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  • 1.3.6-THE WORLD COTTON MARKET-TECHNOLOGY

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  • Technology

    Chapter 1 - The world cotton market - Cotton prices 

     
     
    The long-run decline in real commodity prices is linked to technology change in agriculture, competition with substitute fibres and possibly also to reduced prices for cotton products at the retail level. Since the Second World War, agriculture has been transformed by increased mechanization, expanded use of chemical fertilizers, the development of pesticides and in developed countries the extension of electricity to rural areas that has allowed the use of electrical machinery in irrigation. The process of technology change is continuing, and may even be accelerating.

    The most visible of the new technologies is biotechnology. Biotech cotton varieties accounted for an estimated 36% of world cotton area in 2006 and about 45% of world production. Biotech cotton is primarily risk-reducing and cost-reducing in developed countries, leading to larger area and greater production. In developing countries, biotechnology also enhances yields by offering improved levels of protection against insects in areas where chemical controls were inadequate.

    Production in East China, affected in the early 1990s by resistance among bollworms, climbed about 300,000 tons between 1999/00 and 2000/01 largely because of the adoption of Bt (Bacillus thuringiensis) varieties, and biotech varieties in China are now planted on 70% of the cotton area. Biotech varieties account for about 90% of area in Australia, South Africa and the United States, 25% in Argentina, 60% in Mexico and about 40% in India. Field trials are underway in other producing countries, including Brazil and Pakistan, and biotech cotton varieties will probably account for half of world production by 2007 or 2008.

    Incremental advances in proven technologies such as irrigation management, pesticide formulations and pesticide applicators, low-till and no-till production systems, crop rotations and other management techniques are also contributing to lower production costs and expanded cotton production. All of the technologies are being enhanced by the revolution in information technology, making possible great improvements in management efficiency and control of input applications. The new technologies result in an expansion of supply at each level of cotton prices, resulting in lower average prices.