The Cotton Case

by Laurence Jarvik on 8/19/2004 · 6 comments

Alisher made reference to “let them fish” instead of teaching people to fish. He was, at least in part, referring to the cotton industry, Uzbekistan’s largest business. Unfair American subsidies depress world cotton prices, or so it seems to Uzbeks–and the WTO, which decided in favor of Brazil in a recent related case.

Here’s the BBC report:

The World Trade Organisation has dealt the US a significant blow in a key trade battle by ruling that subsidies to its cotton farmers were unfair.
Brazil had complained that US payments kept world cotton prices too low and gave its producers an edge over less developed and less well-funded rivals.

It is the first time that a country’s domestic farm subsidies have been challenged and may prompt more cases.

But The Washington Times reports that the Bush administration is trying to escape the consequences of the WTO decision:

The United States will not unilaterally eliminate farm subsidies following a World Trade Organization decision that U.S. government payments to cotton farmers break international rules, Bush administration officials said yesterday.

We will be defending U.S. agricultural interests in every form we need to, and have no intention of unilaterally taking steps to disarm when it comes to this,” White House spokesman Scott McClellan said yesterday…

…A report by the Institute for Agriculture and Trade Policy, a free-trade skeptic, said cotton was exported from the United States in 2002 at 61 percent below the cost of production because of subsidies. The low cost drives down prices on commodity markets, lowering income for farmers in other nations.

And yes, American cotton farmers do feel threatened by competition from Uzbek cotton, which has improved in quality recently, at least according to this article in the Southwest Farm Press:

As he did at last year’s meeting, Dunavant expressed concern about the quality of the Mid-South cotton crop. U.S. growers have some catching up to do.

Five years ago, Uzbekistan, which produces 4 million bales of cotton a year, produced the lowest price cotton in the index of foreign growths. Today it is the highest price cotton of the cheapest five growths in the index.

They have gone from the bottom to the top. Their [government paid attention] to the improvement of their fiber, the seed, the bagging and doing away with contamination.

The mills in China would much rather have Uzbek cotton than California/Arizona cotton or any other growths produced in the world. The California/Arizona crop has been a real premier cotton for China over the years.


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{ 6 comments }

Nathan August 19, 2004 at 11:35 am

I remember that when I was in Uzbekistan, the US put in place sanctions against Uzbek cotton over the harvesting practices. Not that we would be buying it anyway, but part of its competitive price is the free labor (some kids told me they like going to the cotton harvest though–gets them away from their parents).

Anyone know if we still have that restriction in place?

All things considered though, I hate US agricultural subsidies (almost as much as I hate the European ones) and welcome their abolition.

Laurence August 19, 2004 at 11:47 am

You mean forced labor, not free labor. All the teachers and students have to go. Some of my students said they liked it, also, because they could keep the cotton wood and use it for heating and cooking, and so forth. They also liked being paid, extra money, though not much by our standards. But most of the teachers I interviewed complained that it hurt education.

Interestingly, the cotton harvest in the US is mechanized. When I suggested to some Uzbeks that perhaps rather than having children and old ladies stooping in cotton fields, maybe to use machines, I was told: 1) Hand-picked cotton is better quality; and 2)What would people do without the cotton harvest?

We went through this about 100 years ago in the American south. The answer is that you make much more money with slightly less quality in mechanized production, so that makes up for it; and the cotton pickers move somewhere else (in the US, from the South to the North). Eventually, the American South industrialized, and is now richer than the North…

Nathan August 20, 2004 at 12:08 pm

Yes, forced labor.

One of the reasons I heard for why cotton is good is, well, sex. Of course, no one ever said this directly, but there was talk of “cotton babies.” My kids didn’t go to cotton, which was nice.

I seem to remember reading an official Uzbek publication that mentioned that they are one of the biggest producers of cotton-harvesting machines in the world. They, of course, haven’t seen fit to use them.

Tim Newman August 21, 2004 at 2:21 am

Have a read of this Economist article on the history of cotton. The article may require subscription, so I’ll reproduce the bit about Uzbekistan here:

Almost a century later, America’s continuing domination of cotton production led the Soviet Union, its implacable enemy in the cold war, to look for self-sufficiency in this vital crop. In 1946, at the urging of Stalin, the Uzbek republic in the south pledged to produce unrealistic quantities of cotton in order to achieve that goal. It thus created one of the worst man-made environmental disasters ever.

The Vegetable Lamb is a thirsty beast, and much of the Uzbeks’ land is desert. In order to fulfil their promise, they diverted two rivers that drained the melted snow from the western Himalayas: the Amu Darya and the Syr Darya. By means of canals and huge concrete aquaducts, they took the rivers’ waters to irrigate vast areas of cotton. But they failed to take account of the fact that what they were redirecting was the sole source for the Aral Sea, a vast inland tank that provided food and livelihood for hundreds of miles around. That sea, now two separate lakes, is today a fraction of its size in 1960. It has virtually no fish, and the health of the local inhabitants has deteriorated markedly.

Despite widespread awareness of the problem, little has been done to reverse this ecological disaster. Even today, over a decade after the collapse of the Soviet Union, Uzbekistan is still the world’s second-biggest exporter of thirsty cotton.

Tim Newman August 21, 2004 at 2:25 am

Have a read of this Economist article on the history of cotton. The article may require subscription, so I’ll reproduce the bit about Uzbekistan here:

Almost a century later, America’s continuing domination of cotton production led the Soviet Union, its implacable enemy in the cold war, to look for self-sufficiency in this vital crop. In 1946, at the urging of Stalin, the Uzbek republic in the south pledged to produce unrealistic quantities of cotton in order to achieve that goal. It thus created one of the worst man-made environmental disasters ever.

The Vegetable Lamb is a thirsty beast, and much of the Uzbeks’ land is desert. In order to fulfil their promise, they diverted two rivers that drained the melted snow from the western Himalayas: the Amu Darya and the Syr Darya. By means of canals and huge concrete aquaducts, they took the rivers’ waters to irrigate vast areas of cotton. But they failed to take account of the fact that what they were redirecting was the sole source for the Aral Sea, a vast inland tank that provided food and livelihood for hundreds of miles around. That sea, now two separate lakes, is today a fraction of its size in 1960. It has virtually no fish, and the health of the local inhabitants has deteriorated markedly.

Despite widespread awareness of the problem, little has been done to reverse this ecological disaster. Even today, over a decade after the collapse of the Soviet Union, Uzbekistan is still the world’s second-biggest exporter of thirsty cotton.

Laurence August 21, 2004 at 8:59 am

Thank you Tim for this interesting reference.

In this regard, last year I saw a very interesting presentation by some Israeli irrigation experts on drip and underground irrigation, who say that Uzbekistan could save about 50% of its water by switching to more modern irrigation systems. But they can’t sell them to the Kolkhozes because they don’t want to spend the money or change the way they do things. The place has been irrigated in some way for some 2,000 years.

And Tajikistan is full of water, they just can’t sell it to Uzbekistan for cash, otherwise they wouldn’t fight over it so much.

Actually, when I was in Tashkent, every toilet was running constantly, water was flowing in gutters, etc. Because water was not metered or charged for. If it is free, it gets wasted.

And diverting Siberian rivers, while expensive, was not really a crazy idea. In the US we had the Tennessee Valley Authority in the New Deal, which did the same sort of thing, see an Elia Kazan film called “The River” showing the heroes building a dam for the TVA, it could have been a Soviet picture…

Water issues are very complicated, and The Economist has its own axes to grind, I think, sometimes, too…

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