Impact of global cotton markets on strongruralstrong poverty in Benin.pdf

Impact of global cotton markets on rural poverty in Benin * Nicholas Minot and ** Lisa Daniels 7 September 2002 Key words: Benin, cotton, poverty, agricultural markets JEL classification codes: I32, O13, Q13 Paper presented at the Northeast Universities Development Consortium Conference (NEUDC) Program, 25-27 October 2002, Williams College, Williamstown, Massachusetts. The field research upon which this study is based was funded by BMZ (Germany). This paper was prepared for The World Bank. * Research Fellow, Markets and Structural Studies Division, International Food Policy Research Institute, Washington, D.C., USA ** Assistant Professor, Department of Economics, Washington Co llege, Chestertown, Maryland., USA Minot and Daniels Impact of global cotton markets on rural poverty in Benin 1 Introduction From January 2001 to May 2002, world cotton prices fell almost 40 percent, from 64 cents per 1 pound to 39 cents per pound . This decline is part of a longer downward trend from the mid-1990s when cotton prices were over 80 cents per pound (see Figure 1). One reason for the recent decline the slowing of worldwide economic growth, which has a greater effect on cotton than grains because clothing is more income-elastic than grains are. As a result, cotton demand has been stagnant at 20 million tons over the last three years. A s