Cotton is grown mainly in inland areas of northern NSW and southern Queensland largely for its fibre (lint) and relies heavily on irrigation water to produce profitable yields. When the cotton is mature seed cotton is taken to a gin where it is separated (ginned) into cotton lint and cotton seed.

The lint is used for yarn while the cotton seed is further processed at an oil mill where the short fibres (linters) remaining on the cotton seed after ginning are removed. These fibres are too short to make cloth but are used for wadding, upholstery and paper. The seeds are then separated into kernels and hulls. The hulls are used for stock feed and as fertiliser, while the kernels are crushed to extract oil. The oilcake residue (crushed kernels) is ground into meal which is a protein roughage used as stock feed.

The estimated gross value of cotton lint and cotton seed in 2002-03 was $853m, a 36% decrease from the previous year.