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Agriculture is the world’s largest industry, employing more than one billion people. Globally, one third of the economically active population works in the agriculture sector. Agriculture involves the cultivation of plants and rearing of animals and birds for food, fabrics, fibers, bio-fuel, medicinal and other products used to sustain and enhance human life. It also includes horticulture and aquaculture. Agricultural industry activities range from preparing the soil for optimum returns, harvesting and improving crops, livestock feeding, dairying, services relating to horticulture, landscaping services, veterinary services, managing labors or farmers etc.
The total value of the agriculture sector globally in 2015 was $3,843 billion. Related to a world population of more than 7.3 billion in 2015 this equates to about $526 per person per annum. Given that World Domestic Product was approximately$73.5 trillion in 2015, the market makes up about 5.2%of the global economy.
Emerging market governments are supporting their domestic machinery manufacturing industries to meet their domestic demand for capital equipment. This form of import substitution is a potential threat to the existing industry in countries such as Germany that have relied on the reputation of their home production for export sales. Agriculture commodity price dynamics are broadly based on supply and demand. In the recent past, demand has surpassed supply to the extent that agriculture commodity prices are at a historic high. Recent innovations in seeds, chemicals and fertilizers helped producers to meet only a portion of the demand. The oil price is also a driving factor of commodity prices. This is because oil is a key ingredient in many fertilizers, required to run modern agricultural machinery and is used in transporting of goods. Other factors which contribute to supply and demand imbalances include poor harvests because of bad weather conditions, restrictive trade policies, varying cultures and outdated technologies.
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