Newswise — World demand for imported cotton will jump by as much as 50 percent in the next decade as China's emerging middle class snaps up ever more of the fluffy fiber, Texas Tech University economists predict.

Yet India is poised to profit most from this windfall instead of U.S. farmers.

Economists say China is poised for a consumer products revolution, which will put a strain on global supply. The country produces, imports and mills more cotton than any other place on the globe, yet residents use relatively few cotton products " about 4.4 pounds annually " compared to the 35 pounds demanded in highly developed countries like the U.S. That leaves plenty of room for growth inside China's untapped consumer frontier.

Add to that the fact that China already uses most of its arable land and produces a 1.7-bales-per-acre yield comparable to the U.S., and China will have to look elsewhere for its textiles. Today, China imports 14.4 million bales. In ten years that number is expected to rise to 28.7 million bales.

Unfortunately, it's not likely that the United States will fill this production dearth. Competition from other crops, specifically those related to rising bio-fuel production, will push the U.S. cotton acreage downward at least for a few years while at the same time India can enjoy massive boosts to its yields as it turns to genetically enhanced crops.

"There's no doubt that U.S. cotton area will go down," said Samarendu Mohanty, an agricultural economist and associate director of the institute. "It could go up if prices for these other crops like corn and soybeans drop drastically, but we don't expect that."

The work, led by researchers with Texas Tech's Cotton Economics Research Institute, is described in the recent release of the group's annual world cotton outlook.

The research results are based on the Texas Tech World Fiber Model, a long-term series of baseline projections that are based on assumptions of normal weather patterns and current trade policies, along with stable economic fundamentals such as population and income growth, and prices for crops that would compete with cotton.

Bt CottonIn the coming years, Chinese yields are only expected to climb 1 percent a year. As a result, China will need to buy cotton on the world market to meet its growing needs.

So, what does this mean for U.S. farmers? The long-term trend for American producers is higher prices for those who do plant cotton, but there will likely be few price spikes.

"With the Chinese increasing demand and pressure on the supply side from the United States, you would have expected the cotton price would double during this period. But India has changed that outlook completely," Mohanty said.

In 2003, India was a net importer of cotton despite having the world's largest planting acreages. While the nation might have planted a lot of cotton, it had one of the world's lowest yields per acre.

Four years later cotton yields have soared, thanks largely to the introduction of Bt cotton. Bt crops are so named because they have been genetically altered to produce Bt toxins, which kill some insects. The toxins are produced in nature by the widespread bacterium Bacillus thuringiensis, hence the abbreviation Bt.

"India's cotton yield, which had been flat for the previous 15 years, has increased by more than 90 percent in the past few years," Mohanty said. "That's a huge swing."

India became the world's second largest cotton producer and exporter this year.

By the end of 2008, India is projected to export more than 6 million bales of cotton, making them the world's second largest exporter behind the United States. In 10 years the researchers are projecting that number to rise to 13.5 million bales, which is close to current U.S. exports. Today, the United States exports about 15 million bales. But India still has much more room to increase yields. Even with massive cotton crops, India's yields are today 60 percent below the United States or about one bale per acre.

"India has much more upside," Mohanty said. "Only 70 percent of their production area is under BT (cotton) now."

The Cotton Economics Research Institute provides cotton economic analysis for policymakers and others interested in agricultural economy. The group conducts economic research on all aspects of cotton production, marketing, trade and processing.

Texas, the nation's leading producer of cotton, harvested about 8.15 million bales of the fluffy fiber in 2007. Nationally, 19.4 million bales were harvested. Cotton is grown across the nation's Southern tier from Virginia and the Carolinas to California.

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