National Cotton Council President and CEO Dr. Mark Lange says the World Trade Organization case remains extraordinary for a lot of reasons:
“It made writing our part of the Farm Bill a very difficult exercise. Inside the WTO, it’s very clear agriculture is permitted to have subsidies, and it’s also very clear in the WTO that there are caps on the extent of support. It’s baffling to me that you could have a subsidy that doesn’t exceed the support level and yet be held to be trade distorting. Why were you allowed to have the subsidy in the first place under the WTO?
I find all this very crazy, extremely frustrating, it’s been very expensive for the US cotton industry and for the US government. Now, I have told all of US agriculture, that some people love to talk about what’s WTO compliant, but you’re only WTO compliant until the next WTO case.”
Lange also says China remains the key to the world cotton market:
“Right now we’re watching the Chinese have an impact in the marketplace because they’re buying cotton and putting in reserves. The impact is that the Chinses by the way they’re behaving of couse they’re allowed to insure that the grower in China is going to get something in the neighborhood of $1.35 a pound for his cotton in China. The Chinese cotton grower again will be the highest paid cotton grower in the world.
The concern that I have is that near-term that provides some support as they pull cotton into their reserves and they’re buying cotton and taking it off the market, but we all know long-term that cotton is still out there. And at some point if the Chinese think that they need to put cotton back into the marketplace, it’ll have the expected impact on price. So, that makes me very nervous.
I’ve always been concerned when countries run those reserve programs. I always thought it ought to be a part of…again, a WTO ought to be saying, ‘You don’t do that, you don’t come into the market and buy cotton simply to control your internal price’. And that’s what they do, they get away with it, and I don’t think they should be allowed to.”
The 2012 Beltwide Cotton Conference wrapped up Friday in Orlando.