THE CONTRIBUTIONS OF COTTON TO ECONOMY AND
FOOD SECURITY IN DEVELOPING COUNTRIES
P. Fortucci
Director, Commodities and Trade Division
Cotton is one of the most important and widely produced agricultural crops in the world. In 2000,
about 130 countries produced cotton, and it is estimated that the crop was planted on 2.5 percent of
the world’s arable land area, making it one of the most significant in terms of land use after food
grains and soybeans. In developing countries it accounts for nearly 3 percent of the total crop area.
Cotton is produced for various purposes. It may meet the basic consumption needs of farm families;
it may be exported to earn foreign exchange; or it may provide the raw material for textile production
for domestic markets or for export. At the household level, cotton is an important cash crop for
millions of farmers worldwide, and the income which it generates contributes to rural household food
security, especially in developing countries.
Cotton is also a heavily traded agricultural commodity. Nearly 170 countries were involved in the
export or import of cotton in 2000. In addition, through the export of textiles, cotton contributes to
broader national economic growth, as a result of the significant multiplier effects deriving from
employment and earnings in the manufacturing sector. Such contributions have become increasingly
important for many developing countries as a result of the migration of textile manufacturing
industries to them in order to benefit from relatively lower cost structures.
Although the importance of cotton is widely known, I would like to take this opportunity to outline a
few salient features regarding its economic significance in developing countries. These are mainly of
an indicative nature, but they serve to underline the very important role that production and trade of
cotton can have for developing countries and for the well-being of large parts of their population.
1.
Revenue contributions
(a)
Contribution to agriculture and economy
In 2000, world cotton production amounted to 19 million tonnes. Although growth was rather slow
during the 1990s, production continued its upward trend during the decade. Based on average export
unit values, the value of world cotton output in 2000 was estimated about US$26.6 billion.
In many instances, the importance of the agricultural sector in terms of its share of GDP has
declined with economic growth. However, for developing countries, agriculture is still the key sector
on which large parts of the population are dependent. And for some of these countries, cotton
accounts for a significant share of agricultural production. Among all cotton producing countries in
2
the world, there were 16 which had a share of cotton production (valued at export unit values relative
to GDP) above 1 percent in 2000. Of these, Uzbekistan, Tajikistan, Benin and the Syrian Arab
Republic had the highest ratios, ranging from 8 to 12 percent. As shown in Table 1, cotton
production contributes substantially to the national economy in some African developing countries
and certain transition economies. Even when the share of national income is small, the crop provides
very significant returns to areas specializing in production, for example in Brazil, China, Egypt, India
and Turkey.
(b)
Contribution to agricultural export revenue
Cotton is one of the important commodities traded in the world market, both in terms of volumes and
value. In 2000, there were over 100 countries exporting cotton, of which 85 were developing
countries. World export revenue from cotton was US$7.1 billion in 2000. This was nearly 2 percent
of value of global export revenues from all agricultural products, excluding forestry, fisheries and
semi-processed products. By individual product groups, the export revenue from cotton was the 6th
largest following oil and fats, wheat, oilseeds, bovine meat and maize.
The level of developing country dependence on cotton exports is similar to that for a few other major
commodities, such as coffee, cocoa, banana and sugar. Table 2 shows the share of cotton export
revenue in total agricultural export revenue for selected countries where cotton exports accounted for
more than 5 percent of total agricultural exports. Of the 28 countries shown, 25 were developing
countries and transition economies. Moreover, 18 countries were in Africa. On average, cotton
exports accounted for nearly 20 percent of total agricultural export revenue for these 18 African
countries.
In absolute terms, cotton exports brought more than US$1 billion for these 18 countries in 2000.
Benin, Côte d'Ivoire, Egypt, Mali and Zimbabwe each earned more than US$100 million from cotton
exports. Such large revenues obviously have important multiplier effects on national economies and
household incomes.
Although there are many countries which earn significant revenues from cotton exports, a few
developing countries are exceptionally dependent on the crop for their total export revenues. As
indicated in Table 2, in countries such as Benin, Burkina Faso, Central African Republic, Mali, Togo,
Tajikistan, Turkmenistan, and Uzbekistan, cotton exports accounted for more than 50 percent of total
agricultural export revenue. Indeed, cotton was practically the sole agricultural export revenue
generator in Benin and Uzbekistan, accounting for 94 and 85 percent respectively of the total in these
countries. Over time, the relative importance of cotton export revenues has also increased in many
countries. This tendency was particularly pronounced in sub-Saharan Africa.
