September 1, 2003

Despite recent soul-searching over quality issues, Australian cotton growers still produce crops at the top of the premium scale in the international marketplace.

UK-based Cotton Outlook says that as of July 25, 2003 Australian cotton was selling at a significant premium compared to similar types throughout the world.

It quoted Australian cotton at 70.5 US cents per pound into European ports and 67.5 US cents per pound into East Asian ports, making it the most valuable "upland" cotton.

Also revealed was a final 2002/03 crop tally of 1.62 million bales, a 50% reduction on last year's crop, due to the impacts of drought.

Merchants say Australian cotton has lost market share recently, not for quality concerns but because production has fallen so rapidly from a high of more than three million bales before the current drought hit.

Forecasts for the coming season look even grimmer, with some predictions as low as one million bales if widespread and heavy rain does not fall soon.

Over the previous five years Australian cotton production was relatively stable, with an average of 3.2 million bales produced from 470,000 hectares.

Although Cotton Outlook places Australia, along with SJV (Californian), at the very top of the premium scale there were instances last season where crops that had been stressed produced fibre that was either over-mature or short and therefore of less value to spinners.

Information obtained from the Australian Cotton Comparative Analysis, 2002 Crop, conducted by Boyce Chartered Accountants and commissioned by the Cotton Research and Development Corporation, shows that increasing yield and the premium for quality have enabled Australian cotton farmers to remain internationally competitive.

A side effect of the increasing yield is that Australian farmers have been able to maintain their cost of production per bale produced, even though cost of production per hectare has increased.

Over the past decade there has been a gradual increase in the costs of cotton production, from about $2200 per hectare in 1993 to $2800 per hectare for the 2002 harvest.

During this period, the value per bale has fallen by about 10%. However, this has been more than offset by increases in yields -- up by about 2.5% per year during the decade.

The average yield of Australian cotton is the highest of any significant producing country in the world. In 2002-03 it was 7.37 bales per hectare, a surprisingly good result considering the shortage of irrigation water due to drought.

These were among the facts presented in a recent cotton industry briefing on crop results and forecasts, environmental performance and new genetically modified cotton varieties to be planted commercially this year.

The briefing, in Parliament House, Canberra, was the culmination of a number of research projects and the collection of cotton industry data over the last two years.