In 2014 Farm Bill debate, the US cotton industry was relegated to the sidelines, because of the adverse rulings in the WTO case, Brazil brought up against the US cotton programme in 2002. Gary Adams, President and CEO, National Cotton Council testified at a House Agriculture Committee hearing on October 21 that the Council does not want this to happen again. Dr Adams said that for the 2015 crop year, India will be the largest cotton producer, surpassing China for the first time. Before 2004, India generally produced between 10 million to 14 million bales. Starting in 2004, India significantly increased production to 19 million bales and has continued to increase each year since (to 29 million bales for 2015-16), he added.
The Minimum Support Price (MSP) operated by the Cotton Corporation of India is based on seed cotton production. The MSP equates to a cash price of between 70 and 80 cents per pound or 20 to 30 cents per pound above the US cotton loan rate. Besides, the Indian government also provides subsidies estimated at more than $9 billion a year for fertiliser for cotton and other crops. However, with the $1.40 per pound China was paying its producers for cotton two years ago.
More than 50 million bales of cotton are amassed in government reserves because of China’s support system, which are likely to have an impact on world cotton prices for years to come. Though developments in India, China, Pakistan, and other cotton-producing nations are underway, some of these entities are expected to impact the US cotton programme when the World Trade Organization holds its 10th Ministerial Conference in Nairobi, Kenya, next month.