Obviously in situations of heavy and often rising dependence on cotton export revenues, the falling
prices of the last few years have had dramatic effects on the economies concerned. Between 1997
and 2002 the average world market price of cotton, as measured by the Cotlook index, declined by
nearly 50 percent. Over this period, many of the countries heavily dependent on cotton exports saw
the value of their exports shrink despite export volumes which either grew or at least remained
steady. Although it is not possible to make a direct link to the impact on the domestic economy, it
may be noted that the value of food imports remained fairly stable but that of total merchandise
imports contracted severely. At the household level, despite devaluation of national currencies, it
would appear that the drop in international prices was also borne by growers. In many of the
countries heavily dependent on international markets, production in 2001 was substantially below
1997 levels despite continued growth in production at the global level.
(c)
Contribution to food imports
Food import bills of developing countries have been rising steadily, reflecting both higher
consumption levels related to income and population growth, but also in many cases the need to
3
supplement slow-growing domestic food production through greater imports. If trade flows are
based on comparative advantage rather than limitations to diversification caused by technological or
policy constraints, the use of resources to produce export commodities rather than food for the
domestic market should yield net benefits.
Cotton export revenues are obviously among those contributing to food import potential. Table 3
provides information on the ratio of cotton export revenues to total food import expenses for selected
countries where cotton accounts for a significant share, above 20 percent. While many of the
countries are the same as those shown in Table 2 that are highly dependent on cotton for their
agricultural export earnings, there are several countries which do not appear because they derive
substantial earnings from non-agricultural exports, such as petroleum.
Interestingly, the majority of countries with a ratio above 20 percent was again in Africa. Indeed,
among the 18 countries where cotton export revenue accounted for more than 20 percent of total food
import expenses, 11 were in Africa and 5 were transition economies. Although the world average of
the ratio was only 2.4 percent, it was near 60 percent for these 18 countries.
(d)
Indirect contributions
In addition to the direct impact of fibre exports, cotton is one of the basic materials for textiles, an
increasingly important export sector for many developing countries. As shown in Table 4, global
export revenues from textiles and clothing in 1999 were US$148 billion and US$186 billion,
respectively, or roughly 6.0 percent of the value of world total merchandise trade. Developing
countries accounted for more than 75 percent of both of these categories of exports. Although manmade fibres are estimated to account for more than 50 percent of the raw materials used in textile
production, the textile export revenue derived from cotton was significant, probably not less than
US$100 billion. The multiplier effects from these earnings clearly contributed significantly to the
national economies concerned.
2.
Employment contribution
Although it is well-known that cotton production contributes to employment, especially in
developing countries, it is difficult to obtain numbers of farmers actually employed. The range of
estimates varies greatly and this is attributable to difficulties of both a definitional and practical
nature. The fact that agricultural production is largely of a seasonal nature greatly complicates the
assessment of the labour needs, while the extent to which family members are involved is often
difficult to define, particularly in developing countries. Differences in farm structures also result in
great diversity in the extent of reliance on farm labour in the production process.
For instance, in countries such as the United States cotton farmers invest heavily in machinery to
work their large farms. In developing countries, cotton is typically produced on small farms with the
intensive use of labour. Thus, with 5.3 million hectares planted to cotton in 2000, the United States
had some 31 500 farms engaged in cultivation, while there were around 40 million small farms
engaged in cotton production in China on a planted area of about 4.2 million hectares. Farms in the
United States are large and highly mechanized while small farms in China, as in other developing
countries, rely on labour.
In very general terms, it may be said that larger farms, mainly in developed countries, account for
around one quarter of world total cotton planted area and one third of world output. However, they
only employ a small fraction of the global cotton farm workers. On the contrary, small cotton farms
use almost all of the global labour employed in cotton to produce 65 percent of the world’s output on
72 percent of the planted area.
The labour force directly involved in cotton production at the farm level in the world could exceed
one hundred million, although the numbers of persons in rural households benefiting from cultivation
4
would be at least double that amount, even though many of these people would work for much of the
time in crops other than cotton.
