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The reference to cash crops originated in American vernacular sometime between 1865 to 1870 as a term that defined small acreage farmers who raised crops for immediate sale on the commodities market. These crops were often wheat and cotton, which were quickly sold as opposed to crops like corn that were largely grown to feed livestock. The concept of the cash crop has diversified over the years, however, and has come to have two other predominant meanings. It can refer to a practice in poor developing nations such as those of Central America that have been derogatorily referred to as “banana republics,” where agriculture is the main source of foreign trade and cash crops like bananas are grown to bring foreign capital into the local economies. Growing crops like marijuana and opium has also become a significant portion of international agriculture as well to fund activity like that of Mexico's criminal cartel organizations.
Before the advent of large-scale commercial agriculture, most farming activity involved growing native crops for subsistence purposes. This meant that the direct benefactors of the crop were the farm family and local community themselves, as well as the livestock that they raised. As of 2011, however, most industrial-sized agricultural concerns grow cash crops that are intended solely for sale on the world commodities market.
Choosing crops grown solely for profit is often done based both on the climate and how fast they can mature and produce the highest possible yields and income for the available land space. This means that, in tropical climates, cash crops are often fruit like oranges, or high-value processed commodities like coffee, cocoa, or cotton. In temperate regions such as the western US, they more typically involve soybeans and grains like wheat, whereas in southern US states tobacco predominates.
Efforts by the World Bank and International Monetary Fund (IMF) since the 1980s have been to promote the development of high-yield cash crops in developing nations. This is seen as key to the economic growth of such nations, though it upsets traditional subsistence farming practices. Local farmers are subsidized to grow crops for export such as flowers and coffee, and those foods grown for domestic consumption are not supported. The disadvantage to such an approach is that cash crops are best suited to large scale agriculture for effective profit levels, involving expensive farming equipment and chemical fertilizers and pesticides to maintain them in growing conditions that are not entirely natural. Farmers with small plots of land often cannot produce these crops in a manner that is competitive with their production in first-world economies.
Cash crops like marijuana in Mexico and opium in Afghanistan are seen as some of the largest income producing crops in the world. This is despite the fact that the hidden marijuana trade in Mexico has financed gang warfare responsible for the death of 40,000 Mexicans between 2006 to 2011. The opium trade in Afghanistan is also seen as supplying 90% of the world market for heroin made from the crop, despite a multi-national military effort to stamp out the tradition of cultivating poppy fields there, where 50 tons of opium were seized and destroyed in 2009 alone. The opium trade is known to generate an income for insurgent forces in Afghanistan of $100,000,000 to $400,000,000 US Dollars (USD) annually.
One example of a success story involving a developing nation that freed itself from the vicious cycle of growing cash crops to generate capital is that of Costa Rica. The three primary cash crops that Costa Rica produces — pineapples, bananas, and coffee — were outpaced by income from other sectors of the economy that began rapid development in the mid-1980s. These included tourism as well as the production of electronics and pharmaceuticals in partnership with US firms. Costa Rica was known as the “Coffee Republic” in the 1800s, and, as of 2011, faces a new conflict of protecting its rainforest environment for tourism while at the same time trying to discourage logging of old-growth forests which are being illegally cut down for a range of immediate cash crops.