AGB 452 -IMPACT OF TRADE POLICIES ON RURAL COMMUNITIES AND FARMERS

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IMPACT OF TRADE POLICIES ON RURAL COMMUNITIES AND FARMERS

1. INTRODUCTION TO TRADE POLICIES AND RURAL ECONOMICS

Policies that control imports and exports of goods in international markets has significant effects

in the rural areas and among farming population. Rural areas are usually highly specialized in

terms of their economic activities – for example, agriculture which requires increased exposure

to price fluctuations and changes in the rules of the international trade. When governments

unilaterally decide to open markets to cheap agricultural imports as a result of a new free trade

agreement the domestic farmers often cannot cope hence a decline in crop prices and farmers

income. This can have severe negative impacts as family farms struggle to remain profitable,

agricultural employment declines, and there is reduced money circulating through the food

industry. On the other hand, protectionist trade policies – especially import tariffs, quotas and

subsidies – help rural industries to perform well and keep farms and rural economies healthy.

However, such protective trade measures also regretfully lead to higher consumer prices and

limited market access to other industries that also rely on exports. Proper balance is the key to

everything. The predominant belief of most trade economists is that moderate protectionism

coupled with adjustment assistance measures will be effective in helping industries in the

protected domestic economy prepare to compete before opening their markets. For example,

phasing out the agricultural subsidies in the course of 5-10 years, while at the same time,

subsidizing the projects that will assist farmers in diversifying their crops or moving to other

industries is the middle ground. However, automation and liberalization without adequate

protection still causes volatility in many agrarian economies, empties small rural agri-food cities,

triggers displacement and emigration, and provokes farmer agitation across the world. Each

country’s government that sets its trade policies must factor in such local effects when designing

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a new tariff schedule, employing intricate economic modelling to extrapolate how changes to the

national tariff rates and structures will cascade down to the countryside and other areas where

people work. When the rural concerns are sidelined in the pursuit of overall national

development through free trade they result in higher rate of inequity, localized business

downturns and cultural transformation in the agricultural zones. The need to avoid the negative

impacts of policy means that in the process of trade negotiations, policymakers should engage

the farmers and other rural advisers. However, for governments involved in international trade,

rural voices are missing to ensure the policies are inclusive, ethical and equitable.

1.1. Overview of international trade theories

International trade theories – the fundamental goal of the theories is to explain why and how

countries engage in imports and exports. Mercantilism is one of the earliest theories of trade,

followed by Absolute Advantage, Comparative Advantage, Heckscher – Ohlin Theory, and the

Gravity model of trade amongst others. According to mercantilists, a country should only

produce goods for export and not for import in order to enhance the wealth of the country. They

explained via the theory of absolute advantage which was postulated by Adam Smith that it is

most efficient for countries to engage only in the production of goods that they do best and then

trade for other goods. David Ricardo took this further by developing his theory of trade based on

comparative advantage, arguing that all countries could gain from trade if they focused on

products with lowest cost of opportunity. While the theory of comparative advantage was

advanced by Torrey, the Heckscher-Ohlin theory is an improvement on comparative advantage

by adding factor endowment to the consideration. I mean, according to it, countries will export

goods that can be produced using factors of production which are in abundance in the country

such as land, labor or capital and import goods that require factors of production that are scarce

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in the country. The gravity model of trade seeks to explain the flow of trade as being dependent

on the economic size of countries and distances between them. These theories offer structures for

making sense of the nature and distribution of bilateral trade flows and welfare effects. They

imply that when trade is free and disposed by the market, it is possible to enhance on the

economic welfare of countries. However, in these standard models, there are some rigidities

inherent in the real economy and fail to directly reflect the distributional equity. Open trade

benefits competitive sectors but presents a problem to declining sectors. Trade expansion could

be advantageous to export concentrating rural areas with an emphasis on farming through

reception of improved prices and revenue. However, there are sectors such as manufacturing and

services that may experience loss of jobs due to imports. These uneven impacts are sidelined in

most mainstream trade theories. As the theory of ‘opening trade’ signifies, there are potential net

economic benefits but which require supportive measures so as to avert premising damage to the

worse-off groups and regions during the transition period. Income support, retraining, and

employment aids are other paths of the USA’s TAAs that can assist industries and rural

communities in managing the disruption. Both the efficiencies and equity in trade policies have

to be achieved. opening up allows for trade liberation implying efficiency but can aggravate

geographic and skill divides if not well protected. Economists go on to develop better models,

and which reflect the omitted features of reality, which were not included in earlier simplified

models while policymakers attempt to deliver assistance to targeted affected groups. Establishing

the best, sustainable level of trade openness therefore continues to be a major challenge.

1.2. Structure of rural economies and farming systems

Globalizing markets and trade policies in the last couple of decades have caused changes in rural

economies and farming systems worldwide. Instead of numerous rural centers which have small

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family farms with focus on sustaining and supplying local markets, modern agricultures

engender consolidation and specialization. There has been a process of concentrating production

at large farm businesses and specializing in cash crops for national and international markets

eradicating the past trends of diversification. This mono-cropping necessitates increasingly

greater amounts of inputs such as fertilizers and machinery to realize the possibilities of scale

economies. Side by side with it, the small family farms and the local agritourism infrastructures

which used to generate income in rural towns have decreased. While using modern techniques in

agricultural productivity has enhanced yield on export crops, costs of overhead have also risen as

well as incidences of debts which make it difficult for small scale farmers to compete. All these

trends can be traced back to the trade policies that which has led to furthering of

globalization. The use of measures such as subsidies and tariffs have led to market manipulation

that has seen larger firms push out their rivals through the application of high prices. GATS and

other regional trade agreements have made it possible for cheap food imports to flood developing

rural economies hindering food production. National policies have also facilitated vertical

integration in agriculture by encouraging research and investment in manufacturing

infrastructure of export-oriented crops such as commodity crops. This has, in turn, lead to

overproduction which has put downward pressure on prices and forced more government

subsidies to support poor farmers who concentrate on these crops. Of course, all these years the

physical and social structures that enable the rural populace to thrive have been degenerating.

storefronts along Main Streets have been abandoned, support for rural health care and schools

has been cut, and a general air of hopelessness hovers over the communities that appear to have

been left behind by the new, more urban-oriented, and globally focused national economy. That

the structure of modern rural economies and farming systems have pushed up the production and

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efficiencies, but the effects on rural communities form a basis of worry. The societal and physical

degradation suggests that there is a requirement for policies that seek to achieve a balanced

economy rather than focus on the sheer numbers of products that need to be produced and the

expense that has to be incurred in the short-term. Trade and agriculture policies should take into

consideration the sustainable quality of life of the rural communities and not just view them

through the lens of producers of commodities that the nation needs but are produced in rural

areas. These are policies that made to restore rural infrastructure and encourage farmers to

diversify their produce and rural food economy to make them independent rather than depending

on handouts from the government and price fluctuations in the global markets.

1.3. Key trade policies affecting agriculture

Several trade policies have impacted the agriculture sector and the overall wellbeing of farm

producing villages a few of which are as follows; These include commodity programs, the import

tariffs and quotas, export subsidies and more current and popular, the free trade agreements.

