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GEOG 216 (241)

Trading Primary Commodities

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McGill University
GEOG 216
Geraldine Akman

Trading Primary Commodities - Agriculture: cultivating crops + rearing livestock to produce food + fiber for sustenance/econ gain - Agribusiness: direct corporate involvement in agricul inclu food produc, processing, distrib - Cash crops: crops grown for sale/trade - Subsistence crops: mainly consumed by farm fam Coffee Prices - When growing tradit crops, prices very unstable (sensitive to certain things in gl/econ) - 1980-1993, prices low, then jump up/down, stabilize 2001 - Bumper crops, climate plays a part in the story - Socially created issues to increase prices (+ for cocoa) Cocoa Prices - 2002: prices reach 17yr high due to violence in Cote d’Ivoire - Ceasefire causes sudden drop in prices (see same thing w/oil) - Speculators on market drive prices - War  good time to buy cocoa @lower prices, as much as I can - Put it in warehouse s/where + wait until price gets high Terms of Trade - Ratio of a nat’s average export price to its average import price (commodity terms of trade) - If you are exporting coffee/cocoa/sugar on market w/already too much supply + demand fairly stable = prices are going to go down - Meanwhile, still importing manufacturers to try + indusz - Economy faces prob of shortage of foreign currency - Terms of trade not favouring nats that sell tradit cash crops Traditional Cash Crops - Relatively low prices mainly due to: - Increased supplies  1970s: LICs borrowed $ to expand agricul production (lead to debt crisis)  To repay debt (in foreign currency), increased exports of agricul products  MNCs created new areas of production to diversify their sources nats + secure their supply  Gl/markets became glutted + prices dropped  Bumper crop
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