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

■■■■Interprofessional committees and farmer organizations need to continue tobe developed, with special emphasis on the operational abilities of the latter.Reforms in research organizations continue to be needed to make sure thatthey are responsive to these interprofessional committees.Clear rules for evaluating and retendering concession areas need to bedeveloped, as this lack has been a key failure in Mozambique.To create more competition, investment and structural reforms in thecottonseed oil sector should be encouraged.Three findings from this research are especially relevant if WCA countriesinstead consider moving to a concentrated, market-based system. First, thesystems in Zimbabwe and Zambia have suffered periodic bouts of instability.Zimbabwe, in particular, appears to have crossed a tipping point since 2001,whereby the entry of additional ginning companies has undermined existingmechanisms for coordination of input supply, extension, and quality control.Regulation of concentrated systems is thus a key challenge (see next). Second,WCA’s agro-ecological conditions (especially the low fertility of its soils) suggestthat a competitive sector (which could be the outcome of instability within aconcentrated sector) may perform quite poorly unless farmer organizationsthemselves are strong enough to ensure broadly based access to inputs. Finally,though farmer organizations in most WCA countries are much stronger thanin ESA countries, few if any appear strong enough to take on this challenge inthe near future. Moving to a fully privatized market that allows competitionamong companies, even if the market is initially very concentrated, is thus arisky proposition for WCA countries. If instead these sectors can use the localmonopoly approach to build up the operational capacity of farmer organizationsand to develop sound regulatory mechanisms, concentrated and eventuallycompetitive systems could perform well.Meanwhile, the key challenge in Mozambique’s local monopoly sector is tocreate incentives for good company performance within the concessions. In theabsence of strong farmer associations, these incentives have to come fromsome combination of improved rules governing tendering and re-tenderingconcessions, procedures for monitoring performance of concessionaires, andcareful selection of companies. It appears that Mozambique has done a goodjob on the latter, with newer companies clearly outperforming original concessionholders; the country is also developing serious proposals for evaluatingand reawarding concession areas. Prices to farmers remain very low, however,and are unlikely to improve without improved regulation.Concentrated SectorsChange in concentrated sectors is likely to be driven less by policy choice thanby inherent characteristics of these systems. Because investment in ginningcapacity is not prohibitively expensive—especially where investors are familiarCONCLUSIONS 177