Commodity programs that were developed in the early 1930s were meant to act as a form of

subsidy where payments were to be made to the farmers every time the prices of crops and

livestock went below certain predetermined levels. This led to the problem of over production

since farmers was trying to plant as many acres as possible to qualify for the payments. Expenses

on commodity programs were becoming prohibitive and conducive the market-oriented policies

in the 1990s. Nevertheless, it is argued that this hastened significant declines in income for small

farming businesses, this impairs competitiveness by raising the cost of imported goods through

tariffs and quotas, which in turn supports domestic prices. For instance, import restrictions that

exist ensure that high prices of sugar prevail in the United States benefiting beet and cane

farmers and disadvantage confectionery manufacturers. Export subsidies bring down the price

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quoted to overseas consumers, thus making export of crops which local consumers would not

pay for at world market prices possible. This the case since it opens up markets abroad for sale

but at the same time disadvantages the farmers in the foreign nations due to low cost of

production. The WTO has thus focused on subsidies of this nature for elimination. Trade

liberalization measures such as NAFTA eliminated barriers and trade restrictions that had existed

for a long time in order to capture the enhanced benefit of open markets. However, the Mexico’s

cheap imported food staples more than offset the export income by flooding the regional

markets, profitability in sectors like corn production for smallholders eroded. Instead of simply

gaining or losing out every time there was a change of policy on trade liberalization of

agriculture over the last century, rural farming communities realized that the impact of each

policy change was not a boost or a setback but rather had distributional effects. It is worth noting

how international and national markets and policies have further conditioned the economic

conditions for agriculture producers up to the present day.

1.4. Historical evolution of agricultural trade

Over the years, agricultural trade has faced changes due to the development of other activities

such as industrialization and globalization. Traditional pre-industrial civilizations mostly

practiced hoe farming and had minimal trade with other nearby regions, mainly barter trade of

excess food products. This changed in the 18th and 19th centuries with the coming of

industrialization, better transport facilities, and the emergence of European imperialism.

Colonization unveiled other areas where cash crops could be grown while industrialization and

imperial preference ensured that there was always a ready market for such products. This gave

rise to the colonialism and imperialism that encouraged specialization and export-oriented

agriculture in colonies and the gradual opening up of the agricultural commodity markets to the

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global system. While positive for giants in the matter of landed property and colonial governors

who were apt to pocket as trading revenues, these initial phases of globalization had diverse

consequences for indigenous rural inhabitants most of who found themselves deprived of their

resources. In the first half of the twentieth century, fool-hardy agricultural protectionism during

the great depression and two world wars undermined export outlets. The raised crisis fostered the

post-war international system of governing agricultural commerce across the globe. New

institutions that included GATT, The World Bank, and the International Monetary Fund helped in

liberalization of agricultural trade through provision of funding for development projects and

gradual reduction on tariffs. But opponents said that these policies were of little benefit to the

poor global farmers and instead favored the developed countries and transnational food

companies. Due to pressure from the grassroots, politicians permitted certain measures of

protection and subsidization of domestic agriculture together with liberalization. The struggle

between the principles of economic rationalism and social justice in regard to the farms’ trade

policies remains an issue to this day. In the past two decades, liberalization of trade through the

WTO and Free Trade agreements has offered new export markets to the rural producers but also

lock them into world price fluctuations and competition from subsidized producers. On the other

hand, global value chain extension enhances the control and surplus value with transnational

traders, processors, and retailers. Mitigating these impacts on minorities in rural areas is still

another dilemma that seems to confront the next evolution in agricultural trade. This analysis of

the evolution of the relation between the fast-food industry and its key stakeholders shows that

during the process of globalization, the positive and negative effects were distributed in an

unequal manner.

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1.5. Stakeholders in rural trade policy

Principal lobbying forces that have an interest in the formulation and consequences of trade

policies concerning rural regions, these stakeholders all possess unique concerns regarding the

positive or negative impact of trade policy on economic prospects involving products from the

agricultural and natural resource sectors and the promotion of sustainability of rural

communities. Large companies with interests in purchasing commodities, running processing

facilities or distributing products into rural areas seek to shape policy for their self-interest,

whether for guaranteed market access, cheaper inputs or other factors that affect company

profits. Intensive provision of inputs, production, and marketing requirements of food processing

companies, both local and foreign, that have vertically coordinated supply chain systems, want to

shape policies concerning trade cost reduction through the removal of trade barriers as well as

lock-in export opportunities in other countries. Farmers unions/associations, cooperatives of

agriculturists, natural resource industry associations, local chambers and trade associations, and

community-based organizations are inclined towards policies that support high commodity

prices, shield domestic sectors from dumped or subsidized imports, generate local employment,

and help the rural territories capture higher value from products they produce. Trade policy is

also an area of concern for rural small business associations and farmer advocacy groups that

also monitor how trade policies affect membership access to equipment, financing, technical

assistance, and other forms of support needed to keep businesses viable. State legislatures in

those states and congressional districts replete with rural and agriculture interests act as conduits

through which various local interests feed into national and international trade policy making

processes. Extension specialists and researchers at land grant universities offer policy makers

data regarding economic returns, costs, and potential loss for rural industries given actual details

of trade partnership. Although the dynamics of these varied rural stakeholders is often polarized

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on specific policy issues concerning trade, the fact that all of them actively engage in these

policy processes means that jobs, income stability, access to inputs and markets, and the stability

of rural economies are at stake.

2. TRADE LIBERALIZATION AND AGRICULTURAL MARKETS

Some of the trade liberalized policies that result to lowering of barriers to imports include tariffs

and quotas that effect agricultural markets as well as the farming communities across many

countries. While the trade liberalization has been realized at the multilateral, regional and

bilateral levels in the recent decades, farmers and the rural populations have experienced the both

the opportunities and risks of international competition and fluctuating prices. On the one hand,

trade liberalization means that farmers are able to get access to a bigger export market, if only

they produce crops and livestock that are experiencing increased world market prices, returns can

be obtained. This accounts for the shift to commercial export-oriented production as witnessed in

some countries in the third world. However, as pointed out earlier, the situation is different with

staple products that experience a decline in the world market price due to oversupply by

developed countries’ heavily subsidized agriculture. This keeps the incomes in the rural areas

low. On the same note, the focused buyer power in liberalized supply chain networks has

facilitated a number of agribusinesses and supermarkets to reduce producer prices, which in turn

imposed further financial stress on smallholder farmers as at the same time consumer food prices

were on the rise, a mirror of the price scissors effect. A shift towards non-traditional crops may

also have implications for soil nutrient productivity, water conservation and pest management,

which are key ingredients in sustainable production. Some of the consequences of these changes

include the employment status of farm workers, the changes in size of farms, food security and

rural migration out of the farming sector especially in the developing world. Government

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policies have at times aggravated these impacts by cutting back on support to agriculture, such as

subsidization, extension and infrastructure development. Because of these multiple and diverse

effects of trade liberalization, formulating trade policies present a lot of dilemmas in trying to

unlock the benefits of global markets while at the same time providing reasonable restraints and

assistance where necessary to bring about productive and pro-poor rural growth instead of

widening the gap between rural and urban biases and agglomerations that left out small

producers and other vulnerable groups. Unlike the earlier neoliberal ‘market access’ framework,

the policy discourse has shifted towards coherent policies on trade adjustment aid, upgrading of

value chains, crop insurance and irrigation subsidies, and development of second jobs in the non-

farming sectors.

2.1. WTO agreements on agriculture

The current WTO agreements on agriculture were adopted during the Uruguay Round of trade

talks and prescribed a new framework of rules that would apply to agricultural trade and markets.

