{"metadata":{"id":"00a916f32a92c663089a0eefb0ef87ba","source":"gardian_index","url":"https://cgspace.cgiar.org/rest/bitstreams/095e6119-9afa-4bd6-bd15-6c857a1d80a4/retrieve"},"pageCount":9,"title":"","keywords":[],"chapters":[{"head":"I 1","index":1,"paragraphs":[{"index":1,"size":53,"text":"While the USA remains the world's largest cotton exporter, in 2012-13 Chinese cotton sector policies have come increasingly to overhang global cotton markets, with Chinese reserves accounting for 63% of global stocks. Chinese support policies, by making duty-paid cotton imports attractive to Chinese textile manufacturers, have supported the global cotton price in 2012-13."},{"index":2,"size":64,"text":"While the ACP accounts for only 5% of global cotton production, cotton remains of considerable social and economic importance in the main ACP cotton producers -Benin, Burkina Faso, Chad and Mali, known as the C4 group. Cotton production in West Africa is projected to show strong growth in marketing year 2012/13 (+41%), and these gains should continue in 2013-14, but at a slower rate."},{"index":3,"size":30,"text":"In Eastern and Southern Africa, a 21% decline in cotton production in 2012/13 is forecast, and this decline is due to continue into 2013/14, following reduced production across the region."},{"index":4,"size":95,"text":"While China now provides the highest overall level of cotton sector support, the EU continues to provide the highest level of support per tonne of production. The expansion of scope for the provision of coupled support, as part of the June 2013 political agreement on CAP reform, could see coupled payments in the cotton sector increased in the next 7 years. This does not bode well for early progress on cotton issues in the WTO, which remained stalled over 2012-13. The US, however, remains central to any substantive movement on cotton issues in the WTO."},{"index":5,"size":45,"text":"Given the influence of Chinese policies on the functioning of global cotton markets, drawing China more substantially into cotton reform discussions in the WTO can be seen potentially as an important priority for the ACP Group's efforts to move cotton issues forward in the WTO."}]},{"head":"Latest developments Developments in global cotton markets 2012-13","index":2,"paragraphs":[{"index":1,"size":19,"text":"In a continuation of the trend evident since 2010/11, global cotton production will again exceed consumption in 2012/13, ending"},{"index":2,"size":9,"text":"\"Cotton production has exceeded consumption for the last 3   "}]},{"head":"\"The cotton dossier in the WTO negotiations is at a standstill\"","index":3,"paragraphs":[{"index":1,"size":16,"text":"The stalemate over cotton is one aspect of the deadlocked negotiations over the wider Doha Round."},{"index":2,"size":11,"text":"Cotton sector subsidies in western countries are also under scrutiny, with"}]},{"head":"Outlook for cotton in 2022","index":4,"paragraphs":[{"index":1,"size":205,"text":"What will the cotton market look like in 10 years' time? In their 'Agricultural Outlook 2013-2022', the FAO and the OECD have for the first time included projections for cotton. While China and the United States are expected to maintain their status as leading consumer and producer respectively, the decade is likely to see significant changes. Consumption is projected to increase at an annual rate of 1.7%, below the longterm average, with a rate of 7% expected in India. It is not expected to reach the 2004 record of 26.7 million tonnes until 2022. Production is forecast to grow more slowly than demand, with a significant fall in China and growth in India and Pakistan. Trade is expected to fall. However the LDCs of sub-Saharan Africa are projected to increase their share of the global export market, overtaking India to become the world's second largest exporter behind the United States. Meanwhile China's share of the global import market will fall by half, with countries like Bangladesh and Vietnam taking up the slack. Finally, prices are projected to increase by 47% relative to the period 2000/09, reaching an average of some US$1395/t. However, they will not be as attractive as those offered by wheat and maize."},{"index":2,"size":23,"text":"discussions currently in progress over CAP reform and the new US Farm Bill (see section 'Developments in the European cotton sector, 2012-13' below)."},{"index":3,"size":144,"text":"In the United States, the two houses of Congress failed to agree a new Farm Bill for 2013/18. In response, the 2008/12 Farm Bill, with a budget in excess of US$288 billion, was extended until 30 September 2013, the deadline for the approval of its successor. Some elements of the new Farm Bill appear to be settled: the budget, at around US$939 billion over 10 years, substantial cuts to subsidies and an increase in crop insurance. However, as of early July, the Senate and the House were still divided, especially over the issue of food stamps. The Republicans in the House of Representatives suggested splitting the Farm Bill as a way forward, and on 11 July the House passed the Bill, shorn of its food stamp clauses. Will this be sufficient to gain a yes vote in the Senate and ultimately White House approval?"