Economics
Australia’s cotton is sold into a world market, competing against around 75 other cotton producing nations for its share of global cotton trade. Australia’s growers produce very high quality cotton with low contamination that is in demand on the world market and commands a premium price.
For Australia’s growers to compete in a heavily subsidised world market (where government’s essentially pay their growers to produce cotton) they must be extremely efficient, grow high yields and keep their costs as low as possible.
The price that a grower receives for each bale of cotton produced is set by a world market via the New York Stock Exchange. Cotton growers “sell” their cotton to one of a number of Australian merchants who then sell it into the world’s markets, aiming to get the best price possible.
This is reliant on a number of factors including world supply and demand, the value of the Australian dollar, quality, ability for growers to fulfil their contracts and shipping the cotton on time. The price that a grower receives goes up and down depending on how all these factors come together at a given point in time.
Australia is the fourth largest exporter of cotton in the world, and its biggest customers are China, Indonesia, Thailand, Bangladesh, Korea and Japan.