FREE MARKET CALLED KEY TO HIKING COTTON OUTPUT

FREE MARKET CALLED KEY TO HIKING COTTON OUTPUT

Global cotton output would rise if developing countries implement free-market agricultural policies and end subsidies to growers, a working group at an international cotton conference said.

Developing countries, however, expressed reservations about the call to eliminate subsidies, saying developed nations also gave subsidies cloaked as incentives and should abolish them first to set an example.The working group on cotton policies at the Washington-based International Cotton Advisory Committee said elimination of subsidies and of state management of production and prices could lead to an increase in production, a decrease in prices for consumers and greater consumption.

''Lower cotton prices would encourage increased consumption," the working group said in a paper presented during the ICAC's five-day full meeting in New Delhi on Tuesday.

The ICAC, representing 46 governments, monitors developments affecting cotton production. Nearly 200 foreign delegates and observers are attending the meeting.

The working group said developing countries that controlled production and consumption or managed prices accounted for 60 percent of the world's average cotton production of 18.7 million metric tons between 1988 and 1992.

These countries, including China, Egypt, India, Pakistan and Zimbabwe, managed by way of government policies to keep domestic prices lower than international levels.

''Because domestic prices are usually lower than international prices in these countries, production could increase if free-market policies were implemented," the working group said.

But the group said production in countries with policies designed

mainly to raise farmers' incomes, such as the United States and Brazil, could react differently if subsidies there were scrapped.

The group referred to the United States and said termination of support programs would result in declining farm income.

''A reduction in farm income could result in reduced U.S. production of cotton, at least in the short run," it said.