US cotton producers aren’t projected to receive any government farm payments in the current fiscal year. In contrast, producers of corn, the biggest US crop, may receive $4.2 billion in aid this year. Globally, cotton is a heavily subsidized crop, with 71 per cent of world production receiving direct aid.
China is the world’s biggest subsidizer, giving $5.3 billion in aid. India’s aid is less direct, coming in the form of subsidies for farmers to cover fertilizer, electricity and other costs. Though China has been cutting back on price supports over the past three years, and reducing production incentives, and creating opportunities for exporters in the US, Brazil and Thailand, the support still isn’t zero.
Subsidies were cut because of a World Trade Organization ruling against the US cotton program, which lawmakers will need to tiptoe around while creating new aid. Cotton farmers in the US facing low prices are clamoring for assistance. They have experienced three or four years of hard times with a worldwide glut of major crops. The surpluses are curbing the outlook for American exports just as some farmers in the south are moving away from growing corn in favor of cotton, a trend that’s boosting domestic production of the fiber.
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