[env-trinity] SACBEE- Cloud over cotton farmers

[Tom Stokely]

http://www.sacbee.com/content/business/story/9164009p-10089585c.html
Cloud over cotton farmers
State's growers fear WTO subsidy edict will hit them hard.
By Jim Evans -- Bee Staff Writer
Published 2:15 am PDT Monday, May 3, 2004

California cotton farmers could be forced to sell out to developers or grow different crops if a World Trade Organization ruling against U.S. cotton subsidies released last week is allowed to stand. 
Last week, a panel from the global trading body ruled that U.S. cotton subsidies - worth about $10 billion in 2002 - create unfair competition for Brazil, which filed the complaint. 

         
 While the report on it hasn't been released, Brazilian officials leaked the ruling last week, prompting U.S. Trade Representative Robert Zoellick to tell a congressional panel that the United States will appeal the WTO ruling, which could take until next year or later. 

"The effect on the California cotton farmer would be devastating," said Paul Betancourt, whose family grows cotton at VF Farms in Fresno County. 

The California cotton business is second only to Texas in size. Cotton farmers in the state produce up to 2.5 million bales a year, which is about 10 percent to 14 percent of the U.S. market in any given year, according to the California Cotton Ginners and Growers Associations. The industry employs about 20,000 workers in the state. 

According to the Environmental Working Group, a nonprofit organization based in Washington, D.C., U.S. cotton subsidies totaled more than $10.5 billion between 1995 and 2002. California's take of those cotton price supports was $1.2 billion, third in the nation after Texas and Mississippi. 

The subsidies bolster an already big business. California cotton farmers count on about $1 billion in exports a year, mostly to markets in the Pacific Rim, and rack up sales of about $3.5 billion annually. 

U.S. cotton farmers say the subsidies are needed because without them they would not be able to compete with countries where the costs of doing business are substantially lower than here. 

"I think we'd be looking at a situation where our cotton producers become uncompetitive because of low world prices," said Greg Palla, director of operations and grower services for Weil Brothers-Cotton Inc., an Alabama-based company with operations in the San Joaquin Valley. 

If the WTO ruling survives the appeal process, California cotton farmers said, some in their ranks may have to sell their farms to housing developers or switch quickly to other crops - which would have ramifications for prices for other agriculture products. 

"If growers seek alternative crops, that puts additional burdens on those other crop businesses," said Palla. 

Economists say California cotton isn't as subsidized as cotton in other states, such as Texas, because subsidies are based on price and California's higher-quality cotton is more expensive, said Daniel Sumner, director of the Agricultural Issues Center at the University of California, Davis. 

Sumner - who served as a consultant for Brazil in its case against the U.S. - said federal subsidies "are far less important to California" than they are to other states. 

Growers in California grow two types of cotton: Upland, or Acala, and Pima. Upland is the only variety covered by the WTO report. Upland cotton makes up about 25 percent to 30 percent of the California cotton market and is the higher-quality cotton - experts say growers get about 5 cents more per pound for upland cotton than for other types. 

Sumner said Brazil's case before the WTO was that U.S. cotton exports, without the subsidies, would fall by 40 percent, and world prices - because the United States is such a large exporter of cotton - would rise almost 13 percent. Developing countries argue that depressed prices make it harder for them to compete because they don't subsidize their crops. 

U.S. cotton farmers say that if Brazil wins its case, all U.S. farm subsidies could be threatened. Experts said U.S. farmers receive $15 billion to $20 billion annually in federal subsidies for all agricultural products. 

"Cotton will not walk the plank alone on this thing," said John Pucheu, co-owner of Pucheu Brothers Ranch in Tranquillity, and chairman of American Cotton Producers. "It could apply to all supported crops." 

Over the past 25 years, California's cotton business, in acreage, has dwindled considerably. In 1979, California cotton growers produced 3.4 million bales of cotton on 1.6 million acres. In 2002, cotton farmers produced about 2 million bales of cotton on only 700,000 California acres. 

So far, this year's cotton growing season has gotten off to a roaring start. 

"We're going into a season right now - knock on wood - that's been one of the most ideal starts in 50 years," said Bruce Roberts, University of California Cooperative Extension farm adviser in Kings County. 



--------------------------------------------------------------------------------

About the Writer
---------------------------

The Bee's Jim Evans can be reached at (916) 321-1215 or jevans at sacbee.com. 
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://www2.dcn.org/pipermail/env-trinity/attachments/20040503/d843f72b/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: 64313730623035333430303832633930?_RM_EMPTY_
Type: application/octet-stream
Size: 43 bytes
Desc: not available
URL: <http://www2.dcn.org/pipermail/env-trinity/attachments/20040503/d843f72b/attachment.obj>