Study of cotton market developmentIntruduction:Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. Under natural condition, the cotton balls will tend to increase the dispersion of the seeds.

The plant is a shrub native to tropical and subtropical regions around the world, including the Americas, Africa, and India. The greatest diversity of wild cotton species is found in Mexico, followed by Australia and Africa. Cotton was independently domesticated in the Old and New Worlds. The English name derives from the Arabic (al) qutn قُطْن , which began to be used circa 1400 AD.

The fiber is most often spun into yarn or thread and used to make a soft, breathable textile. The use of cotton for fabric is known to date to prehistoric times; fragments of cotton fabric dated from 5000 BC have been excavated in Mexico and Pakistan. Although cultivated since antiquity, it was the invention of the cotton gin that so lowered the cost of production that led to its widespread use, and it is the most widely used natural fiber cloth in clothing today.

Fig: Cotton

Current estimates for world production are about 25 million tonnes annually, accounting for 2.5% of the world's arable land. China is the world's largest producer of cotton, but most of this is used domestically. The United States has been the largest exporter for many years.

Types of cottonThere are four commercially-grown species of cotton, all domesticated in antiquity:

Gossypium hirsutum – upland cotton, native to Central America, Mexico, the Caribbean and southern Florida, (90% of world production)

Gossypium barbadense – known as extra-long staple cotton, native to tropical South America (8% of world production)

Gossypium arboreum – tree cotton, native to India and Pakistan (less than 2%) Gossypium herbaceum – Levant cotton, native to southern

Africa and the Arabian Peninsula (less than 2%)

History of Cotton

No one knows exactly how old cotton is. Scientists searching caves in Mexico found bits of cotton bolls and pieces of cotton cloth that proved to be at least 7,000 years old. They also found that the cotton itself was much like that grown in America today.

In the Indus River Valley in Pakistan, cotton was being grown, spun and woven into cloth 3,000 years BC. At about the same time, natives of Egypt’s Nile valley were making and wearing cotton clothing.

Arab merchants brought cotton cloth to Europe about 800 A.D. When Columbus discovered America in 1492, he found cotton growing in the Bahama Islands. By 1500, cotton was known generally throughout the world.

Cotton seed are believed to have been planted in Florida in 1556 and in Virginia in 1607. By 1616, colonists were growing cotton along the James River in Virginia.

Cotton was first spun by machinery in England in 1730. The industrial revolution in England and the invention of the cotton gin in the U.S. paved the way for the important place cotton holds in the world today.

Eli Whitney, a native of Massachusetts, secured a patent on the cotton gin in 1793, though patent office records indicate that the first cotton gin may have been built by a machinist named Noah Homes two years before Whitney’s patent was filed. The gin, short for engine, could do the work 10 times faster than by hand.

The gin made it possible to supply large quantities of cotton fiber to the fast-growing textile industry. Within 10 years, the value of the U.S. cotton crop rose from $150,000 to more than $8 million.

How Cotton is Ginned and Marketed

International trade

The largest producers of cotton, currently (2009), are China and India, with annual production of about 34 million bales and 24 million bales, respectively; most of this production is consumed by their respective textile industries. The largest exporters of raw cotton are the United States, with sales of $4.9 billion, and

Today, nearly all cotton is stored in modules, which look like giant loaves of bread. Modules allow the cotton to be stored without loosing yield or quality prior to ginning. Specially designed trucks pick up modules of seed cotton from the field and move them to the gin. Modern gins place modules in front of machines called module feeders. Some module feeders have stationary heads, in which case, giant conveyors move the modules into the module feeder. Other module feeders are self-propelled and move down a track that along side the modules. The module feeders literally break the modules apart and “feed” the seed cotton into the gin. Other gins use powerful pipes to suck the cotton into the gin building. Once in the cotton gin, the seed cotton moves through dryers and through cleaning machines that remove the gin waste such as burs, dirt, stems and leaf material from the cotton. Then it goes to the gin stand where circular saws with small, sharp teeth pluck the fiber from the seed.

From the gin, fiber and seed go different ways. The ginned fiber, now called lint, is pressed together and made into dense bales weighting about 500 pounds. To determine the value of cotton, samples are taken from each bale and classed according to fiber length (staple), strength, micronaire, color and cleanness. Producers usually sell their cotton to a local buyer or merchant who, in turn, sells it to a textile mill either in the United States or a foreign country.