},{"index":4,"size":150,"text":"As far as cotton is concerned, the reform marks a change from direct payments to crop insurance programmes. Crop insurance will be complemented by the Stacked Income Protection Plan for Producers of Upland Cotton (STAX), proposed by the National Cotton Council (NCC) to cover smaller losses, and uncontested on 11 July. The NCC argues that STAX will benefit cotton growers while also providing a basis \"for a definitive resolution of the dispute with Brazil and the WTO\". In an interim agreement until the new Farm Bill comes into force, the US is making annual compensation payments of US$147.3 million to Brazil, which is still contemplating retaliatory measures if the new bill fails to meet its expectations. Studies conducted by the International Centre for Trade and Sustainable Development (ICTSD) show that in certain circumstances a crop insurance system combined with STAX could increase American spending on cotton when prices are low."},{"index":5,"size":50,"text":"While the steady increase in Chinese support for the domestic cotton sector has worked to keep the market stable and prices relatively high, especially during 2012/13, the past decade has also seen a negative correlation between levels of subsidy and the Cotlook A Index, particularly for the US and Europe."},{"index":6,"size":18,"text":"\"By including cotton in its duty-free, quota-free access for LDCs, China could increase the competitiveness of African cotton\""},{"index":7,"size":63,"text":"However, an ICAC/ICTSD Information Note suggests that by including cotton in its duty-free, quota-free access to markets programme for LDCs, China could increase the competitiveness of African cotton relative to other regions by making it duty free. Apart from the annual quota of 894,000 tonnes set as part of its WTO obligations, China's duties on imported cotton currently range from 5 to 40%."},{"index":8,"size":196,"text":"Despite the continuing stalemate at the WTO over the cotton issue, there has been an increase in the amount of aid received by African countries. A Cotton and Cashew Industry Management Council has been set up to reform the sector. Following the model adopted for the cocoa sector in Janu-ary 2012, it will focus its attention on growers. It aims to offer them higher returns on the sale of their crop and growers will thus receive 60% of the international price. The project will be accompanied by a special development fund designed to increase production to 600,000 tonnes in 2016, and a buffer fund, on the Burkina Faso model, is also envisaged. In Central Africa, Chad enjoyed marked growth in cotton production, driven by its cotton sector improvement programme for 2012-2016. Chad's cotton processing company, CotonTchad, took a number of measures at the beginning of 2012/13, collecting and paying for the previous year's seed cotton, ordering inputs, etc., and the result was a 50% increase in production to 120,000 tonnes. In Cameroon, production was affected by floods in 2012/13. However, it still grew by 19% to 220,000 tonnes and Sodecoton's target for 2013/14 is 260,000 tonnes."},{"index":9,"size":44,"text":"The company conducted its first trials of GM cotton in 2012 and a joint trade association for cotton is being planned. The association is in theory to start work in 2013, bringing together Sodecoton and the National Confederation of Cotton Producers of Cameroon (CNPCC)."}]},{"head":"East Africa and Southern Africa","index":5,"paragraphs":[{"index":1,"size":69,"text":"In contrast to West Africa and Central Africa, cotton production in East Africa and Southern Africa fell sharply in 2012/13, with no sign of an upturn for 2013/14. Between 2011/12 and 2012/13, production dropped by 22% and the planted area by 17% -the consequence of a 2011/12 season marked in several countries by tensions between growers and millers, as well as falling prices that turned growers away from cotton."},{"index":2,"size":114,"text":"In Tanzania, the system of contract farming central to its cotton sector reform seems mired in disputes. Problems were already apparent in 2012 (see Agritrade article 'Contract farming strengthens functioning of Tanzanian cotton supply chain', 4 June 2012), but during 2013 these became political. The Tanzania Cotton Association (TCA) accused some politicians and cotton buyers of conducting an anti-contract farming campaign that, by encouraging farmers not to sell their cotton below a certain price, has contributed to a potential 40% drop in this year's cotton harvest. With lower yields and a 26% reduction in the planted area from 2012, production is unlikely to exceed 240,000 tonnes in 2013, down from 354,000 tonnes in 2012."