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

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Figure 11.1 Estimated Average Ginning Costs at 2006 Capacity UtilizationRates in Study Countries25.00U.S. cents/kg lint cotton20.0015.0010.005.000.00Burkina FasoMaliCameroonZambiaZimbabweTanzaniaUgandaMozambiquevariable costs/kg of lintfixed costs/kg of lintSource: Authors.(around US$0.025 per kg). Finally, maintenance and other variable costs are, asa general rule, substantially lower in ESA, thus reflecting higher cost efficiency atthe processing stage.The gap between ginning costs in WCA and ESA countries would be reducedbut not eliminated, if the Communauté Française d’Afrique (French communityof Africa) franc/US$ exchange rate returned to its 1995–2006 mean, whichcorresponds to the period since the 1994 devaluation (see final line of table 11.1):costs in Cameroon would be at the upper end of those in ESA, but costs in BurkinaFaso and especially in Mali would remain much higher. This projection suggeststhat, while the current CFA franc/US$ exchange rate does contribute to thecurrent financial crisis in the region, a more fundamental cause for the financialcrisis, at least in Burkina Faso and Mali, is very high costs of operation in cottonginning. This conclusion becomes even stronger when one realizes that figuresfor the highest cost ginner in ESA—Zambia—are heavily affected by the sharpappreciation of the kwacha during 2005/06. Zambia’s ginning cost in U.S. dollarswould be below US$0.10/kg of lint if the kwacha were at its 2005 level.Table 11.2 builds in additional costs from farm gate to FOT to develop theoverall indicator of company cost efficiency: total farm gate to FOT costsexcluding taxes and critical functions. The main discriminating factor for collectioncosts appears to be the size of ginning units; transport costs are lowerin countries with smaller ginning units (particularly Uganda) because thepurchasing area for each unit is smaller and are higher in countries with largescaleginning units (Zambia and WCA).Short-term financial costs are higher in monopolistic systems (exceptCameroon) for managerial reasons. In such systems, cotton companies tend142 GERGELY
Table 11.2 Company Performance Indicator: Adjusted Costs, Farm Gate to FOT (U.S.¢ per kg of lint)Indicator Burkina Faso Cameroon Mali Mozambique Tanzania Uganda Zambia ZimbabweType of cotton industryNationalmonopolyNationalmonopolyNationalmonopolyLocalmonopoly Competitive Hybrid Concentrated ConcentratedDate of data 2003/04 2004/05 2006/07 2005 2006/07 2006/07 2005/06 2005/06Collection of seed cotton 10.3 9.7 7.3 9.7 9.4 7.9 13.6 8.1Transport 6.5 5.0 5.2 8.8 5.1 3.2 7.7 6.1Other 3.8 4.7 2.1 0.9 4.1 4.8 5.9 2.0Ginning costs 15.8 13.4 23.4 23.7 8.2 20 12.3 8.1Overhead 4.6 6.5 6.0 3.0 1.8 2.5 4.0 4.9Portion of overheadpaid to DAGRIS 1.2 1.2 0.3 n.a. n.a. n.a. n.a. n.a.Short-term financingcost 6.7 1.3 8.0 2.0 2.0 1.6 2.0 3.6Total adjusted costs 37.4 30.8 44.6 38.4 21.4 31.9 31.9 25.5Source: Authors.Note: n.a. = not applicable.a. Cost of input borne by cotton company.DAGRIS = Développement des Agro-Industries du Sud; FOT = Free on truck.143
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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
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Figure 4.2 African Cotton Sector Ty
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Box 4.1 Is This Typology Specific t
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52Table 4.1 Trading Off: Strengths
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CONCEPTUALIZATION OF THE LINKS BETW
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chosen in this book and the impact
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Table 4.3 Expected Performance alon
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Box 4.2 (Continued)Second, farmers
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SECTION THREEComparative Analysis:C
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PRICING MECHANISMS IN WCAPricing me
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efore planting, price risk in the s
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Table 5.3 Summary of Producer Share
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Finally, FOT price shares in WCA ro
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MALI AND CAMEROON: GOVERNMENT MONOP
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Significant in Mozambique, the comp
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Zimbabwe transitioned during the 19
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Box 6.1 (Continued)A move from a co
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82Table 6.1 Summary of Input Supply
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84Table 6.1 (Continued)IndicatorsCo
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CHAPTER SEVENQuality ControlGérald
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Tanzania Competitive 1 2 Very lax n
Page 127 and 128: Figure 7.1 Estimated Premium for To
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Page 131 and 132: Box 7.1 (Continued)newly liberalize
Page 133 and 134: CHAPTER EIGHTValorization of SeedCo
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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
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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
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Page 173: were based on a 2005 cotton farmer
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Page 180 and 181: to buy seed cotton immediately afte
Page 182 and 183: 146Table 11.3 Overall Competitivene
Page 184 and 185: 148Table 11.4 Total Value Added per
Page 186 and 187: Figure 11.3 Total Value Added per c
Page 189 and 190: CHAPTER TWELVEConclusionsPatrick La
Page 191 and 192: Table 12.1 Summary of Expected and
Page 193 and 194: Valorization ofby-productsValue of
Page 195 and 196: Macro impact■ Total value addedpe
Page 197 and 198: across concession zones, with newer
Page 199 and 200: high yields. However, a mixed pictu
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Page 203 and 204: against price and exchange rate ris
Page 205 and 206: Improvements in the Delivery of Ext
Page 207 and 208: esistant, “stacked” genes), and
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Page 213 and 214: ■■■■Interprofessional commi
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Page 217 and 218: APPENDIX AStatistical Tables181
Page 219 and 220: 1989/90 43 111 383 40.7 95 0.491990
Page 221 and 222: 1989/90 62 150 416 41.0 95 0.671990
Page 223 and 224: 1989/90 43 89 482 41.3 95 0.651990/
Page 225 and 226: 1989/90 99 189 521 42.8 85 0.541990
Page 227 and 228: 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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