Measures of Government Support to the Cotton Sector

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The Secretariat of the ICAC periodically reports on the level of direct assistance provided by governments to the cotton sector through production programs, border protection, export programs and crop insurance programs. However, the definition of total government support to the cotton sector can be extended to include other government measures, such as implicit transfers from taxpayers to producers through subsidized interest rates on working capital loans, or good-payer rebates on investment loans. The OECD has developed a standard methodology to measure the total transfers associated with agricultural policies, classifying them into three categories: transfers to producers individually, transfers to consumers individually, and transfers of general services to agriculture collectively. The OECD periodically reports these measures of support to agriculture for all its member countries/areas, as well as for some non-member countries.

The list of covered commodities in OECD’s reports includes 41 commodities, cotton among them. Estimates of total transfers associated with agricultural policies for each country are based on subsets of the complete list of commodities. Cotton is included in the commodity subsets of Australia and Turkey (OECD member countries) and Brazil (non-member country). The purpose of this article is to review OECD’s methodology, in order to develop for use by the Secretariat of the ICAC a broader definition of government support to the cotton sector, beyond direct government assistance.