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

All other variables in the budgets are kept constant. Predictably, returns tolabor fall for all groups. Critically, returns to labor become negative for group 3in Burkina Faso, which means that cotton would be completely nonviable forthis group, even if labor input into cotton did not compete at all with opportunitiesfor off-farm labor. If one recalculates the weighted returns to labor underthese alternative scenarios, the figure for Burkina Faso becomes comparable tothat achieved by Zimbabwe. This finding suggests that, under a more sustainablepricing regime, WCA sectors could still deliver returns to labor that arecomparable to the best achieved in ESA.The alternative scenario for Tanzania involved lower yields, but higherprices (the prices actually observed in 2005/06) and lower harvesting labor.The country report (Poulton and Maro 2007) noted that national yields in2005/06 were only 58 percent of those recorded in 2004/05, so the base-caseyield for each group was adjusted by this factor. Actual seed cotton prices paidin Tanzania in 2005/06 were extremely attractive—the highest outside of thesubsidized WCA sectors and comparable to the sustainable prices just notedfor Burkina Faso and Mali. However, even with lower harvest labor, these highprices do not compensate for the reduced yields experienced as a result of the2005/06 drought. All producer groups achieve returns to family labor that areclearly lower than the estimated casual wage rate, while the weighted averagereturns now approximate those realized in Mozambique. This finding showsthe vulnerability of ESA cotton farmers to rainfall fluctuations.CONCLUSIONSThe starting point when comparing across sectors is that there will always besome farmers who, by superior skill or hard work and by asset accumulation(and perhaps higher starting asset endowment), do well, thereby producinghigh yields and achieving good returns. How well these top producers dodepends in part on soil fertility. Sector performance should not be judged onthe basis of the performance of this top group alone.Companies (hence sectors) can contribute to overall farm-level performanceby the following:■■■■Assist with access to inputs through credit provision, thereby allowing morefarmers to achieve high yields and allowing good farmers to expand production(at a given yield level).Provide extension advice, thereby assisting more farmers to raise productivity.Paying high prices, thereby raising returns for a given technical performance.Facilitating asset accumulation, especially animal traction.Asset accumulation can be assisted either passively (by assisting producers inobtaining good returns over a sustained period) or actively (by promotinguptake of the assets in question). Asset accumulation allows more producers tomove into groups 1 and 2 over time.YIELDS AND RETURNS TO FARMERS 131