SOMETHING INTERESTING FROMTHE ICAC

 

ICAC REPORTS ON GOVERNMENT SUBSIDY MEASURES AFFECTING COTTONPRODUCTION, GINNING, & TRADE

A draft report prepared by the Secretariat of the InternationalCotton Advisory Committee (ICAC) for presentation at its NovemberPlenary Meeting in Australia surveyed the programs in 37 countries.The section of the report dealing with income support programsnotes that:

In 1986, 25 countries had production subsidies in the formof price or income programs. That year, an estimated 69% of worldproduction was subject to government subsidies. During the 1990s,income and price support programs were discontinued in severaldeveloping countries. Information gathered by the Secretariatsuggests that 53% of world cotton production benefited in 1998/99from direct income or price support programs. Of 76 cotton producingcountries in 1998/99, support programs directed at cotton productionwere in place in eight countries: Brazil, China, Egypt, Greece,Mexico, Spain, Turkey and the USA. The level of assistance providedby governments in these eight countries was US$5.4 billion in1998/99. Subsidies in 1998/99 ranged from an estimated US$15 millionprovided by Mexico to US$2.7 billion provided by China. Assistanceper pound of lint in 1998/99 ranged from 89 cents US cents inSpain to 3 US cents in Mexico. Production estimates and additionalinformation gathered by the Secretariat suggest that 52% of worldcotton production benefited in 1999/00 from direct income or pricesupport programs. The overall level of assistance is estimatedto have decreased to US$4.7 billion. In 1999/00, the governmentof Egypt discontinued its minimum price mechanism and only sevencountries have direct support programs in place.

 

Level of Assistance Provided to Governmentsto Cotton Sector

Through Production Programs*

Country

1998/99

1999/00

Production

Average

Assistance

Per Pound

Produced

Assistance to Production

Production

Average Assistance Per Pound

Produced

Assistance to Production

1,000 tons

US cents

US$ Millions

1,000 tons

US cents

US$ Millions

USA

3030

22.2

1480

3694

25.4

2065

China (Mainland)

4501

26.7

2648

3830

15.4

1534

Greece

390

76.7

660

428

67.6

638

Turkey

882

11.3

220

795

11.3

198

Spain

104

88.8

204

125

74.9

206

Brazil

521

5.3

60

622

1.8

25

Mexico

219

3.1

15

137

9.3

28

Egypt

230

13.1

66

229

0.0

0

             
All countries

9877

24.6

5353

9860

21.6

4695

*Income and price support programsonly. Credit and other assistance not included.

 

In its review of the government assistance provided exportsthe ICAC noted that:

As of October 1, 1999, the US government approved legislationmaking available about US$ 10 million for Pima cotton. The mechanismby which a payment rate is made compares the difference betweena five-day average spot U.S. Pima price with the lowest pricedcompetitor in Northern Europe adjusted for quality and transportation.

Level of Assistance Provided by Governmentsto

the Cotton Sector ThroughExport Programs

Country

1998/99

1999/00

Exports

Average Assistance per Pound Exported

Assistance to Exports

Exports

Average Assistance per Pound Exported

Assistance to Exports

1000 tons

US cents

US$ Millions

1,000 tons

US cents

US$ Millions

USA

936

5.6

116

1440

6.0

175

China (Mainland)

147

13.0

42

300

13.0

86

             
All countries

1083

6.6

158

1740

6.8

261

 

 

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