Cash crops in developing countries are mainly for exports and some of these products include coffee, tea and cocoa, however the oversupply of these products in the global market leads to low prices, high competition in the global market also leads to the low prices of these products.
Subsistent crops are produced for the purpose of domestic consumption and the surplus is sold in the local markets, however the products are usually perishables and due to lack of good infrastructure and communication networks products do not reach the market where prices would have been high.
The production of both cash crops and subsistence crops is important in these developing countries, cash crops are grown for the purpose of export while the subsistence crops are for local production, however these countries mostly produce the cash crops in large quantities in order to export although these goods do not yield sustainable incomes for the country to develop, there is need to diversify these products.
Many developing countries are faced with natural disasters such as draughts and floods, this cause them to import food from other countries when such disasters occur, they lack food security programs that ensure that in years of over production the surplus is stored and these therefore contribute to food shortages, these importation of food products from other countries results to unfavourable balance of payment and unsustainable debts, therefore there is need to initiate a food security program and also an import substitution strategy.
Falling food prices in the long term
Due to the overproduction of agricultural products leading to high supply levels, the prices of food products falls even to levels below the cost of production, these leads to underdevelopment in the agricultural sector where farmers avoid overproduction of products.
The developing countries