Nearly US$400m has been committed to - or spent on - development assistance for cotton producers since 2005, the World Trade Organization (WTO) has revealed.

In all, some $389m has been disbursed, mainly to African countries, $291m of it in completed projects and $97m in ongoing activities, up $10m on six months ago.

However, at a recent WTO meeting on the issue, concerns were raised that the amount spent so far on current projects had fallen to only 28% of the $354m committed – although donors said this was partly subject to when commitments were made and how long projects last, as well as what stage they were at.

Beyond direct cotton aid, the meeting heard that a further $1.4bn had been spent on completed or continuing projects linked to agriculture and infrastructure, which would also benefit cotton – with a total of $5bn committed.

Concerns were also raised on the need for a “quick, ambitious and specific” reform to the cotton trade, as envisaged in the 2005 Hong Kong Ministerial Declaration, with members of the African Cotton-4 group – including Benin, Burkina Faso, Chad and Mali – pushing for change.

Cotton-4 is also set to continue discussions with US officials in Washington and Geneva, amid concerns that new legislation in the US might exacerbate perceived problems with trade-distorting subsidies in some parts of the world.

The WTO meeting also heard from a representative from the International Cotton Advisory Committee (ICAC), who set out the unusual state of the cotton market in 2012, with stable and high prices despite increasing production and large stocks.

One of the main factors behind this, ICAC said, was the Chinese government’s stockpiling of cotton in order to raise and stabilise domestic prices and to support its cotton growers – with reserves rising from 3% of mill use in August 2011 to 90% in November 2012.

A knock-on effect has been a decline in Chinese mill use of cotton, offset by an increase in other countries which have stepped in to fill the gap.

Turning to Africa, ICAC said structural adjustments in countries' cotton industries could increase production, but not always – contrasting expanding production in Burkina Faso, where competition was introduced, and in Mali, where it wasn’t.

Meanwhile, in Egypt, production had declined despite the liberalisation of the market and a high proportion of cotton used by the country’s mills, but this had been partly caused by farmers switching to more profitable crops such as rice.

In the Ivory Coast and Zimbabwe, however, cotton production had proven resilient in spite of political instability and tensions, even though mill use had remained at low levels.

And cotton production and mill use had both risen in Tanzania in recent times, thanks to direct foreign investment from countries including Thailand and Indonesia, enticed by Tanzania’s strategic location as a convenient location for exporting to Asian countries.

Expert analysis

The Effect of Rises in Cotton Fibre Prices on Textile and Apparel Prices in the Supply Chain

The Effect of Rises in Cotton Fibre Prices on Textile and Apparel Prices in the Supply Chain

This report provides strategic planners with a method for predicting the timing and extent to which future changes in the cotton fibre price are likely to affect their business. In addition, it contai...read more