The 2014 US farm bill and its effects on the world market for cotton

Under the 2014 US Farm Bill, US cotton producers will receive significant subsidies which will have trade-distorting effects irrespective of future cotton prices. At a futures market cotton price of US$ 0.70/lb, US subsidy programmes are likely to suppress artificially the world cotton price by almost 7 percent, and result in about US$ 3.3 billion of loss for cotton-producing countries around the world, most of which are developing countries. This paper seeks to provide an objective, evidence-based assessment of the effects on the world market for cotton of the US cotton subsidies under the 2014 US Farm Bill.