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

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206 NOTES11. Important cotton sector reforms have taken place in Côte d’Ivoire in the past 10 years,but it is not part of the study sample.12. Although India’s area allocated to GM cotton (10 percent) is small compared withother countries, its share in worldwide GM cotton production is high because thetotal cotton area in India is high and because GM yields are well above mean yieldsin the country.13. Price variability of cotton has not been that different from other primary commodities.Pan and Valderrama (2005), for example, compared the price variability of 22primary commodities and concluded that during 2000–04, 17 commodities exhibitedmore price variability than cotton. Similarly, Gilbert (2006) ranked 21 commoditiesaccording to their volatility and found cotton to be somewhere in the middle.14. A study that estimated the price transmission elasticities from crude oil to 35 primarycommodities (including cotton and most food commodities) found that theaverage elasticity for food commodities was 0.18 and highly significant while thatfor cotton was 0.14 and marginally significant (Baffes 2007). Although this resultseems counterintuitive because cotton competes with human-made fibers, whosekey input is crude oil, food commodities are much bulkier than cotton while thecrude oil component in chemical fibers is small. Similarly, the study found lowtransmission elasticities for natural rubber (which competes with synthetic rubber)as well as some energy-intensive metals.15. For a discussion of how the U.S. dollar exchange rate affects dollar-commodityprices, see Radetzki (1985).16. The highly divergent results of these models reflect a number of factors. First, thereare differences in the level and structure of support. For example, some modelsincorporate China’s support to its cotton sector and model its removal; others donot. Second, there are differences in the underlying scenarios. Some models assumeliberalization in all commodity markets while others assume liberalization only inthe cotton sector. Third, the models use different base years and hence different levelsof subsidies. For example, support in the United States was three times as highin 1999 as in 1997.17. Note that these differentials are between short staple varieties and extra long staplepima varieties grown in different environments. As will be shown in chapter 7, theprice differentials observed within African upland cotton varieties, while stillimportant, are much smaller than this.18. Fiber length is the average length of the longest half of fibers. Grade is a commercialvalue that is based on a visual assessment of a combination of lint color, cleanliness,and preparation. Color is determined by the degree of reflectance (good) andyellowness (bad). Micronaire is a measure of fiber fineness and maturity.19. Neps are cotton fibers tangled into a knot.20. Gossypium barbadense.21. Cost and Freight Far East.22. Ring spun carded yarn is typically used for knitting and weaving, in a large rangeof coarse to fine counts.23. Combed yarns are stronger, more uniform, smoother and purer, and they havegreater shine than carded yarns.24. In Africa, these mother companies include Dunavant, Cargill, Plexus, DAGRIS,Reinhart, and others.25. Or the quotation for the African franc zone in Cotton Outlook.26. Though exceptions may exist: for example, supply is more atomized in Benin thanin Zambia.
27. In some countries, seeds are sold directly on the domestic market without processinginto oil and cake. In Mali, about 20 percent of cotton seeds are sold as livestockfeed at prices 30 percent higher than those paid by the oil mills.28. In most cases, this processing takes place within the country of origin. However,varying quantities of seed are exported from Mozambique and Zambia to SouthAfrica for processing. Similarly, at the end of the 1990s, there was a Europeandemand for seeds. Some WCA cotton companies decided then to export, bringingfinancial problems to the large-scale oil industry in the countries concerned, whichneeds large quantities of seeds to cover fixed costs. This export market to Europehas since declined and only one trader from WCA is still dealing on it.29. Because the world market for cottonseed oil is very thin, its price indicator may notbe as reliable as those of the four major oils.30. CFDT was renamed DAGRIS in 2000.31. CFDT withdrew from Benin after the advent of the socialist regime in that countryin 1972.32. With the exception of Benin and Burkina Faso, where cotton extension was providedby the national agricultural extension systems.33. Predefined standard costs on the basis of which cotton companies were remuneratedfor the public services they provided.34. Benin and Côte d’Ivoire were exceptions to this single channel pattern. Reforms inBenin started earlier than elsewhere but were complex and badly managed. In Côted’Ivoire, full liberalization took place but was soon affected by the country’s politicalcrisis.35. Côte d’Ivoire and Senegal in WCA have also introduced private cotton companies.36. Eventually adjusted before harvest in case of major changes in world prices.37. Distributors are farmers chosen from the community to help mainly in the logisticsof credit provision given the large number of farmers that Dunavant deals with.Efforts at more serious extension assistance have been carried out through Dunavant’sYIELD program, financed by the German development agency GTZ.38. Input costs are subsidized