Trade Regulations and Policy
Trade liberation makes it easy for nations to conduct businesses across the world. It is because any form of trade restrictions or barriers has been reduced allowing free exchange to take place in nations. However, when obstacles are moved and the tariff obstacles reduced, the level of global competition becomes high. It then increases the production which moves to the larger scale. Trade liberations have given farmers a chance to increase their sells levels because of high demand levels for products (Akhtar 25). The demand for agricultural products is affected by changes in the methods of production and transportation costs which are better in majority of nations. However, changes in the pattern of food consumption have the potential to affect the demand in the market. All these factors are correlated with GDP per capita which is used to estimate growth levels in a country (Akhtar 21).
The growth for income in developing nations is different from that of developed countries such as the US which is determined by the inelasticity levels. In developing nations, the demand for processed foods and meat is high which explains a shift in demand for other bulk commodities like cereals, grains and rice. Those with low level of income mainly demand ready processed foods such as dairy products, meat and fruits which they buy at higher prices (Porter 50). The contrary is experienced in developed nations where the demand for agricultural products is low because of the low production methods used. Majority of nations such as North America mainly demands organic foods and genetically modified organisms which affects the agricultural market (Porter 38). The U.S. government supports the agricultural sector by offering the farmers with agricultural subsidy which is paid to all agribusinesses and the farmers. The aim is to increase the supply of fresh agricultural products such as soybeans, wheat, rice, and corn in the market to increase the demand levels. However, this has the potential to lower the import levels which may end up affecting the economy of developing nations that rely on exportation of agricultural products to developed nations.
Akhtar, Muhammad. Effects of Trade Liberalization on Agriculture in Pakistan Commodity Aspects. The CGPRT Centre, 1999. Retrieved from https://ageconsearch.umn.edu/bitstream/32697/1/wp990044.pdf
Porter, Gareth. Agricultural Trade Liberalization and The Environment in North America: Analyzing the Production Effect. Commission for Environmental Cooperation, 2003. Retrieved from http://www3.cec.org/islandora/en/item/1883-agricultural-trade-liberalization-and-environment-in-north-america-en.pdf