Four African countries – Burkina Faso, Benin, Chad and Mali – have called on other countries to stop subsidising cotton farmers when prices fall.
The West African nations – named the 'Cotton-4' by the World Trade Organization (WTO) – are seeking cuts in subsidies and tariffs to allow them to compete internationally and for other nations to “slash policies that distort markets” as part of WTO trade negotiations.
Weaker demand from China and more stock on the market has led to a recent fall in cotton prices. In October, the fibre was trading at 155.07 cents/kilo, whereas three months ago it was 184.4 cents/kilo.
Consequently some governments, including those in China and Pakistan, have provided subsidies to farmers to help them mitigate the lower prices and higher production costs, according to the International Cotton Advisory Committee (ICAC).
The demand has been supported by China, Argentina, India, Nigeria and Brazil.
According to ICAC, cotton production will remain the same in 2014-15 at 26.2 million tons. Even though lower prices will reduce production in the southern hemisphere, this will be offset by additional production in the North.