Impacts on Globalization on Agriculture

This situation has emerged steadily in Canada since the 1970's, when farmers borrowed heavily on the basis of short-lived price increases to buy new land and machinery in order to meet the increasing demand for cheap and readily available food. But as the economic recession of the early 1980's set in, they faced rising interest rates and plummeting food prices. Between 1980 and 1986, farmers' incomes dropped by 20 percent while the cost of farming rose by 15 percent. This was not the first time that the 'boom and bust' cycle of the economy had affected agriculture, but fact that globalization of trade was making it easier to buy food from elsewhere made it that much harder to adjust to and find solutions for such economic problems.

An example that illustrates this problem faced by farmers is the foreign origin of most of the vegetables sold in Canadian supermarkets, most of which is grown in USA. Why do supermarket chains sell produce from the US when many of the same vegetables are also grown in Québec or elsewhere in Canada? The answer is simple: vegetables grown in huge quantities by agricultural producers to the south are cheaper than the one of smaller local producers due to climate and other advantages. Even though the products must be transported from further away, they are available all year round, and in consistent quantity and quality. Local producers, however, are often limited by seasonal weather, and can only provide smaller quantities on a less regular basis. The Canadian farmers principal ability to compete is therefore based on price, and gaining market share can only be accomplished by lowering prices.