One of the goals was to encourage a greater level of market opening and export ness in the

course of a reform package aimed at cutting back the support for agriculture and protection in the

future. More particularly, the members committed themselves to replace the non-tariff trade

barriers by tariffs, restrict trade distorting domestic support to agriculture and cut the agricultural

tariffs. These new rules affected agricultural markets and income levels to a great extent for rural

communities and farmers even in the developed nations and developing nations. In developed

countries where tremendous subsidies and high levels of market protection was offered like the

EU, Japan and United States, the reforms led to some reduction in domestic prices and higher

import penetration as agricultural markets were liberalized further for world markets. This

pressure resulted in some level of difficulty for some farm producers and rural populace making

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governments to offer transition support programs. But nonetheless, the overall picture of

developed country markets remained sufficiently solid in terms of comparative support compared

to the developing countries. The emergence of the rules in trade-deforming support has prompted

many developing countries to look for new ways of grabbing export market share in such

strategic markets such as the EU and the US. This also led to more investment in countries where

production was being exported such as horticulture, livestock, wine and seafood exports from

Latin America and Asia amongst others. Employment rose in rural areas, there was development

of new Agro-industries, and an increase in yields. However, a serious weakness was that the

access to the new market opportunities for the least developed countries could not be effectively

exploited to the extent comparable to those developed developing countries. There were also

concerns that rural poverty rise was caused by those communities who depended on staple foods

as imported products from developed nations that flooded the markets after policies were enacted

for trade liberalization. Finally, the effects of the WTO agricultural accords in regard to markets,

rural populations, and farmers depended on the economic level of development and the ability to

take advantage of liberalization or adapt to increased competition.

2.2. Regional and bilateral trade agreements

Trade liberalization and free trade agreements have been on the rise in the world in the past few

decades due to globalization. These agreements are also targeted at easing trade constraints

among the member countries by cutting on the tariffs, quotas and other factors. In the agricultural

sector, the RTAs can either enhance or depress production, prices as well as the lives of rural

farmers. For instance, the formation of NAFTA brought about significant shifts in the agricultural

markets of North America. Integration with the United States led to liberalization of trade and the

extensive substitution of domestic production with Mexican fruits and vegetables more so in

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tomatoes and avocados affecting Mexican rural areas. In a similar way, when tariffs were

reduced under NAFTA, American corn with heavy subsidy started flooding Mexican markets and

this caused displacement of smallholder farmers and rise of rural poverty. Other RTAs such as

CAFTA-DR in Central America erred on liberalizing markets thus allowing the US agribusiness

to exert enhanced competition that negatively affected the smallholder farming populations.

However, certain categories of products such as grain and oilseeds exploited the conditions to

record improved exports. The effects in general therefore hinge more on the terms of the treaty

and the comparative advantage or disadvantage provided by domestic agriculture. It is similar to

bilateral agreements that can cause similar outcomes of market integration in agriculture and

rural economy displacement if not well handled. For example, trade liberalization in the Thai-

Chinese bilateral trade agreements that promoted Thais fruits and vegetables exports but came

with a threat of increased import competition of Chinese produce that have adversely affected

farmers’ income. Like regional agreements, bilateral contracts grant the export sector access to

new markets but also create further uncertainty for the dependent small-holder farmers. Thus, it

will be crucial to prevent the emergence of race to the bottom in criteria and unfair competition

so that such agreements could create rural opportunities rather than worsen injustice. Both

regional and bilateral trade can help agricultural trade, throughput, and efficiency but at the same

time pose challenges to rural producers if not reformed to protect the vulnerable farmers against

volatile and unfair markets. Such policy interventions as trade adjustment assistance, bolstered

social protection mechanism, and initiatives on making small farmers more competitive, among

others, will be critical to accompany additional liberalization of agricultural trade through RTA

and BTA, only through such supportive policies can trade induced agricultural growth be made

pro poor to the disadvantaged groups in the rural areas.

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2.3. Impact on commodity prices and market access

It is clearly evident that the global policy of trade liberalization aimed at removing trade barriers

including import tariffs and export subsidies has varying effects on agricultural commodity

prices and market accessibility to the developing countries. In essence, any policy that lowers or

removes barriers on imported agricultural goods results in the influx of cheaper foreign goods in

the domestic market. This kind of import competition puts pressure on the local markets to

reduce the prices of similar agricultural commodities that farmers cultivate for their survival. For

instance, liberalization of trade in India in the early 1990s when quotas and tariffs on sugar

imports were removed meet with rapid growth in the imports of the cheap products, thereby

reducing domestic wholesale price of sugar by half in a space of 5 years. This affected up to 6

million sugar farmers and workers as these categories of people experienced a reduction in their

earnings due to the low prices of the produce. On the same note, trade liberalization can also lead

to the granting of greater access to the world market for export competitive industries in the

developing nations. For example, removal of European sugar export subsidies and minimum

price guarantee under the EBA scheme facilitated fair competition by ensuring that the more

efficient ACP countries supplied more raw cane sugar to the high price EU markets. However, as

we saw above these domestic scarcities also led to an increase in local prices of sugar which

negatively affected poor net-purchasing households in the ACP countries. Trade liberalization

therefore leads to the emergence of prices shocks to the integrated regional markets- either

sharply higher prices or sharply lower prices depending on a country’s competitiveness vis-à-vis

other countries and thus adds a new source of variability to agricultural incomes and access to

the food by the poor rural households. The distributional consequences of ATTPs for commodity

market prices are generally heterogonous – benefiting efficient producers involved in exports

while putting pressure on the marginal growers exposed to import competition and lower prices.

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They are therefore required to adopt the safety net policies in order to protect the vulnerable

farmers who would have been affected by economic dislocation during the trade transition

towards the open markets regime.

2.4. Changes in production patterns and crop choices

Special policies of liberalization of trade have greatly affected the structure and the types of

crops to be produced in the agriculture sector in a way that has both positive and negative

impacts on growers and rural societies. One key impact is the change in the allocation of

resources with more emphasis being placed on the production of cash crops for export rather

than produce for local consumption. They earn their export revenue through the revenue sources,

the primary and main categories of export for many developing countries comprise of

commodities such as coffee, cocoa, spices, fruits and vegetables for which they hold comparative

advantage. When trading restrictions are lowered through WTO deals and programs, good export

chances emerge for these products. He noted that farmers go for crop varieties with higher

potential profits which are directed towards the global market rather than a local market. For

instance, due to the liberalization policies introduced in the early 1990s, farmers in Punjab

shifted from cereal production to production of vegetables and fruits. Still, the focus on global

commodities that are prone to the volatility of the market can lead to further risks for the

smallholder farmers economically. Global prices drop erratically, and a fall could be catastrophic

to the livelihood of many people as evidenced by the crashes in price of coffee and cocoa.

Transition to high-value perishable crops requires own or access to transportation and storage

and distribution infrastructure to be able to effectively participate in distant export value chains.

Absence of these structures together with small plots of land which are characteristic of most

marginal farmers can lock them out from accessing these benefits. This has also led to other

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changes contributed to by liberalization of trade by making large multi-national agribusiness

corporations to dominate agricultural markets at the expense of small farmers. It further

encouraged foreign direct investment in processed foods as well as supermarkets, where raw

agricultural products from the developing nations can be procured and processed for export to

global markets. Bulky buyers have most manufacturers and sellers within their power, hence

placing low farm-gate prices for farmers while getting the biggest portions of the end-consumer

prices. This aggravates income and equity negative externalities imposing costs on rural

smallholders particularly in developing country export destination of agricultural commodities

through trade liberalization and global agricultural market opening up.

