Problem

Instability of cotton trade

Nature:

The proportion of cotton in world fibre consumption (in cotton equivalent weight) is declining. Synthetic substitutes are taking over particularly in developed market economies, but inroads by synthetics have also occurred in cotton-producing developing countries. This has not only resulted in a stagnation in demand for cotton but has also in some cases caused cotton prices to rise higher than the price of synthetics. The high cotton prices have forced many mills out of business or caused them to change to production of synthetics, and this move is difficult to reverse. Despite high world prices, producer developing countries have not benefited proportionately because they have failed to switch to strains of cotton which blend more easily with synthetic fibres. These trends in consumption and prices are threatening the well-being and jeopardizing the economic and social development large areas of the developing world.

Incidence:

About 55% of cotton fibre consumption is accounted for by the developing countries.

Counter Claim:

Classifying the cotton trade as unstable is inaccurate. Since the 1960's, imports and exports have generally been in balance. While there are short-term fluctuations in both production and consumption, the price mechanism, coupled with the fact that cotton is grown in both hemispheres, has meant that imbalances have ben quickly corrected. Cotton consumption is volume terms has risen uninterrupted since the Second World War, by an average of 3.5% per annum.

Problem Type:
E: Emanations of other problems
Date of last update
16.01.2018 – 21:08 CET