Cotton
Meetings Stress Need to Advance Talks, Focus on Fertilizer Issues and
Development
·
Members were unable to agree on a work plan
for agriculture negotiations, including cotton, at the 12th Ministerial Conference
(MC12) in June
The multifaceted
challenges facing cotton producers have highlighted the need to strengthen the resilience
of the cotton sector and speed up cotton trade reform, the Cotton-4 (Benin, Burkina
Faso, Chad and Mali) and other cotton-producing developing countries stressed at
the WTO’s Cotton Days on 9-10 November. The meetings heard updates on trends in
cotton trade following recent crises. Also, a strong call was made to mobilize additional
financial resources and technical assistance to support cotton-related development
projects.
Deputy Director-General Xiangchen
Zhang, acting on behalf of Director-General Ngozi Okonjo-
Iweala, chaired the meeting on the development dimension of cotton on 10 November
while Marieme Fall, Officer in charge of the Agriculture
and Commodities Division of the WTO, facilitated the discussion on cotton trade
on 9 November in the absence of an agriculture negotiations chair.
A roundtable discussion, opened by Deputy Director-General
Jean-Marie Paugam, looked into the availability and affordability
of fertilizers for cotton farmers and ways to mitigate negative market conditions.
At the dedicated discussion on cotton trade on 9 November, Ms Fall, noted that members were unable to agree
on a work plan for agriculture negotiations, including cotton, at the 12th Ministerial
Conference (MC12) in June, and drew attention to the last
report by the previous
chair, Ambassador Gloria Abraham Peralta. In this report, the chair regretted the
low level of engagement on cotton-specific trade-distorting domestic support despite
all the efforts by her predecessors and invited members to adopt a fresh approach.
This "might require a candid exchange between the proponents and other key
players" and "a better understanding of the existing state of play regarding
cotton support", Ms Peralta had added.
The need to approach the agriculture negotiations with
fresh thinking, building on post-MC12 momentum, was also stressed at the agricultural
retreat held on 24
October, Ms Fall
added, highlighting the useful discussions at the retreat on how to remove obstacles
that have stymied progress in negotiations to date.
The Cotton-4 reiterated the importance of cotton in their
countries' economic and social development, flagging its contribution to food security,
job creation, income generation and social inclusion. Regretting the impasse in
the agriculture negotiations, the C-4 urged members to increase their engagement.
They also called for an open, transparent, inclusive and balanced outcome at MC13,
including on cotton, in line with the commitment made in 2005 to address cotton
ambitiously, expeditiously and specifically.
Several members underscored the critical role of cotton
in the livelihood of farmers in cotton-producing countries. They also shared their
sense of urgency in making progress on cotton negotiations. In addition to trade-distorting
domestic support, some members also referred to issues such as improving market
access and enhancing transparency. Several members also underscored the need to
have evidence-based negotiations.
Members discussed the latest analysis of cotton production
and trade trends undertaken by the International Cotton Advisory Committee (ICAC). They also reviewed the short- and medium-term outlook for the C-4's cotton markets, as presented by the UN Food and Agriculture
Organization (FAO).
Both studies underlined the unfavourable market climate
resulting from the COVID-19 pandemic, geopolitical tensions and a potential economic
recession.
Cotton prices fell considerably towards the end of the
2021-22 season and at the beginning of the 2022-23 season due to concerns about
inflation and potential recession, the ICAC said. In addition, global production
in the 2022-23 season is outpacing or on a par with consumption as global demand
is decreasing.
Cotton exports in 2021-22 declined by 9%, reaching 9.7
million tonnes, while west African cotton exports remained stable, following the
1.19 million tonnes of exports recorded in 2020-21, the ICAC stated. The downward
trend in exports is expected to continue into 2023, with a further drop of 3.2%
predicted. The ICAC also estimated government subsidies in 2021-22 at USD 3.5 billion,
57% lower than the previous season and the lowest level since 2010-11.
The FAO said cotton production in the Cotton-4 is projected
to increase in the coming years, provided appropriate action is undertaken, including
promoting sustainable standards, empowering women and youth, supporting textile
manufacturers, reducing trade-distorting subsidies and broadening market access
to least developed countries (LDCs).
The Cotton-4 aired their concerns regarding the drop in
demand. Noting the Cotton-4's interest in mitigating climate change and pest risks,
the FAO said risk management mechanisms in relation to cotton are important tools
for climate adaptation and pest control.
The WTO Secretariat introduced its updated “background
paper” (TN/AG/GEN/34/Rev.17
and two addenda) compiling
the latest information on cotton policies in domestic support, market access and
export competition.
In his opening remarks at a side event on fertilizers,
DDG Paugam stressed the strategic importance of boosting
cotton production and ensuring food security for cotton-producing countries. Due
to export restrictions and higher input costs for fertilizer, global prices have
reached record highs, exacerbating the pressure on all agriculture output, including
cotton, he said. Therefore, keeping trade open for fertilizers and other agriculture
inputs is key to tackling food insecurity.
The WTO has been monitoring the situation closely, calling for trade policy
transparency, he added.
The event looked into the current market situation
for fertilizers and viable alternatives for cotton producers. It also shed light on how to strike a balance
between improving cotton yields, meeting market needs and achieving sustainable
development objectives, such as organic fertilization.
The latest “Evolving Table on Cotton Development Assistance” prepared by the WTO Secretariat provides
updates on the implementation and disbursement of development assistance for cotton,
with four new projects reported by the European Union and disbursements and project
completions by Brazil, Canada Japan, and the United Nations Conference on Trade
and Development (UNCTAD).
The table shows an increase in active projects both in
cotton-specific development assistance (29 projects totalling USD 225 million) and
in agriculture and infrastructure-related development assistance (41 projects totalling
USD 2.073 billion).
Several members reported on their latest activities, with
some developing members providing updates on their efforts to strengthen South-South
cooperation in the cotton sector.
The Brazilian Cooperation Agency and the FAO introduced
their joint Cotton+ project in Latin America, which aims to leverage new technologies
to improve soil fertility and enhance cotton yields for family farmers. The ICAC also shared results regarding soil management,
detailing the use of charcoal made from biological material (biochar) to improve
soil health, reduce acidity and boost cotton production.
The Cotton-4 welcomed the work done at the WTO to increase
the visibility of cotton and to channel resources to support the cotton value chain,
ranging from World Cotton Day 2022 and the signing of a "call for action" on cotton to the
African Export and Import Bank (Afreximbank)'s pledge of USD 300,000 for supporting African cotton
and the
Memorandum of Understanding signed by the WTO and FIFA.
However, more needs to be done, the Cotton-4 said. It
renewed its call for development partners' support for its "Route du Coton" (WT/CFMC/W/72 and WT/CFMC/W/73) and highlighted
the importance of technology transfer and scaling up good practices from other agricultural
products.