Cotton Subsidies- Help Out

The WTO has ruled, not surprisingly, that American subsidies of cotton have caused overproduction leading to lower global pricing. In 2002 $3.9billion went to US cotton subsidies. The striking part is that the money is 20% greater than the value of the cotton produced. Commodity subsidies - which pay the farmer the difference from the actual market value to Congress’s fair price- had the farmers receiving 86 cents a pound of cotton while it was being exported at 37 cents per pound. In Malawi the local farmers sell the cotton to coops at around 12 cents a pound.

It is estimated by Oxfam America that $350 million was lost by Sub Saharan Africa due to subsidies in one year. One country, Burkino Faso, received $10million in aid from the US while loosing $13.7 million to subsidies.

Some of the subsidies are reasonable but one, so called “step 2”, pays for US textile factories to buy U.S. cotton at market rates, covering the gap. This stings a bit as the farmer is paid to produce it and then Cotton companies are paid to use it.

The subsidies do not really support the rural small farmers. 71% of the subsidies goes to 10% of the producers, big business. This might be read as financially powerful lobbies helping politicians campaigns.

Change is in the works, supported by none other than Pres. Bush. The recommended changes include removing Step 2 subsidies and closing loop holes that allow people to take extra advantage. The estimated savings of this change would be $1.2 billion over 5 years for the government. This could be used for nutrition projects or sustainable farming projects.

This change in policy would bring an expected increase in market price of 5-13%. It would benefit rural small holder farms as well as greatly assist the over 18 million African farmers. Lower African poverty by creating fair trade. It appears as if the EU is not completely convinced to remove sugar subsidies so help support the changes for cotton.

The corporations will not like the changes as it means lost profit. Credit should be given to the cotton industry in the US for streamlining the process and keeping a market for cotton materials by marketing. This aside we should not protect something at such a cost.

Ø HELP OUT BY SIGNING PETITION
http://www.maketradefair.com/en/index.htm/t_self

Ø what you can do- through OXFAMS America webpage
http://www.oxfamamerica.org/whatyoucando/act_now/fallactioncenter/farmers

Ø see the following for more information
http://www.oxfamamerica.org/newsandpublications/press_releases/press_release.2005-06-20.9260528119