Organization and Performance of Cotton Sectors in Africa ... - infoDev

ecame a contentious issue during the current trade round under the auspicesof the Doha Development Agenda. The cotton subsidy issue was further highlightedfollowing the move by four WCA cotton producing countries (Benin,Burkina Faso, Chad, and Mali) to demand compensation for the lower pricesreceived because of subsidies. Brazil also brought a case to the World TradeOrganization (WTO) against the United States, claiming, among other issues,that subsidies reduce world prices and hence hurt Brazil’s export earnings.Following the WTO’s ruling, the United States removed the Step 2 paymentpart of its cotton program (amounting to about 15 percent of its subsidies).The WCA cotton producers, however, have not received any compensation.The fate of remaining U.S. subsidies is currently under discussion within theframework of the U.S. Farm Bill. Although there may be some reduction inU.S. subsidies, it is unlikely that they will be eliminated altogether.INCREASINGLY STRINGENT DEMAND FOR QUALITY FIBERLike all commodities, cotton is differentiated by quality parameters for thepurposes of trade. Cotton fiber (lint) is the raw material for the textile manufacturerwho transforms cotton into yarn and then into fabric for apparel,household goods, or industrial products. Cotton quality requirements canvary substantially depending on the final product, and the quality differencesaffect the price that manufacturers are willing to pay and the value they canget from the cotton lint. Price differentials vary widely, with a ratio of about1:4 between the lowest and the highest quality lint. 17Increasingly, quality demands are being placed on the entire textile supplychain, from the raw material to end products. Chemical fiber performance hasbecome a benchmark for cotton spinning. The main challenge for cotton is tobe able to compete with chemical fibers, mainly polyester, on both price andquality. Chemical fibers are generally easier to process, more versatile, andstronger than cotton fiber, and modern textile industry machinery requiresfrom cotton fiber the same characteristics of cleanliness and homogeneity asthose offered by artificial fibers.In short, the increasingly stringent demand for quality cotton can be articulatedin the following motto: “fiber, only fiber, but more than just fiber.” Therest of this section elaborates on each aspect of this challenge.FiberBecause cotton is a natural and seasonal product, its fiber properties, its cleanlinessand contamination, and the homogeneity of its characteristics can varygreatly as a result of genetic, environmental, harvesting, and ginning factors.Such variability impacts processing performance, costs, and quality throughoutthe cotton textile chain. Fiber properties primarily depend on varieties grown,agro-climatic conditions, and crop management practices. The cleanliness of lintMARKET CONTEXT 21