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

■■works by companies agreeing on an opening price, based on a cautious estimateof the company’s costs and desired profits, with market competitionthen driving the price up as the season progresses. The opening price is notheavily affected by the season, but when the harvest is good, the price willbe driven up less than in a drought season when companies are desperatefor seed cotton to fulfill contracts. Thus, when one in adjustes prices toreflect a good season, the average price received by the top producers (whosell more of their product late in the season) is lowered by more than theaverage price received by the poorer producers (who are forced to sell muchof their product as soon as the season opens to meet pressing cash needs).In Mozambique, budgets were constructed for four groups of farmers. Anationally representative annual household survey allows the distributionof cotton yields in both 2004/05 (a drought year) and 2005/06 (a good rainfallyear) to be examined. The national yield spread is roughly mirrored bythe following combination of focus group budgets: 2005/06—group 1 (40percent), group 2 (20 percent), group 4 (40 percent); 2004/05—group 1 (20percent), group 3 (20 percent), group 4 (60 percent). Unlike the case of acompetitive cotton sector such as Tanzania’s, however, prices in Mozambiquevary less between good and bad seasons. This book, therefore, considersjust one scenario (figures 10.5 and 10.7), in which the balance of producersacross groups is assumed to be as follows: group 1 (5 percent), group2 (25 percent), group 3 (30 percent), group 4 (40 percent).In Mali, information on actual yields for the period 2004 to 2006 in the villageswhere focus group discussions were held was available from the localextension agent. The average village-level yield was similar to the averagenational yield (approximately 1,100 kg/ha), but it was higher than theweighted average yield generated by focus group discussions (approximately1,000 kg/ha). For the budgets, therefore, the yields reported by thefocus groups were adjusted upward by 10 percent.Distribution of Producers across GroupsFigure 10.5 shows estimates of the proportion of cotton farmers found withineach group. These figures were determined in a number of ways. In Mali,Zambia, and Zimbabwe, the numbers were taken from the focus group exercises.In these countries, all farmers from each village were assigned to onegroup or another. The data are thus strictly representative of the focus groupvillages and at best are only illustrative of the country more widely. Yet in eachcase, the weighted average yield figures that resulted from these proportionsare plausible in light of other information for the country. In Burkina Fasoand Cameroon, the data were from monitoring reports by SOFITEX andSODECOTON, respectively. In Tanzania, the numbers were taken from a 2004cotton farmer survey (Maro and Poulton 2005), while those in Mozambique136 POULTON, LABASTE, AND BOUGHTON