2004年-世界发展银行全球_Cotton___Market_Setting_Trade____________Policies_and_Issues_88页_671kb

Summary of the Document: "Cotton - Market Setting, Trade Policies, and Issues"

Core Content

This document provides an in-depth analysis of the global cotton market, focusing on market structure, trade policies, and policy reforms. It highlights the economic importance of cotton, particularly for developing countries, and examines the impact of government interventions and trade arrangements on the sector. The paper also presents policy recommendations aimed at improving the sustainability and competitiveness of cotton production and trade.

Main Points

Global Cotton Market Overview

• World cotton production in 2000/01 was estimated at $20 billion, down from $35 billion in 1996/97 due to falling prices.
• Cotton contributes significantly to the economies of several developing countries, accounting for up to 40% of total merchandise export earnings in Benin and Burkina Faso, and 30% in Chad, Mali, and Uzbekistan.
• Cotton contributes between 5-10% to GDP in many developing countries.
• It supports the livelihoods of millions of people, especially in West and Central Africa.
• Global production has doubled since 1960, with China and the U.S. being the largest producers, followed by India, Pakistan, and Uzbekistan.
• Over one-third of global cotton production is traded internationally, with the U.S., Uzbekistan, Francophone Africa, and Australia being the main exporters.

Price Trends and Variability

• Real cotton prices have declined significantly over the last 50 years, currently at about one-fifth of their 1950 levels.
• Prices were relatively stable during the 1950s and 1960s but became more volatile after 1973, especially post-1985.
• Chemical fibers, particularly polyester, now account for nearly 60% of global fiber consumption, up from 33% in 1960.
• Polyester prices have declined over time and are now similar to cotton prices, though they have shown a slight upward trend.

Non-Conventional Cotton Production

• Genetically Modified (GM) cotton accounts for nearly 30% of global production in 2002, with the U.S. leading in adoption.
• Organic cotton has limited market presence and faces challenges due to weak demand and higher production costs.

The Secondhand Clothing Market

• This market has grown and has displaced potential demand for new garments, especially in developing countries.
• It is expected to continue affecting the demand for cotton in these regions.

Policy Setting and Distortions

Support and Subsidies

• Annual direct support to cotton producers in major countries averaged $4.5 billion in recent years.
• U.S. support includes loan deficiency payments, marketing loans, production flexibility contracts, counter-cyclical payments, insurance, and export subsidies.
• EU support is based on guarantee prices, with producer prices in Greece and Spain being 144% and 184% higher than world prices in 2001/02.
• China reportedly provided $1.3 billion in annual support, though it is difficult to quantify due to complex policies.
• Uzbekistan continues to impose high taxes on its cotton sector.

Preferential Arrangements

• The Agreement on Textiles and Clothing (ATC) and the Africa Growth and Opportunity Act (AGOA) have indirectly affected the cotton market.
• The ATC, which is being phased out by 2004, has imposed an implicit tax on cotton goods by influencing the location of textile industries.
• AGOA allows duty-free access for apparel imports from 14 African countries, potentially increasing domestic cotton consumption.

Impact of Distortions and Reforms

• Low cotton prices due to subsidies have negatively impacted rural incomes in cotton-dependent countries.
• A 40% reduction in farmgate prices in Benin would lead to a 7% drop in rural per capita income in the short run and a 5-6% drop in the long run.
• Reforms in several African countries (e.g., Tanzania, Uganda, Zambia, Zimbabwe) have improved supply responses, export prices, and timely payments to growers.
• Removal of support could lead to a price increase of 12.7% over the next 10 years and boost global cotton trade by 5.8%, with Africa's exports increasing by 12.6%.
• However, complete elimination of support is unlikely, especially in the EU and U.S., where support is seen as a poverty reduction mechanism.

Policy Options and Recommendations

• Reducing support in developed countries is crucial to improving price competitiveness and export shares for low-cost producers.
• Decoupled support mechanisms (e.g., payments based on historical production levels) are considered a less distortionary alternative to direct support.
• Reforms in developing countries are needed to improve efficiency, reduce distortions, and enhance competitiveness.
• The World Trade Organization (WTO) is a key platform for advocating reform and seeking financial compensation for affected countries.

Key Issues and Outlook

• Cotton consumption is expected to grow at a similar rate to population growth, while chemical fiber consumption grows faster.
• Chemical fibers are likely to maintain pressure on cotton demand due to continued technological improvements.
• The secondhand clothing market is expected to further reduce the demand for new cotton garments in developing countries.
• Market liberalization and reform are necessary for long-term sustainability of the cotton sector, but their implementation is complex and depends on political and economic factors.

Conclusion

The cotton market is shaped by a combination of production trends, trade dynamics, and policy interventions. While cotton remains vital for many developing economies, its competitiveness is undermined by support from major producers. Reform is essential to restore market balance and ensure the sector's long-term viability.