},{"index":3,"size":69,"text":"Unfavourable weather and a move to alternative crops, soybeans in particular, mean that Zambia is also expecting a fall in production -by some 30% to approx. 175,000 tonnes (275,000 tonnes in 2011/12) -as well a 27% reduction in the planted area. However, in 2012/13, the government for the first time included cotton in its Farmer Input Support Programme (FISP), a scheme which has already helped to increase maize production."}]},{"head":"\"There has been a fall in production in Eastern and Southern Africa\"","index":6,"paragraphs":[{"index":1,"size":16,"text":"The same trend is evident in Zimbabwe, with a fall of 25% to approx. 260,000 tonnes."},{"index":2,"size":43,"text":"Mozambique has experienced a sharper reduction, with a fall of approx. 46% to 110,000 tonnes, down from the 184,000 tonnes achieved in 2011/12, a year when annual production almost tripled, according to the Cotton Institute. However, the industry is continuing to attract investment. "}]},{"head":"ACP countries must keep up with Chinese policy developments","index":7,"paragraphs":[{"index":1,"size":27,"text":"Any change in China's current policy of supporting domestic cotton producers and building up its national reserve stocks could have a damaging effect on the ACP countries."}]},{"head":"\"Any change in Chinese policy will have an impact on the markets\"","index":8,"paragraphs":[{"index":1,"size":53,"text":"Chinese policy has undeniably worked to support international prices at an artificially high level and any rethink could provoke price falls. The first signs of such a change are now appearing, with the experimental payment in April of targeted subsidies direct to cotton growers in Xinjiang in an effort to halt falling production."},{"index":2,"size":89,"text":"This would have an immediate impact on the ACP countries, which are unprotected and export the majority of their production as raw cotton. However, China has maintained its policy of buying domestic cotton at a price of 20,400 yuan/tonne (€2,504/t), and although farm-gate prices in franc-zone Africa have fallen slightly, they are still relatively high. Chinese production, and global production in general, is projected to fall in 2013/14. With consumption rising, supply and demand are expected to be in equilibrium. However, stocks remain high and will grow further still."}]},{"head":"ACP countries must secure preferential thirdcountry access for their textiles","index":9,"paragraphs":[{"index":1,"size":27,"text":"Renewal of the third-country fabric provisions of the Africa Growth and Opportunity Act (AGOA), which expired on 30 September 2012, was only secured after a fierce struggle."}]},{"head":"\"AGOA's third-country fabric provisions are vital to Africa's textile industry\"","index":10,"paragraphs":[{"index":1,"size":115,"text":"The Act was eventually passed in August 2012 for a period of 3 years, although only after an intense lobbying campaign and more than a year of delays. The AGOA will remain in force until 2015, but any renegotiation of its terms would badly affect the African textile industry, especially in Kenya, Malawi, Lesotho and Tanzania. LDCs which benefit from the AGOA can buy thread and fabric on the global market and export finished garments manufactured from these raw materials to the American market duty free: 86% of African garment exports to the United States depend on these provisions, and the problematic renewal process has already had a negative impact on the Africa-US garment trade."},{"index":2,"size":53,"text":"The struggle will begin again when negotiations resume over the renewal of the AGOA and its third-country fabric provisions in 2015. President Obama confirmed his support for the AGOA when he visited Africa in June 2013 and indicated that he is interested in finding ways of ensuring that it is renewed and improved."}]},{"head":"Tackling the problem of sustainability criteria","index":11,"paragraphs":[{"index":1,"size":87,"text":"Organic cotton first took off in the 1990s. However, the mid 2000s brought new initiatives, such as Fairtrade International (FLO), Cotton Made in Africa (CMIA) and Better Cotton Initiative (BCI), which seemed to resonate with consumers and the big textile manufacturers, although certified cotton still represents only a fraction of the market (2.2% of global production in 2011/12). These certification initiatives vary by approach and geographical area, but all of them aim to make cotton more sustainable and socially responsible, and to increase the return to growers."