Overview

Cotton is an arable crop used mainly for fibre. The cottonseed, which remains after cotton is ginned, is used to produce oil for human consumption and oilseed cake for animal feed.

Currently, cotton is produced only in three EU countries on around 320,000 ha. Greece is the main cotton grower, with 80% of European cotton area, followed by Spain (mainly the region of Andalucía) with a share of 20%. Bulgaria produces cotton on less than 1,000 ha.

Although cotton represents less than 0.2% of the value of European agricultural production, it has strong regional importance in the two main producing EU countries.

Following the last reform in the cotton sector, EU production of ginned cotton decreased to similar levels as the mid-eighties.

In 2018, the EU cotton production is estimated at 340,000 t, which represents only 1% of world cotton production.

European imports of ginned cotton have fallen sharply over the last 10 years: from 870,000 t in 2002 to 130,000 t on average during the last 5 years. Over the same period, EU exports remained relatively stable, fluctuating around 250,000 t per year.

The EU market is completely open as there are no import duties or export subsidies on cotton.

EU cotton policy

Cotton aid was introduced in 1981, with the accession of Greece to the then European Community. The European cotton policy has been reformed several times since then, and for the last time in 2006.

The current regime is designed to encourage a competitive, sustainable and market-driven cotton sector, while safeguarding the legal commitments of supporting "the production of cotton in regions of the Community where it is important for the agricultural economy".

As is the same as any other farmer, cotton growers are entitled to receive decoupled direct payments in return for respecting strict standards of environmental protection, animal welfare and food safety, known as cross compliance.

In addition, the EU provides some crop-specific payment for cotton, limited to a certain base area per EU country. To be eligible for crop-specific aid, farmers must only grow cotton on land authorised by the EU country, using authorised varieties of seed and subject to minimum quality of cotton actually harvested. The purpose of this crop-specific payment is to ensure against any risk of disruption to production in the cotton producing regions.

A maximum of 302,000 ha are eligible for coupled support each year. Of this, 250,000 ha in Greece and 48,000 ha in Spain.

To help the EU cotton sector become more economically viable, a restructuring scheme was launched in 2009, providing possible support for the dismantling of ginning facilities, investments in the ginning industry, participation of farmers in cotton quality schemes etc.

These restructuring programmes of four or eight years were allowed to run their course, with no possibility of extension. Funds available from the four-year programmes were integrated into the available EU funds for measures under rural development from 2014. Funds available for the eight-year programmes were included in the national ceilings for direct payments from 2017.

Legal bases

Legislation is in force with regards to cotton, including EU regulation 1307/2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy.

EU implementing regulation 2017/1185 lays down rules for the application of EU regulation  1307/2013 and EU regulation 1308/2013 as regards notifications to the European Commission of information and documents, and amending and repealing several European Commission regulations.

Market monitoring

The cotton market situation is monitored over a long term period, with the evolution of production, consumption and stocks, as well as EU cotton yield, imports and exports charted. 

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Studies

An evaluation of the cotton agricultural policy measures regarding the cotton sector was published in July 2014, with the objective to measure the impacts of the measures implemented after the 2006 reform. It covered the three producer countries – Greece, Spain and Bulgaria.

Key conclusions focused on the effect on

  • the production of unginned cotton
  • income and the regional economy
  • the structures of economy
  • the structures of production
  • the downstream sector
  • the environment
  • efficiency, relevance and coherence

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