FUTURE POTENTIAL OF BRAZILIAN COTTON EXPORTS

An Acreage Allocation model of the type developed by Holt (1999) is applied to the four most important Brazilian field crops (cotton, soybeans, corn and rice) in Brazil’s new and expanding cotton producing states of Mato Grosso and Goais. Cotton acreage response to additional field crop land (scale effect) and own and cross crop price elasticities are estimated. Results indicate that Goais has a higher scale elasticity than Mato Grosso (0.75 versus 0.61), and that cotton acreage is significantly affected by own price and corn price behavior, but not by soybean and rice prices. Baseline projections indicate that cotton acreage in Brazil’s new cotton producing region will grow at a slower rate than total world acreage from 2003 to 2008, and at a faster from 2009 to 2013. However, Brazil’s total cotton production is projected to grow more rapidly than the world aver-age if Brazil’s cotton yields increase at their historical trend, but total production growth will be similar to the World’s if Brazil’s cotton yields remain constant