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

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98Table 8.1 Cotton Seed Production and Processing in Study CountriesIndicatorBeninBurkinaFaso Cameroon Mali Mozambique Tanzania Uganda Zambia ZimbabweAverage national seedcotton production(tons), 2001–06 339,500 557,833 242,966 488,281 72,178 235,000 78,410 160,000 246,350Cottonseed oil productionas percentage of nationaloil consumption a 53 57 18 50 6 (potential) 8 4 20 27Number of cottonseed oilprocessors, 2006 2 11 1 2 0 13 or more 4 3 6 or moreRetail price of oil(US$/liter), 2006–07 — 0.95 b 1.28 — — 0.83 b — 1.29 1.55Seed price (US$/ton), 2006 63 44 59 c 50 e 55 27–117 d 86 71 95Landlocked No Yes No Yes No No Yes Yes YesSource: Authors.Note: — = not available.a. Estimated from the quantity of seed available for crushing (2001–06 average), after subtraction of seed retained for redistribution to farmers, using an oiloutturn of 18 percent and an average annual oil consumption of 7 kg per person.b. Some of these prices have surged in 2007/08, such as the retail price of cotton oil in Burkina Faso, which went up to US$2.00 per liter.c. Tanzania figure is wholesale price, so estimated retail price = US$1.00 to US$1.08 per liter.d. Accounting price recorded within the integrated company.e. US$27 per ton is the lowest price reached in 2005 (bumper harvest), while US$117 per ton is highest price reached during 2006 (drought year). Averagefigure is not available, but some respondents reported that a “normal” price would be about US$50.
competitive market in some of the other countries. Vertical relationships cover awide spectrum, from full integration with cotton ginning (as in Cameroon, mostcottonseed oil processors in Tanzania, and three new companies in Zimbabwe),through various forms of vertical coordination (Société Nouvelle CITEC inBurkina Faso and larger companies in Zimbabwe), to market relationships.Transaction cost economics (Williamson 1985) can provide insights intothe varying vertical relationships. In the African context, large-scale processingequipment for high-quality oil (deodorized, neutralized, cleaned, withgossypol removed) is a fairly specific asset. In Africa, either vertical integrationor coordination could strengthen the incentives for investment in oil processing.Thus, in Zimbabwe three large-scale oil processors have maintained closerelationships with the two largest cotton companies through regular interactionon the National Cotton Council (NCC). 62 By contrast, outside of Westand Central Africa (WCA) and Zimbabwe, processing operations are muchsmaller and often produce lower quality oil. Many of the new processingplants being installed in Burkina Faso, Mali, Tanzania, and Zimbabwe uselow-cost Indian equipment. For such plants, relying on spot market purchasesof seed presents only a modest risk.However, the main factor explaining observed variations in sector structure isnot the techno-economic attributes of different types of processing equipment,but policy choice. Until the 1990s, in WCA countries vertical integration oflarge-scale oil processing within the parastatal cotton company was part of thedevelopment model for the national cotton sector. In subsequent years, an earlypart of the reform process was the privatization of the oil processing activities.These privatizations have rarely been open and transparent, however. In Mali, aprivate monopoly was created by the divestment of the state from HuileriesCotonnières du Mali (HUICOMA). The new company has performed so farpoorly and is now in dire financial straits, with smaller operators entering themarket in competition. In Burkina Faso, the French company Développement desAgro-Industries du Sud, a shareholder in the main cotton company SOFITEX, isalso the majority shareholder in the main private oil processor. Cameroon, theone country in the sample where little significant reform of the cotton sector hastaken place, is also the one country where ginning and oil processing haveremained integrated. Oil processing in Cameroon is managed in an entrepreneurialmanner and contributes to the overall stability of the cotton operation.In East and Southern Africa (ESA), where the cotton market has been liberalizedsince 1994/95 (earlier in Mozambique), oil processing is entirely in privatehands. Given the small proportion of national edible oil consumption thatcottonseed oil supplies in these countries (table 8.1), its processing has limitedstrategic importance. As a general rule, where multinational trading companieshave invested in cotton production in these countries, they have shown littleinterest in cottonseed oil processing because volumes are too small for companiesprimarily interested in international markets. Oil processing has thus beenleft to domestic or Asian entrepreneurs.VALORIZATION OF SEED COTTON BY-PRODUCTS 99
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AGRICULTURE AND RURAL DEVELOPMENTOr
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AGRICULTURE AND RURAL DEVELOPMENTSe
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© 2009 The International Bank for
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Section II. Historical Background a
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BOXES, FIGURES, AND TABLESBoxes2.1
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5.2 Summary of Pricing Mechanisms i
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eference are limited to neighboring
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ACKNOWLEDGMENTSThis study was carri
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ABBREVIATIONS¢ U.S. centACPAgricul
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US$U shWAEMUWCAWTOU.S. dollarUganda
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output markets, improving productiv
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etween these competing needs, provi
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■■■■■competition increase
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monopolies range from 0.98 to 1.15,
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macroeconomics, developments in com
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central body and that the state nee
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CHAPTER ONEIntroductionDavid Tschir
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The debate about how to deal with t
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Figure 1.1 Map of Africa Highlighti
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hypotheses about sector performance
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to reach 25 million tons of lint in
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cotton production was introduced in
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Figure 2.2 Nominal Cotton Prices (U
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Box 2.1 (Continued)Togo, 39 percent
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Box 2.2 Cotton SubsidiesCotton subs
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efers specifically to the presence
