(Recasts with background, details throughout)
By Tiemoko Diallo
BAMAKO, Feb 21 (Reuters) - Cotton production in Mali is expected to have dropped by more than a quarter in 2006 as farmers in the impoverished West African nation give up on the crop in the face of tumbling world prices.
Export earnings in Mali, the leading cotton producer in West and Central Africa, are heavily reliant on cotton, known locally as "white gold". The government has long blamed U.S. domestic farm subsidies for the slump in world prices.
State cotton company CMDT said cotton output was expected to have dropped to 435,000 tonnes in the 2006 season from 585,000 tonnes the previous year as farmers struggled to earn enough money to maintain their fields.
Cotton is grown in Mali between around June and November, harvested in November and December, before being bought from farmers by the CMDT in a buying campaign which runs until May.
A senior official in the CMDT's statistics division, which had originally forecast production of some 600,000 tonnes for 2006 but revised the forecast down to 500,380 tonnes last October, said even their latest estimate had proved optimistic.
"At this stage in the (buying) campaign, we think that only 87 percent of the 500,380 tonnes forecast will actually be realised," the CMDT official said.
That would equate to 435,331 tonnes.
The official said 293,527 tonnes had been bought by Feb. 20.
Mali has been leading calls for rich nations including the United States to end subsidies to their farmers, which it says harm 15 million people in some of the world's poorest states around West Africa by lowering their income.
Representatives of the United States' 10,000 cotton growers -- the world's largest exporters -- say rising output from new sources like India and Brazil is to blame. But trade campaigners say U.S. subsidies have cut cotton prices by 12 percent.
The CMDT official said the sharp drop in the prices paid to farmers -- which he estimated as a fall of more than 20 percent to 165 CFA francs ($0.33) per kg from 210 CFA francs -- meant many had lost interest in the crop.
Agriculture employs four-fifths of the workforce in Mali, and many farmers have been forced to sell livestock and equipment to pay off debts, lowering their productivity further.
"The cotton sector is faring badly, farmers are disappointed by the low prices they are receiving and they are less and less interested in cotton," the official told Reuters.
Cotton is Mali's second leading export after gold and more than three million in the former French colony are directly or indirectly employed by the industry.
The Fairtrade movement could transform the lives of millions of the world's poorest with less than $100 million over the next five years, according to the woman in charge of promoting the scheme. [nL2180484]