The seed usually is sold by the producer to the gin. The ginner either sells for feed or to an oil mill where the linters (downy fuzz) are removed in an operation very much like ginning. Linters are baled and sold to the paper, batting and plastics industries, while the seed is processed into cottonseed oil, meal and hulls.

Africa, with sales of $2.1 billion. The total international trade is estimated to be $12 billion. Africa's share of the cotton trade has doubled since 1980. Neither area has a significant domestic textile industry, textile manufacturing having moved to developing nations in Eastern and South Asia such as India and China. In Africa, cotton is grown by numerous small holders. Dunavant Enterprises, based in Memphis, Tennessee, is the leading cotton broker in Africa, with hundreds of purchasing agents. It operates cotton gins in Uganda , Mozambique, and Zambia. In Zambia, it often offers loans for seed and expenses to the 180,000 small farmers who grow cotton for it, as well as advice on farming methods. Cargill also purchases cotton in Africa for export.

Fig: Worldwide cotton production Fig:Cottonseed output in 2005

The 25,000 cotton growers in the United States of America are heavily subsidized at the rate of $2 billion per year. The future of these subsidies is uncertain and has led to anticipatory expansion of cotton brokers' operations in Africa. Dunavant expanded in Africa by buying out local operations. This is only possible in former British colonies and Mozambique; former French colonies continue to maintain tight monopolies, inherited from their former colonialist masters, on cotton purchases at low fixed prices.

Leading producer countries

The five leading exporters of cotton in 2011 are (1) the United States, (2) India, (3) Brazil, (4) Australia, and (5) Uzbekistan. The largest nonproducing importers are Korea, Taiwan, Russia, Hong Kong and Japan.

In India, the states of Maharashtra (26.63%), Gujarat (17.96%) and Andhra Pradesh (13.75%) and also Madhya Pradesh are the leading cotton producing states,[47] these states have a predominantly tropical wet and dry climate.

In Pakistan, cotton is grown predominantly in the provinces of Punjab and Sindh. The leading area of cotton production is the south Punjab, comprising the areas around Bahawalpur, Multan, and Vehari. Faisalabad is a leader in textiles within Pakistan. Punjab has a tropical wet and dry climate throughout the year therefore enhancing the growth of cotton.

In the United States, the state of Texas led in total production as of 2004, while the state of California had the highest yield per acre.

Trade

Cotton is bought and sold by investors and price speculators as a tradable commodity on 2 different stock exchanges in the United States of America .

Cotton futures contracts are traded on the New York Mercantile Exchange (NYMEX) under the ticker symbol TT. They are delivered every year in March, May, July, October, and December.

Cotton #2 futures contracts are traded on the New York Board of Trade (NYBOT) under the ticker symbol CT. They are delivered every year in March, May, July, October, and December.

Cotton production

World cotton production (million tonnes), by main countries, 1980/81 - 2012/13

Top ten cotton producers—2011 (480-pound bales)

 People's Republic of China 33.0 million bales India 27.0 million bales United States 18.0 million bales Pakistan 10.3 million bales Brazil 9.3 million bales Uzbekistan 4.6 million bales Australia 4.2 million bales Turkey 2.8 million bales Turkmenistan 1.6 million bales Greece 1.4 million bales

Source: UNCTAD secretariat, based on International Cotton Advisory Committee (ICAC) statistics

A declining trend of cotton's share in textiles fibres since the 1970s compare to the chemical textiles (branched off oil) was stated- in 1960 the part of cotton was of 68.3% against 21,8% for chemical textiles and at the opposite the percentages were respectively of 39,7% and 57,7% in 2002. Cotton remains nevertheless by far the most important natural fibre of the 20th century (see "uses"). In a development context, cotton is crucially important for income and employment provided in its production and processing. Much of the growth of cotton production since the end of the Second World War (WWII) was due to improved yield (output per hectare more than multiplied by four quadrupled between 1945/46 and 2006/07, from 0.2 tons per hectare (t/ha) to 0.8 tons per hectare, according to the International Cotton Advisory Committee - ICAC), rather than to expanded area (cultivated land increased by only 35% over the 1945/46-2006/07 period, expanding from 22.3 million hectares to 34.8 millions). The development of the cultivated area mainly occured at the end of the 1940s and remained relatively unchanged since then.

