India's cotton subsidy will cool markets

A recent subsidy increase for India’s cotton farmers could drop world cotton prices by as much as 6 percent, according to a report from Texas Tech University’s Cotton Economics Research Institute (CERI).

Written by: Jessica Behnham

A recent subsidy increase for India’s cotton farmers could drop world cotton prices by as much as 6 percent, according to a report from Texas Tech University’s Cotton Economics Research Institute (CERI).

U.S. farmers will see their prices slashed by an average 2.48 percent during the next five years, cutting into an industry that CERI Director Darren Hudson said pumps roughly $40 billion into the U.S. economy each year.

While U.S. producers often take heat from developing countries for the subsidies they receive, Texas Tech researchers point out India employs a domestic subsidy program similar to U.S. marketing assistance loans.

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