2.5. Case studies of trade liberalization outcomes

Impacts of liberalizing trade between the US and Mexico under the NAFT A study of the trade

pattern after the signing of NAFT in 1994 has shown dramatic changes in the trade flow, farm

income and conditions of the rural population in Mexico. The liberalization of trade under

NAFTA increased new competition from cheap American agricultural imports like corn that

Mexican small holder farmers were unable to compete with while at the same time Mexican

agricultural multinationals and large farms that were able to easily export horticultural crops to

the US. While some households in the rural areas were able to transition from corn growing to

fruit and vegetables for export, many downsized peasant incomes due to low global corn prices,

other research points out that state agriculture employment declined by 1. 3 million in the early

part of this decade with farm laborers moving in droves to urban areas in search of employment,

albeit low paying ones. Similar effects have been observed under other liberalization measures

including any bilateral, regional or unilateral liberalization measures such as that undertaken by

India for agricultural trade in the 1990s under structural adjustment programs advocated for by

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the World Bank. The recent dismantling of quotas and quantitative restrictions, coupled with the

reduction of high tariffs, have left Indian farmers vulnerable to fluctuating international prices of

agricultural products and increased competition from cheaper imports. The declines in farmer

incomes were most notably recorded in the cotton-growing regions experiencing declines in

global cotton prices, while increases in incomes were most evident in regions that were able to

transition to new export crops. Thus, despite some positive effects, the reforms led to a sharp

crisis in the Indian agriculture, the development of which was characterized by more than

250,000 Indian farmers’ suicides since 1995, mainly due to the inability to repay their debts as a

result of crop failures and low prices. As much as trade liberalization was partly responsible for

declining incomes, other issues like pre-existing subsidized overproduction were also

characteristic of the Indian rural crisis. The fact that certain subsectors of agriculture were able to

shake off their antidumping shackles while others remained hogtied by export restrictions

confirm that while some communities and some farmers can look forward to new outlets for their

crops, many smallholders are still struggling to survive import competition and volatile markets,

it becomes clear that there is a necessity for a number of policy interventions for minimizing

such impacts and managing the shift to more open trade.

3. EFFECTS ON FARM INCOMES AND RURAL LIVELIHOODS

It is evident from the various policies that trade policies affect the rural communities and farmers

in either positive or negative manner. Trade liberalization through FTAs is also likely to increase

export outlets and increase the prices of some enumerated commodities, thereby increasing NFI.

For instance, NAFTA reduced trade restrictions on the key US agricultural products for export to

Canada and Mexico such as maize, beans, wheat, meat and pork. On the other hand, other sectors

may be faced with low prices and therefore low incomes if importation is adopted. NAFTA led to

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increased production of horticultural products in Mexico hence increased competition in this

subsector of the fruits and vegetable industry in USA. At the same time, there are such matters as

dumped imports and manipulation of currency by the trading partners that can negatively affect

the American farmer income. Based on the following estimates of yuan undervaluation with

respect to dollar: 40% undervaluation of yuan from 2007 to 2017 actually worsened the trade

deficit with China which is massive in this period and also affected incomes in various sectors

such as beef production due to increased import competition. Frictions in the trade policy create

risks and uncertainty in the long-term investments in agriculture. For instance, rural income can

experience increased fluctuation as a result of higher reliance on protectionist measures such as

tariffs on imported agricultural produce and their subsequent withdrawal under new freed trade

agreements. When Trump directed tariffs on billion worth of Chinese imports including some

agricultural products within the same year, soybean exports to China were significantly affected

by tariffs imposed from China. However, sudden fluctuations of prices due to factors such as the

signing of the phase one US-China trade agreement in 2020, which reduced previous tariff

levels, make planning difficult and worsen cyclical effects for farmers. The WTO rules on trade

in other areas such as subsidies and standards in trade can limit the policy choices available for

supporting farmers. The WTO measures such as the subsidies which have been prescribed for a

certain limit and the quotas and tariffs meant for supporting prices and incomes have also

provoked criticisms. For instance, the WTO has been able to force change by making a ruling

such as the Brazil vs US case regarding the cotton subsidies in the 2002 farm bill. Trade

differences involving geographical indications and protected designations for products such as

cheeses have also emerged, which have affected rural agricultural regions. Maintaining the right

balance of subsidizing incomes through trade policy whilst at the same time assisting export-

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oriented farmers to afford the opportunities offered by market access remains a politically

sensitive issue.

3.1. Income distribution among different types of farmers

There is a huge disparity in income among farmers depending on the size of their farms, the

types of crops they cultivate, and the use of hi-tech equipment. Farmers with small land area or

those who are engaged in subsistence farming, which is below the threshold for scale economy,

earn the least. Most small farmer cultivate staple cereals such as wheat and rice for which their

real prices have been declining in the recent past thus exerting pressure on the profits earned by

small farmers. With little capital to use for better seeds, machinery and irrigation techniques,

yields and productivity rates are low. In an investigation made in India through various agro-

climatic regions, the productivity on small farms was reported to be 36-44% lower than what was

observed in large farms. Further, lower marketable surplus from small farm production also

reduces bargaining power and opportunities to achieve remunerative prices. Farms also, local job

chances for landless agricultural employees also earned highly insecurity income and are

scarcely any other rural employment prospects in districts with negligible industrial growth. On

the other hand, the farmers who are having medium to large land holdings and who are engaged

in growing high value cash crops and horticulture products can get much higher average income,

especially when they are able to invest more on modern agri-tech. Policies of income support and

pricing that are extended by governments tend to benefit growers of export crops such as coffee,

cotton, tea, spices, etc. causing inequalities in inter-crop income. Modernization through use of

advanced GMO seeds, mechanization, greenhouse farming has thus helped progressive farmers

to improve quality and quantity of produce and access export and urban domestic markets which

has changed their income levels very much above average rural household. According to an

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IFPRI study that looked at 9 developing nations it was estimated that those who adopted GM

technology got yield increases of 22% and income increases of 68% when they grew insect

resistant cotton. Comparable degree of income disparity occurs between the crop and livestock

production due to the impact of the capital investments on per unit productivity and market

integration. Hence, income inequalities exist among the farmers depending on resource

ownership, the ability to acquire and use improved technology, access to and control over the

value chain, or government policies and actions. Eradicating such income gaps entails providing

smallholders with the required access and opportunity to engage in and benefit from better

paying value chains and it is an ongoing policy issue in the developing world.

