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U.S. cotton not to blame for Third World poverty

CLARKSDALE, Miss. — It's pop quiz time: What is Burkina Faso? A Japanese soup from soybeans? Nah, that's miso. A yummy Italian ice cream? Wrong, that's gelato.

It's a question almost anyone in the U.S. cotton industry can answer, having been beaten up for many months now by members of Congress, editorials in the New York Times and other metropolitan media, and several U.S./world leaders, all whining that unconscionably high subsidies to American cotton growers are wreaking economic havoc on the cotton farmers of Burkina Faso (a land-locked nation in Africa, formerly Upper Volta, that is about twice the size of Colorado).

"…What could be more absurd," a recent Times editorial lamented, "than the sight of the world's richest nation — a fiery preacher of free trade and free market values — spending $3 billion or $4 billion a year in taxpayer money to grow cotton worth less than that, and selling its mounting surpluses at ever greater loss?"

Those American subsidies "are killing" 2 million or so Burkina Faso growers by depressing the price for their cotton, the article says. Four West African countries — Burkina Faso, Mali, Benin, and Chad — are demanding that U.S., China, and European Union cotton subsidies be included in all international proceedings on agriculture. They threaten, in the upcoming World Trade Organization negotiations at Cancun, Mexico, in September, to refuse discussion on other matters "as long as the cotton issue is not resolved; from now on, we want the cotton issue to be as central as that of petroleum…"

Few would dispute the need for improvements to the lives of Burkina Faso's populace, which ranks 172nd of the 174 poorest on the planet, with an annual per capita income of slightly more than $1,000 U.S. Among the smallest countries in West Africa, it is also one of the most heavily populated (12 million-plus). Much of the country is arid, deserty, unsuited to agriculture. Drought, deforestation, desertification, overgrazing, and rapid population growth have added to the woes.

Cotton, virtually all hand-picked, is the country's most important crop. Farmers are required to sell their output to a government agency, SOFITEX, which sets the farm-gate price. If the agency misreads demand and sets the price too low, farmers suffer; then when the price is high, they boost production. In 2001, as a result of a high price, production zoomed by 70 percent to 400,000 tons. Nearly 100 percent of the cotton is sold in the export market.

It is estimated that half the seed from each year's crop is lost to resistant worms, despite an average eight insecticide applications annually. The country is considering a move to Bt cotton, which could boost production by 30 percent to 80 percent and cut insecticide use by as much as half.

Countries in the region have, over the past few years, increased cotton production more than five-fold and now collectively rank seventh in the world.

But to infer that the country's problems of poverty can be solved by putting American cotton farmers out of business is something of a stretch (as is the Times' positing 2 million cotton farmers in such a small country, where several million people live in cities, not on farms).

The National Cotton Council has been tenacious in trying to counteract the newspaper's ongoing campaign against U.S. cotton. Surprisingly, the Times printed a rebuttal letter from NCC President Mark Lange, who cited "outright misrepresentations" and "absurd claims."

This low price phenomenon is not associated with any one country's foreign or domestic policies, a council paper notes. "The world agricultural system is rampant with subsidies, both transparent and not, that distort markets and prices."

Unfortunately, an increasingly urban U.S. population, ever more unaware of the realities of food/fiber production, tends to take at face value the media stories about greedy, heavily-subsidized farmers (however lacking metropolitan-based writers may be in agricultural knowledge).

Perhaps a more reasoned analysis is in a Newsweek magazine story, "Poor Nations Can't Live by Markets Alone."

Citing a per-capita income decline in 54 poor nations in the 1990s, a "dramatic reversal" from the previous decade, the story notes that this deterioration coincided with the so-called "Washington Consensus," a set of free market policies advocated by the International Monetary Fund, the World Bank, and the administrations of Presidents Bush (Senior) and Clinton.

"'The 1990s punctured the myth that if you followed the Washington Consensus, growth would follow as surely as light follows night,' says United Nations Development Program (UNDP) Administrator Mark Brown."

The problem, says Brown, "was that macro policies were over-emphasized as a panacea for the Third World's ills," while the importance of "more down-to-earth measures needed to spur sustainable development and reduce poverty" (investments in health care, education, roads, and clean water) were downplayed.

"The World Bank and International Monetary Fund put such a high priority on budgetary prudence that they actually told impoverished nations to reduce such basic infrastructure spending," the article notes.

"The hurdles that the world's poorest nations must clear are too steep to overcome with just marketplace magic," the UNDP argues. "Given their high population growth and uneven income distribution, most nations in sub-Saharan Africa would need to generate annual economic growth of 6 percent before poverty levels would markedly decline. That would require heavy investment by local entrepreneurs and foreigners. But it's virtually impossible for nations like Burkina Faso or Chad to lure that level of investment without massive infusions of foreign aid."

Dependence on exports of a single commodity "can also set economies back in harsh ways," the article notes.

The bottom line of the UNDP report is that "before the world's poorest nations can begin to escape their poverty traps, they need much more than better economic policies. They also need huge infusions of resources. And since foreign investment isn't coming, for now it will have to come through foreign aid by rich nations."

However regrettable the plight of farmers in Burkina Faso, or anyplace else, it is absurd to try and lay the blame for declining incomes and poverty at the doorstep of the U.S. cotton industry.

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