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

group). This degree of variation cannot be justified by economic fundamentals.The following can be observed:■■■■■Landlocked countries in East and Southern Africa (ESA; Uganda, Zambia,and Zimbabwe) record high prices for seed, as expected. In Zimbabwe, theobserved price is higher than otherwise, most likely a reflection of the currentexacerbated oil shortage.Coastal countries in both ESA and WCA record modest prices for seed,again as expected. A range of US$55–US$63 per ton is observed, withBenin the highest, followed by Cameroon. However, as noted in table 8.1,the price in Tanzania can go well above this price range when seed suppliesare limited.It is more difficult to brand cottonseed oil as a superior product (commandinga price premium over imported palm oil) when it accounts for themajority of the total oil market than when it accounts for a much smallershare. Within the four WCA countries, the only one where cottonseed oilhas been successfully branded and promoted is Cameroon. Likewise, inTanzania some of the early private oil processors established brands that arewell known within the cotton-growing regions around Lake Victoria. Cottonseedoil is preferred over palm oil for the frying of fish and doughnutsbecause it burns at a higher temperature.Demand for cottonseed cake from the domestic livestock industry is muchstronger in the Sahelian countries (Burkina Faso and Mali), plus possiblyZimbabwe, 63 than in the other countries in the sample. In the Saheliancountries, cake is sold for around Communauté Française d’Afrique (Frenchcommunity of Africa) franc 50/kg (US$0.1/kg) ex factory, which makes thevalue of cake about half that of oil (given a cake outturn of 80 percent per kgof seed processed).Oil produced by the established companies in the four WCA countries plusZimbabwe is of a higher quality (with commensurately higher processingcosts) than that produced in Tanzania or by the newer companies in WCAand Zimbabwe.If one takes these observations together, the clear outliers in cotton seedpricing are Burkina Faso and Mali. Both are landlocked and exhibit strongdemand for cottonseed cake, but in 2006 seed prices were only US$44/ton andUS$50/ton, respectively. The retail oil price in Burkina Faso is also low for alandlocked country, which may reflect the impact of oil smuggled in throughTogo. However, in both Burkina Faso and Mali, the fundamental problemappears to be monopsony power. In Mali, where the privatization of theparastatal processor has already been commented upon, even US$50/ton wasan improvement over the price paid in the previous two years. In BurkinaFaso, the privatized former parastatal SN CITEC still accounts for around twothirdsof seed purchases and acts as a price leader. The 10 smaller new entrants102 GERGELY AND POULTON