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Cotton production contracts amidst bleak economic outlook

20
Dec '08
World cotton production in 2008/09 is forecast at 112.9 million bales, down 6.4 percent from the previous year when production was at a near-record. The decline in global production, which is the largest in six years, derives from a drop in major producing countries. Between 2007/08 and 2008/09, production in the United States, Brazil, Uzbekistan, and China are estimated to decline 29.6 percent, 15.1 percent, 7.3 percent, and 1.4 percent respectively.

Among several reasons for the contraction in world cotton production are the relatively higher prices for grains and oilseeds at planting time and the global shortage of credit arising from the ongoing financial crisis.

Global cotton area harvested is estimated at 31.3 million hectares, down 5.6 percent from the previous year. This is the largest decline in four years, with the greatest loss from the United States (1.1 million hectares), China (200,000 hectares), and India (150,000 hectares). As shown in figure 8, world acreage has been declining since 2005/06, after hitting a record acreage of 35.7 million hectares in 2004/05.

In the spring of 2008, global food prices spiked, rendering cotton production less competitive in several producing countries. Grain and oilseed prices have recently been waning, but because they are still above the level before the surge, acreage that shifted from cotton to grain production have not all been regained.

In Brazil, like some other major cotton producing countries, the ongoing liquidity crisis has made it difficult for farmers to acquire credit and to expand cotton area. This situation has been complicated by capital flight from the country due to investor fears. In 2008/09, Mato Grosso1, Brazil's highest cotton producing state, may reduce area by as much as 20 percent from the previous year.

World cotton yield in 2008/09 is estimated at 784 kilograms per hectare, down 0.76 percent from the previous year, the second time in a decade that global yield has declined. The most recent time the world experienced a negative yield growth was in 2004/05, when cotton yield dropped by 1.22 percent from the previous year's 740 kilograms per hectare.

In the last decade, yields in several major cotton producing countries have been rising. Between 1999 and 2008, yields in India, Brazil, the United States, and China grew by 92.0 percent, 53.8 percent, 38.1 percent, and 28.8 percent respectively. Greece is the only major cotton producing country where yield growth declined--6.4 percent.

Although Pakistan, India, the United States, and China all have adopted genetically modified (GM) cottonseed, the positive yield results in India have been remarkable. The use of Bt cottonseed combined with improved crop management practices and irrigation systems have boosted yields, where biotech seed was introduced in 2002. The variety has gained both political and industrial support because it offers high yield while minimizing the expenditure on pesticides.

According to the government of India, Bt cotton now accounts for more than an estimated 70 percent of total cotton acreage in India.

Cotton USA


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