Cost of Cotton Production in People's Republic of China, Poster for California Cotton Council

The objective of this research project was to (1) collect and analyze enterprise budget data for the production of cotton in major production regions in the People's Republic of China; (2) Compare and contrast the cost of production of Bt and conventional cotton in the these regions; and (3) Compare and contrast the information for China with representative budgets for U.S. cotton production to assess current relative competitiveness between the two and potential implications for Chinese cotton import demand. The survey was conducted on 1027 plots of 450 farmers in 5 provinces, Hebei, Shandong, Henan, Anhui and
Hubei in 2005. The results indicate the cost of production of cotton in China on average is significantly less on a per acre basis than in the U.S. Differences are sensitive to assumptions regarding labor costs in China. In addition with high yields per acre some U.S. cotton producing regions remain competitive despite labor cost disadvantages. Recent reports indicate that despite cost of production advantages the desire on the part of the Chinese government to maintain grain production may discourage increased cotton production in certain regions decreasing potential negative effects on future cotton import demand. The survey effort was extended in 2006 to include 480 plots of 120 farmers in the largest single cotton producing province, Xinjiang.