Looking in particular at China, which has by far the largest labour force in cotton production, can
provide an indication of the magnitude of labour involvement under small farm and low capital input
conditions. The average size of cotton farms is 0.1 hectares. Most farms are relatively diversified,
with many crops other than cotton also being cultivated for household and cash needs. Almost no
machinery is used in cotton production, and labour is the key input. Because of the small size of the
holdings, one farmer can manage all of the operations associated with cotton growing during the
year. Thus some 40 million farmers are directly engaged in cultivation, and they and their households
derive income and food security from the crop. Under similar economic and farm structure
conditions, it may be expected that cotton cultivation contributes in an equally significant manner to
rural employment in other developing countries.
In addition to direct farm employment, cotton production also provides additional opportunities for
rural employment in cotton ginning, transport and marketing and, in those countries with textile
industries, in textile and clothing manufacture. There are one or two million workers engaged in
cotton ginning and marketing in the world, but the textile and clothing industries employ far more. In
fact, these industries have contributed significantly to economic development in many countries. In
2000, worldwide installation of spinning machinery reached 165 million units requiring some 10
million workers to operate. Asia has the largest share of this equipment, accounting for 70 percent of
the world total. Weaving machines numbered about 2 million units in the world in 2000, and again,
Asia accounted for 70 percent of the total. Most fabrics are made into apparel, a process which is
very labour intensive. In China alone, some 17 million workers are employed in textile and apparel
production.
3.
Food security contribution
Since the 1996 World Food Summit, the definition of food security used in the Rome Declaration has
been widely adopted. It states that food security exists when all people, at all times, have physical
and economic access to sufficient, safe and nutritious food to meet their dietary needs and food
preferences for an active and healthy life at the individual, household, national, regional and global
levels. Cotton production contributes to food security in several ways.
At the national level, export revenue makes it possible for a country to access food through imports.
When cotton export revenue is the major source of foreign exchange, its contribution to food security
is obviously of primary importance. Table 6 illustrates the role of cotton exports in food security at
the national level for six countries where cotton export revenue accounted for more than 10 percent
of total national export revenue. Without cotton revenues, the food import bills in these countries
could still have been met, but their ability to import other goods would have been severely curtailed.
In fact, the declining cotton prices and earnings of recent years have been accompanied by downward
adjustments in total merchandise imports.
At the rural household level, the contribution of cotton production to food security is mainly through
income. When households are specialized in cotton production, there is a direct link between cotton
production and their ability to buy basic foodstuffs and other goods.
For the diversified small farms, cotton is an important cash crop. Cash income is needed by rural
households to acquire health care, more nutritious foods such as meat, milk, fruits and vegetables,
clothing, housing and many other services. Field visits in Asia and Africa confirmed that in the
cotton producing regions, the crop was a key cash income generator for small farms. For instance, in
Malawi, rural households planting cotton relied on almost solely on the crop for their cash income,
which was used for buying bread, milk and meat for family consumption. In a major cotton
producing province of China, Hubei, the crop contributed about 50 percent of the cash income of
diversified small farms. The share reached nearly 85 percent for those households in remote areas
5
where farmers had little opportunity for off-farm work. According to the survey, on average, these
diversified and basically food self-sufficient households used about 35 percent of their total cash
income to buy food, 10 percent to buy clothing, 15 percent to buy production inputs, and 40 percent
for many other needs such as medical care, communications and education. For the households with
a school age child, nearly 40 percent of the cash income was used for the child’s education. Clearly,
such expenditures may be regarded as very significant for the food security of future generations.
As discussed above, cotton production induced additional employment and export revenue from
textile and clothing manufacturing. The export revenue from textiles and clothing and employment
opportunities in the cotton ginning, spinning, weaving, processing, marketing and transporting have
very important income and food security implications for the country and households living both
rural and urban areas.
During the World Food Summit: Five Years Later which was just concluded in June, member nations
of FAO once again committed their determination to fight hunger and ensure food for all. As an
important agricultural commodity, with many dimensions of contributions to revenue and income
generation, cotton will continue to play an important role in food security at both the national and the
household level.
Table 1. Share of cotton output value in total GDP, 1980 and 2000 (Selected countries, by highest shares in
2000
1980
Estimated Value
GDP in 1980
of Cotton Output
US$
( . . . . . . . . . million US$ . . . . . . . . . .
