Cotton-Farmers & Doha

This week, The Economist published an article entitled 'A tangle of troubles'. "America's cotton-farmers are worried about both drought and Doha... The absurdity of America's cotton subsidies is well known... The end of this gravy train is long overdue." Here is the article:

“That's what the drought does for us,” says Barry Evans, a family farmer near the west Texas town of Kress. He is peering out of his pickup at thin, scraggly green cotton plants, a foot or so high in between rows of dry stalks. It barely rained last winter and, by June, Kress had received less than two-thirds of the rain that fell a year earlier. Now blistering heat is drying out the plants even more. Across the Texas plains, cotton experts estimate that 1m acres—perhaps 15% of the state's crop—have already been lost.

If weather were the only problem facing cotton farmers, things might not be so bad. They are used to nature's whims: Kress lies in the heart of the 1930s Dust Bowl, and even today dirt storms (and sometimes tornadoes) roll through in the spring. Fortunately cotton requires much less water than, say, maize. Many farmers tap the Ogallala Aquifer for at least part of their crop, but Texas also has substantial areas of “dry-land cotton” (about one-third of Mr Evans's crop, for example) that remain outside the irrigators' reach.

Free trade is even more of a threat. The cotton industry exists in America only because of subsidies, and it stands to lose much if the World Trade Organisation's Doha negotiating round succeeds. Cutting trade-distorting farm subsidies is a top priority in the trade round and negotiators have already promised that subsidies for cotton will be cut “more ambitiously” than others.

Nothing will happen immediately, since the talks are at a standstill. American negotiators have offered to cut the limits for the most trade-skewing subsidies by 60% in return for greater access to international markets. The European Union and big developing countries want bigger cuts in America's subsidies but are loth, as always, to dismantle their own barriers.

The absurdity of America's cotton subsidies is well known. Uncle Sam spends over $4 billion a year propping up cotton farmers, with the bulk of the money going to those whose operations are much larger than Mr Evans's. Cotton receives far more government cash per acre than other crops—in 2001, four or five times that of maize or wheat, according to a recent paper by the National Centre for Policy Analysis, a conservative think-tank. The losers are not just American taxpayers but some of the world's poorest farmers, as America's subsidised production pushes down world prices. Cotton prices have halved since the mid-1990s as America's subsidies have doubled.

The end of this gravy train is long overdue. Some change is inevitable even without a Doha deal, as the WTO has already declared some American cotton subsidies illegal. The uncertainly is casting a pall over the Cotton Belt—especially Texas, where more than a third of America's 20m bales are grown. Mr Evans, looking gloomily ahead, fears his livelihood may be about to be “traded away”.

Don Ethridge, director of the Cotton Economics Research Institute at Texas Tech University, reckons that if America cuts its cotton subsidy by 60%, income for cotton farmers would fall by 26% over six years—or 19% if America won great access to international markets. “We're scared to death,” says Mr Evans. Though not scared enough, it seems, to think beyond today's subsidies. Some dream that cottonseed oil, already used for cooking, could one day power America's cars. But “I sure am not going to bet my long-term future on biofuels,” says Mr Evans. “We just don't know enough yet.”