Market power analysis among selected countries in the world cotton industry

The agricultural sector is extremely important because it affects economic growth, contributes to agricultural labor and income levels, and stimulates demand for other sectors of the economy. Cotton, one of the oldest and most widespread agricultural products, has strategic importance as it provides raw materials for the textile industry, livestock farming, and the food sector. As an alternative to petroleum, cottonseed oil, which is obtained from cotton seeds, is also used as a raw material in the production of biodiesel in increasing amounts. In addition, the increase in population and the rise in living standards cause the demand for cotton to increase. The income obtained from cotton, which is a crop that can meet the basic needs of millions of farmers around the world, contributes greatly to the welfare of rural households, especially in developing countries. It is also important for countries to be an export product in order to earn foreign exchange and provide raw materials for the textile industry. When we look at world cotton production statistics from 1950 to the present; it is seen that production has increased approximately fourfold despite the limited upward shift in planting areas. The world average seed cotton yield was 2610 kg per hectare in 2020. Among the countries with high cotton yields in 2020, China ranked first with an average yield of 9080 kg per hectare. Despite being in the first place for many years in terms of seed cotton yield, Australia managed to rank second on the list with an average yield of 5340 kg/ha. India, one of the world's largest cotton producers, and African countries that have expanded their cotton cultivation areas grow cotton with yields below the world average. In this context, three selected countries in the world cotton sector, the USA, Brazil and Australia, are considered as the main competitive countries. In the research, the export structure of the countries is estimated with the Goldberg and Knetter model using data between 1991-2022. ARDL bounds tests were used to determine the dominant country in the market within the scope of the model. While cotton price is used as the dependent variable in the model; export amount of the countries, cotton producer price and real effective exchange rate are used as independent variables. According to the analysis results, the market demand elasticities for the USA, Brazil and Australia in the cotton sector were obtained as 4.53, 2.34 and 2.39, respectively. Therefore, the dominant country in the market was determined as the USA.