3.2. Off-farm employment and diversification

Measures such as MFN and Doha have affected the economic feasibility of small-holder farming

in many rural areas through trade policies that include removing subsidies on agriculture and

protection of markets. Since the profit-margins of the conventional crops and livestock are

declining due to the global market force and import policies, most of the small farms are in a

state where they cannot sustain their financial earnings just through agricultural business. This

has increased the trend of households in developed and developing regions of the rural to look

for off-farm wages and or diversification of farming business. Finding another form of

employment is helpful for rural families to have a steady income, have access to health

management, and retirement income that would not be affected by the unfavourable condition of

the weather or the process of a specific commodity. Nevertheless, it is known that off-farm

employment implies long drives due to the geographical location of many farming communities

relative to urban labor markets, it also implies that a rural household may feel pressured to

balance between farm-related activities and off-farm employment. Government heads should

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therefore look at the transportation infrastructure and work from off-farm policies as a way of

allowing farm workers to engage in farm related activities without hampering productivity and

work culture of the farming population. Hedging on farm business activities is another

prescriptive strategy that is becoming more popular in rural areas affected by liberalization of

trade policies. For instance, expanding farming from the traditional production of crops and

livestock to the addition of value-added products, hospitality services, recreation activities, and

renewable energy projects diversify the sources of income that farm households would depend

on in the event of risk. These local food campaigns have in turn empowered diversified farms to

market to the consumer’s need for fresh, locally sourced, sustainably gown and niche crops and

products. Converting a small farm which in the best of times already has rather low profits into a

versatile business however requires substantial working capital, time, marketing skills as well as

radical changes in the lifestyle of farm communities which may be conservative. Expanding the

rural development grants, loans and reaching out for more technical assistance could help the

rural households planning to diversify the family farms which are being affected by the adverse

trade policies or the volatile commodity market. In all those territories for which negative long-

term consequences of trade liberalization are expected in terms of crop prices and agricultural

competitiveness, rural populations may be forced to look for collective responses to the problem

of sustainable economic development of rural territories beyond traditional agriculture. Heritage

tourism, food processing industries, renewable energy industries, digital industries and computer-

based jobs could lead to fresh employment opportunities that are least vulnerable to shocks

created by such agricultural trade policies, such rural restructuring strategies are best

implemented with direct collaboration of the government, development organizations, private

sector and relevant community groups.

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3.3. Rural-urban migration patterns

Since the onset of the structural adjustment and liberalization policies, many developing

countries have liberalized their markets which has led to un-competitiveness of many rural areas

as places of living and economic activities. It has been blamed for some of the negative effects it

has caused such as promoting early and massive movement from rural areas to urban ones as

young people abandon family farms and agricultural practices in search of better paying jobs in

cities. This growing gap between rural and urban food sources is due to policies that have

provided cheaper domestic food for so many farm produce and cheaper imported foods as well.

So there is a clear move across the developing world from countryside to cityscape due to lesser

income earning potential left in the rural areas. For instance, over 100 million people have

shifted from rural village areas to fast growing cities say, Mumbai or Delhi since liberalization in

the Indian economy in the early 1990s. The effects of this ‘brain drain’ have been far-reaching

for both the original sending regions who see themselves lose talent and economic activity, and

the stressed destination cities that are unable to generate employment or adequate housing for the

influx of people. Rural development and the improvement of agricultural productivity are critical

to smallholder farmers, while, at the same time, socio-cultural factors such as social

relationships, family structures, and, in particular, migration from rural to urban areas remain

important and continue to change at an accelerated pace. The younger generations are relocating

from rural areas, not by choice but due to the need to seek employment; the left behind

populations are usually the senior citizens and other individuals who cannot move. This kind of

outmigration is selective and contributes to labor scarcity for the producers of agriculture and at

the same time, the rural areas are culturally deprived. As the indigenous knowledge and the ways

of living that are unique and precious to the holder as individuals and as communities are

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increasingly threatened with marginalization, the questions about the sustainability of those

regions that have apparently been left behind by the globalized trade integration policies arise.

3.4. Gender dimensions of trade impacts

Policies on trade and liberalization of trade can produce gendered effects on women and men in a

rural farming environment. Since they are mostly confined within the home front, in childcare

and other domestic activities, women are much more constrained throughout the world than men

in terms of mobility, resource, networks and information. Therefore, the general change that

comes as a result of the new trade policies could potentially impact their ability to earn a living

and their earnings differently. For example, fluctuations in the prices or demand for crops that are

produced by women farmers such as through shocks that affect the market will affect their

incomes in a way that is worse than men. Moreover, promoting export crops especially which are

produced majorly by male farmers may reduce funding and focus on improving staple crops

produced by women for home use and for retail markets, this has the potential of raising the

vulnerability and economic subjugation of women in the rural areas. Conversely, such

liberalization and modernization of farming through the export of agricultural produce or

commercial farming may have negative impacts to women, as it alters social relations and

demography. Even where new income generating opportunities might arise – which include

wage employment, sorting/packaging work in relation to cash crop exports – there is a

corresponding burden on rural women of doing more work for which they are not remunerated,

including farming or childcare. This goes further in taking the gender-based inequitable

distribution of labor that is usually experienced to another level. Further, mechanization and

technology modifications that occur in the agriculture sector, primarily for use and operation by

men, may disempower women from production and management, reducing their autonomy,

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access to cash, and use of assets. Culturally driven modernization and a masculine export-

oriented model also contribute to forgetting of traditional knowledge and skills, crop options, and

genetic variation of seeds grown by women. Therefore, trade liberalization with no measures put

in place that can check the existing gender gaps in incomes, poverty levels, food security, work

burden and levels of empowerment of women and men in the rural areas of the developing

countries means that such liberalization measures deepen the feminization of responsibilities and

vulnerabilities.

3.5. Food security and nutrition in rural households

When it comes to linking policies to food security and nutrition among the farm households engaged in

farming activities, trade policies play a critical role. If for instance the trade barriers such as tariffs and

quotas are lifted, the local farmers supplying agricultural products are likely to face higher levels of

competition from larger producers in foreign markets. It can keep food prices low for the agricultural

horticulture products and this in turn cuts the earnings of farmers in the rural settings who are mostly

smallholders. Considering that most farming families in rural areas are financially insecure and earn less,

they are able to spend less money on food purchase. Not only commercial farmers, but even farmers who

produce crops to feed their households, are affected because low prices discourage producers. This has the

effect of meaning less food is available in the long-term, and so production must be curbed. Also, most of

the rural small farms have small amount of capital revenues in order to make changes in production

practices or change to other crops which are economically more rewarding. They also cannot frequently

rely on insurance policies and government entitlements to minimize fluctuations in income. Therefore,

free trade policies mean precisely enhanced food vulnerability and reduced nutritional health. The adverse

effects which scare childhood malnutrition and affect pregnant women occur when there is deterioration

of the economy in traditional rural agricultural societies. This decline of income decreases the capacity to

purchase a balanced diet full of micronutrient foods such as fruits, vegetables, animal protein, etc. It can

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also lead to a dependence on ultra-inexpensive and refined foods and starchy commodities and diseases of

deficiency. When rural livelihoods are constricted, it does result in migration to urban areas that

destabilize the traditional safety nets of rural communities. These ramifications all point to the

significance of how trade reforms should be approached critically by policymakers especially in relation

to food security and nutritional outcomes on the populace of the rural areas. Trade may yield its positive

welfare impacts domestically but for vulnerable farming households, countervailing measures may be

necessary to prevent incomes dropping low enough to compromise their reliance on affordable, healthy

and adequate foods.

