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

zones, prohibited movement of seed cotton across zones, and facilitated saleof inputs at 50 percent of cost, with the subsidy implicitly collected in theprice paid to farmers. Extension was a heavy focus in the system, with 7,000demonstration plots and training days financed two-thirds by ginners andone-third by the U.S. Agency for International Development. The consensusamong ginners and observers was that input supply and extension would bedrastically reduced if the zona system, or some variant of it, was not in place.Despite these major efforts at input supply and extension, production inUganda did not consistently rise above 20,000 to 25,000 tons of lint. In hindsight,it appears clear that a short-lived production boom in 2004 and 2005 wasprimarily due to high prices in the two preceding years (Baffes, backgroundpaper on Uganda, 2007). As a result of the inability to boost production, stakeholdersin 2007 decided to abandon the zonal quota system, though it is notclear at this point what has replaced that system.Under Tanzania’s passbook system introduced in 2003, farmers selling cottonreceive a stamp in their passbooks that entitles them to seed or chemicals 50the next year proportional to the amount of cotton they sold. For most farmers,the entitlement amounts to one or two chemical sprays and some seed (notenough for a full planting) the following year. The system is funded by a levypaid by ginners to CDF, which funds the importation of insecticides by privatecompanies. Field interviews by Poulton and Maro (2007) suggest that the systemhas been “one contributory factor toward the major resurgence in cottonproduction in 2004 and 2005,” but the authors conclude that “the system canmake only a limited contribution to the intensification of cotton production inTanzania,” because it can finance only limited insecticide sprays and no fertilizerapplications, and it does nothing to provide extension assistance.Geographical factors may provide some explanation for why these twocountries, with very similar prereform histories and nearly identical structuresafter reform, chose (for a time) such different approaches to solving the inputcredit and extension problem. As long as the north of Uganda was closed, thescope for expanding cotton production under a low input approach was farlower than in Tanzania. Ginners in Uganda were thus forced to increase productionin relatively small areas already under production. The fact that thesector abandoned the quota system at the same time that the north began toopen up lends some support to this argument.CONCENTRATED, MARKET-BASED SECTORS: ZIMBABWEAND ZAMBIA PERFORM WELL ON INPUT CREDIT ANDEXTENSION, BUT FACE INSTABILITYThe two countries in ESA with single-channel marketing systems before reformmaintained relatively concentrated sectors for several years after reform. Each hasperformed much better on input provision and extension than have Tanzaniaand Uganda. However, each has faced substantial structural instability that hasaffected both services.INPUT CREDIT AND EXTENSION 77