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

were to occur, it would most likely be toward a local monopoly or hybrid system.Uganda began experimenting with solutions to input and seasonalfinance market problems nearly as soon as it emerged from reform with about30 active ginners. In 2003, it moved to a hybrid sector model that includedzoning and seed cotton quotas, as a way of providing incentives for investmentin input supply. However, this model has also encountered problemsand has been suspended for the 2007/08 season. By contrast, Tanzania hasdeveloped an approach to input supply that features an important role for thegovernment, but it has always incorporated arrangements that allow it to preservethe strong competition among firms in the market for seed cotton. 96Key insights from this work regarding competitive systems include thefollowing:■■Such coordination as does occur within a competitive sector must comefrom some central body. Given the difficulty of obtaining consensus amonglarge numbers of competing ginners, the state is likely to have to play a keyrole within this body. This state is in contrast to local monopoly or concentratedsystems, where interprofessional committees dominated by ginnersand farmers have more potential to adequately manage the sector. The riskwith allowing a state agency to play such a central role is that it can makemistakes, even if well intentioned, and it could do worse if rent-seeking orother motivations prevail. Thus, the accountability of regulatory bodies toginners and farmers needs to be strengthened.Incentives within competitive sectors for individual ginners to supportlong-term programs, such as initiatives to enhance soil fertility or to promoteanimal traction, are extremely limited. Thus, the cotton board and theginners’ association may have to work with other actors (local governmentor donors, for instance) to develop programs that enhance the asset base offarmers and also generate benefits beyond the cotton sector. In the sameway, they could possibly explore seasonal financing models (for example,Savings and Credit Cooperatives 97 in Tanzania) that, over time, might allowsome farmers to access greater quantities of purchased inputs for cottonproduction.Uganda’s hybrid approach to solving the input credit problem in competitivesystems kept all ginners in the market by granting them all quotas for outputpurchase. However, after four years, the resulting (erratic) improvementsin service delivery had failed to stimulate an increase in total seed cotton production.The main consequence of this measure, therefore, was to entrench thesector’s chronic overcapacity, thereby leading to operating costs that weremuch higher than they would otherwise be, especially considering the heavyuse of roller gins in the country. Generalizing, we suggest that hybrid approacheswithin competitive sectors need to avoid protecting ginners entirely from competitivepressure from within the country.CONCLUSIONS 179