Context 1: THE GLOBAL CONTEXT

Extract A: World price indices for wheat and maize

Extract B: The global grain market

Individual wheat farmers are once again expanding their cultivation areas to take advantage of rising global prices. Increased demand for wheat and other grains on world markets has led to a dramatic change in the fortunes of these farmers, who are price takers.

Crop cultivation has become a highly integrated global trade. In 2024, with wheat selling internationally at historic highs, there were major investments in agricultural infrastructure across South America and Eastern Europe. Wheat is exported globally, particularly to feed growing populations and support livestock industries in rapidly developing nations.

However, intensive farming practices have triggered widespread concerns. In several regions, excessive use of nitrogen fertilisers to boost yields has led to runoff, causing eutrophication in local waterways and polluting groundwater. This represents a clear environmental market failure, as the full social costs of industrial agriculture are not reflected in market prices.

Some environmental groups suggest that agricultural policy should focus instead on regenerative farming and crop rotation to restore soil health. They advocate reducing reliance on chemical pesticides and promoting organic alternatives. Land use regulations and nitrogen quotas are being debated, but there are concerns about potential unintended consequences, such as food price inflation or illegal clearing of protected land. Some market experts predict that within a decade, sustainable agricultural certification will be mandatory for accessing premium global markets.