.)
World
Uzbekistan
Tajikistan
Benin
Syrian Arab Republic
Burkina Faso
Chad
Mali
Togo
Pakistan
Turkmenistan
Zimbabwe
Côte d'Ivoire
Cameroon
Central African Republic
Paraguay
Guinea
Nigeria
Zambia
Myanmar
Source: FAOSTAT; World Bank
2000
Share of cotton
value
in total GDP
percent
Estimated Value
GDP in 2000
of Cotton Output
US$
( . . . . . . . . . million US$ . . . . . . . . . .
.)
Share of cotton
value
in total GDP
percent
22 570
10 674 160
0.2
26 640
31 492 776
0.1
9
212
33
35
61
11
956
89
105
53
11
110
9
20
1 405
13 062
1 709
1 033
1 687
1 136
23 629
6 679
10 175
6 741
797
4 579
64 202
3 884
-
0.6
1.6
1.9
3.4
3.6
1.0
4.0
1.3
1.0
0.8
1.4
2.4
0.2
-
988
102
192
1 453
151
72
114
60
1 814
115
174
163
116
12
96
33
375
21
67
7 666
991
2 168
16 984
2 192
1 407
2 298
1 219
61 638
4 404
7 392
9 370
8 879
963
7 521
3 012
41 085
2 911
-
12.9
10.3
8.8
8.6
6.9
5.1
5.0
4.9
2.9
2.6
2.4
1.7
1.3
1.3
1.3
1.1
0.9
0.7
-
Table 2. The contribution of cotton to total agricultural export revenue, 1980 and 2000
1980
2000
Cotton
Lint
Total
Agricultural
Exports
( . . . . million US $ . . . .
. )
Share of Cotton
in
Total Export
percent
Cotton
Lint
Total
Agricultural
Exports
( . . . . million US $ . . . .
. )
Share of
Cotton
in
Total Export
percent
World
7 846
234 255
3.3
7 124
410 549
1.7
Africa
Benin
12
55
21.4
106
113
93.8
Burkina Faso
Cameroon
40
43
80
688
49.8
6.2
85
97
125
471
67.7
20.6
Central African Republic
Chad
18
39
60
115
30.0
34.0
13
46
21
108
61.9
42.1
69
423
2 009
677
3.4
62.5
148
132
1 910
499
7.7
26.5
Guinea
Mali
1
79
33
192
4.2
41.1
10
156
33
264
30.3
59.1
Mozambique
Nigeria
8
18
157
446
5.2
4.0
8
23
58
357
14.3
6.4
10
236
113
553
9.1
42.6
67
21
165
358
40.5
5.9
49
8
406
77
12.0
10.3
18
55
290
78
6.2
70.5
4
8
344
13
1.2
62.1
17
15
261
56
6.7
26.8
89
453
19.6
109
1 094
9.9
Sub total of above
1 154
6 470
17.8
1 126
6 261
18.0
Economies in Transition
Kazakhstan
Kyrgyzstan
-
-
-
80
27
703
178
11.4
15.2
Tajikistan
Turkmenistan
-
-
-
82
105
113
142
72.3
74.1
Uzbekistan
-
-
-
840
988
85.0
-
-
-
1 134
2 124
53.4
Other Developing
Pakistan
335
936
35.8
156
1 073
14.6
Syrian Arab Republic
169
276
813
2 403
505
1 212
61.3
41.6
969
3 476
33.8
27.9
75
9 216
0.8
892
14 698
6.1
34
100
1 419
862
2.4
11.6
289
55
2 577
912
11.2
6.0
208
11 497
1.8
1 235
18 187
6.8
Côte d'Ivoire
Egypt
Senegal
Sudan
Tanzania, United Rep of
Togo
Uganda
Zambia
Zimbabwe
Sub total of above
Sub total of above
Developed
Australia
Greece
Israel
Sub total of above
Source: FAOSTAT
Table 3. Contribution of cotton revenues to food import balance, 1980 and 2000 (Selected countries, by highest shares in 2000)
Value 1980
Cotton
Food
Exports
Imports
( . . . . . . million US$ . . . .
. .)
