Cotton industry in Syria: raw and ginned cotton

Cotton is cited by Syrian farmers as white gold, due to its contribution to the GDP as a major source of foreign exchange and as major source of income for the majority of farmers. Albeit the significance of cotton in the Syrian economy no single study investigated the whole stage of the cotton in both the local and foreign markets. Cotton is encountered by many problems namely; highly exhausted crop for land and water resource,old gins is still running and produce low quality,large quantities of ginned cotton is exported while manufacturing cotton gives more value add to the whole economy. The objective of this paper is to examine the current economic policies and identify the most important variables that affect raw and ginned cotton production and marketing. In order to achieve these objectives econometric model of farm and ginning sectors is formulated. Ordinary Least Squares method is used to estimate the model parameters of the two stages: raw cotton and ginning cotton. In the farm stage six equations in logarithm form are estimated. The results show that increases in the cultivated area of cotton affects positively the supply of raw cotton while the impact of farm price on the cotton supply is variant among the settlement area. Unfortunately, the government price policy is not reflected by such variations in the price affects. Also, the same variations of the effects of the domestic prices and world prices on the ginned cotton price provide another indication of the inappropriate cotton pricing policy in Syria. The results of the ginning stage estimates show that increase in domestic and export prices have significant negative effects on the exports of ginned cotton to all imported countries of Syrian cotton while the domestic supply of ginned cotton is affected positively by domestic prices. Simulation technique is applied in this paper in order to validate the cotton model. Simulation model is designed to imitate the time-evolution of the real system, and to show to any extent the model is close to real system. The model was validated by comparing cotton statistical model with cotton simulated model. Also, simulation is used to examine the effect of removing subsidy on farm price. The results show that removing subsidy leads to more fluctuation in raw cotton supply and demand and increase the quantities in the last years. The same result applies to the quantities of ginned cotton and cotton seeds. The exports of ginned cotton is unchanged with regard to change in the domestic supply of ginned cotton especially at the last years of the study