Exogenous World Farm Prices

The level of world farm prices also affects the scale and level of impact from developing country domestic policy upon resource degradation or renewal in DRAs. With marked fluctuations, world prices for most main crops have been falling in real terms for 40 years. Farmers anticipating continued price declines will shift toward adding value by farm production now at the cost of production later. Accelerated resource degradation results. This price-induced shift toward resource degradation is attributable to exogenous factors.

In its analysis of the impact of world farm prices upon degradation of resources in DRAs, the text states that:

Item 4 -expectation of lower prices in the future induces greater levels of production in the present.