“I Believe in Science”

“I believe in science,” said Secretary Hillary Clinton, candidate for president of the United States, in her acceptance speech in late July before the national convention of members of the Democratic Party who had gathered to formally endorse her nomination. Secretary Clinton was paraphrasing President Barak Obama who wrote in his book, “The Audacity of Hope,” that he believes in “evolution, scientific inquiry and global warming, …” Continue reading

Evaluating the WTO Nairobi Outcome on Cotton

The Tenth WTO Ministerial mandates that all countries prohibit cotton export subsidies by 2017. Since the United States eliminated a program called “Step 2” in 2006, no country has provided subsidies for Upland cotton exports.

The Tenth WTO Ministerial mandates that developed countries, and those developing countries declaring that they are able to do so, provide duty-free and quota-free access for cotton from LDCs. As of 2016, no developed country imposes either duties or quotas on imports of cotton, and China is the only developing country of any market significance to impose quotas or duties.

All subsidies distort, and cotton farmers in the EU and the United States still benefit from subsidies. However, the subsidies received by farmers in the EU and the United States are now mostly decoupled from current production decisions, and depending on price patterns, are likely to be significantly less than subsidies received in earlier decades.

1b. Final Report Evaluating Nairobi – What Does the Outcome Mean for Trade in Food and Farm Goods

 

The Five R’s of Environmental Responsibility: Refuse, Reduce, Reuse, Recycle, & ROT

By linking worldwide data on solid waste, population density, and economic status, Jenna R. Jambeck and co-authors writing in the Journal Science estimated that 275 million metric tons of plastic waste were generated worldwide in 192 coastal countries in 2010, with 4.8 to 12.7 million tons entering the ocean (Science 13 February 2015: Vol. 347 no. 6223 pp. 768-771) The authors noted that world plastic production increased by 620% in the last 40 years. Continue reading

Overcoming Good Intentions: Government Measures do More Harm than Good

Governments always mean well, and sometimes government programs actually achieve desired results. Nevertheless, government measures that distort production, consumption and trade always do more harm than good, and in a highly competitive world economy, cotton would be better off with less government “support,” not more. Continue reading

WTO Disciplines Should Apply to All

In the Age of Sail, all lines on ships were made of natural fibers, mostly hemp and sisal, and millions of tons of both fibers were produced each year. As late as the 1960s, world hemp production was still nearly 400,000 tons per year and sisal production still totaled 750,000 tons per year. Today, with the exception of museum ships, all ships’ lines are made of nylon, polypropylene or polyester, and world production of hemp has fallen to less than 60,000 tons while sisal production has fallen to less than 300,000 tons, most of which is used in agricultural twines and cordage.

Prior to the advent of “fast fashion” and “casual Fridays,” wool was a major apparel fiber. In the 1960s, wool accounted for 10% of world apparel fiber use, and wool production for all uses including carpets reached 1.8 million tons in the early 1990s. Today, wool accounts for 1.2% of world apparel fiber use, and production has fallen to 1.1 million tons.

Prior to the invention of manmade fibers, all apparel fibers were natural, and in the 1800s and early 1900s, cotton probably accounted for 85% of world fiber use. However, with the development of nylon, rayon, polyester, and other manmade fibers, cotton’s share has fallen. In the 1960s, cotton still accounted for two-thirds of all apparel fiber use. By the 1980s, cotton’s share had fallen to half, and today, cotton’s share of world fiber consumption is less than 30%, and falling. World cotton consumption reached 26.6 million tons in 2007, but eight years later in 2015, despite population growth of 8% or 600 million, and cumulative world real GDP growth of 18%, world cotton consumption is still 2 million tons less than it was at its peak. Just as with sisal, wool and other natural fibers, the world may have passed peak use of cotton. Continue reading

Natural Fibers and the World Economy

World natural fiber production in 2013 (the latest year of complete data) is estimated at 33 million tons, including 26 million tons of cotton, 3.3 million tons of jute, 1.2 million tons of clean wool, and 900,000 tons of coir (fibers made from coconut husks). Production of all other natural fibers, including abaca, flax, hemp, kapok, ramie, sisal, silk, and other fibers summed to approximately 1.6 million tons.

