the cotton war looms large

For some time now, a cold war has been rumbling on between India and China – Asia’s biggest economic powerhouses, and the predicted future global superpowers.

While tensions between these two nuclear neighbours have yet to reach USA – Soviet levels, there has been a long term antagonism between them as each strives for dominance in a new world of global economics.

One of the principal factors in the war has been commodities, both states are large scale producers of raw materials, as well as having massive amounts of cheap labour. The ability to vertically integrate production of items such as clothing for the export market has been massive for both China and India in terms of development and financial growth.

As I referred to clothing there, the obvious commodity which comes into play is cotton, the world’s most successful commodity. It is grown on vast scales in both countries by both small holder cooperative type arrangements, and monocultural agri-business.

But China has always grown much more cotton than India – there are various reasons for this – now the main one now seems to be that Indian cotton is generally hand picked, as opposed to the machine picking which is done in countries like Australia (reportedly the world’s most productive cotton country), the USA, Brazil, and indeed China.Even if this were to change, it seems unlikely that Indian soils, water supplies and farming practises would be able to sustain a greater level of production.

Per hectare Chinese cotton farmers may be able to plant more than ten times the amount of cotton plants than their Indian counterparts. This has an obvious affect on output.  Production yield per hectare then is about 1,301 kg in China, compared to a 2008 high of around 554kg per hectare in India, which has now dropped to 475kg.

This low level production, along with a dry year, a drop in global cotton prices and a corresponding likely future decline in acreage under cultivation means that for India to maintain or increase its garment production levels, it is likely to move from being an exporter of raw cotton, to needing to import cotton in only a few years.

Added in to the mix is the factor of a growing battle for acreage between cotton producers and food grain producers – the latter being likely to secure better subsidies, thereby luring farmers away from cotton. India’s growing demand for meat (as it develops a more western lifestyle) means greater demands on grains to be used as animal feed. That’s not even taking the population growth into account.

We may note that some experts have also suggested that India’s disasterous introduction of BT cotton into Maharashtra has also spoiled its chances of gaining dominance in the area of organic cotton production, this is my own area of particular interest – but not the subject of this article.

When it comes to textiles, China is the world’s largest exporter, with a global market share of 28.3 percent in 2010, approximately 7 times the size of India’s share of 4.3 percent.

It’s massive export volume requires China to maintain a huge cotton processing industry, and as that grows its reliance on imported cotton, particularly from the USA, will grow. For India to continue to try and compete with China, it will have to go toe to toe in the search for sources of cotton to import. This may be good news for some of the South East Asian countries looking for cash crops, but India is way behind China in terms of its cultural outreach – Chinese influence and financial clout has seen it extend agriculturally into countries as far away as Africa.

As these two antagonistic neighbours both seek new sources of raw cotton, I predict that by 2020 we will see a marked rise in demand for conventional cotton from places like Central and South East Asia, and Northern Africa.

But despite China’s dominant market share, India is used to pushing the odds, and to punching hard. Its vast population continues to grow exponentially and its financial muscle grows daily. If there is to be a cotton war, which seems highly likely to me, it could get very nasty, much may yet depend upon the USA’s relationship with China, and how it’s commitment to massive cotton subsidy holds up in the teeth of ongoin recession and growing demand for both bio fuels and food crops.

sources: Economic times; Tirupur exporters association; South Asian Idea

Previously on there goes rhymin simon – US Cotton change could save lives

the cotton war looms large