The first is that world consumption has begun climbing after nearly a decade of stagnation; the second, that world yields are not keeping pace with consumption, says Terry Townsend, the ICAC’s executive director.
“Despite surging production in western Brazil and eastern Turkey, 2000/01 is the ninth consecutive year in which the world yield is lower than the record of 533 pounds set in 1991/92,” he said. “From the end of World War II until the 1990s, the world cotton yield rose an average of 2 percent per year.”
Speaking at the USDA Outlook Conference in Arlington, Va., Townsend said the significance of the decline in world yield is shown by the history of world cotton area since 1950/51.
“Since the 1940s, world cotton area has been in a range between 72 million and 89 million acres with no tendency either higher or lower,” he said. “World area is estimated at 80 million this season, and a rise to 85 million acres is projected for 2001/02 with the rise in cotton prices in season.”
Townsend said yields are rising in a few areas. In Brazil, cotton use is estimated at a record 4.2 million bales in 2000/01, “demonstrating again the power of currency devaluation and sound macroeconomic management to spur export-led economic growth.”
Between 1995/96, cotton production in the state of Mato Grosso in southern Brazil climbed from 150,000 bales to 1.5 million, rising from a small portion of the Brazilian total to more than half.
“As farmers have gained experience with cotton in Mato Grosso, the state lint yield has more than doubled and was 1,400 pounds per acre in 1999/00, possibly the highest average yield in a rainfed area in the world,” he noted.
Over the next two seasons, Brazil’s production could rise to nearly 5 million bales and consumption could climb to an estimated 4.5 million bales, meaning that Brazil will once again be a significant exporter, according to Townsend. Production is also recovering in Argentina and Paraguay because of higher market prices.
But, a different picture is emerging in other parts of the world.
Cotton consumption is rising in the Commonwealth of Independent States, the former Soviet bloc because of higher government purchases of textile products and reduced competition from imports following currency devaluation in 1999.
The increase is occurring without the benefit of rising production in Central Asia, the traditional source of cotton supplies for the Soviet bloc prior to its breakup in 1991. “The latter resulted in the loss of 9 million bales in world demand, a principle reason that world cotton use did not rise during the 1990s,” said Townsend.
He said yields in for the former Soviet republic of Uzbekistan averaged 860 pounds per acre in the late 1980s and fell during the 1990s as input supplies were disrupted and incentives to grow cotton weakened. The 2000 Uzbek yield is estimated at less than 600 pounds, roughly on a par with yields in the 1950s.
“Normal weather will presumably lead to increased production next season, as the government will try to maintain cotton production near 5 million bales per year,” he noted. “Production in the CIS is estimated at 6.3 million bales this season and seven million next season. USSR production used to average 12 million bales.”
In India, where consumption is closely tied to production, average yields reached 280 pounds per acre in 1989/90, rose by only 5 percent over the next seven years and is estimated at 250 pounds per acre in 2000/01.
“Production declines have been the most pronounced in northern India because of disease and insect resistance to pesticides, and the yield failures are occurring despite efforts to improve the technology used by farmers,” says Townsend. “Because of this, a substantial rise in production is not expected this decade, and India likely will be a net cotton importer in most years.”
Declines in domestic production have also constrained consumption in Pakistan. Last season’s consumption of 7.3 million bales was no higher than in 1993/94.
“Disease and difficulties controlling insects depressed yields and production in Pakistan during the 1990s, but there has been progress developing new varieties tolerant of the leaf curl virus, and production last season rose to 7.8 million bales, the highest since 1995/96,” he said.
“Cotton use is rising in Pakistan this season because of ample domestic supplies following the rise in production last season. Use in 2001/01 is estimated at a record 7.5 million bales, an increase of 150,000 bales, and consumption is forecast to rise to 7.8 million bales over the next two seasons.”
Cotton production in Turkey has been between 3.5 and 4.1 million bales the last six seasons as increased area in the irrigated Southeast region has offset declining production in other regions due to competition with food crops.
“Production in 2001/02 is estimated in the middle of the range at 3.8 million bales,” said Townsend. “Exports to Russia compose a significant portion of demand for the Turkish textile industry. Mill use of cotton in Turkey reached 5.3 million bales in 1997/98, but dropped below 5 million bales in 1998/99 after the devaluation of the Russian ruble.”
Turkey devalued its currency by 25 percent the day before Townsend spoke at the USDA Outlook Conference on Feb. 23.