Cotton Backgrounder

by Leslie Meyer, Stephen MacDonald, and Linda Foreman

U.S. cotton growers, like producers of other agricultural commodities in recent years, have confronted pressures from market forces and the impacts of policy developments, both domestic and international. Most notably, the ending of the Multifiber Arrangement (MFA) sent a ripple effect throughout the global cotton industry. While adjustments in the textile and apparel sectors of many countries, including the United States, continue to evolve, dramatic changes have already been seen for some. World cotton mill use has accelerated along with economic growth since 1999, particularly in China, and U.S. cotton producers have benefited as foreign import demand has reached new heights. Government payments contribute a considerable portion of total revenue to the cotton sector, and adjustments to this program or any other commodity program in the 2007 farm legislation will be driven by factors such as domestic market conditions, multilateral trade negotiations, and the Federal budget deficit.

Keywords: Cotton, supply, demand, trade, textiles, apparel, Multifiber Arrangement, farm policy, government support program

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