},{"index":2,"size":77,"text":"The past 2 years have seen a fall in the global production of organic cotton, although India still dominates, with 75% of the market. Several countries are expressing their reservations about organic cotton, particularly Tanzania, the leading African producer (c.75% of Africa's organic crop), which experienced a fall in production (including conventional cotton) in 2012/13. Organic yields are smaller, and the price premium when paid (and this is not always the case) is not enough to compensate."}]},{"head":"\"Organic cotton is in turmoil\"","index":12,"paragraphs":[{"index":1,"size":127,"text":"Some growers are also finding it difficult to secure a market for their cotton. African countries, unlike India and Turkey, do not benefit from an integrated textile industry. They are price takers for organic cotton and conventional cotton alike. Without medium-term contracts to guarantee sales, growers will not stay in the market. Only Fairtrade cotton offers a minimum price and a price premium to the grower, but the brand seems to be marking time, since most of its cotton is also organic. Both certifications impose costs not applicable to the alternative CMIA and BCI marks, which consequently enjoyed considerable growth in 2010/11 and 2011/12. However, none of these initiatives guarantee a market to the producer. All imply additional costs, and they remain subject to supply and demand."},{"index":2,"size":72,"text":"Compliance with these sustainability criteria can offer African producers price premiums and attractive opportunities, but it seems these are by no means guaranteed. Any ACP producer wishing to go down this route must ensure that the price premiums offered for organic cotton provide effective compensation for lower yields and the costs of certification. The development of textile industries in cotton growing countries would also leave growers less vulnerable to external market trends."}]}],"figures":[{"text":"3 .Figure 1 : Figure 1: Cotton price trends on the New York futures market, 2009-13 (US $/lb) "},{"text":"Table 1 : Cotton fibre production trends in sub-Saharan Africa ('000 tonnes) 2011/12 2012/13* 2013/14* 2011/122012/13*2013/14* Francophone Africa 717 1011 912 Francophone Africa7171011912 -Benin 75 158 151 -Benin75158151 -Burkina Faso 174 260 92 -Burkina Faso17426092 -Cameroon 78 100 151 -Cameroon78100151 -Côte d'Ivoire 113 140 133 -Côte d'Ivoire113140133 -Mali 187 229 211 -Mali187229211 Anglophone Africa 633 503 461 Anglophone Africa633503461 -Mozambique 61 37 27 -Mozambique613727 -Nigeria 63 57 56 -Nigeria635756 -Tanzania 120 97 80 -Tanzania1209780 -Zambia 110 74 65 -Zambia1107465 -Zimbabwe 142 119 107 -Zimbabwe142119107 Note: *estimate    Note: *estimate Source: International Cotton Advisory Committee (ICAC), March 2013  Source: International Cotton Advisory Committee (ICAC), March 2013 Benin experienced considerable (Benin, Burkina Faso, Côte d'Ivoire, Benin experienced considerable(Benin, Burkina Faso, Côte d'Ivoire, uncertainty in 2012/13, with the gov- Mali, Senegal and Togo) as a whole, uncertainty in 2012/13, with the gov-Mali, Senegal and Togo) as a whole, ernment eventually resuming control production figures of approximately 1.8 ernment eventually resuming controlproduction figures of approximately 1.8 of the industry and sidelining Patrice million tonnes in 2012/13 are forecast of the industry and sidelining Patricemillion tonnes in 2012/13 are forecast Talon, a key figure in cotton, involved to grow by +20% to 2.1 million tonnes Talon, a key figure in cotton, involvedto grow by +20% to 2.1 million tonnes at every stage of the supply chain and in 2013/14.  at every stage of the supply chain andin 2013/14. particularly in the import of inputs. The    particularly in the import of inputs. The government was unable to turn things    government was unable to turn things round at such short notice and pro-    round at such short notice and pro- duction was limited to 250,000 tonnes    duction was limited to 250,000 tonnes instead of the anticipated 600,000    instead of the anticipated 600,000 tonnes. However, this still represented    tonnes. However, this still represented an increase over the 2011/12 figure of    an increase over the 2011/12 figure of 175,000 tonnes. Togo, too, was unable    175,000 tonnes. Togo, too, was unable to reach its target of 100,000 tonnes,    to reach its target of 100,000 tonnes, production remaining steady at 80,000    production remaining steady at 80,000 tonnes. In Mali, the CMDT consolidated    tonnes. In Mali, the CMDT consolidated its gains despite the conflict, with pro-    its gains despite the conflict, with pro- duction of 453,000 tonnes, almost    duction of 453,000 tonnes, almost identical to the previous year. The    identical to the previous year. The target for 2013/14 is 522,000 tonnes.    target for 2013/14 is 522,000 tonnes. For the six countries of West Africa    For the six countries of West Africa  "}],"sieverID":"633873f2-bf8c-4d86-a47d-39579a588d7e","abstract":""}