World
Uzbekistan
Togo
Mali
Zimbabwe
Chad
Burkina Faso
Benin
Turkmenistan
Cameroon
Central African Republic
Tajikistan
Kyrgyzstan
Côte d'Ivoire
Paraguay
Zambia
Syrian Arab Republic
Kazakhstan
Senegal
Sub total of above
Source: FAOSTAT
Ratio
Cotton exports
to
Food imports
Value 2000
Cotton
Food
Exports
Imports
( . . . . . . million US$ . . . .
. .)
(%)
Ratio
Cotton exports
to
Food imports
(%)
7 846
180 520
4.3
7 124
294 502
2.4
8
79
89
39
40
12
43
18
69
105
8
169
10
50
70
38
5
56
48
109
17
423
26
125
514
220
16.0
112.3
231.3
742.9
70.5
24.1
39.1
104.7
16.4
406.2
6.7
32.9
4.7
840
55
156
109
46
85
106
105
97
13
82
27
148
62
15
813
80
67
426
32
97
74
32
85
120
129
124
21
164
57
326
145
42
2 407
331
295
197.0
169.6
160.9
146.4
143.8
99.5
88.0
81.2
78.2
62.5
49.9
47.4
45.3
42.3
35.4
33.8
24.2
22.7
688
1 702
40.4
2 904
4 910
59.1
Table 4. Exports of textiles and clothing, year 1999 (selected countries)
TEXTILES
Share in
total
merchandise
exports
Value
World
Africa
Egypt
Morocco
Mauritius
Tunisia
Latin America
Brazil
Colombia
Jamaica
Mexico
Peru
Uruguay
Far East
China
Bangladesh
India
Indonesia
Macau, China
Malaysia
Hong Kong, China
Korea, Rep. of
Pakistan
Philippines
Singapore
Sri Lanka
Thailand
Total value of
textiles and
clothing
exports
Million US
$
percentage
Million US
$
percentage
Million US $
148 000
2.7
186 000
3.4
334 000
13.8
1.9
2.2
333
724
910
2 375
10.4
10.3
58.9
40.2
774
859
910
2 504
1.7
2.0
1.8
1.9
3.1
427
228
7 805
414
145
3.7
16.5
5.7
6.8
5.2
822
664
228
10 323
529
230
6.7
8.6
13.6
6.2
10.6
1.3
7.0
8.0
50.8
0.8
0.7
4.5
3.1
30 078
3 786
4 782
3 857
1 630
2 253
22 371
4 871
1 957
2 111
1 603
2 287
3 449
15.4
2.0
14.2
7.9
75.6
2.7
12.8
3.4
22.0
5.8
1.4
49.7
5.9
43 121
4 219
9 340
6 876
1 858
3 373
34 642
16 489
6 469
2 387
2 456
2 493
5 265
3.5
13.4
6 516
25.0
443
9 994
1.9
4.1
2.9
2.7
1.9
0.5
2.8
3.6
524
670
1 312
620
2 199
2 044
351
529
538
12.3
2.5
5.2
15.3
8.0
24.0
0.5
5.2
5.9
606
1 767
1 312
736
2 926
2 209
743
820
862
441
135
129
822
237
2 518
115
85
13 043
433
4 558
3 019
228
1 120
12 271
11 618
4 512
276
853
206
1 816
Near East
Iran, Islamic Rep. of
Turkey
443
3 478
Eastern Europe
Croatia
Czech Rep.
Hungary
Bulgaria
Poland
Romania
Russian Fed
Slovak Rep.
Slovenia
82
1 097
116
727
165
392
291
324
* 1998 data
** 1997 data
Source: WTO
CLOTHING
Share in
total
merchandise
exports
Value
*
**
*
*
*
*
**
**
*
*
*
*
Table 5. Contribution of cotton export revenues to meeting food import bills, year 2000 (selected countries)
Total
Cotton
Export
Export
Receipts
Receipts
( . . . . . . US $ million . . . . .
.)
Tajikistan
Togo
Benin
Chad
Burkina Faso
Mali
Source: FAOSTAT
784
385
550
183
255
450
82
55
106
46
85
156
Cotton Receipts
as
share of Total
( . . . percent . . . )
10.5
14.3
19.3
24.9
33.2
34.7
Value of export
Value of
receipts
Food
excluding
Imports
Cotton
(. . . . . . . . . US $ million . . . . . . .
.)
164
32
120
32
85
97
538
298
324
106
85
197