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Cotton : Market setting, trade policies, and issues

  • Baffes, John

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.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3218.

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Date of creation: 01 Feb 2004
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Handle: RePEc:wbk:wbrwps:3218
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  1. Bruce A. Babcock & John C. Beghin & Jacinto F. Fabiosa & Stephane De Cara & Amani Elobeid & Cheng Fang & Chad E. Hart & Murat Isik & Holger Matthey & Alexander E. Saak & Karen Kovarik & FAPRI Staff, 2002. "Doha Round of the World Trade Organization: Appraising Further Liberalization of Agricultural Markets, The," Food and Agricultural Policy Research Institute (FAPRI) Publications 02-wp317, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  2. Louis M. Goreux & Paul R. Masson & Dhaneshwar Ghura & Ousmane Badiane, 2002. "Cotton Sector Strategies in West and Central Africa," IMF Working Papers 02/173, International Monetary Fund.
  3. Stephen Tokarick, 2003. "Measuring the Impact of Distortions in Agricultural Trade in Partial and General Equilibrium," IMF Working Papers 03/110, International Monetary Fund.
  4. Fang, Cheng & Beghin, John C., 2003. "Protection and Comparative Advantage of Chinese Agriculture: Implications for Regional and National Specialization," Staff General Research Papers 10102, Iowa State University, Department of Economics.
  5. Minot, Nicholas & Daniels, Lisa, 2002. "Impact of global cotton markets on rural poverty in Benin," MSSD discussion papers 48, International Food Policy Research Institute (IFPRI).
  6. Giannis Karagiannis & Christos Pantzios, . "To comply or Not to Comply with Policy Regulations: The Case of Greek Cotton Growers," Working Papers 9817, University of Crete, Department of Economics.
  7. Carl Pray & Danmeng Ma & Jikun Huang & Fangbin Qiao, 2001. "Impact of Bt Cotton in China," CEMA Working Papers 510, China Economics and Management Academy, Central University of Finance and Economics.
  8. repec:rus:hseeco:123040 is not listed on IDEAS
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