Brazilian cotton farmers want compensation after the World Trade Organisation (WTO) in June cleared the way for Brazil to seek up to $4 billion in trade sanctions on US imports, the head of the cotton growers association said. The WTO judged that the United States had not complied with decisions in the dispute brought by Brazil in 2002 over subsidies for US cotton farmers.

The Brazilian government has yet to decide whether to apply the sanctions.

"If there is retaliation, we want it to favour the sector," said the president of the Brazilian Cotton Growers Association (Abrapa), Haroldo Rodrigues da Cunha.

"If the government decides not to retaliate against the United States, there should be an internal compensation to producers," he told Reuters during the inauguration of a cotton ginning facility on Thursday. He cited as an example of "internal compensation", the extension of the guaranteed minimum price for the whole crop. Today, the official aid scheme known as Pepro benefits only 60 percent of the national cotton output.

Cunha said the farmers' request was discussed this week with agriculture and foreign ministries, but no decision has been taken. Brazil's 2008/09 cotton area is expected to fall due mainly to higher returns from soybean and corn. But the recent drop in grain prices could recover some lost area in favour of cotton.

"We had forecast a reduction of 200,000 hectares (494,000 acres) but this could be smaller with the falling price of grains," Cunha said. "The reduction could be 100,000 hectares." He added, however, that costs for planting cotton have risen sharply and the appreciation of the local currency, the real, against the US dollar, should curb planted area to cotton.

Producers have still three months to decide what to plant. About 70 percent of the expected 1.55-million-tonne cotton crop in the current season has been harvested, he said.

Source: Reuters