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picking, storage, handling, or tran
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national monopoly (state-owned or p
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SECTION TWOHistorical Background an
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shares belonging to governments, an
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Changes Made Since the End of the 1
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long-term development strategies, (
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possible link between price-setting
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production fell further, to lows of
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all aspects of the chain from input
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suggestions (a) of establishing fas
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Figure 4.1 Decision Tree for Cotton
Page 84 and 85: Figure 4.2 African Cotton Sector Ty
Page 86 and 87: Box 4.1 Is This Typology Specific t
Page 88 and 89: 52Table 4.1 Trading Off: Strengths
Page 90 and 91: CONCEPTUALIZATION OF THE LINKS BETW
Page 92 and 93: chosen in this book and the impact
Page 94 and 95: Table 4.3 Expected Performance alon
Page 96 and 97: Box 4.2 (Continued)Second, farmers
Page 99: SECTION THREEComparative Analysis:C
Page 102 and 103: PRICING MECHANISMS IN WCAPricing me
Page 104 and 105: efore planting, price risk in the s
Page 106 and 107: Table 5.3 Summary of Producer Share
Page 108 and 109: Finally, FOT price shares in WCA ro
Page 110 and 111: MALI AND CAMEROON: GOVERNMENT MONOP
Page 112 and 113: Significant in Mozambique, the comp
Page 114 and 115: Zimbabwe transitioned during the 19
Page 116 and 117: Box 6.1 (Continued)A move from a co
Page 118 and 119: 82Table 6.1 Summary of Input Supply
Page 120 and 121: 84Table 6.1 (Continued)IndicatorsCo
Page 123 and 124: CHAPTER SEVENQuality ControlGérald
Page 125 and 126: Tanzania Competitive 1 2 Very lax n
Page 127 and 128: Figure 7.1 Estimated Premium for To
Page 129 and 130: all fiber coming from Africa—are
Page 131 and 132: Box 7.1 (Continued)newly liberalize
Page 133: CHAPTER EIGHTValorization of SeedCo
Page 137 and 138: a few years, it indicates that some
Page 139 and 140: should eventually make a difference
Page 141 and 142: CHAPTER NINECotton ResearchDuncan B
Page 143 and 144: With regard to human and financial
Page 145 and 146: ■■■Be involved in setting res
Page 147 and 148: made royalty payments to CRI. When
Page 149: and to identify complementary inves
Page 153 and 154: CHAPTER TENYields and Returns toFar
Page 155 and 156: fact that 55 percent of cotton is p
Page 157 and 158: Yields by Farmer TypeTo assess perf
Page 159 and 160: Factors beyond company services als
Page 161 and 162: Table 10.1 Summary Crop Budgets by
Page 163 and 164: According to the focus group inform
Page 165 and 166: Figure 10.6 Net Margins after All C
Page 167 and 168: All other variables in the budgets
Page 169 and 170: Table 10.2Summary of Average Yield
Page 171 and 172: ■■■■impression is given tha
Page 173: were based on a 2005 cotton farmer
Page 176 and 177: more recent data are not available
Page 178 and 179: Figure 11.1 Estimated Average Ginni
Page 180 and 181: to buy seed cotton immediately afte
Page 182 and 183: 146Table 11.3 Overall Competitivene
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148Table 11.4 Total Value Added per
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Figure 11.3 Total Value Added per c
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CHAPTER TWELVEConclusionsPatrick La
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Table 12.1 Summary of Expected and
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Valorization ofby-productsValue of
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Macro impact■ Total value addedpe
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across concession zones, with newer
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high yields. However, a mixed pictu
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governance and regulatory structure
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against price and exchange rate ris
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Improvements in the Delivery of Ext
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esistant, “stacked” genes), and
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Just as improved sector management
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More-competitive systems are perhap
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■■■■Interprofessional commi
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were to occur, it would most likely
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APPENDIX AStatistical Tables181
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1989/90 43 111 383 40.7 95 0.491990
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1989/90 62 150 416 41.0 95 0.671990
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1989/90 43 89 482 41.3 95 0.651990/
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1989/90 99 189 521 42.8 85 0.541990
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1997/98 31 327 95 33 to 35 2,950 83
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1994/95 82 344 238 33 207.0 40.0119
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Table A8 ZambiaSeasonLint productio
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Table A9 ZimbabweSeasonLint product
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Table A10 Ginning and FOB-to-CIF Co
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1997/98 1.64 598 210 75 49 74 7.619
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1987/88 17,609 31,238 564 414 911 4
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206 NOTES11. Important cotton secto
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208 NOTES47. Benin is not included
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210 NOTES79. In Zimbabwe and Zambia
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BIBLIOGRAPHYBadiane, Ousmane, Dhane
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and Instability, ed. A. Sarris and
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World Bank. 2007. Strategies for Co
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CFA exchange rate, 17-18b, 19fcompa
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input credit and extension in, 77-8
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firm types, 211n93fixed prices, for
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productivity, 119, 121f, 205n8,209n
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key indicators, 56-58, 57-58t,155-5
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focus group discussions by farmerty
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technology transfer, 170-71by typol
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ECO-AUDITEnvironmental Benefits Sta
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