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Cotton
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Cotton production (million tonnes), by main countries, 1980/81 - 2009/10
Source: UNCTAD secretariat, based on: "Cotton: World Statistics - International Cotton Advisory Committee (ICAC)"
Despite the declining trend of cotton's share in textiles fibres since the 1970s, cotton remains by far the most important natural fibre of the 20th century (see "uses"). Still in the early 2000s, cotton represents 38% of the fibre market. 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 tripled between 1946 and 2003, topping at 643 kilograms per hectare (kg/ha) in 2003 up from 209 kg/ha in 1946, according to the International Cotton Advisory Committee - ICAC), rather than to expanded area (cultivated land increased by only 32% over the 1946-2003 period, expanding from 22.3 million hectares to 30 millions).
Despite the fact that production is spread out all over the world (in 2004, cotton was grown in about 100 countries), four countries alone (China, the USA, India, and Pakistan) account for approximately two thirds of world output. If we added Uzbekistan and Egypt, six countries would account for three fourths of world cotton production. This concentration in cotton production 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 quotations also affect global output. Indeed, the perception that cotton is not profitable has led a number of producing countries to turn away from the sector. This was notably the case of several Latin American countries, where central planning (as in China and the former Soviet Union) or cotton support programmes (as those implemented in the USA) were not in place.
Since 1940, 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 end of the 1990s. Developing countries accounted for approximately 77% of global cotton consumption between 1981and 1998; since 1999 their ratio has been above 80%; according to projections based on ICAC figures, in 2007 they would absorb almost 87% 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 enterprises 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 would account for approximately 56% of global cotton consumption over the period 1980 to 2007. Their overall consumption has risen considerably in volume (see figure below). For example, consumption multiplied by 1.3 in the USA and almost doubled in China and India. Pakistan has had the largest increase in volume (which multiplied by 4.5 between 1980 and 2007).
Cotton consumption (million tonnes), by main countries, 1980/81-2009/10
Source: UNCTAD secretariat, based on: "Cotton: World Statistics - International Cotton Advisory Committee (ICAC)"
Despite increasing local processing (especially in developing countries), cotton is still one of the most traded agricultural raw materials. Almost one third of cotton production (approximately 4.6 million tonnes of fibre) has been traded per annum since the 1960s.
Flow chart for trade in cotton (avg 2000-2004)
Source: UNCTAD secretariat (Data:
Comtrade statistics - SITC Rev.3, 2631: "Cotton -other than linters-
not carded or combed")
With an annual average export of 1.6 million tonnes since 1980 (that is, 26% of the world's cotton exports), the United States are by large the dominant exporter with regard to cotton fibre.
In terms of direction of trade flows, 48% of US cotton exports went to Asia in the 2000-2004 period, with four Asian countries (China, Japan, the Republic of Korea and Indonesia) accounting for one third of imports from the USA. The United States is also 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.
Four percent of US exports during the period 2000-2004 went to Canada. Over the same period, Turkey absorbed 11% of cotton exports from the USA.
Breakdown of EU imports (UE15), by country of origin, avg 2000 - 2004
Source: UNCTAD secretariat (Data: Comtrade statistics - SITC Rev.3, 2631: "Cotton -other than linters- not carded or combed")
Since the collapse of the former Soviet Union, Uzbekistan has been the second major cotton exporter, accounting for 12% of world exports over the period 1990-2004 (around 700'000 tonnes exported per annum over the reference period). According to ICAC projections, exports from Uzbekistan would decrease significantly over the years, declining in volume from 760,000 tonnes in 2001 to below 600,000 tonnes in 2006 (11% lost in world exports).
Seed cotton contribution to foreign exchange earnings
(relative to other agricultural commodities)
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1st
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2nd
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3rd
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4th
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5th
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- Benin |
- Afghanistan - Bolivia - Burundi - El Salvador - Pakistan - Turkey - Uganda - Tanzania |
- Colombia |
- Honduras - Mozambique - Nigeria - Peru |
- Ivory Cost - Malawi - Cameroon |
Source: "Le coton : deuxième partie - le coton entre le Nord et le Sud : une fibre menacée, une industrie combative", by Françoise de Morsier et Simone Forster (revised by the UNCTAD secretariat)
Though West African countries together account for a small share of world exports, their cotton production is largely for export. According to Marchés tropicaux, 22 March 2002, West African countries would export 95% of their production.
Share of selected countries in cotton fibre import, decades 1980 to 2000
Source: UNCTAD secretariat, based on: "Cotton: World Statistics - International Cotton Advisory Committee (ICAC)"
Since the early 1980s, imports of raw cotton 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 104 in 2004. The share of traditional cotton importers has fallen over the past decades. The European Union, the Russian Federation, Japan, the Republic of Korea, and China together accounted for slightly more than one third of world cotton imports in the 2000s, compared to about three fourths over the 1980 decade. Especially in Asia, new important cotton importers have entered the market. This is notably the case of Thailand and Mexico, whose share in world cotton imports rose from less than 10% in the 1980s to almost 30% in the 2000s.
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. 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) 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).
Price granted under fair trade cotton seeds scheme
Source: UNCTAD Secretariat according to an article issued by Marchés tropicaux on March 11 2005
For further information, see:
- Max Havelaar
- FLO
- DAGRIS
- Centre
for the development of enterprise (CDE)