In 2007, cotton was grown in 90 countries. In 2006/07, the four main producing countries were China, India, the USA and Pakistan and accounted for approximately three quarters of world output. If we added Uzbekistan and Brasil, six countries would account for 83% of world cotton production. This concentration in cotton production, which appears to increase for several years, has to be put into perspective by considering the impact of domestic policy reforms in the largest cotton producing countries, as well as climatic and sanitary contingencies. For example, global output increased by 30% between the seasons 1983/84 and 1984/85, rising to 19.2 million tonnes up from 14.5 million tonnes. Most of the growth came from China, where increases in production (Chinese production edged upward from 4.6 million tonnes in 1983/84 to 6.3 million tonnes in the 1984/85 season) were prompted by incentive measures taken by the Government. To stimulate production growth, the Government used price incentives (price adjustment increased from 15% to 50% according to the main commodities) and above-quota premiums in cotton procurement (in China farmers were assigned quotas for delivering cotton at administered prices). Additional policy measures were taken to stimulate cotton production in the 1993/4 season, including loans at preferential rates and advance payments to cotton producers before planting. The combined effect of these policy reforms was quite remarkable. Cotton production increased by 3.7 million tonnes in the 1992/93 season to 4.34 million tonnes in 1993/94 (a 16.1% increase). The increase in production remained around the trend in the 1995/96 season, as the Government announced that it would increase cotton procurement price by 25%.

Cotton consumption

Since the beginning of the 1940s, world cotton consumption has increased at an average annual growth rate of about 2% (roughly the same as production). Growth in the demand for cotton was comparatively higher in the 1950s and 1980s, with an average growth rate of 4,6% a year during the 1950s and 3% in the 1980s. Developing countries have absorbed much of global cotton output since the end of WWII. Their share in global consumption has become even more significant since the beginning of 2000s. Developing countries accounted for approximately 78% of global cotton consumption between 1981and 1999; since 2000 their ratio has been above 80%; according to projections based on ICAC figures, in 2010 they would absorb almost 94% of global cotton output.

Cotton consumption has shifted to developing countries mainly as a reflection of rising wage levels in developed countries. In the textile sector, labour accounts for about 1/6 of production costs. This means that raising labour costs eroded the competitive edge of developed countries, and contributed to the shifting of cotton processing to low-cost economies (most notably Asia and the Maghreb, but also Africa). Following specialisation, certain countries were able to forge new patterns of comparative advantages out of competitive differences in quality. These countries built on the competitiveness and dynamism of the textile sector, which became the foundation stone of their development. Other exogenous factors (such as the development of new technologies and improved infrastructures) favoured delocalisation of production by multinational companies based in developed countries.

The main cotton producing economies also account for a large part of consumption. According to ICAC data, China, the United States, India, and Pakistan as a whole have accounted for approximately more than 55% of global cotton consumption over the period 1980 to 2008. Their overall consumption has risen considerably in volume (see figure below). For example, consumption multiplied by 3 in China and by more than 3 in India. Pakistan has had the largest increase in volume (which multiplied by 6 between 1980 and 2008) in order to responde to export-driven demand for textiles.

Exporting country

Exports (value in '000 US$)

Trading partner (% of exports)

Developing countries Countries in transition Developed countries

USA 3'719'793

92.5 7.5Developing countries:- 79% of US exports are sent to Asia (inc. China (43%), Turkey (16%), Indonesia (9%), Thailand (6%), Pakistan (5%)) and, - 12% to Mexico.

West Africa 994'048

84.9 0.1 14.1Developing countries:- 80% of West African exports are sent to Asia (inc. China (36%), Indonesia (21%), Thailand (10%) and, - 18% are traded in Africa (16% in the West African region and 12% to Morocco).

Uzbekistan 867'692

59.8 17 23.1

Developing countries:Uzbek cotton sold to developing countries is mainly traded with Asia (99.5%) and to China (52%) and Bangladesh (35%) in the lead. Countries in transition: The main trading partner within the area is the Russian Federation (89%). Developed economies : The main destination of Uzbek exports is the EU (99%)

Australia 705'720 87.1 0.2 12.7

Developing countries: The main trading partner of Australia in regard to its cotton is Asie (which accounts for 99.7% of Australian exports to developing countries). Within the region, the main source of imports are: Indonesia (33%), China (26%) and Thailand (16%) in the lead.