The farm value of natural fiber production in 2013 was around US$60 billion, of which cotton accounted for $45 billion, wool $8-9 billion and jute $2 billion. All other natural fibers together accounted for the balance of about $3 billion.

It is difficult to estimate employment in the agricultural segments of natural fiber value chains because most production occurs in developing countries with weak systems of data collection, most producers are small holders and most labor is hired informally and seasonally, and because many households go in and out of fiber production from one season to the next, making it difficult to know who and how many are employed in any one year. Nevertheless, a reasonable estimate of total employment in natural fiber industries, including family labor, hired labor and employment in industries providing services to agriculture, and including both full time year round employment and part time or seasonal employment, is around 60 million households (about 300 million people), or about 4% of the world’s population. Continue reading

Availability Cascade, Information Cascade and Reputation Cascade: The Relevance of Cascades to Cotton

Summary: An “availability cascade” is a self-reinforcing process of belief formation, in which repetition of a belief triggers a chain reaction of additional repetition. Merely because the belief is repeated, it becomes widely accepted. In other words, a belief becomes irresistible simply as a result of its repetition.

Cotton is suffering from an availability cascade of demonizing allegations that have become so thoroughly interwoven into the consciousness of retailers, organic cotton advocates and environmental and social activists that objective information, no matter how powerful, contrary data, no matter how well researched, and historical perspective, no matter how valid, are automatically rejected as invalid, unacceptable and illegitimate.

Examples of availability cascades of negative information about cotton include the Aral Sea, pesticide use and water consumption.

13b. Availabilty Cascade

Incentives Matter: Why Environmentalists, Retailers and NGO’s are Slowly Strangling the Cotton Industry

Summary: The world cotton industry is being slowly strangled by loss of market share to polyester. Campaigns of demonization contribute to this strangulation. As one example, the C&A Foundation Annual Report 2014 uses evocative language, exaggeration, and repetition of allegations years out of date to demonize, rather than inform, in the service of enhancing the C&A brand. The report is unremarkable, except that it is recent, and serves as an example of efforts by NGO’s, retailers and environmentalists to build sales and enhance careers, while undermining the livelihoods of tens of millions of cotton households. Only by volubly challenging those who demonize, with public, specific, fact-based rebuttals, will the cotton industry be able to make demonization expensive and thus shift the structure of incentives that currently makes demonization profitable.

12a. C&A Foundation report 2014

Tough Times for Speculators/Tough Times for Cotton

There is an adage: “Be careful for what you wish; you may get it.”

The world cotton industry is experiencing price stability rarely seen, and while some segments may appreciate the tranquility, the industry as a whole will suffer. This may seem counter intuitive as most government officials and many market participants decry price volatility. However, the current stability in prices is not the result of a natural balance between cotton supply and demand. Rather, the current situation results from management of reserve stocks by the governments of China and India.

Those who wished for stable prices have them now. For many, stable cotton prices will make management decisions much easier. There will be no need to hedge sales or purchases. Farmers will plant, ginners will buy, merchants will market, and spinners will sell, each knowing with greater certainty what their returns will be. However, a market situation that seems to be an advantage for individual participants will prove to be a disadvantage for the industry as a whole. Nevertheless, whether desirable or not, stable prices are likely to characterize the cotton market for several years to come.

11. Tough Times for Speculators

The 2014 Farm Bill and Cotton: Proof that the WTO Matters

The 2014 farm bill (Agricultural Act of 2014) fundamentally reduced the level of agricultural subsidies for all the program crops, and the bill changed the way that subsides are calculated by eliminating the Direct Payments, Countercyclical Payments, and Average Crop Revenue Election Payments and substituting revenue insurance programs, including the Stacked Income Protection Plan (STAX) for upland cotton—almost all cotton in the world is classified as upland.

Farm bills are products of diverse influences, including policy objectives, political pressures and budget limitations. The 2014 farm bill was uniquely influenced by an additional factor, the legal ramifications of the Brazil cotton case in the World Trade Organization (WTO).

In WTO parlance, upland cotton was treated “specifically” and “ambitiously,” within the 2014 farm bill, and such treatment would never have happened but for the legal pressure brought by Brazil under the Dispute Settlement Mechanism within the World Trade Organization (WTO), augmented by the force of moral suasion brought by African countries and their supporters within the Talks on Agriculture in the Doha Development Agenda (the Doha Round).
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