Cotton prices to rise

According to a report released by the United Nations Food & Agriculture Organization yesterday, cotton prices are on the rise. The report says in part:

Cotton prices declined in late 2004 as a result of record output in the major cotton-producing countries (Brazil, China, India, Pakistan and the United States – which together account for more than 70 percent of world production). World cotton prices were recovering in the first three months of 2005, mostly due to expectations of lower production in 2005/06 following reduced plantings in response to low prices at sowing time.

As overproduction lowered cotton prices last year, there was less incentive to produce cotton this year meaning fewer supplies. While subsidized cotton production in the US is of benefit to manufacturers (and consequently consumers) reducing or eliminating cotton subsidies improves the economic situation of lesser developed countries dependent upon commodity production. Further proposals for eliminating subsidies will be hotly debated at the WTO meeting next week in Hong Kong. In short, expect the price of cotton fabrics to rise next year.

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2 comments

  1. Liana says:

    I remember in 1995 that cotton prices were the highest since the Civil War. Interesting that it took 130 years to regain the inflation that a blockade and war produced.

  2. Dani says:

    Prices may have gone up, but they are certainly not where they should be. As a third generation cotton farmer, I know firsthand how hard it is to scrape out a living…..cotton prices as they are do not reflect the costs of fuel, seed, and the various production expenses that are part of our operating costs. Don’t be fooled by the headlines…..our profits are minimal and the U.S. should be taking care of its’ own. Subsidies are a form of control…..and yes, taking them away will help other countries, but what will it do for the American farmer? It will put him out of business. Soon all farms will be in the hands of large corporations (not necessarily owned by US citizens, but that is a whole other subject!) and the “family” farm will be history. Subsidies were created by the government to solve a problem that it created when with the removal of other programs. This, in turn, resulted in unregulated free markets. Our cotton prices dropped to rock bottom. Imported cotton increased the supply, but not the demand. We all want to buy “Made in America”, but we need to remember this goes beyond sewn or assembled….was it “grown” in America? We should demand it as consumers. There is a wealth of information for anyone interested located at http://www.agpolicy.org, specifically the publication titled “Rethinking US Agriculture Policy”. Sorry for the long and ardent response, but this is a subject that really “hits” home. Kathleen, I don’t know if this subject fits in on this type of blog, but when I read the Dec.9 posting & comment, I just couldn’t help but respond!

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