Egypt 298'690

65.5 34.5

Unlike other cotton producing / exporting countries, Egyptian exports are pretty well distributed among country groups (developing / developed). This fact may mainly been explained by the specificity of Egyptian cotton fibers.

In regard to developing countries: 98% of Egyptian cotton fibers are exported to Asia (mainly to India (34%), Pakistan (18%), China and Turkey (9% each) and Thailand (7%) in the lead. In regard to exports to developed countries, the European Union is the main market for Egyptian cotton and accounts for 56% of Egyptian exports to developed countries.

Cotton consumption (million tonnes), by main countries, 1980/81-2012/13

International trade in cottonDespite increasing local processing (especially in developing countries), cotton is still the main traded agricultural raw materials with more than 30% of cotton production (approximately 6.3 million tonnes of fibre) traded per annum since the beginning of the 1980s.

Source: UNCTAD statistical data

With 3.7 billion dollars and almost 3 million tons of cotton exported over the 2002-2006 period (around 40% of world exports over the period, the United States are by large the dominant exporter with regard to cotton fibre.

In terms of direction of trade flows, 73% of US cotton exports went to developing Asia in the 2002-2006 period, the remain went to mainly to Mexico (11%). The United States is indeed the single largest exporter of raw cotton to Mexico, which has relied heavily on US imports to supply its export assembly plants, known as Maquiladoras. Up to 1992 these transactions were only recorded by the Central Bank of Mexico. Starting from 1992, they have been incorporated into official international trade statistics, which explains the (apparent) sharp rise in Mexico's imports from the USA since then.

Breakdown of EU imports (UE25), by country of origin, avg 2002 - 2006

Source: UNCTAD statistical data

Since the collapse of the former Soviet Union, Uzbekistan has been the second major cotton exporter (third if West Africa is considered as a group), with 870 million dollars of cotton exported annually between 2002 and 2006 (about 825 000 tons). Uzbekistan accounted for 10% of world exports over the period 2002-2006.

Seed cotton contribution to foreign exchange earnings (relative to commody exports)

1st 2nd 3rd 4th 5th

- Tuvalu - Tokelau (25%) - Sudan (17.7%) - Tanzania - Greece (9.8%)

(91.2%)- Benin (86.1%)- Mali (75.6%)- Burkina Faso (67.6%)- Uzbekistan (37.8%)- Togo (31.3%)- Kyrgyzstan (27%)

- Zimbabwe (20.5%)- American Samoas (12.3%)- Tajikistan (8.6%)- Turkmenistan (3.1%)- Chad (3%)- Burundi (2.2%)

- India (8.3%)- Pakistan (6.7%)- Malawi (2.9%)- Central African Republic (2.4%)- Zambia (2.2%)

(10.6%)- Afghanistan (7.3%)- Barbados (4.8%)- Cameroon (4.2%)- Syria (3.8%)- Azerbaijan (0.9%)- Nigeria (0.9%)

- Senegal (5.4%)- Paraguay (3.1%)- Côte d'Ivoire (2.9%)- Mauritius (2.7%)- Mozambique (2.5%)- Gambia (2%)

Source: UNCTAD Secretariat

From 2004/05 to 2007/08, West African countries together accounted for 16% of world exports. As a group, they ranked second after the United States (~38%). Exports earnings are important for African countries, which export more than 80% of their domestic production on average.

Evolution of the share of selected regions in world cotton fibre imports, decades 1980 to 2010

Source: UNCTAD

secretariat, based on ICAC statistics

Since the early 1980s, the market situation in regard to cotton imports has been changing. They have become less concentrated and the trend is expected to continue over the time. The

number of cotton importing countries rose from 85 in 1980 to 150 in 2006 (according to FAO statistics). Moreover, the share of traditional cotton importers has fallen over the past decades. This is for instance the case of the European Union, of East Asia & former USSR countries. Indeed, if these country groups shared more than the two thirds of world cotton imports during the 1980s, their combined import share may be divided by two over the 2000s (33%).

