Tuesday, March 06, 2012

The Cotton Club

India, the second largest cotton producer in the world has banned all exports of cotton "until further notice".


Because China, the largest cotton producer in the world is importing and hoarding a lot of cotton, and because Indian cotton exports had already "exceeded government targets".

I am not making any of this up.

These are two huge countries that just seem to have no clue when it comes to trade. Casual arrogant protectionism and the enshrinement of inefficiency seem to be policy goals.


Gabriel said...

Two thoughts:
1) Sounds like a big favor to India's incredibly inefficient textile industry
2) This is exactly how the rice crisis started a few years ago. At least nobody riots over high cotton prices

Shylock Holmes said...

Wait - so one country that can produce a ton of cotton is worried about another country hoarding all the cotton and doing...what? Setting up a one man cotton cartel, or an artificial shortage?

It's not like India could just grow more cotton in the case of a drastic cotton shortage. Or worse, they might have to wear polyester instead, and nobody wants that.