Cotton proposal ignores supply management

CANCUN, Mexico, September 13, 2003: minsterial reaction from IATP: The latest WTO draft declaration fails to address the plight of West African cotton producers and highlights the need for international agreements on commodity production and prices. While the current rhetoric is focused on export subsidies, West African farmers are demanding a much more fundamental change in the supply management of cotton that is driving down world prices for cotton producers everywhere, says the U.S. based Institute for Agriculture and Trade Policy.

Rather than truly addressing the problem of low prices for this commodity, the United States government is pushing for further consultations within other areas of the WTO negotiating agenda that deflect the problem to value-added sectors of cotton.

The US market prices for cotton determine world market prices. Since the signing of the WTO agreements, dumping of U.S. cotton has doubled with recent exports at roughly half the cost of production. These low prices are created by huge cotton surpluses on the market. A recent study by the Agriculture Policy Analysis Center for the University of Tennessee finds that the primary solution to these low prices is the introduction of supply management programs in the US to prevent oversupply in the world market.

This study also concludes that the elimination of U.S. government payments would have little effect on the overall supply and would only result in the increase of cotton prices by roughly 10 percent. With cotton prices currently at half the cost of production, this would mean that cotton producers in West Africa will continue to lose money with or without U.S. payments. Only a global supply management approach would bring prices up to levels high enough to cover the cost of production for small farmers in the developing world.

West African Network of Farmers Organizations (ROPPA) are calling for supply management and a minimum guaranteed price for their producers. "After so many comments and declarations of sympathy with our cause from the WTO secretariat and many ministers, the mountain gave birth to an ant!" commented Francois Traoré, head of the National Union of Cotton Producers of Burkina Faso, in a press release. "The rhetoric was not matched with facts."

“The only way forward on the commodity crisis” according to Mark Ritchie, President of the Institute for Agriculture and Trade Policy, “is to adopt global agreements to bring supply in line with demand in order to insure fair prices to family farmers everywhere.”

The Institute for Agriculture and Trade Policy promotes resilient family farms, rural communities and ecosystems around the world through research and education, science and technology, and advocacy.