4. ADAPTATION STRATEGIES FOR RURAL COMMUNITIES

Trade policies that seek to liberalize domestic agricultural markets for competition from international

players can significantly impact on rural consumers and producers. Integration and liberalization

agreements remove barriers to trade and subsidies which make local foods more affordable and

accessible; commodity prices are unpredictable while exports fluctuate. This leads to complications in

transition when less competitive operations are shut down. Innovation is paramount, but in this case,

solutions should be realistic regarding the conditions of rural areas and financial constraints, this can be

buffered through diversification into high-value products such as crops, and the development of other

products such as niche products, agricultural tourism, and off- farm income. There is the support derived

from the transition programs that promote skills training, education, and enterprise development. This

means that infrastructure and connectivity investments make markets accessible and affordable. Enhanced

farmer associations pressure political systems into implementing measures and creating labeling systems

that convey quality statements regarding niche products. While trade could create weaknesses, rural

communities can also harness benefits through export destinations, technology acquisition and value

chain membership. To realize these benefits there is thus a need for purposeful strategies directed towards

increasing international competitiveness. Export consortiums benefit the small holder in that it enables

them to realize scale economies, in some cases, private extension services and NGOs are involved to

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enhance knowledge and capacity on sustainable certification systems. Air and digital freight services

make it easier to open up access to perishable supply chains that are associated with considerable value.

Such infrastructure projects as Access to trade finance, Irrigation, Storage and processing infrastructure

increases in rural areas. Therefore, the adaptation actions have to be aimed at rural areas to seek new

opportunities rather than focusing on dealing with disruptions. This requires the calibration of policy

making to proactively develop capacity, accommodate change and foster inclusive growth, it means

investment in the people assets, knowledge capital, innovation, and enterprise. If properly managed and

harnessed, the opportunities arising out of the current open agricultural markets pose themselves as the

developmental engines of the rural regions.

4.1. Farmer cooperatives and collective action

Through farmer cooperatives, rural people can collectively embark on innovations that may be

necessitated by shifts in trade liberalization and trade liberalization. Small farmers, when join into a

group, can be in a position to share the expenses as well as gain more bargaining powers for acquiring

improved technologies, acquiring inputs and outputs at reasonable prices, and other strongholds to

withstand higher fluctuations of prices. Through formation of cooperative, the member farmers are able to

share ownership of the expensive value adding plantations such as food processing, cold storage,

warehouses and transportation vehicles that individual small holder farmers cannot afford. Besides an

economic factor, cooperatives offer social support services to rural communities in form of community

activities, opportunities for agricultural training for the youths as well as fighting for farmers’ right and

welfare at local, national and international levels. Education and training mean that farmers become more

informed on current policies that affect them hence they can be actively involved in the policy-making

processes of the farmer cooperatives since they are democratic organizations Farmers can pool money by

accessing credit from cooperative banks, and this means that farmers can invest collectively in research

and other capacity-building, programs and projects. Liberalized trade environment which poses high

conditions of risk due to shocks in prices of commodities, many small fragmented farms can prolong their

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survival through collective group action in form of cooperatives and associations. These rural member-

based institutions build on the strength of group solidarity to assist the communities in getting access to

better market conditions, negotiating for a better deal in the markets other than just price and/or market

differentiation by putting labels on the regional products. Cooperatives also help small farm to mitigate

risks, adopt right technologies at faster pace, mobilize capital through cooperative and self-help groups

and bring extension services to upgrade their skills. For the policy makers, it is important to provide the

cooperatives with the legal framework, provide them with the financial support, and link them to the

programs for rural employment and accessing the natural resources such as water and land. Building more

genuine cooperative structures of farmers have proven to enhance small farm sustainability and food

availability to rural folks in the Global South since they act as a buffer against price SWs. Through

cooperatives, rural communities participate in the decision making on the solutions that address their

realities of shifting trade policies as opposed to being mere beneficiaries of highly likely development

paradigms. Through aggregation, small farmers need not worry on how best to deal with problems that

affect individual farms hence are capable of eradicating problems affecting small farms hence improving

the livelihoods of many farmers in rural areas, in addition to economic benefits, cooperatives foster the

formation of people’s skills in decision making and leadership – essential values for rural societies in

adopting new conditions arising from globalization.

4.2. Value chain integration and upgrades

To enhance the transportation segment and make rural producers more linked with the modern market

channels is one of the successful strategies of value chain upgrading for improving the rural standard of

living. Of the value chain interventions that have been implemented to enhance the model, those that

concentrate on connecting small holder farmers to fair trade and organic certified export markets have

been effective in areas like Latin America and Sub-Saharan Africa. This enables the farmers from the

rural area to gain better prices through gaining organic certification and through the formation of

cooperatives for their products in the export niche markets. An effort has to be made to raise food safety

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and quality standards to ensure compliance with the demands of the high-value trade channels. Training,

production of relevant material, and finance are some of the methods that can be used to actualize these

improvements is by offering support to start product traceability systems. To avoid post-harvest losses,

and provide adequate storage for produce that will be exported, investment in cold storage and

refrigerated transport must follow this. Logistics relationships with transport providers and distributors

must also be set up to effectively and efficiently connect rural collection centers to large port terminals to

facilitate the delivery of produce to overseas consumers. In some areas it may involve infrastructural

development of new feeder roads and transports to the central network. On the same note, it is possible to

implement the concept of rural aggregation points for products where suppliers can group products from

scattered locations in order to meet the required export quantities. Occasionally, there will be a necessity

to have third parties between the farmers and final consumers and markets in the definition of trading

relations. However, measures like contracting should be taken to ensure that the benefits of the measures

undertaken are received on both the giving and taking sides. In such a way, upgrading value chains in

these manners can be an intensive process that necessitates intensive public and private investment.

Although this transportation strategy implies short-term fiscal costs, research has found that the longer-

term welfare benefits exceed the costs, so integration is rational from a fiscal point of view from a

national perspective. Efficient value chains in the trade also reduce risk associated with volatility since

producers are connected with stable outlets hence protecting the rural groups and producers from shocks

arising from changes in trade policies.

4.3. Adoption of new technologies and practices

Trade liberalization which is a common feature of international trade has negative impacts to farmers and

affected rural communities as mentioned above. Thus, the consistency of the organization and the ability

to remain relevant in the current conditions are dependent on the introduction of new technologies and the

use of the best practices. Some technologies and techniques for production can enhance farmers’ yield and

income, yet can require the utilization of less inputs from nature, such things as GPS, Satellite imaging,

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variable rate input application, moisture probes and yield monitors provide farmers with better and more

accurate information to help in decision making on planting, water and fertilizer use and

harvesting. Using genetically modified seeds also proves to be useful in minimizing crop failure due to

pests, diseases and climate factors and thus increase production. With the help of internet connectivity,

rural farmers are also able to adopt these sophisticated tools and connect to new markets, they reveal that

business entities can interact directly with the suppliers and buyers without involving the middlemen. As

for the positive effects of Internet and e-commerce, rural communities can also increase the amount of

consumers they reach to supply local products, or offer such services as financial planning, taxes, etc.

Infrastructure development is also crucial as well – better storage and transport structures that make it

possible for the farms and related businesses to run their operations with ease and also minimize losses

between harvesting and selling. Education and training courses that foster both computer skills, budgeting

and marketing strategies equip rural individuals, particularly women and the young, with the skills to run

their own businesses. Credit and crop insurance, provide farmers with the necessary safety net that allows

for adaptation and adoption of new technologies and best practices to the farming operations. The

volatility of trade environment is then cushioned by proactive adaptation on behalf of the rural

communities. Technology helps transfer knowledge while at the same time creating new stream of

income. Innovation changes the status of community members from being powerless and dependent to

being powerful in approaching the guarantees in the global economy. Trade policies do not have to be a

way of making rural areas disappear from the map or to stop giving them any attention.

