Subsidies to the cotton sector took a major jump in the 2017-18 season including direct support to production, border protection, crop insurance subsidies, and minimum support price mechanisms. At $5.9 billion, it reflects an increase of 33% over the 2016/17 total of $4.4 billion.
Those are the findings in the 2018 ‘Production and Trade Subsidies Affecting the Cotton Industry’ report just released by the International Cotton Advisory Committee (ICAC). In all, 10 countries provided subsidies to their domestic cotton industries with an average value of 18 cents per pound, up from 17 cents per pound the year before.
One data point that has reversed long-term trends is the correlation between prices and the amounts of subsidies provided by governments. Since the Secretariat began tracking government support in cotton in 1997-98, trends have shown that subsidies decline when prices are high and increase when prices are low. When cotton prices increased from 70 cents per pound in 2015-16 to 83 cents per pound in 2016-17, subsidies decreased. When prices jumped again to 88 cents per pound in 2017-18, however, subsidies continued to increase.
The share of world cotton production receiving direct government assistance — including direct payments and border protection — increased from an average of 55% between 1997-98 and 2007-08, to an estimated 83% in 2008-09. From 2009-10 through 2013-14, this share declined and averaged 48%.
In 2014-15 and 2015-16, the average percentage of production receiving direct assistance increased to 75%. That number then declined to 47% in 2016-17 and 2017-18.