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Oxfam America’s campaign to reform US trade-distorting commodity subsidies rests on two basic premises. The first premise is that trade-distorting commodity subsidies lead to additional production of cotton, which lowers the world price for cotton. The negative relationship between cotton subsidies and the world price of cotton is well established (despite ongoing debate over the magnitude of the price effect) and Alston and Brunke (2006) provide updated estimates using 2004-2005 as a baseline. The second premise is that lower world cotton prices harm cotton farmers in West Africa and elsewhere. Between 2 million and 3 million farms in West Africa rely on cotton as their main source of cash income, and they compete directly with subsidized US cotton. Not surprisingly then, lower world cotton prices harm millions of households and more than 10 million people across the region.

Oxfam America - Impacts of Reductions in US Cotton Subsidies on West African Cotton Producers (pages: 38)

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