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Created by: JonathanHowse1
Created on: 18-10-14 23:51

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Role of trade and investment in the development gap - Cotton
- Mali
  - Background
    - 10 million small-scale cotton growers suffering from falling prices
    - Small scale farmers can earn up to $1000/year
    - 3 million Malians rely on cotton to survive
    - 2001 US aid = $37.7 m
    - 2001 = Mali lost $343 million due to American subsidises
    - = 6% of GDP
  - Impacts of cotton
    - Breathing problems due to cotton fibres
    - Farming cotton gives a farmer 3x the average annual income
    - Plans to privatise the cotton industry
    - 4% of population driven into poverty
  - Link to the development gap
    - Subsidies lead to overproduction of cotton = forces cotton prices down = Mali cotton farmers earn less =decline in living standards
    - If cotton subsidies to USA farmers were scrapped prices would have risen for African farmers by 3.5%
- USA
  - Background
    - Up to 20% of cotton farmer’s income comes from subsidies
    - USA spends 3x as much on subsidies for cotton then it does on aid forwhole of Africa
    - The US is the second largest cotton producer
    - US currently accounts for more than 50% of the worlds exported cotton.
    - 25,000 cotton producers receive $4 billion/year in subsidies
  - Impacts of cotton
    - Large scale production e.g. 1 16,000 acre farm makes enough cotton for 200,000 t-shirts
    - The slack in world production of clothing has been taken up by China and Pakistan
    - In countries that subsidise their farming, only 5% of the population are farmers
  - Link tte the development gap
    - Reduced cotton prices by 15%
    - Law passed banning export subsidies on cotton
    - WTO ruled in March 2007 that cotton subsidies were unfair