ECONOMY

Declining King Cotton source of concern to farmers

The production of cotton, one of Greece’s main agricultural products, will record a small decline this year and again in 2006 due to the crisis in the domestic textile industry and the introduction of the European Union’s reformed agricultural policy as of January 1, 2006, business research company ICAP says in a recent study. According to official data, Greek cotton output declined in the 2000-2003 period at an annual rate of 6.2 percent but recovered with 17 percent growth in 2004. The ICAP study argues that investing in the modernization of equipment and the maintenance of existing and creation of new commercial relationships and networks are the main weapons that will enable Greek companies to stay internationally competitive through the production of high-quality cotton. The reformed Common Agricultural Policy provides for the disconnection of 65 percent of farm subsidies from production and direct payments to farmers per acre. The remaining 35 percent will remain as indirect support through ginneries. This is a source of some anxiety among firms in the sector in view of the projected fall in production. ICAP notes that 75-80 percent of the production of Greek spinning mills is cotton yarns. Cotton cultivation absorbs about 25 percent of EU farm subsidies to Greece, which is the biggest producer in the Union and the fourth-largest cotton exporter worldwide after the United States, Uzbekistan and Australia.