Brazil's Cotton Crop Expanding

WASHINGTON - Jan 8/07 - SNS -- Cotton area is expected to increase significantly this year in the Brazilian states of Mato Grosso and Bahia, argues the U.S. agricultural attache in a recent report on the sector.

This increase is significant enough that, even with a slight decrease in area in the south of Brazil, overall area is expected to increase approximately 20%. This should see 1.03 million hectares sown in 2006-07, compared to 856,000 hectares in 2005-06, and production reach 6.1 million bales, up from 4.767 million bales in 2005-06.

The low production in 2005-06, resulting from low prices, succeeded in raising domestic prices. As a result, it was more appealing for producers to sell in the domestic market, putting at risk approximately 460,000 tons worth of already-signed export contracts.

The Brazilian government decided to utilize PEPRO (Prêmio de Equalização pago ao Produtor), for which it had budgeted R$253.5 million (USD 118.6 million) in 2006, in order to allow the export contracts to be filled. PEPRO is a subsidy paid to the producer or cooperative to help them sell their product.

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