Increasing globalization promises big impacts on the agriculture industry

As the world becomes an increasingly smaller place, economists note that globalization cannot be stopped, yet it offers benefits to the agriculture industry. 

“When we talk about globalization, we are talking about the increased flow of goods, services, labor, capital, technology, information and ideas at the global level and across country boundaries,” says University of Wyoming International Programs Director and Outreach School Associate Dean Anne Alexander. 

With globalization increasing, there are challenges producers must deal with and benefits that can be gleaned from working in global markets.

Importance of globalization

Alexander highlights two main reasons that globalization has importance and significance for agriculture.

“Global markets are the best way to grow a market,” she says. “Finding good trading partners – not necessarily just the countries and governments, but the people producers can work with in a country – is important.”

Agriculture provides additional challenges in the extra rules and regulations required to trade in the global marketplace, meaning that good partners are vital to market access.

“When we look at many agricultural goods, their prices are like oil – set in a global market,” Alexander says. “Even if a producer’s market isn’t outside the U.S. and even if they aren’t selling to global customers, an awareness of the things that can impact the global environment is really important.”

Alexander strongly recommends that producers stay on top of what is happening in the world around us to give them the edge in the marketplace.

“Regardless of whether a producer wants to get into the business of international trade or exploring new markets, it is important for them all to take a look at things that may disrupt global markets,” she said.

Impacts on markets

A wide array of situations can impact global agriculture markets, whether directly related to agriculture or not.

“For example, the situation in Ukraine, Crimea and Russia is having a massive impact on wheat markets,” says Alexander. “What will that do in the long-run to grain and other crops that affect livestock markets?”

Though events don’t seem like they would or should impact agriculture, she says that producers should pay attention to all major events happening worldwide.

“Most producers already know that they should pay attention to what is going on in other parts of the world,” Alexander comments.

Response effects

An additional impact of conflict, such as the current situation between Ukraine and Russia, is the response that other countries have.

“The interesting thing to watch with this situation is the European response,” she notes. “Will there be any trade sanctions that Europe puts on Russia?”

While the U.S. only sees about three percent of its trade with Russia, there could be ancillary effects.

“If there are sanctions by Europe, there could be expanding demand from Europe on goods,” says Alexander. “Ukraine has been the breadbasket of Europe, so that could have an impact.”

Countries of concern

Alexander notes that two regions are of increasing importance as we move into the immediate future – the Trans-Pacific Partnership (TPP) countries and countries involved in the North American Free Trade Agreement (NAFTA).

“The TPP has such an immense membership,” she says. “Some of those countries are really good matches for many of the goods across the U.S., as far as ag products go.”

Additionally, there are possibilities with the TPP in Australia and New Zealand.

The increasing tensions between Japan and China may also have long-term impacts.

“There have been increased tensions between those countries over the past few months,” she notes. “While a lot less hot than with Russia and Ukraine, there are tensions that could genuinely disrupt trade, as well.”

NAFTA

“NAFTA has really opened up a lot of trade with Canada, and we are looking at ways to expand exports into Mexico,” Alexander comments, noting that recent activity between NAFTA countries regarding trade continue to impact both countries. 

Mexico, adds Alexander, provides a particularly interesting case.

“On average, the typical Mexican citizen has become much better off in the past 20 years,” she explains. “They have a growing middle class, and it’s an interesting export market.”

“Both the TPP countries and Canada and Mexico are particularly important right now,” Alexander emphasizes.

Unstoppable force

“The top point that I’d like to make is, we can’t stop the process of globalization,” Alexander comments. “It is already unfolding.”
Globalization, she adds, is a process that can only be halted or slowed by war. 

“Even war wouldn’t necessarily stop globalization because we don’t react the way we used to,” she says. “We don’t tend to become incredibly isolationist.”

“Globalization is in play. It is a process that has no heart or human behind it,” says Alexander. “People must recognize that globalization is here, and we need to work with it.”

Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at saige@wylr.net.

As the world becomes an increasingly smaller place, economists note that globalization cannot be stopped, yet it offers benefits to the agriculture industry. 

“When we talk about globalization, we are talking about the increased flow of goods, services, labor, capital, technology, information and ideas at the global level and across country boundaries,” says University of Wyoming International Programs Director and Outreach School Associate Dean Anne Alexander. 

