The cotton industry is a clear example of how subsidies to producers in one country can have a highly negative impact on growers in other parts of the world, to the extent of affecting the livelihood of millions of families.
It is the same story as with other commodity subsidies. American cotton producers for instance receive federal subsidies for additional production volumes, encouraging overproduction. The surplus is dumped on the international market, which lowers prices and impoverishes millions of poor farmers around the world who depend on cotton sales to support them and their families. Such is the fate of Burkina Faso in West Africa, where around 10 million people today live on less than $1 dollar a day. A typical cotton producing household in West Africa has about 10 family members, an average life expectancy of about 48 years and an adult literacy rate of less than 25 %. Cotton represents to these families their only source of cash income. With depressed cotton prices breadwinners are unable to obtain fertilizers, keep their children in school, buy sufficient food, and pay for health care.
According to the Oxfam, an international confederation of 14 organizations working together to find lasting solutions to poverty and injustice, simply eliminating US cotton subsidies to domestic cotton producers would change the lives of poor farmers in West Africa. The world price of cotton would increase by 6-14% and West African farmers would receive 5-12% more for their cotton. The impact of this increase in household revenue would translate into coverage of all health care costs for four to ten individuals for the entire year, or schooling costs for one to ten children, or a one year supply of food for one or two children.
The responsibility of developed economies in the campaign to reduce global poverty never ceases to be discussed in international forums, but things do not change much. The political will to introduce subsidy reforms still seems to be absent.