4.4. Niche markets and product differentiation

Rural communities and farmers can adopt market niche and product differentiation strategies as a form of

coping mechanism in case of shift in trade policies. Rural producers can be less dependent on trade

policies because by focusing on specialized products that are not simply commodity crops, rural farmers

can obtain better prices and better unit margins, than the mass-market crops that could be affected by the

policies. Niche markets may be defined by production method, product type, product origin, or product

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quality standards, and may encompass such items as organic vegetables and fruits, heritage crop varieties,

pastured meat and eggs, processed food products, farm tourism, and specialty crafts. The differentiation

extends to characteristics such as quality, regional origin, specific production method, sustainability and

the start to end farmer-consumer relationships that bypass intermediaries and connect rural producers with

discerning urban consumers. By moving towards specialized production, rural areas establish more

heterogeneity and, therefore, application of trade policies’ negative effects will not affect them as much as

if they were competing in homogenized mass production markets. Other programs that can also be used

by these rural towns in branding include; Landscape, culture and goods branding which are some of the

regional branding programs that can further be adopted by the towns in the region. Whether it is apples

for heritage markets, cheese production or providing accommodation in the farm, specialization brings in

higher margins of differentiation values added to the products. Of course, specialized production is costly

and risky, which means that cornerstone support services are required to assist rural producers in search of

promising niche markets, to contribute to financing the up-front costs of market entry and development of

niche distribution channels, and to help rural producers promote their differential products to targeted

consuming publics. However, if properly managed, the current commodity market trends represent an

opportunity that can make the rural communities gain better incomes and also reduce vulnerability to

fluctuations in the global market as opposed to becoming a threat. In the current world, the concept of

differentiation remains popular as a strategy, enabling the rural business to look for those segments that

are not fully exploited in the market, while not directly confronting the mass market giants.

4.5. Rural infrastructure development

This missing link of the infrastructure means that many rural areas are poorly developed and lack the

required connectivity to provide services. Infrastructure can refer to the construction of roads, networks of

transport, and communication as well as installations such as water supplies and electricity in rural areas

that would enhance the prospects of economic and social abilities. Roads and rail infrastructure because

they encourage farmers and rural industries to transport their produce to the market and also mobilize

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workers and consumers. Nevertheless, many rural towns and farmlands still lack accessibility, appropriate

road networks, insufficient and deficient rail tracks, and scarce public transportation. These could be

significantly improved through development-themed infrastructure interventions that are targeted at these

networks. For instance, resurfacing, rebuilding and extending rural roads, bridges and highways would

enhance the linkages between suppliers, farms and urban markets. Rail transport expansions through rail

laying and train transport accessibility would also enhance the conveyance of agricultural products from

rural towns to the domestic and global markets. Besides transportation connections, the infrastructures

which can be further developed and improved in the rural areas are electricity, broadband internet

connections, water supply and waste removal systems. With a steady supply of electricity that is regarded

to be fairly reliable and a good broadband connection that is within the reach of most farm owners,

businesses as well as farmers can improve their operations by incorporating better technologies and

equipment. Access to safe and drinkable community water systems enhances the health standards of

individuals, and their total quality of living. Sanitary sewer systems or waste treatment plants therefore

protect natural resources from degradation through upgraded waste management, it enables rural

industries to grow and to provide the needed utility services to the populace, which will foster new people

and investments into the area. They have found out that with appropriate application of smart public

policy and investment into rural infrastructure development initiatives particularly, on transport and

utilities infrastructure such as roads, bridges, railways, electricity and water systems, and other similar

infrastructure, rural towns and farming communities can access new economic opportunities and markets,

technological advancements and equipment, business, and farm expansion and growth as well as being

able to develop their resilience needed for greater prosperity.

5. POLICY RESPONSES AND FUTURE DIRECTIONS

As internationalization and free trade has pressed the world market, governing bodies must also design

trade policies with functional and effective considerations with justice and stability of the

community. Growth in trade on a more extensive scale has its positive effects on the national economy,

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although historical experience shows quite negative effects on specific sectors in rural areas and its

employees. This calls for policy responses that seek to address social impacts that may be negative to the

rural communities as well as manage change in the economy. There are ways through which governments

can assist displaced farmers in their transition to new occupations; these include trade adjustment

programs that contain financial assistance, skill enhancement programs, relocation services and options

for early retirement, among others. These may be in the form of cash grants, concessional loans,

individual training vouchers for skill upgrading, microenterprise development, and support for creation

and development of new start-ups through innovation hubs and incubators in rural settings to spur

demand for innovation and entrepreneurship. They also need investment in upgrading transport

connections, telephone and internet networks, and other public amenities so these rural towns can grow

their economies and support new businesses besides connecting well to the latest global economy.

Deliberative policy-making mechanisms should involve the rural people in trade agreements through

consultation to reflect their views and values. The identification and reinforcement of relevant indicators

for impact monitoring, as well as the subsequent adjustments of policy responses when negative effects

arise, will also be important approaches to minimize or eliminate setbacks if and when they occur.

Because the use of automation, new technologies, and artificial intelligence systems that are already

changing agriculture and manufacturing sectors is also moving to rural areas, there may be a need for

policy measures that would support creation of new, remote working hubs, maker spaces, technology

training for residents, etc., that would be specifically relevant for rural communities. Appropriate policies

that are sensitive to the needs of inclusion and fairness, as well as measures that could avoid leaving

behind vulnerable groups in rural areas, can significantly reduce the negative impacts of the expansion of

trade for these groups as the global economy is transitioned. While building strong, vibrant rural

communities while promoting and implementing trade liberalization policies involves careful policy

actions, innovative ideas, and massive public participation, the liberalization of trade does not necessarily

have to lead to equity and sustainable rural development if only governments and policy makers will

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approach it with concern for the people and engage the public in formulating the policies and

implementing them.

5.1. Domestic support measures for agriculture

Policies within domestic support which are supportive of farmers and other rural dwellers are quite useful

especially in buffering segments of the population from blunt force of free trade and liberalization.

Examples of measures include income support measures, crop insurance, disaster assistance funding,

concessional rates for inputs such as water and electricity, expenditure on rural physical infrastructure,

expenditure on agricultural research and development, concessional credit, and modification of the

granularity of the safety nets. Such supports help level out farmer risks during fluctuating markets, aid

them in regaining their footing in case of disasters and occurrences beyond their control, mitigate jarring

economic blows that adversely impact food insecure communities that heavily rely on farming, and

rectify imbalances and lack of information access which inherently puts small scale farmers at a

disadvantageous position. As for the future, some estimators insist on raising domestic supports in order

to give farmers at least a decent living wage and thus stop the flow of people who leave the countryside.

Countries that have virtually removed direct payments from farmers to the industry could be used as

examples of excessive liberalization among developed nations. On the other hand, developing nations

may not have the fiscal ability to proactively support farmers during changeover shocks originating from

trade policy changes. Global development institutions may force developing nations to quickly cut

supports as a condition of structural adjustment programs, what is required is a much more nuanced

approach that can help open the doors to trade but can also help the rural poor navigate its consequences

and prepare them to engage with these changes appropriately rather than locking them out. This way,

while some of the programs could require a fine-tune according to the efficiency, equity and

environmental criteria, it is still possible to implement workable protections and supports that would

allow for a more sustainable and inclusive development regardless of the external policy influences. Thus,

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timely and carefully crafted policy interventions show that domestic supports and free trade are not

mutually exclusive.

