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U.S. Cotton Subsidies: Drawing a Fine Line on the Degree of Decoupling

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  • Schmitz, Andrew
  • Rossi, Frederick
  • Schmitz, Troy G.

Abstract

The impact of the U.S. cotton policy depends on several interrelated factors: how input subsidies interact with producer price supports, producer price expectations, and the extent to which price supports are decoupled from production. Cotton subsidies have a direct impact on world cotton prices, depending on the extent to which price supports are coupled to production. At one extreme, there is a price impact of 12.4% when producers make decisions at the loan rate, but the average price impact is 20.9% when producers make decisions based on the target price. Results are presented for intermediate cases of decoupling.

Suggested Citation

  • Schmitz, Andrew & Rossi, Frederick & Schmitz, Troy G., 2007. "U.S. Cotton Subsidies: Drawing a Fine Line on the Degree of Decoupling," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 39(1), pages 135-149, April.
    • Handle: RePEc:cup:jagaec:v:39:y:2007:i:01:p:135-149_02
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    Cited by:

    1. Jales, Mário, 2010. "How Would A Trade Deal On Cotton Affect Exporting And Importing Countries?," WTO Doha Round 320115, International Centre for Trade and Sustainable Development (ICTSD).
    2. Xinyao Wang & Dan Li & Yue Yu, 2022. "Current Situation and Optimization Countermeasures of Cotton Subsidy in China Based on WTO Rules," Agriculture, MDPI, vol. 12(8), pages 1-16, August.

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