With globalization increasing, there are challenges producers must deal with and benefits that can be gleaned from working in global markets.

Importance of globalization

Alexander highlights two main reasons that globalization has importance and significance for agriculture.

“Global markets are the best way to grow a market,” she says. “Finding good trading partners – not necessarily just the countries and governments, but the people producers can work with in a country – is important.”

Agriculture provides additional challenges in the extra rules and regulations required to trade in the global marketplace, meaning that good partners are vital to market access.

“When we look at many agricultural goods, their prices are like oil – set in a global market,” Alexander says. “Even if a producer’s market isn’t outside the U.S. and even if they aren’t selling to global customers, an awareness of the things that can impact the global environment is really important.”

Alexander strongly recommends that producers stay on top of what is happening in the world around us to give them the edge in the marketplace.

“Regardless of whether a producer wants to get into the business of international trade or exploring new markets, it is important for them all to take a look at things that may disrupt global markets,” she said.

Impacts on markets

A wide array of situations can impact global agriculture markets, whether directly related to agriculture or not.

“For example, the situation in Ukraine, Crimea and Russia is having a massive impact on wheat markets,” says Alexander. “What will that do in the long-run to grain and other crops that affect livestock markets?”

Though events don’t seem like they would or should impact agriculture, she says that producers should pay attention to all major events happening worldwide.

“Most producers already know that they should pay attention to what is going on in other parts of the world,” Alexander comments.

Response effects

An additional impact of conflict, such as the current situation between Ukraine and Russia, is the response that other countries have.

“The interesting thing to watch with this situation is the European response,” she notes. “Will there be any trade sanctions that Europe puts on Russia?”

While the U.S. only sees about three percent of its trade with Russia, there could be ancillary effects.

“If there are sanctions by Europe, there could be expanding demand from Europe on goods,” says Alexander. “Ukraine has been the breadbasket of Europe, so that could have an impact.”

Countries of concern

Alexander notes that two regions are of increasing importance as we move into the immediate future – the Trans-Pacific Partnership (TPP) countries and countries involved in the North American Free Trade Agreement (NAFTA).

“The TPP has such an immense membership,” she says. “Some of those countries are really good matches for many of the goods across the U.S., as far as ag products go.”

Additionally, there are possibilities with the TPP in Australia and New Zealand.

The increasing tensions between Japan and China may also have long-term impacts.

“There have been increased tensions between those countries over the past few months,” she notes. “While a lot less hot than with Russia and Ukraine, there are tensions that could genuinely disrupt trade, as well.”

NAFTA

“NAFTA has really opened up a lot of trade with Canada, and we are looking at ways to expand exports into Mexico,” Alexander comments, noting that recent activity between NAFTA countries regarding trade continue to impact both countries. 

Mexico, adds Alexander, provides a particularly interesting case.

“On average, the typical Mexican citizen has become much better off in the past 20 years,” she explains. “They have a growing middle class, and it’s an interesting export market.”

“Both the TPP countries and Canada and Mexico are particularly important right now,” Alexander emphasizes.

Unstoppable force

“The top point that I’d like to make is, we can’t stop the process of globalization,” Alexander comments. “It is already unfolding.”
Globalization, she adds, is a process that can only be halted or slowed by war. 

“Even war wouldn’t necessarily stop globalization because we don’t react the way we used to,” she says. “We don’t tend to become incredibly isolationist.”

“Globalization is in play. It is a process that has no heart or human behind it,” says Alexander. “People must recognize that globalization is here, and we need to work with it.”

Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at saige@wylr.net.

SIDEBAR:

Getting involved

For any small business, the question of how to get involved in a global marketplace is a big one, says UW’s Anne Alexander.

“The first step is huge,” she adds. “Where do I go? What market do I look at? There are lots of questions.”

Alexander notes that Wyoming offers a number of resources to help producers get started.

“The Wyoming Business Council has amazing resources to help people figure out where the best fit is for them,” she notes. “They also have really good, basic tools to help people think through where good markets are, where they should be looking and how to come up with a global market strategy.”

The Wyoming Department of Agriculture and UW Extension are also good resources with access to small business tools for producers to utilize.

“How do we eat an elephant? One bite at a time,” Alexander says. “Those organizations can provide good advice on the first bite.”