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Friday, February 23, 2024

Cotton subsidies of rich countries making farmers from others poorer

Cotton farmers in rich countries continue to be paid subsidies, making poor cotton farmers in Africa and developing countries poorer as they are not able to earn as much as their counterparts in rich countries.

This is because the World Trade Organisation (WTO) has not been able to address a decision at a Hong Kong Ministerial Meeting in 2005 to reduce the cotton subsidies expeditiously. The 12th Ministerial Conference could also not deliver on the decision reached in 2005 and with the 13th one scheduled for 2024, there is still no consensus on stopping the cotton subsidies. Countries that provide subsidies to their cotton farmers are able to export cotton at a lower rate, making the cotton export of those cotton farmers not receiving subsidies uncompetitive.

The cotton subsidy issue was raised in a report titled ‘Cultivating Poverty’ by Oxfam. The report found that subsidies received by cotton farmers in the US led to depressed global prices and destroyed the livelihood of African cotton farmers. “The massive subsidies given to farmers from rich countries create an artificial competitive advantage for farmers of the developing and least developed countries (LDC),” media reports stated.

In Africa, cotton is mainly grown in Chad, Mali, Benin, and Burkina Faso, and to some extent in Côte d’Ivoire. Cotton farmers in Africa and other developing countries were massively affected by the US subsidies.

Although the US is not the biggest producer of cotton, it still is the largest exporter accounting for a global market share of 28 percent, while exporting 90 percent of its cotton output. The average size of a single US cotton farm is 624 hectares compared to 1-3 hectares in China, African countries, and India.

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