It is also interesting to point out that the share of China (Mainland) has been multiplied by almost 6 between the 1980s and 2000s. This increase has been particularly important in the course of the recent years and especially since the beginning of the decade 2000. In fact, Chinese imports increased from 52 000 tons in 2000/01 to 2,5 million tons over the 2007/08 crop season. This increase may continue in the years to come according to ICAC forecasts reaching more than 3.8 million tons over the 2012/13 crop year (about 46% of world imports - against less than 1% in 2000/01).

is in 2005/2006 the firt importer of cotton. Turkey remained the second largest importer for the fourth consecutive season with 8% of world imports (50% from United States, the rest is mainly shared between Greece and Syria).

Fair Trade Cotton Market

Max Havelaar, one of the main fair trade associations, launched, in March 2005, the first fair trade label for a non-food commodity: cotton. To achieve its aim, Max Havelaar has worked with small producers from Cameroon, Mali and Senegal (about 20'000) organised in association and certified by the international standardisation body: FLO (Fairtrade Labelling Organizations International ). Cotton growers from Burkina Faso are expected to join this enterprise by the end of 2005. Then, cotton farmers from this country are likely to account for the greatest share of the global fair trade cotton production.

In order to implement this new fair trade segment, Max Havelaar entered into partnerships with the French company DAGRIS and benefited from the financial support of several bodies (e.g. French Ministry of Foreign Affairs and the Centre for the development of enterprise*). Fair trade cotton products are sold off by using different brand names (e.g. Armor Lux, Célio, Cora/influx, Eider, Hacot, Colombier, Hydra, Kindy, La redoute et TDV industries). In order to benefit from better price (including fair trade premium) for cottonseeds (which corresponds to, according to Max Havelaar, an increase of 46% compared to the price paid for the traditional cottonseeds originated from Senegal and 26% compared to the one from Mali, over the period 2004/05 and is predicted to reach a price of 60% more for 2005/06) producers must be certified (costs assumed by them). They also have to meet particular specifications (e.g. use cotton-made bags rather than polypropylene ones, ensure a better sorting of the cotton seeds). Moreover, the textile fabrics where "fair tarde cotton" is produced are submitted to audit in order to check whether the WLO (World Labour Organisation) conventions are respected.

Price granted under fair trade cotton seeds scheme

Source: UNCTAD Secretariat according to an article issued by Marchés tropicaux on March 11 2005

The first conclusions drawn in Mali after two years of fair trade cotton presence are positive. Indeed, in the Djidjan region, the extra income enabled famers among others to buy new agricultural material, cattle, scholastic furniture, enroll children to school and pay teachers' wage.

The Importance of Cotton

Today, the world uses more cotton than any other fiber, and cotton is a leading cash crop in the U.S. At the farm level alone, the production of each year’s crop involves the purchase of more than $5.3 billion worth of supplies and services. This stimulates business activities for factories and enterprises throughout the country. Processing and handling of cotton after it leaves the farm generates even more business activity. Annual business revenue stimulated by cotton in the U.S. economy exceeds $120 billion, making cotton America’s number one value-added crop.

Cotton is a part of our daily lives from the time we dry our faces on a soft cotton towel in the morning until we slide between fresh cotton sheets at night. It has hundreds of uses, from blue jeans to shoe strings. Clothing and household items are the largest uses, but industrial products account from many thousands of bales.

All parts of the cotton plant are useful. The most important is the fiber or lint, which is used in making cotton cloth. Linters – the short fuzz on the seed – provide cellulose for making plastics, explosives and other products. Linters also are incorporated into high quality paper products and processed into batting for padding mattresses, furniture and automobile cushions.

The cottonseed is crushed in order to separate its three products – oil, meal and hulls. Cottonseed oil is used primarily for shortening, cooking oil and salad dressing. The meal and hulls that remain are used either separately or in combination as livestock, poultry and fish feed and as fertilizer. The stalks and leaves of the cotton plant are plowed under to enrich the soil.

Some cottonseed also is used as high-protein concentrate in baked goods and other food products.

