Cotton Prices at Historical High

Cotton prices are at their highest in 140 years, the Wall Street Journal wrote in October 2010 -- and they keep climbing.

The price last week on the market in India, the world's second largest producer, is $1.93 per pound -- it's been hovering around $2.00/lb. for some time and is expected to stay around this price.

Not since the Reconstruction era in the US has cotton fetched such a price on world markets, due to poor harvests, floods in Pakistan and China, and growing demand from China.

Manufacturers are concerned that they will have to pass on higher costs to consumers, and Nike has already raised the price of sneakers for 2012.

What does this mean for school-children forced to work in the fields in Uzbekistan? It certainly doesn't mean they will be paid higher wages.  Although there is nominally a private farming system, the market in Uzbekistan is not really free -- sale prices are state-controlled and farmers are assigned quotas they must meet or face severe reprisals like the loss of their land leases.

As we saw from the 2010 harvest when prices rose to $1/lb, the incentive to use children was greater precisely so that local and national officials could keep more of the profits. If farms could freely sell their output and set wages accordingly, they might be able to lure back adult migrant laborers who left Uzbekistan in search of a livelihood in nearby countries, and refrain from exploitation of children -- after all, a stated government goal and obligation under the ILO conventions Uzbekistan signed in 2009. But the state assigns producers a price and controls agricultural supplies as well -- and in some regions buses the school-children to the fields directly from school.

Children forced to bring in the cotton harvest earn the equivalent of 5 cents a kilo, or at most, $4-5/day, according to reports from the Uzbek German Forum for Human Rights. And they must pay for food and clothing out of those meager wages.

The government of Uzbekistan has made the false claim that groups campaigning for the boycott of Uzbek cotton are somehow stalking horses of Western governments and companies wishing to knock out their competition on the world market. That propagandistic argument will be far harder to make with surging prices. If anything, there is concern about shortages and some US corn farmers are thinking to turn to cotton crops.