The impact of cotton subsidies

Cotton prices have been on a downward trend since the fifties. It has been estimated by Oxfam that they are now half of what they were in the nineties and at the this lowest level since the depression in the thirties. But why are cotton prices so low and what does this mean for producers?

It is thought that the price of cotton is kept artificially low by the subsidies paid to cotton farmers in at least eight countries including China, Brazil, US, Egypt, Greece, Mexico, Spain and Turkey. Between 1998 and 2002 this assistance is thought to have averaged 5.2 billion US dollars.

For African countries that do not receive subsidies towards cotton production, this means that the producers suffer a loss of income caused by an up to 20% decrease in the price of cotton. In West and Central Africa, the livelihood of more than 10  million is dependant on cotton production. Cotton is also a source of foreign exchange in some of the worlds poorest countries including in countries such as Burkina Faso, Mali and Benin. The withdrawal the substantial and very significant cotton subsidies in the US could have a huge impact on the livelihood of cotton producers in developing countries.

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