06 September 2021, Brazil: Since the early 2000s, cotton cultivation has been occupying more and more space in Brazilian agribusiness. In 2019, Brazil produced approximately 6.9 million tons of the product, a brand that placed the country as the fourth largest producer in the world, behind China, India and the United States. Feather cotton exports generated foreign exchange in 2019 of R$ 10.6 billion.
A study by the Institute of Applied Economic Research (IPEA) analyzed the trajectory of cotton cultivation in Brazil and the path taken until the country reached the place of competitiveness it currently occupies. “The Gross Domestic Product (GDP) of the cotton chain agribusiness, calculated by the Center for Advanced Studies in Applied Economics (Cepea) was R$16.1 billion in 2017. This is a scenario signaled by the Brazilian Association of Cotton Producers (Abrapa) as promising since, in addition to Brazil being among the main producers, it is also one of the largest consumers of this product,” points out the publication of IPEA.
According to the institute’s research, for the country to reach this level, cotton production in Brazil went through “profound productive and technological transformations”. The document gives an overview of the recent history of culture and recalls that a serious crisis was faced in the sector from the mid-1980s to the 1990s, with the occurrence of a plague, known as cotton beak.
The crisis caused farmers to migrate their crops from the South and Southeast towards the Cerrado in the mid-1990s. The production area was also reduced in the Northeast, but despite this, the representativeness of this activity has been maintained in the region over time. “This process of geographical redistribution of production enabled the evolution of the cotton production system, which went from the manufacturing system to the technified system, thus generating gains in scale, given the expansion of the productive units,” explains the IPEA document.
After the crisis, producers were able to adjust production and even reduce costs. However, cotton was considered a high-risk crop, as it required large investments in technology. Another aspect that hindered the performance of Brazilian cotton growing was the distortion of international cotton prices, caused by U.S. policies that caused damage to Brazil and led the country to file a lawsuit with the World Trade Organization (WTO) in 2002.
“This dispute, which lasted for more than a decade, had a favorable position to Brazil and was only closed in 2014, when the two countries signed the memorandum of understanding regarding cotton litigation,” says the IPEA study.