Srividya Sheshadri

Over one billion people of the world’s formal labor force are employed in agriculture, constituting it the world’s largest labor sector. A majority of those who depend upon agriculture reside in the developing world. Furthermore, according to the World Bank (WB) 75 percent of the world’s impoverished live in rural areas.

The pros and cons of globalization continue to be debated. However, the depravity of the global agricultural sector as evidenced by a rise in farmer suicide globally, as well as the impending food crisis indicate globalization has had less than a favorable impact upon the most economically vulnerable.

Globalization is commonly defined as the process by which the world community becomes virtually smaller and increasingly homogenous. The impact of this global process has invariably had mixed results particularly within the agricultural sector.

As globalization has literally meant the opening of the global economic market, small farmers in developing countries, are thrust upon the global economy to compete with agriculturalists of all sizes from developed and developing countries.¹

Classical economic theory holds that trade is healthy for the economy. However, the model assumes trade policies are fair and balanced. On the contrary, liberalized trade policies have historically favored the more economically powerful. In 1994 the World Trade Organization (WTO) was founded to oversee international trade and settle trade disputes among member nations.

According to agricultural economist Vandana Shiva, “the implicit, if not explicit, objective in forming the WTO was to reduce and eventually remove all restraints to trade, in order to achieve a single ‘global free market.’ It can be deduced from this statement that the WTO was established in order to further the mission of globalization. However, as another agricultural economist Ikerd, J. E, comments, the concern is, “once the economic boundaries are removed, cultural boundaries will become further blurred, and ecological boundaries will be left open to economic exploitation.”

So, what does this all mean for the rural farmer? Liberalized trade, a bi-product of globalization, has already meant that small farmers must work increasingly hard to remain efficient with limited recourses. Farmers, who receive greater price supports, can afford advanced technology and crop diversification expertise, are consequently better equipped to produce greater amounts of yield.

The result: as supply increases, world prices of crops fall. Therefore while rural farmers invest heavily into the production process, they receive a considerably small return. To keep up with the market, small farmers in India, for instance are required to take up loans to support production.

However, as a majority of small farmers lack credit to qualify for formal lending, many resort to borrowing from informal and corrupt money lenders.

¹India is officially classified as a developing country, while a majority of countries in Africa are classified as least developed. This distinction is stated to acknowledge the variance in disparity but simplified for the purposes of this discussion.