The US policy for cotton subsidies has affected the market internationally and domestically, united stated by producing 19 percent of world cotton production is one of the most influence country in cotton market.
Although there is argument weather US should cut their subsidies on cotton or not but cutting the subsidies and replacing with the new recommended program has much greater benefit for the cotton market domestically and internationally. However the supporter of US subsidies believe that current program supports domestic farmers ,but according to below chart only 10 % of US farmer are enjoying the benefits of cotton subsidies.

Eliminating billions of dollars in federal subsidies to American cotton growers each year would make competitive environment for domestic farmer to be more productive and grow plants efficiently. In addition it cause raise in prices by about 10 percent which improve the incomes of millions of poor cotton farmers in Africa especially in Benin, Burkina Faso, Mali, and Chad.
The reductions in developed country cotton subsidies as a means to fight rural poverty in the developing world, the added income would help families feed and educate millions of children. This statement is very good reason that Congress should cut cotton subsidies.
Current Cotton Subsidies Program and its consequences:
The main forms of subsidy includes: (1) direct payments to farmers and landlords; (2) price supports implemented with government purchases and storage; (3) regulations that set minimum prices by location, end user; (4) subsidies for such items as crop insurance, disaster response, credit, marketing, and irrigation water; (5) export subsidies; and (6) import barriers in the form of quotas, tariffs, or regulations.
The impacts of above subsidies depend on their form is different. Farm subsidy programs typically transfer income from consumers and taxpayers to farm operators, especially to owners of farmland and other resources used in farm production.
Among the most controversial aspects of cotton subsidy programs in recent decades have been their impacts on international trade. As globalization has increased, farm trade barriers and subsidies that block of agricultural Comparative advantage have become more disruptive to normal trade relations and trade negotiations.
The price depressing effects of wealthy countries cotton subsidies disadvantaged their farmers. U.S. cotton subsidies are a clear example. Some of the poorest countries in West Africa have traditionally been cotton exporters. They faced a world price of cotton ranging from 35 cents to 45 cents per pound. Meanwhile, cotton growers in the United States received 70 cents or more per pound from the subsidies plus the market price.
Economists Estimate:
Economists have estimated that U.S. exports of cotton would have been substantially lower, and the world price of cotton 10 to 15 percent higher, if U.S. cotton subsidies is being cut. Reducing farm subsidies in the United States and other rich countries would help poor cotton growers and other farmers in poor countries, and, moreover, would begin a process of relying more on trade rather than aid for economic growth. Taxpayers in rich countries would gain in two ways: by paying lower subsidies to their farmers and farmers in other countries. For example the US subsidies to Brazil which recently approved by WTO can be eliminated.
New Recommended Program and its advantages:
In order to achieve domestic advantages such as decrease in farmer’s laziness of those who enjoy the direct payment subsidies, increase the productivity of cotton land by making competitive environment, higher the quality of product and targeting the subsidies in order that all farmers receive fair value according to their production volume.
In addition to achieve international advantages including reduce the poverty of west African countries, growth of a competitive market, improving the international trade, increase the price of cotton by 10- 15 % to the real price which all producer enjoy simultaneously.
Above goals can be achieved by targeting the subsidies effectively and replacing below recommended subsidies program with current one: * Federal Insurance * Setting minimum price to secure farmers. (ceiling) * Increase export subsidies. * Setting payment limitation for farmers
The new recommended program eliminates direct payments to farmers. The current direct payment program provides subsidies based upon historical acreage and yields. The crop subsidy payments is not based on the crops planted in a given year, but on historic base acres and yields, meaning that farmers do not require to plant the crops to get the benefits.
The new program will replace the direct subsidy programs with four new plans. Federal insurance cover the loss of farmer in case of any natural disaster, setting a minimum price for cotton as ceiling price that farmers make sure they are on safe side and their product price won’t be less than their cost, increase the export subsidies that farmers encourage to increase their international trade by comparative advantage, and Setting payment limitation for farmers to receive subsidies to make sure subsidies reach to all farmers fairly. This program can affects millions of other agricultural and nutrition programs positively. By changing the current subsidies program to new one the government can save those extra subsidies to support other agricultural program and other part of country.
Prove that our cotton farmers can thrive with new program:
It is normal for people to fear economic changes, but history shows many industries have been reformed in recent decades with positive results, including the airline, telecommunications, and energy industries. If cotton subsidies reforms as recommended the US cotton industry will force to work more innovative and efficient in order to survive.
It is interesting that producers of most U.S. agricultural commodities do not receive regular subsidies from the federal government. In fact, commodities that are eligible for federal subsidies account for 36 percent of U.S. farm production, while commodities that generally survive without subsidies, including meats, poultry, fruits, and vegetables, account for 64 percent of production.
Another point to consider is that US farmers are much more diversified today and better able to deal with market fluctuations. USDA figures show that only 38 percent of farm households consider farming their primary occupation.
An example of farmers prospering without subsidies is in New Zealand. That nation ended its farm subsidies in 1984, which was very risky because the country is four times more dependent on farming than the United States. Today, data from the Organization for Economic Cooperation and Development show that farm subsidies in New Zealand represent just 1 percent of the value of farm production, which is significantly lower in compare to 11 percent in the United States.

References: * Andrea R. Woodward, The Impact of U.S Subsidies on west African Cotton Production, 2007 * Geoffrey S. Becker, Farm Community Programs: A Short Primer, 2001 * Vaudine England, Shorn of Subsidies, New Zealand Farmers Thrive, 2005. * Organization for Economic Cooperation and Development, Agriculture Policies in OECD Countries: Monitoring and Evaluation, 2007.