Government Support to the Cotton Industry

Subsidies to the cotton industry, including direct support to production, border protection, crop insurance subsidies, and minimum support price mechanisms are estimated at $3.9 billion in 2011/12 up from $1.4 billion in 2010/11. Ten countries provided subsidies in 2011/12, and the subsidies averaged 14 cents per pound, up from 5 cents per pound on average in 2010/11.
Subsidies to the cotton industry, including direct support to production, border protection, crop insurance subsidies, and minimum support price mechanisms are estimated at $3.9 billion in 2011/12 up from $1.4
billion in 2010/11. Ten countries provided subsidies in 2011/12, and the subsidies averaged 14 cents per pound, up from 5 cents per pound on average in 2010/11. More countries have cotton production support
programs, but because of high prices the programs did not result in actual spending in 2011/12. 
 
Lower market prices for cotton in 2011/12 led to an increase in subsidies paid to producers. The Cotlook A Index averaged 105 cents per pound during the first nine months of 2011/12, and 164 cents per pound in
2010/11. However, prices in 2011/12 were still well above long-term averages, and government interventions in a number of support programs in several countries were not triggered this season. Pakistan, Mexico and
India have minimum support price programs, but because market prices were still higher in 2011/12, these programs did not result in payments to producers. However, if prices were lower these programs would be
effective.
 
The share of world cotton production receiving direct government assistance, including direct payments and border protection, increased from an average of 55% between 1997/98 and 2007/08, to an estimated 84% in
2008/09. During 2009/10 through 2011/12, the share averaged 49%. Since 1997/98, there is clearly a negative correlation between the Cotlook A Index and the amount of subsidy provided to the world cotton
industry, as well as the number of subsidizing countries.
 
Some countries provided subsidies for cotton inputs in 2011/12, especially for fertilizers, storage, transportation, classing services and other marketing costs.