation has negatively impacted
optimize the beneficial effect of EG while avoiding the ecosystem by including the burning or chopping
its drawbacks. down of trees. Duarte et al. stated that implementing
EG could jeopardise the successful management of
sustainable water resources in some situations. The
| Impact Factor value 7.52 | ISO 9001: 2008 Certified Journal Page 373
International Journal of Humanities Social Science and Management (IJHSSM)
Volume 4, Issue 2, Mar.-Apr., 2024, pp: 372-376 www.ijhssm.org
expansion of agricultural trade in the Mediterranean selection of options and improved pricing. The
region, based on irrigated crops, leads to increased agriculture sector has experienced growth and
competition for water resources. Exporting expansion in major cities and countries worldwide,
agricultural products leads to a water scarcity for becoming a highly profitable industry for
other purposes. Research on the effects of economic participants. Promoting the use of local commodities
globalisation (EG) on agriculture is necessary in has increased the competitiveness of domestic
developing countries to understand how the products and improved the entire eating experience
agricultural sector contributes to their domestic for customers.
economic stability by generating revenue through
exports. Foreign investors find this industry Navigating the Challenges and Opportunities of
attractive because to its dual role in providing Globalization in Agriculture
essential human nutrition and serving as a source of The agrifood systems worldwide have seen
industrial raw materials. It also stimulates significant changes due to the phenomenon of
employment by attracting individuals to rural areas globalization. This trend has led to increased
from different locations within the state or from functional integration among global economies,
other parts of the country. By 2030, 85% of the facilitated by the Internet, the emergence of
global population will reside in developing and transnational firms, and the elimination of various
emerging countries. Agriculture is essential to trade and investment restrictions. Expanding
ensure the population has adequate food supplies. agriculture in the context of globalisation requires
Globalisation has made it easier for underdeveloped the right approach. This is especially accurate given
countries to access technologies that can help that climate change is currently causing disruptions
improve their food production. in global food supply. If successful, these efforts in
agriculture could help eradicate poverty and
Economic Globalization: Enhancing Agricultural enhance economic equality and human growth.
Practices and Market Dynamics Globalisation has worsened the challenges
There is substantial anecdotal evidence to encountered by agriculture in developing countries,
suggest that EG has a positive impact on agricultural including urbanisation, rising consumer affluence,
practices. EG enhances agricultural income and and increased demand for food quality and safety.
employment, supports the promotion of unique Therefore, these various methods may not be the
national products and the expansion of exports, most efficient. Due to these advancements, local
speeds up the modernization of agriculture, fosters farmers are now confronted with the task of
the growth of agricultural markets and value chains, preserving their competitive advantage in a
and increases awareness in developing countries constantly changing and developing global market.
about the importance of conserving Some businesses have failed due to their failure to
agrobiodiversity.The management of agriculture has adapt to changes, while others have succeeded by
consistently encountered challenges both at the farm investing in new technology and procedures to
level and the industry level. Efforts have been made improve efficiency and quality. Another aspect to
at both the human and institutional levels to address consider is that the impact of globalisation on the
the problems, yet they continue to persist. During trade of agricultural products has not been evenly
this time, global competition for agricultural distributed. Some farmers have benefited from
products would increase the competitiveness of enhanced access to international markets and
local agricultural items and lead to more beneficial modern technology, while others have experienced
pricing. Domestic producers will find it challenging negative consequences such as the abandonment of
to enhance their competitiveness sufficiently to traditional farming methods and the loss of their
effectively compete with imported goods. EG has land and means of living due to these advancements.
also advocated for the utilisation of local products to The influence of globalisation on agriculture is
stimulate agricultural markets in urban centres and clearly varied and intricate. Individuals who have
abroad. Consumers find it easy to choose a variety adjusted to the changes and welcomed new
of food products in different cultural settings, approaches have succeeded, whilst others who have
making the food industry highly profitable. The opposed or lacked the resources to do so have
promotion of domestic agricultural products and the encountered substantial difficulties. This difference
utilisation of local goods have enhanced the in results emphasises the necessity of providing
diversity and competitiveness of the food market. assistance and resources to aid farmers in adapting
This has opened up chances for both local producers to the changing environment of international trade
and customers to take advantage of a broader
| Impact Factor value 7.52 | ISO 9001: 2008 Certified Journal Page 374
International Journal of Humanities Social Science and Management (IJHSSM)
Volume 4, Issue 2, Mar.-Apr., 2024, pp: 372-376 www.ijhssm.org
and technology to secure a sustainable and fair to farmers facing challenges in adjusting to the
future for agriculture. evolving agricultural environment. This involves
funding research and development of crops that are
III. Conclusion robust to climate change, along with offering
International competitive growth has led to financial aid and training initiatives for small-scale
price fluctuations, putting local farmers under farmers. By tackling the problems of globalisation
increased pressure to enhance productivity and and climate change, we can secure a more stable and
reduce costs due to economic globalisation (EG), robust future for global food production. It is crucial
significantly impacting agricultural trade. The to prioritise the welfare of all farmers and guarantee
development has led to the emergence of large they have the necessary resources and assistance to
multinational corporations that control the industry, succeed in a more interconnected world.
resulting in a further consolidation of wealth and
influence among a select few key players. An References
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Volume 4, Issue 2, Mar.-Apr., 2024, pp: 372-376 www.ijhssm.org
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