2018/19 Global Cotton Subsidy Statistics

According to the annual report of the international cotton advisory board (ICAC), total cotton subsidies in 2018/19 amounted to $5 billion 400 million, down from $5 billion 500 million in the previous year.

The report said that 10 countries in the world provided subsidies for cotton production in 2018/19, including Columbia, Ivory Coast, China, the United States, Mali, Greece, Senegal, Spain, Burkina Faso and Turkey.

The subsidies for China and the United States were 3 billion 500 million US dollars and 1 billion 200 million US dollars respectively. The highest cotton subsidies in West Africa were Burkina Faso and Mali (35 million US dollars), followed by Ivory Coast (15 million US dollars) and Senegal (1 million US dollars).

According to ICAC, from the historical trend, there is a strong negative correlation between cotton subsidies and cotton prices, that is, in higher prices, subsidies tend to decrease while subsidies tend to increase in lower prices. Over the past few years, this relationship has been quite stable.

Data showed that the A index dropped from 91 cents / pound in 2013/14 to about 70 cents / pound in 2014/15 and 2015/16, and increased to 83 cents / pound in 2016/17. In 2014/15, global cotton subsidies reached a record level of US $10 billion. In 2017/18, the average price of cotton increased to 88 cents / pound, and subsidies increased. In 2018/19, cotton prices declined slightly and subsidies declined slightly.

According to the ICAC report, the average subsidy for 10 cotton producing countries in 2018/19 is 16 cents / pound, slightly lower than the 17 cent / pound in 2017/18. These subsidies are directly supported by production, border protection, crop insurance subsidies and the minimum supporting price mechanism. From 2016/17 to 2018/19, the proportion of cotton directly subsidized (direct subsidy + border protection) in the world accounted for 49% of the total output. From 2014/15 to 2015/16, the ratio was 75%.

Because the market price is lower than MSP, the India government acquired cotton through the lowest support price (MSP) scheme in 2014/15 and 2015/16. In 2018/19, the MSP of Shankar-6 was 5350 rupees / weight (equivalent to 101 cents / pound of lint). 2017/18 was 4320 rupees / kg (89 cents / pound). In 2019/20, MSP rose further to 5550 rupees / weight (105 cents / pound).

In the year 2018/19, various kinds of support provided by the United States to producers, including price loss insurance / agricultural insurance, crop insurance and STAX, were estimated at 1 billion 200 million US dollars (actually calculated at 14 cents / pound), which is higher than the 890 million US dollars (9 cents / pounds) in 2017/18.