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

monopolies range from 0.98 to 1.15, compared with a range of 0.76 to 0.88 inall other countries except Uganda. Although it is clear that the WCA nationalmonopoly model has generated strong returns to very large numbers of farmers,poor incentives for cost efficiency have undermined the international competitivenessof these sectors, as well as their contribution to the wider economy.In Zambia and Zimbabwe, and also in Mozambique, the competitive costto-valueratios have been achieved in part because of the low prices paid tofarmers. In Mozambique (which scores 0.79 by the study’s measure), the seedcotton price has been 20 percent to 30 percent lower than prices in all otherESA countries. In Zambia (the most internationally competitive sector in thestudy at 0.76), the seed cotton price to farmers is substantially higher than inMozambique and not far below that in Tanzania in absolute terms, but itreflects little of the substantial quality premium that Zambian companiesreceive on the international market.CORE CHALLENGES: PERFORMANCE OF AFRICANCOTTON SECTORS IN THE GLOBAL CONTEXTThe comparison of the nine cotton sectors of the study sample concluded thatno single market sector type performed so well that it can be considered thebenchmark for all others. There are strong correlations between sector typeand performance results, yet there is no ideal model among the study countriesand trade-offs have to be considered. There are clear indications that factors inaddition to sector structure do have an influence. A given sectoral type can performwell or poorly on final outcome indicators, and this performance isstrongly influenced by history (including past investments), culture, managerialeffectiveness (which is partly a function of culture and individual personalities),and agro-ecological endowments. Nevertheless, sector type (marketstructure and associated regulatory framework) does say a great deal about thekey challenges that will be most difficult for a sector to meet, and about themost promising approaches for dealing with those challenges. For example,input credit, extension, and quality will be problems in competitive systems;prices to farmers will tend to be low in concentrated sectors; company efficiencywill tend to be poor in monopolies.The high intrinsic quality of African fiber, the fact that it is handpicked, andthe low unit production costs of its smallholder production base give Africancotton important growth potential on the world market in the long run. However,an assessment of relative performance among African countries and what theyneed to do to be competitive reveals that all sectors show productivity and performancegaps on a global scale and therefore generally lag well behind the best performersin the world. Across the full spectrum of African cotton industries, corechallenges for competitiveness and profitability have emerged. All African cottonsectors face increasing competition from other countries and continentsxxxEXECUTIVE SUMMARY