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Cotton : Market setting, trade policies, and issues

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  • Baffes, John

Abstract

The value of world cotton production in 2000-01 has been estimated at about $20 billion, down from $35 billion in 1996-97 when cotton prices were 50 percent higher. Although cotton's share in world merchandise trade is insignificant (about 0.12 percent), it is very important to a number of developing countries. Cotton accounts for approximately 40 percent of total merchandise export earnings in Benin and Burkina Faso, and 30 percent in Chad, Mali, and Uzbekistan. Its contribution to GDP in these and other developing countries is substantial, ranging between 5 and 10 percent. Cotton supports the livelihoods of millions in developing countries (at least 10 million in West and Central Africa) where it is a typical, and often dominant, smallholder cash crop. The cotton market also has been subject to considerable market intervention-subsidization in the European Union and the United States, and taxation in Africa and Central Asia. During the past three seasons, annual direct support averaged $4.5 billion. The author reviews the market setting and policy issues and gives recommendations on how industrial and developing cotton-producing countries can improve the policy environment.

Suggested Citation

  • Baffes, John, 2004. "Cotton : Market setting, trade policies, and issues," Policy Research Working Paper Series 3218, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3218
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Delpeuch, Claire & Vandeplas, Anneleen, 2013. "Revisiting the “Cotton Problem”—A Comparative Analysis of Cotton Reforms in Sub-Saharan Africa," World Development, Elsevier, vol. 42(C), pages 209-221.
    2. Onumah, Gideon & Davis, Junior & Kleih, Ulrich & Proctor, Felicity, 2007. "Empowering Smallholder Farmers in Markets: Changing agricultural marketing systems and innovative responses by producer organizations," MPRA Paper 25984, University Library of Munich, Germany.
    3. Jonathan Kaminski & Alban Thomas, 2011. "Land Use, Production Growth, and the Institutional Environment of Smallholders: Evidence from Burkinabè Cotton Farmers," Land Economics, University of Wisconsin Press, vol. 87(1), pages 160-182.
    4. Berk Özler & Giovanna Prennushi, 2006. "Toward Greater Global Equity," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 32, pages 3-15.
    5. Beghin, John & Diop, Ndiame & Matthey, Holger, 2006. "Groundnut trade liberalization: Could the South help the south?," World Development, Elsevier, vol. 34(6), pages 1016-1036, June.
    6. Pomfret, Richard, 2005. "Trade policies in Central Asia after EU enlargement and before Russian WTO accession: Regionalism and integration into the world economy," Economic Systems, Elsevier, vol. 29(1), pages 32-58, March.
    7. Shepherd, Ben & Delpeuch, Claire, 2007. "Subsidies and regulatory reform in West African cotton: What are the development stakes?," MPRA Paper 2289, University Library of Munich, Germany.
    8. Pan, Suwen & Welch, Mark & Mohanty, Samarendu & Fadiga, Mohamadou L. & Ethridge, Don E., 2005. "Assessing the Impacts of the Chinese TRQ System and U.S. Subsidies on the World Cotton Market," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 6(2).
    9. Yang, Pengju & Hu, Hongchang & Tian, Fuqiang & Zhang, Zhi & Dai, Chao, 2016. "Crop coefficient for cotton under plastic mulch and drip irrigation based on eddy covariance observation in an arid area of northwestern China," Agricultural Water Management, Elsevier, vol. 171(C), pages 21-30.
    10. Surabhi Mittal, 2007. "OECD Agricultural Trade Reforms Impact On India's Prces and Producer's Welfare," Working Papers id:1072, eSocialSciences.
    11. Kaminski, Jonathan & Thomas, Alban, 2009. "Commodity Reform and Extensive Production Growth: Evidence from Burkinabè Cotton Farmers," TSE Working Papers 09-008, Toulouse School of Economics (TSE).
    12. Kaminski, Jonathan, 2008. "Wealth, Living Standards and Perceptions in a Cotton Economy: Evidence from the Cotton Reform in Burkina Faso," Discussion Papers 45780, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    13. Ben Shepherd, 2005. "The Impact of US Subsidies on the World Cotton Market: A Reassessment," International Trade 0511012, EconWPA.
    14. Balat, Jorge F. & Porto, Guido G., 2005. "The WTO Doha Round, cotton sector dynamics, and poverty trends in Zambia," Policy Research Working Paper Series 3697, The World Bank.
    15. KAMINSKI Jonathan & THOMAS Alban, 2009. "Commodity Reform and Extensive Production Growth: Evidence from Burkinabè cotton farmers," LERNA Working Papers 09.01.277, LERNA, University of Toulouse.
    16. Kaminski, Jonathan, 2008. "Changing Incentives to Sow Cotton for African Farmers: Evidence from the Burkina Faso Reform," Discussion Papers 45779, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    17. Theriault, Veronique & Tschirley, David L., 2014. "How Institutions Mediate the Impact of Cash Cropping on Food Crop Intensification: An Application to Cotton in Sub-Saharan Africa," World Development, Elsevier, vol. 64(C), pages 298-310.
    18. Kenneth Reinert, 2007. "The European Union, the Doha Round, and Asia," Asia Europe Journal, Springer, vol. 5(3), pages 317-330, September.
    19. Stephen Tokarick, 2008. "Dispelling Some Misconceptions about Agricultural Trade Liberalization," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 199-216, Winter.
    20. Baffes, John & Gohou, Gaston, 2005. "The co-movement between cotton and polyester prices," Policy Research Working Paper Series 3534, The World Bank.
    21. Tonshia Luster & Andrew Barkley, 2011. "The Economic Determinants of the Number of Minority Farmers in the Southeast Region of the United States, 1969-1997," The Review of Black Political Economy, Springer;National Economic Association, vol. 38(1), pages 83-101, March.
    22. Surabhi Mittal, 2007. "Oecd Agricultural Trade Reforms Impact On India’s Prices And Producers Welfare," Trade Working Papers 22225, East Asian Bureau of Economic Research.

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