Cotton Symbolizes Global Trade System’s 'Iniquity'

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by
Inter Press Service

Cotton Symbolizes Global Trade System’s 'Iniquity'

by
Francis Kokutse

The international cotton trade has been a sad tale for West African countries. The region produces five percent of the world's cotton and 15 percent of the global cotton fibre trade. Yet West African cotton farmers are among the poorest in the world. (File photo)

ACCRA - The international cotton trade has been a sad tale for West African countries. The region produces five percent of the world's cotton and 15 percent of the global cotton fibre trade. Yet West African cotton farmers are among the poorest in the world.

Their purchasing power is only five percent that of farmers in Europe, the U.S. and Japan. Purchasing power refers to the value of goods (cotton) compared to the amount of money paid.

Non-governmental organisation Oxfam GB's trade spokesperson, Amy Barry, told IPS, ‘‘cotton has become a symbol of the unfairness of the global trading system.

‘‘In West Africa alone, 10 million people depend on cotton for their livelihoods. For these households, the subsidies the U.S. pays its farmers have a critical bearing on their ability to put food on the table, educate their children, and sustain their health.''

Unfortunately the World Trade Organisation (WTO), which is supposed to create a level playing field for global trade, finds it difficult to be of any help to these farmers because the industrialised countries do not want to play by the rules.

West African cotton farmers' uphill battle against subsided U.S. farmers has been an issue for many years. Last year Oxfam issued another report on the fate of the West African farmers.

Barry said, ‘‘it has been proven time and again that U.S. cotton subsidies do significant damage to farmers in developing countries, particularly West Africa. The refusal so far by the U.S. to adequately reform these cotton subsidies is a signal that they are not serious about the promise to reform trade rules to promote development.

‘‘The US must act in good faith and honour its promises to treat cotton as a priority issue.''

However, with the situation remaining the same, there are signs that cotton farmers in West Africa will be taking up other forms of farming.

Cotton production takes a very central place in the economies of some countries in West Africa. The depressed prices, caused by large quantities of subsidised cotton on the world market, affect the livelihoods of thousands.

It is against this background that the governments of Mali, Benin, Burkina Faso and Chad have fought in the WTO to find ways to end the subsidies that farmers in the industrialised countries receive from their governments.

According to Oxfam, these subsidies caused losses of 400 million dollars to these West African economies in the period 2001 to 2003 alone.

Therefore it urged the WTO to find ways to stabilise prices paid to producers. This is yet to be taken seriously. Unfortunately, with the breakdown in the Doha Round of the WTO talks in July this year, West African farmers will be badly hit.

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Barry pointed out that, ‘‘U.S. cotton producers will receive about one billion dollars annually in subsidies over the next five years under the new U.S. Farm Bill. The vast majority of these subsidies go to about 12,000 mostly large-scale cotton farms.

‘‘A quarter of all subsidies go to the top one percent of recipients, who get 500,000 dollars each on average. The Farm Bill recently passed by the U.S. Congress actually reinstated cotton subsidies already ruled illegal at the WTO.

‘‘The U.S. offer to cap its trade distorting agricultural subsidies at 14.4 billion dollars, made at the Doha talks in July, would not require the US to cut trade-distorting cotton subsidies by one cent. The U.S.'s failure to get serious on this issue is undermining their position in what were meant to be pro-development negotiations,'' Barry added.

Beninese journalist Gerard Migan told IPS cotton production plays a very important part in his country's economy. Therefore anything that distorts production would greatly harm both the nation and the farmers at large.

Migan said that since 2006 the government had to support farmers with the assistance of the World Bank so that they could maintain production. ‘‘That is why Benin has joined the ranks with others to battle against U.S. subsidies to its cotton farmers,'' he added.

Oxfam's suggestion for the establishment of a support fund was mean to create a mechanism to stabilise prices. This has been started in Burkina Faso where the government created the fund in 1992, which ensured that farmers received guaranteed prices even if prices fell lower than expected.

According to Oxfam, ‘‘the producers became active in the management of the fund in 1999. The fund also ensured that cotton companies were reimbursed the difference between the actual sale price and the reference price for the tonnage sold, when actual prices fell below this reference price.''

According to Oxfam, this success story has been destroyed because of unchecked U.S. subsidies and the downward trend of commodity prices.

 

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