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Friday, Jul 12, 2002

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World cotton producers split on subsidy issue

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Cotton subsidies provided by 14 countries were blamed for the global cotton crisis.

MUMBAI, July 11

LOW cotton prices have divided the world cotton industry and trade. Developed and developing countries producing cotton are holding diametrically opposite views on the effect of the governments' measures including subsidies.

Delegates to the cotton conference, jointly organised by World Bank and the International Cotton Advisory Committee (ICAC), reported that the decline in cotton prices, partially caused by states' measures that encourage over-production, were causing severe injury to their economies. Cotton subsidies provided by the Governments of 14 countries were blamed for the global cotton crisis.

Delegates from countries that provide Government support emphasised that cotton consumption was expanding due to the efforts of national programmes to promote cotton, and that more countries should be encouraged to adopt such programmes.

It was also noted that Government measures do not necessarily lead to an increased share of world cotton production. Delegates from developing countries nevertheless questioned the fairness of support programmes.

The world cotton industry is undergoing through one of the most painful periods for producers since the invention of the cotton gin 200 years ago. Average international prices this season will be the lowest since 1972-73.

When adjusted for inflation, the average cotton price this season, is the lowest in history. The ICAC Secretariat estimates that average international prices would be 70 per cent higher this season in the absence of Government measures.

The direct loss to the economies of producing countries this season caused by Government measures is approximately $14.5 billion. The accumulated direct loss over the last four seasons, when prices fell below their long-term average, is $35 billion.

The inaugural session speakers included Mr S.B. Mohapatra, Secretary, Ministry of Textiles, apart from representatives of World Bank, UNCTAD, FAO, WTO etc. Indian delegates included Mr Suresh Kotak, President of East India Cotton Association and Indian Merchants' Chamber, and Mr Vishwa Nath, Chairman-cum-Managing Director of Cotton Corporation of India Ltd.

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