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

and from synthetic fibers, and thus they face continual pressure on prices.African cotton sectors must therefore continually strive to cut costs, raise productivity,improve lint quality, and add value if they are to maintain attractivereturns to farmers and to make a positive contribution to national povertyreduction goals. To achieve this goal, cotton sectors need to improve their performanceon critical factors, such as the responsiveness and efficiency ofresearch and extension, technology transfer in areas such as genetically modifiedstrain dissemination, lint quality management and marketing, soil conservation,and technical support to farmers and farmer organizations.Effective strategies for African cotton sectors should, therefore, combineinstitutional innovations and reforms with necessary investments in key publicgoods. The three broad objectives that all African cotton sectors should pursueare (a) achieving greater value through improved quality, marketing, and valorizationof by-products; (b) bridging competitiveness gaps through farmlevelproductivity and ginning efficiency; and (c) improving sustainabilitythrough institutional development and capacity-building of stakeholders, aswell as strengthening of governance and regulatory structures and managementsystems. Some of these actions could usefully be tackled at a regionallevel, as well as nationally, and could benefit from donor support.The analysis also showed that a country’s history, current sector type, andpolitical imperatives also have a significant influence on the feasible path ofinstitutional change over time. For example, concentrated (market-based) sectorsemerge from the analysis as perhaps the best performers, doing well on awide range of indicators. Yet in the current setting in SSA, marked by institutionaland human capacity weakness, these sectors have a difficult time maintainingtheir concentrated structure. They tend to slide toward greater competition,with predictable declines in performance on input credit, extension, andquality. A worrisome finding is that, as competition increases in concentratedsectors, input supply and quality control may decline before prices paid tofarmers show noticeable signs of improvement. Such a pattern is of specialconcern because these negative impacts are quite difficult to reverse.STRUCTURE AS A KEY FACTOR OF COMPETITIVENESSAND SUSTAINABILITY OF AFRICAN COTTON SECTORSImplicit in reform programs in cotton and other sectors in Africa to date hasbeen the notion that structure matters, at least insofar as it promotes or impedescompetition. One of the main conclusions of this analysis is that structure doesexplain a good share of the variability in sector performance. This is anextremely important finding for decision makers, as well as a clear encouragementfor governments to pursue reforms of their cotton sectors as a means ofensuring future competitiveness. At the same time, this analysis recognizes thatother factors, such as history, managerial competence, geography, politics,EXECUTIVE SUMMARYxxxi