by companies, rather than provided on credit. Becausethe subsidy must eventually be recovered in the price, it can be conceived of as partialin-kind credit.39. See Leibenstein (1966) for original concept of “x-inefficiency,” and see vast followupliterature in the area of business management.40. The details of this system are explained in more detail in chapter 6.41. By labeling soil fertility “exogenous,” the intention is not to dismiss concerns aboutthe impact (negative or positive) of cotton production on soil fertility. Rather, itpoints out that other factors also make a major contribution to the observed soilfertility, the inherent characteristics of the soil, the population density, and theoverall management of the farming system being three major ones.42. Consistent with this definition, this study does not cover the further processing oflint because it belongs to a completely different, downstream segment of the cottonand textile value chain.43. Filière is the French word for value chain or subsector and embodies the verticallycoordinated approach long pursued in WCA.44. In 2004, the government of Zimbabwe did get involved in resolving a pricing disputebetween producers and companies.45. And in Cameroon, the price support fund has been exhausted by the high prices.46. See chapter 1 of this book for background on this issue.NOTES 207
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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
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Figure 7.1 Estimated Premium for To
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all fiber coming from Africa—are
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Box 7.1 (Continued)newly liberalize
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CHAPTER EIGHTValorization of SeedCo
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competitive market in some of the o
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a few years, it indicates that some
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should eventually make a difference
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CHAPTER NINECotton ResearchDuncan B
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With regard to human and financial
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■■■Be involved in setting res
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made royalty payments to CRI. When
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and to identify complementary inves
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CHAPTER TENYields and Returns toFar
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fact that 55 percent of cotton is p
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Yields by Farmer TypeTo assess perf
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Factors beyond company services als
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Table 10.1 Summary Crop Budgets by
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According to the focus group inform
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Figure 10.6 Net Margins after All C
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All other variables in the budgets
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Table 10.2Summary of Average Yield
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■■■■impression is given tha
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were based on a 2005 cotton farmer
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more recent data are not available
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Figure 11.1 Estimated Average Ginni
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to buy seed cotton immediately afte
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146Table 11.3 Overall Competitivene
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148Table 11.4 Total Value Added per
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Figure 11.3 Total Value Added per c
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CHAPTER TWELVEConclusionsPatrick La
Page 191 and 192: Table 12.1 Summary of Expected and
Page 193 and 194: Valorization ofby-productsValue of
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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 211 and 212: More-competitive systems are perhap
Page 213 and 214: ■■■■Interprofessional commi
Page 215 and 216: were to occur, it would most likely
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
Page 229 and 230: 1994/95 82 344 238 33 207.0 40.0119
Page 231 and 232: Table A8 ZambiaSeasonLint productio
Page 233 and 234: Table A9 ZimbabweSeasonLint product
Page 235 and 236: Table A10 Ginning and FOB-to-CIF Co
Page 237 and 238: 1997/98 1.64 598 210 75 49 74 7.619
Page 239: 1987/88 17,609 31,238 564 414 911 4
Page 244 and 245: 208 NOTES47. Benin is not included
Page 246 and 247: 210 NOTES79. In Zimbabwe and Zambia
Page 249 and 250: BIBLIOGRAPHYBadiane, Ousmane, Dhane
Page 251 and 252: and Instability, ed. A. Sarris and
Page 253: World Bank. 2007. Strategies for Co
Page 256 and 257: CFA exchange rate, 17-18b, 19fcompa
Page 258 and 259: input credit and extension in, 77-8
Page 260 and 261: firm types, 211n93fixed prices, for
Page 262 and 263: productivity, 119, 121f, 205n8,209n
Page 264 and 265: key indicators, 56-58, 57-58t,155-5
Page 266 and 267: focus group discussions by farmerty
Page 268 and 269: technology transfer, 170-71by typol
Page 270: ECO-AUDITEnvironmental Benefits Sta
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