THE CONTRIBUTIONS OF COTTON TO ECONOMY AND FOOD SECURITY IN DEVELOPING COUNTRIES

Cotton is one of the most important and widely produced agricultural crops in the world. In 2000, about 130 countries produced cotton, and it is estimated that the crop was planted on 2.5 percent of the world’s arable land area, making it one of the most significant in terms of land use after food grains and soybeans. In developing countries it accounts for nearly 3 percent of the total crop area. Cotton is produced for various purposes. It may meet the basic consumption needs of farm families; it may be exported to earn foreign exchange; or it may provide the raw material for textile production for domestic markets or for export. At the household level, cotton is an important cash crop for millions of farmers worldwide, and the income which it generates contributes to rural household food security, especially in developing countries. Cotton is also a heavily traded agricultural commodity. Nearly 170 countries were involved in the export or import of cotton in 2000. In addition, through the export of textiles, cotton contributes to broader national economic growth, as a result of the significant multiplier effects deriving from employment and earnings in the manufacturing sector. Such contributions have become increasingly important for many developing countries as a result of the migration of textile manufacturing industries to them in order to benefit from relatively lower cost structures.

Although the importance of cotton is widely known, I would like to take this opportunity to outline a few salient features regarding its economic significance in developing countries. These are mainly of an indicative nature, but they serve to underline the very important role that production and trade of cotton can have for developing countries and for the well-being of large parts of their population.

1) Contribution to agriculture and economy

In 2000, world cotton production amounted to 19 million tonnes. Although growth was rather slow during the 1990s, production continued its upward trend during the decade. Based on average export unit values, the value of world cotton output in 2000 was estimated about US$26.6 billion. In many instances, the importance of the agricultural sector in terms of its share of GDP has declined with economic growth. However, for developing countries, agriculture is still the key sector on which large parts of the population are dependent. And for some of these countries, cotton accounts for a significant share of agricultural production. Among all cotton producing countries in the world, there were 16 which had a share of cotton production (valued at export unit values relative to GDP) above 1 percent in 2000. Of these, Uzbekistan, Tajikistan, Benin and the Syrian Arab Republic had the highest ratios, ranging from 8 to 12 percent. As shown in Table 1, cotton production contributes substantially to the national economy in some African developing countries and certain transition economies. Even when the share of national income is small, the crop provides very significant returns to areas specializing in production, for example in Brazil, China, Egypt, India and Turkey.

2. Employment contribution

Although it is well-known that cotton production contributes to employment, especially in developing countries, it is difficult to obtain numbers of farmers actually employed. The range of estimates varies greatly and this is attributable to difficulties of both a definitional

and practical nature. The fact that agricultural production is largely of a seasonal nature greatly complicates the assessment of the labour needs, while the extent to which family members are involved is often difficult to define, particularly in developing countries. Differences in farm structures also result in great diversity in the extent of reliance on farm labour in the production process. For instance, in countries such as the United States cotton farmers invest heavily in machinery to work their large farms. In developing countries, cotton is typically produced on small farms with the intensive use of labour. Thus, with 5.3 million hectares planted to cotton in 2000, the United States had some 31 500 farms engaged in cultivation, while there were around 40 million small farms engaged in cotton production in China on a planted area of about 4.2 million hectares. Farms in the United States are large and highly mechanized while small farms in China, as in other developing countries, rely on labour. In very general terms, it may be said that larger farms, mainly in developed countries, account for around one quarter of world total cotton planted area and one third of world output. However, they only employ a small fraction of the global cotton farm workers. On the contrary, small cotton farms use almost all of the global labour employed in cotton to produce 65 percent of the world’s output on 72 percent of the planted area.

The labour force directly involved in cotton production at the farm level in the world could exceed one hundred million, although the numbers of persons in rural households benefiting from cultivation would be at least double that amount, even though many of these people would work for much of the time in crops other than cotton.

Looking in particular at China, which has by far the largest labour force in cotton production, can provide an indication of the magnitude of labour involvement under small farm and low capital input conditions. The average size of cotton farms is 0.1 hectares. Most farms are relatively diversified, with many crops other than cotton also being cultivated for household and cash needs. Almost no machinery is used in cotton production, and labour is the key input. Because of the small size of the holdings, one farmer can manage all of the operations associated with cotton growing during the year. Thus some 40 million farmers are directly engaged in cultivation, and they and their households derive income and food security from the crop. Under similar economic and farm structure conditions, it may be expected that cotton cultivation contributes in an equally significant manner to rural employment in other developing countries. In addition to direct farm employment, cotton production also provides additional opportunities for rural employment in cotton ginning, transport and marketing and, in those countries with textile industries, in textile and clothing manufacture. There are one or two million workers engaged in cotton ginning and marketing in the world, but the textile and clothing industries employ far more. In fact, these industries have contributed significantly to economic development in many countries. In 2000, worldwide installation of spinning machinery reached 165 million units requiring some 10 million workers to operate. Asia has the largest share of this equipment, accounting for 70 percent of the world total. Weaving machines numbered about 2 million units in the world in 2000, and again, Asia accounted for 70 percent of the total. Most fabrics are made into apparel, a process which is very labour intensive. In China alone, some 17 million workers are employed in textile and apparel production.

