Cotton is one of the oldest commercial crop and is one of the most important fiber crops in the global textile industry. It accounts for about 50% of the global textile market. Cotton cultivation dates back 3000 years ago in India, Egypt and Peru. It played a very important role in Industrial revolution and development of many western countries. Even today, it plays a vital role in economic and social development of deve loping and underdeveloped countries. Cotton export generates around 4% to 7% of GDP in some of the African countries like Benin, Chad, Mali, Burkina Faso and Togo.

Falling cotton prices:
Global cotton prices are steadily coming down. From 60’s to 84, the cotton prices were stable around US$2.62/kg. There followed a sharp decline in 83/84 season when prices almost halved from US$1.93/Kg. to US$1.07/Kg. in 85/86. During 90’s prices stabilized around US$1.59/Kg. subsequently falling to US$0.92/Kg. in 01/02 its lowest level in 30 years. While some of the overall long-term decline in prices can be explained by reductions in production costs as a result of technological advances, slow demand growth and strong competition from synthetic fibers, still a direct relation can be established with the subsidies granted by rich cotton producing countries to its farmers.

Subsidies
More than 70 countries produce and export cotton. In 2004 Only 10 countries accounted for 85% of total production of 20.7 million tons which were US, China, India, Turkey, Pakistan, Uzbekistan, Brazil, Greece, Australia and Syria. Out of total production, about 33% of cotton is traded internationally with and export value of US$8 bn in 2003. Compare it with US$4.2bn subsidy that US farmers receive and 60% of their cotton is exported. Cotton trade and production are highly distorted by the domestic policies of rich countries and the case of cotton demonstrates how western agricultural subsidies can have catastrophic impacts on farmers in developing countries.

Domestic support, greatest in US, EU and China has caused a depression in prices, damaging those developing countries which rely on cotton exports for vital foreign exchange earnings that could be allocated to health, education and other social development projects. US is the 2nd largest producer of cotton in the world and dumping 60% (02/03) (about 39% of global trade) and 78% (03/04) of its produce in global markets. Though EU is not a major player in cotton production but there are about 100,000 farmers in Spain and Greece which produce just 2.5% of Global cotton production but receive 17% (US$1bn) of world cotton subsidies. It has put a great pressure on global prices. It is assumed that global cotton prices would be 15% higher if all subsidies were eliminated. There are about 100million rural households globally involved in cotton production.

The economic strain on farmers caused by falling prices and low value received by them due to subsidies by developed nations, they are under pressure to use more andmore chemicals in an attempt to increase yields and thus income. Cotton now uses 10% of the world’s pesticides and 25% of the world’s insecticides. Also there is a great pressure of using genetically modified cotton (GM cotton) (BT Cotton). Fairtrade offers and alternative vision of how trade can be undertaken and what it can achieve. The success of Fairtrade model in other products clearly demonstrates that trade can play and important part in contributing to poverty reduction and achieving sustainable development.

Synthetic Fibers
There is a significant competition from synthetic or man-made fibers such as polyester, nylon and acrylic. It started in 40’s with the introduction of man made fibers. At that time the total share of synthetic fibers in global fiber consumption was just 12% which has raised to about 50% currently. Production of synthetic fibers is growing even faster than ever before building more and more pressure on cotton prices.