Worth Reading

The ICAC’s new, free report on production and trade subsidies in cotton shows:

  • Government support for domestic cotton industries is rising rapidly
  • Ten nations provided subsidies that averaged 18 cents per pound in 2017/18
  • The 2017/18 season breaks the long-term trend of subsidies decreasing when prices are strong
  • The report is available in English, French and Spanish

Government Support to Cotton Sector Up 33 % to USD 5.9 billion in 2017/18

Subsidies to the cotton sector — including direct support to production, border protection, crop insurance subsidies, and minimum support price mechanisms — took a major jump in the 2017/18 season. At USD 5.9 billion, it reflects an increase of 33 % over the 2016/17 total of USD 4.4 billion.

Those are the findings in the 2018 ‘Production and Trade Subsidies Affecting the Cotton Industry’ report just released by the International Cotton Advisory Committee (ICAC). In all, 10 countries provided subsidies to their domestic cotton industries with an average value of 18 cents per pound, up from 17 US cents per pound the year before.

One data point that has reversed long-term trends is the correlation between prices and the amounts of subsidies provided by governments. Since the Secretariat began tracking government support in cotton in 1997/98, trends have shown that subsidies decline when prices are high and increase when prices are low. When cotton prices increased from 70 cents per pound in 2015/16 to 83 cents per pound in 2016/17, subsidies decreased. When prices jumped again to 88 cents per pound in 2017/18, however, subsidies continued to increase.

The share of world cotton production receiving direct government assistance — including direct payments and border protection — increased from an average of 55 % between 1997/98 and 2007/08, to an estimated 83% in 2008/09. From 2009/10 through 2013/14, this share declined and averaged 48%.

In 2014/15 and 2015/16, the average percentage of production receiving direct assistance increased to 75%. That number then declined to 47% in 2016/17 and 2017/18.

To view the 2018 ‘Production and Trade Subsidies Affecting the Cotton Industry’ report, please click on one of the languages below:

English

French

Spanish

Formed in 1939, the ICAC is an association of cotton producing, consuming and trading countries. It acts as a catalyst for change by helping member countries maintain a healthy world cotton economy; provides transparency to the world cotton market by serving as a clearinghouse for technical information on cotton production; and serves as a forum for discussing cotton issues of international significance. The ICAC does not have a role in setting market prices or in intervening in market mechanisms.

www.icac.org