3. Food security contribution Since the 1996 World Food Summit, the definition of food security used in the Rome Declaration has been widely adopted. It states that food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet

their dietary needs and food preferences for an active and healthy life at the individual, household, national, regional and global levels. Cotton production contributes to food security in several ways. At the national level, export revenue makes it possible for a country to access food through imports. When cotton export revenue is the major source of foreign exchange, its contribution to food security is obviously of primary importance. Table 6 illustrates the role of cotton exports in food security at the national level for six countries where cotton export revenue accounted for more than 10 percent of total national export revenue. Without cotton revenues, the food import bills in these countries could still have been met, but their ability to import other goods would have been severely curtailed. In fact, the declining cotton prices and earnings of recent years have been accompanied by downward adjustments in total merchandise imports At the rural household level, the contribution of cotton production to food security is mainly through income. When households are specialized in cotton production, there is a direct link between cotton production and their ability to buy basic foodstuffs and other goods. For the diversified small farms, cotton is an important cash crop. Cash income is needed by rural households to acquire health care, more nutritious foods such as meat, milk, fruits and vegetables, clothing, housing and many other services. Field visits in Asia and Africa confirmed that in the cotton producing regions, the crop was a key cash income generator for small farms. For instance, in Malawi, rural households planting cotton relied on almost solely on the crop for their cash income, which was used for buying bread, milk and meat for family consumption. In a major cotton producing province of China, Hubei, the crop contributed about 50 percent of the cash income of diversified small farms. The share reached nearly 85 percent for those households in remote areas where farmers had little opportunity for off-farm work. According to the survey, on average, these diversified and basically food self-sufficient households used about 35 percent of their total cash income to buy food, 10 percent to buy clothing, 15 percent to buy production inputs, and 40 percent for many other needs such as medical care, communications and education. For the households with a school age child, nearly 40 percent of the cash income was used for the child’s education. Clearly, such expenditures may be regarded as very significant for the food security of future generations.

As discussed above, cotton production induced additional employment and export revenue from textile and clothing manufacturing. The export revenue from textiles and clothing and employment opportunities in the cotton ginning, spinning, weaving, processing, marketing and transporting have very important income and food security implications for the country and households living both rural and urban areas.

During the World Food Summit: Five Years Later which was just concluded in June, member nations of FAO once again committed their determination to fight hunger and ensure food for all. As an important agricultural commodity, with many dimensions of contributions to revenue and income generation, cotton will continue to play an important role in food security at both the national and the household level.

Conclusion :

The 1990s was a lost decade for the world cotton industry, but this decade will be one of growth. With consumption rising in both the CIS and China (Mainland), and growth continuing elsewhere, world consumption is forecast at 22 million bales in 2001/02. However, the world yield is not climbing, with ramifications for the structure of the world cotton industry. With world cotton use climbing, while yields are stagnant, cotton area must expand toward the top of the long-term range. In order to attract cotton area, cotton yields will need to be above average. The average of the Cot look A Index over the last

threedecades has been 74 cents per pound, and prices are expected to move toward the average nextseason. Over the balance of this decade, cotton prices are likely to be above the long-termaverage inmost years.

Reference

1)en.wikipedia.org/wiki/Cotton

2)r0.unctad.org/infocomm/anglais/cotton/market.htm Source: UNCTAD secretariat, based on International Cotton Advisory Committee (ICAC) statistics

Source: UNCTAD secretariat, based on International Cotton Advisory Committee (ICAC) statistics

Source: UNCTAD statistical data

Source: UNCTAD statistical data

Source: UNCTAD Secretariat

Source: UNCTAD secretariat, based on ICAC statistics

Source: UNCTAD Secretariat according to an article issued by Marchés tropicaux on March 11 2005

www.icac.org/meetings/cgtn_conf/documents/11_fortucci.pdf