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Shooting from the hip, unedited, warts & all. Please click through if you can't see it.
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Welcome to the first post for the Growing Organically series ~ so glad you stopped in!
Today's topic is about U.S. cotton subsidies.
If you've purchased organic cotton fabric, you know that the price at the cash register is slightly higher than a non-organic (conventional) fabric. To put it simply, the pricepoint of organic fabric reflects real and fair costs of production and conventional cotton does not.
The United States pays subsidies to US cotton farmers*, which have averaged $3 billion/year for the past decade. These "little" side payments allow these farms (we're talking Big Agra here) to charge far less than they should per bale of cotton on the world market b/c they don't need to recoup the actual costs of their production from buyers. It's kinda like when your kiddo has to pay a fee for a trip or camp, and your out-of-pocket expense is the difference between how much the trip actually costs and how much your child raised selling candy or washing cars. And it kinda makes you feel like your kid is taking a trip for $200, when the real cost of the trip is $500.
The impact of these subsidies is felt on a global scale because the US exports 40-60% of its cotton production. As such, the artificial, discounted price that these farms charge for their cotton sets the price precedent for every other farmer in every other country. This means that the small family farmer in a developing country and even large farms in developed countries cannot charge a fair and "real" price for their cotton ~ these are farmers and farms that do not receive handsome bonuses on the side from their governments. Thus, the margins they earn on their crops are not fair and keep them in an endless cycle of poverty and worse. The World Trade Organization has ruled that these subsidies are illegal b/c it violates international trade agreements and allows for unfair competition... yet it still happens and conventional cotton is still erroneously cheap.
To ensure increasing cotton exports and maintain dominance in price-setting, Big Agra in the US has turned to more and more toxic, chemical-laden processes in recent decades that allow it to handily outcompete other cotton-producing countries. Whoa Nellie! A topic for another day.
*The European Union subsidizes cotton as well, but they don't export at the same volumes.
"Don't ask why organic is so expensive.
Ask why the others are so cheap."
I don't remember where I read this quote, but in the case of cotton, it is true. Organic cotton is not subsidized like conventional US cotton** is, and the pricepoint reflects real and fair inputs along all steps in the supply chain - most importantly, the farmer. The end price to you will naturally be more for organics than conventional.
**Yes, weather extremes can play a part as well in the price of cotton. However, cotton prices were kept so artificially low for so long that the price became inelastic and could not "weather" the weather extremes of recent years.
From Oxfam America article Paying the Price (linked below):
How do US cotton subsidies affect the world price of cotton?
The more bales of cotton an American producer grows, the more dollars that farmer can expect to receive from the US government. Farmers also receive subsidies to offset low cotton prices and to provide a guaranteed cash flow. Therefore, growers produce substantially more than they would otherwise to get more subsidies. Since the US is the world’s largest cotton exporter, these additional US cotton exports depress world prices. Past studies suggest that US subsidies lower world prices by between 3 to 30 percent, or an average of about 12 percent. This new study draws on more recent analysis and shows that the elimination of US cotton subsidies would increase the world price by between 6 and 14 percent."
Paying the Price / Oxfam America
Spinning the Threads of Poverty / Rights Work
Brazil's victory in cotton trade case exposes America's wasteful subsidies / Washington Post
U.S. Cotton Subsidies: Subsidizing Suffering / ForceChange
United States: Cotton Subsidies / NY Times
Why U.S. Taxpayers Are Paying Brazilian Cotton Growers / NPR
Fact Sheet on U.S. Cotton Subsidies and Cotton Production / Organic Consumer Assoc.