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US WTO Defeat Will Raise Brazil Cotton Exports by 20%

Brazil should increase cotton exports with the end of North American subsidies to farmers. “Our current yearly foreign sales may grow up to 20%,” stated João Luiz Ribas Pessa, the president of the Association of Mato Grosso State Cotton Producers (AMPA).

According to figures supplied by Brazilian Association of Cotton Producers (Abrapa), if the United States eliminates all its cotton subsidies, following the World Trade Organization (WTO) decision, announced last week, US exports should fall 40%.


This market, theoretically, may be disputed by Brazil. Last year, the USA exported around 2.7 million tons of cotton, 40.7% of world exports of the product. Brazil traded just 371,000 tons on the foreign market.


“The impact of the decision in the country should start being felt at the 2006 crop,” stated Pessa. The reason is that the North Americans have a grace period so as to adapt to the WTO resolutions.


Up to July 1st they will have to remove the direct export subsidies. They will then have a period of approximately 15 months to reduce the other incentives.


“As the crop there starts being sown in August, it will be at this time that the farmers will miss the subsidies and might stop sowing cotton,” stated Hélio Tollini, the executive director of the Abrapa. The organization calculates a 29% reduction in the North American production next year.


The WTO dispute between Brazil and the United States started in 2003, when the Brazilian government stated that of the US$ 13.9 billion in revenues reached by US cotton farmers, US$ 12.5 billion were paid by the government. That means that for every dollar obtained with the sale of cotton, no less than 89.5 dollar cents were federal funds.


Last year, the WTO decided in favor of Brazil, but the United States appealed. The final decision was reached last week.


“Now the United States has no more right to appeals. If the WTO recommendations are not accepted, there may be sanctions,” stated Pessa.


Brazil and Africa


The cotton victory is the second Brazilian victory this year. The first was against subsidies offered by the European Union (EU) to sugar producers.


In the case of cotton, the WTO decision does not only benefit Brazil. Countries in Africa, whose economy depends on cotton farming, like Benin, Mali and Burkina Faso, will also benefit from the Brazilian victory.


According to figures supplied by the NGO Oxfam, which fights against poverty, between 2001 and 2003, small African cotton farmers lost US$ 400 million due to American subsidies. In Africa, the production of cotton provides the livelihood of around 10 million people.


In Brazil, the sector’s annual losses with US help totalled US$ 480 million, according to the Abrapa. The country is the fifth largest cotton producer in the world. In 2004, production totalled 3.6 million tons. For this year, the estimate is 3.8 million.


Translated by Mark Ament
ANBA ”“ Brazil-Arab News Agency
www.anba.com.br

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