Falling cotton prices hurt African farmers far more than their American counterparts. And American subsidies may be to blame for the Africans' pain, according to a documentary on Dev.tv, a nonprofit media outlet.
American farmers profit by growing more cotton since the U.S. government has promised them a fixed price no matter how much they produce. But American subsidies cause the market to be flooded with cotton, according to an industry expert in Benin, Bernard Adikpeto. "Because the U.S. subsidizes its cotton production, its farmers put a surfeit of 1 million tonnes in the market in 2001, leading to a drop in cotton prices."
On the other hand, African farmers don't get any subsidies, so they are hit hard when cotton prices fall in the free market. Consequences are especially bad because this crop is a crucial source of income in countries of Central and West Africa. For example, the cotton industry in Burkina Faso employs more than 2 million people and generates 40 percent of the nation's export revenue. Nearly 40 percent of Chad's population is involved in producing cotton, and two-thirds of its total export comes from this crop. In all, more than 10 million African farmers have lost income since the price of cotton fell worldwide.
What's ironic is that African farmers are losing money while selling a product they produce more competitively than others. Central and West African countries produce cotton at half the cost of the U.S. and Europe. Yet, these African nations bear a loss of $1 billion in the cotton economy every year.
To learn more on this topic, you can watch the documentary below :