Organization and Performance of Cotton Sectors in Africa ... - infoDev

Table 5.3 Summary of Producer Shares of FOT Lint Price (percent)1990–94 1995–99 2000–051995–2005(postreformin ESA)EntirePeriod(1990–2005)Benin 58 62 71 67 64Burkina Faso 55 57 73 66 62Cameroon 61 61 73 68 66Mali 56 52 76 65 62Mozambique 27 52 48 50 43Tanzania 49 65 70 68 62Uganda — 72 68 70 70Zambia — 63 55 59 58Zimbabwe 63 69 49 58 59Source: Authors.Note: — = not available.transport and port cost data. Estimates of average quality premiums for eachcountry (see chapter 7) are then added to derive the value received by theginner at the ginnery door. The ratio of these two values—that paid to farmersby the ginners and that received by ginners at the factory door—shows theshare of FOT paid to farmers. The FOT lint price is used instead of FOBbecause FOT is the final product price most within the companies’ control.Transport costs from FOT to FOB tend to be higher in landlocked countries(Burkina Faso, Mali, Uganda, Zambia, and Zimbabwe) than in coastal countries(Cameroon, Mozambique, and Tanzania). Thus, for example, costs fromFOT to FOB are estimated to be 50 percent higher in Zimbabwe (US$0.157 perkg of lint) than in Tanzania (US$0.105 per kg of lint) entirely because of geography.(Because of different transport costs, seed cotton prices in U.S. dollarterms may be lower in Uganda than in Tanzania, but the share of FOT paid tofarmers may be larger.)Caution is required in interpreting the data in table 5.3 for a number of reasons.First, the cotton companies in WCA, with the exception of Cameroon,have accumulated large deficits since the beginning of the 2000s, so that pricesreceived by cotton growers include taxpayer (or donor) resources not capturedby the FOT shares. Second, even FOT figures do not account for different ratesof taxation across countries (for example, Tanzania taxes its cotton sector quiteheavily while Uganda does not). Third, there are various exchange rate issuesin six of the nine countries examined, implying that several of the cotton sectorshave been taxed (the issues include, for example, a likely overvaluation ofthe CFA franc in WCA and the effects of local currency appreciation in Zambia).Finally, the ratio should be interpreted as an indicator of how well ginners70 BAFFES, TSCHIRLEY, AND GERGELY