5.2. Rural development programs and trade adjustment assistance

Rural development programs and trade adjustment assistance for example are used to address some of the

undesirable impacts of trade liberalization on rural economies. While the amount of protectionism

decreases, and the markets become globalized, a number of domestic prices for commodities decline,

resulting in economic pressure on farmers and the continuation of the process of rural manufacturing

decline. To enhance productivity and incomes, governments have established rural development programs

comprising of investments in physical and social capital, BXS and human capital. For example, EU’s

CAP that guides and funds rural development includes initiatives for building the necessary rural

broadband connections, supporting young farmers, and providing aid for farms to diversify into added-

value or tourism-related activities, likewise, the United States Department of Agriculture monitors rural

business development grants, especially to those areas affected by trade shocks to foster new business.

Trade adjustment assistance, on the other hand, takes it one step further by providing cash transfers

directly to affected trade workers and firms in forms of wage subsidies, relocation allowances and training

grants. These adjustment assistance policies are still unclear because they often prevent necessary change;

however, good policies with a focus on re-skilling can promote structural change. With the trade openness

process persisting through the agreements such as CPTPP, the authorities are to make choices concerning

the further increases in the support towards those in need or concerning the further encouragement of the

market signals for unavoidable shifts in the economy. New policy directions might include moving from

providing adjustment assistance on the basis of passive income maintenance to active job placement

programs for re-employment. A few other trade scholars have also advocated for liberalizing trade while

at the same time containing place-based policies for the struggling regions through the offering of the

specific investment and human capital investment. It is perhaps because of such considerations that these

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more innovative, conditional trade adjustment policies could help prepare the rural areas to better seize

the new export possibilities and the global economy.

5.3. Sustainable and climate-resilient agricultural practices

Governments and the relevant policymakers should encourage producers to engage in climate change

adaptive and more sustainable farming practices as a result of the ongoing process of liberalization of

trade. Adopting more sustainable farming practices such as conservation tillage, use of cover crops, and

crop-livestock integration offers the best way of reducing climate change effects and dependency on

expensive and costly inputs, silent solutions include funding for agricultural research and technology that

will enhance climate change adaptation among the smallholder farmers through seeds, water management

and decision-making programs that will focus on climate forecasts. There is therefore a potential for

structural reforms such as sustainable increase in production through contractual farming relationships

that may allow rural farmers to supply increasing market demands under trade policies when

implementing environmental best practices. Extension services, cost sharing in insurance and credit can

help the rural producers begin the transition to Agro-ecological production methods in the open trade

environment, this opens a discussion on the necessity to combine the liberalization of trades and related

reforms with environmental safeguards addressing the sustainable use of land, soil water, and

agrobiodiversity. There is a requirement for surveillance to Track ecological and social parameters of rural

agriculturally engaged livelihoods in relation to changing trade dynamics. At the national levels, complete

and strict frameworks for the agricultural sector climate adaptation policies can be brought in line with

international climate targets and trade obligations using Nationally Determined Contributions and

National Adaptation Plans which lay out the mitigation and adaptations strategies in details suitable for

rural areas. Climate change initiatives through the application of the Paris accord and other agreements

for global cooperation on climate issues can help in the promotion of sustainable development of the rural

communities in accordance to new trade rules that can accommodate measures of enhancement of

environmental protection and promotion of green economy. Policy research is thus necessary to avail

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policymakers with up-to-date information on how new trade and climate policy deals impact vulnerable

rural people, whose livelihoods rely on agriculture, so the right choices that will enhance both social and

ecological justice are achieved democratically and ethically involving farmers in decisions that affect

their future resilience. Through such comprehensive and strategic measures that allow sustainable and

climate-resilient farming practices in the rural regions, governments can ensure that globalization is used

in the attainment of the common benefits of people globally with regards to the support of ecological

conservation in light of climate change vulnerability.

5.4. Trade policies for smallholder farmer inclusion

Despite concerns about the economic agency of smallholder farmers, which the FAO defined as those

operating on less than 2 hectares of land, owning 95% of the world farms, there are important questions

on their vulnerability to market shocks. Trade policies that are informed by the impact on smallholder

producers have the potential of enhancing the resilience of such producers’ communities to unfavorable

economic conditions. Information is another important element where it is important to improve the

availability of timely and transparent market information on prices, supply and demand, quality and

consumer preferences as well export requirements. Governments can help in publishing the agricultural

trade information that includes print media, radio and SMS platform to ensure that farmers are in a

position to negotiate better prices and markets that will be able to pay good prices for their produce. Also,

policies that ease the process of trader registration also assist in enhancing the recognition of the markets

in agricultural trade, tracking of transactions alongside the prices and at the same time widening

possibilities of market access for the small farmers. Governments also require to be very active in

combating non-tariff measures through financing feeder roads, pack houses, refrigerated transport, power

through renewable sources and communication networks – this creates space for smallholders to venture

into produce value addition, thus enhancing their earnings as well as mitigating post-harvest losses of

perishable commodities. Other long-term trade policies include comprehensive standards compliance

training and financial assistance for audit costs to support farmer cooperatives in overcoming the process

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hurdles of exporting products certified as sustainably or fairly sourced to consumers with high standards

for food and drink imports. Finally, facilitative rules of origin policies, TRQs reserved for small

producers, and PBA that are deliberately provided to smallholders add new trade inclusion options within

a constraining global trade regime architecture. Although trade policies themselves may not be sufficient,

there are important possibilities for improving the lot of rural smallholders if these policies are fair and in

a positive direction.

5.5. Balancing trade objectives with rural welfare

When governments have set objectives to liberalize trade, attract foreign direct investment and integrate

into the global economy, then it is important that a balance must be struck between these objectives and

the welfare of the rural people. Removing barriers to trade in agricultural products may bring benefits

accrued through lower prices for consumers, while imposing a range of risks for farmers. Likewise,

ending policies that tie land use rights to tenancy may facilitate bigger production scales but potentially at

the cost of calling dibs on them from disadvantaged renters. Although, trade liberalization and

privatization policies have a positive effect on national income through efficiency gains, these effects may

have some negative effects on poor rural communities, this goes a long way in supporting the argument

that there is need for synchronizing policies that would enhance the participation of everyone in economic

development. For instance, import shocks makes trade adjustment assistance programs as income support

of farmers who shift from farming to other professions necessary. Education for skill enhancement

ensures that the rural people are well equipped to secure employment opportunities in the tradable sectors.

The physical means of transport and communication that link up residents in rural areas to commercial

centers in the cities also helps them to engage in and benefit from trade. Moreover, the expansion of rural

development schemes contributing to the social safety nets assists in preserving the welfare of the weak

during the change of the economic environment. However, the development of the competitiveness and

sustainability of agriculture for sustainable rural development is beyond simple short-term survival

strategies, this implies increased public investment in rural infrastructure and agricultural research and

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development, as well as increasing access to credit and crop insurance; coupled with putting in place

measures that can enhance value chain efficiency and food safety. The challenge is to get the policy mix

right – as trade reforms and rural development interventions are targeted correctly, the gains from

globalization can be made without either alienating the rural poor or creating unsustainable pressures on

the environment. What is required is not a marginal consideration of the welfare of rural communities but

a central measure as countries map out the trade policy interventions.

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