ECONOMY

How cotton changed from ‘white gold’ into a problem

It is a familiar sight, the protests and roadblocks by farmers from Greece’s biggest plains about what perhaps is the Common Agriculture Policy’s most favored product, the so-called «white gold» of Greece. It’s cotton again. Why? The application of the Common Agricultural Policy (CAP), and its special subsidy system, in Greece since 1981 led, within a decade, to the trebling of cotton production and the expansion of its cultivation to nearly all irrigated regions in the plains of central and northern Greece. According to the regulation in force, the subsidy that farmers receive depends on the extent of production exceeding the national limit. The more this limit (782,000 tons) is exceeded, the smaller the subsidy becomes. Despite the fact that the Greek production has for more than a decade now exceeded 1 million tons, the level of subsidy remains substantial. It amounts to 70 percent of the final price, with the remaining 30 percent being the commercial value of the product, so from a final price of 82-88 cents per kilo, only about 20-23 cents pertain to the crop’s commercial value at international prices; the remaining 60-65 cents are actually accounted for by subsidies. Subsidy comes in installments: Usually, the first one comes as a deposit and the rest arrives when production levels are confirmed, as this determines the amount of the subsidy. This is the very bone of contention: What is the level of production? The farmers’ demand recognition of a higher production level than the one the Agriculture Ministry accepts, without, however, a corresponding reduction in the subsidy. In other words, they want «all the kilos, all the money,» to use the well-known chant. The key figure to all this is 1,137,750 tons. This is the amount the ministry has been trying not to exceed since 2001. Recent crop excesses beyond this amount are mainly down to the permission that was hastily (or not so hastily) given last April for the cultivation of 100 million sq.m. more, 65 percent of which was in Thessaly. In this expansion, and also in the relaxation of controls and the ambiguous stance regarding confirmation of the amount produced, is where the main government responsibilities are located. National resources Satisfying all this demand is beyond the CAP framework. There is only one option for those who advocate that it be met: pay the difference using national resources. This could be done either directly, following approval by the EU Agriculture Council, once the government proves that the cotton farmers’ income has been significantly reduced as per EU stipulation; or indirectly, with the issuance of interest-free loans or special regulations. But who would be willing to pay the cost of such a settlement? If a further special regulation applies to cotton, how can they turn down similar demands by other productive groups with a proven low income? How will the fall in tobacco or olive oil revenue be tackled, where incomes are admittedly even lower? Why are we not willing to say that cotton revenues, based on the official data from the Agriculture Ministry, are at least double that of an average Greek farmer, or even four times the average when it comes to Larissa or Viotia cotton farmers? Farmers’ income is supported and must be supported, for they offer services not rewarded by the market. For instance, they contribute to maintaining a minimum population in the countryside and help protect the environment. To what extent does this apply to cotton? It is hard to tell for sure. We seem to forget that in regions such as Thessaly, which is a gift from nature, the water table has fallen in the last few years from 150 to 800 meters below the surface and the water drawn is often brackish. And really, what other type of cultivation uses 286,000 tons of fertilizers every year? Isn’t all this known? Of course it is. Past and present agriculture ministers, ministry officials, experts and technicians, and the farmers themselves as well as all people living in the regions where cotton is almost the sole product cultivated know all this very well. It’s just that nobody dares to state the obvious, that cotton is not the (now provocatively dubbed) «white gold,» but a national problem. Let us be clear: First, policies and practices such as those applied to cotton have effectively and continuously downgraded Greek agriculture’s competitiveness, besides giving a temporary financial boost to farmers. Despite the large amounts of money spent on subsidies, Greek agriculture produces fewer and fewer products of those in demand, not only by the international but also from the local market. On this basis, farmers learned to produce for subsidies only. From farmers, independent producers and entrepreneurs, they have turned into state-supported employees. Secondly, the current conflict over cotton highlights a more general political problem dogging Greek society as a whole. It shows that, unfortunately, the political game is played here without rules, measure or historical memory. Yesterday’s accusers turn into today’s defendants and vice versa. The cotton issue should be taught as a classic example of political opportunism and endless populism. In Greece, however, such political behavior is actually taken as a token of social sensitivity. (1) Stelios D. Katranidis is an Economics professor at the Macedonia University.