Cotton subsidies on the rise in 2012-13

Cotton subsidies on the rise in 2012-13

The level of subsidies for cotton increased dramatically in the season 2012-13

The assistance in US cents/lb has increased from 8 to 13 cents on average for income and price support and total subsidies for production worldwide increased from USD 4749 to USD 7268 million. China granted in 2011-12 USD 3053 million and in 2012-13 USD 5869 million in direct assistance. In America the respective figures were USD 819 for 2011-12 And USD 562 million for 2012-13, Turkey spent USD 428 million in the previous season and USD 317 in 2012-13, Greece USD 183 million and now USD 258 million. All of these figures are preliminary estimates.

The share of world cotton production entitled to direct government assistance increased from an average of 55 % between 1997-98 and 2007-08 to an estimated 84 % in 2008-09, during 2009-10 and 2012-13 it averaged only 48 %.

As we are all aware, India has a system of MSP Minimum Support Price, since market prices were above these levels during two seasons, there were no government purchases and no payments to producers. 2012-13 the MSP for medium staple cotton increased 29 % to INR 3600 (INR 2800) per 100 kg of seed cotton or an equivalent of 88 US cents per pound of lint at the season average exchange rate. The average domestic price for the same variety was 79 US cents and reached 88 US cents/lb during April 2013. The government owned Cotton Corporation of India purchased 425000 t (estimated value around USD 910 million, with additional costs of warehousing and handling of cotton to build a strategic reserve, worth around USD one billion. These stocks might be auctioned to mills when prices climb above purchase costs. Indian cotton growers benefit also from debt forgiveness and fertiliser subsidies. The Indian government provides support to cotton production, such as the development of infrastructure facilities for production and distribution of quality seeds. There is also a Technology Mission for the modernisation of ginning and pressing units, as well as for improving cotton marketing during the past several years. In addition, the government supports the textile sector with a number of programs providing direct support and soft loans. Actually there is a great competition on way in India regarding prices for seed and its different qualities.

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