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

etween 2001 and 2003, equal to about 60 percent of the national gross domesticproduct (GDP) of both Burkina Faso and Mali.Formal complaints under the World Trade Organization (WTO) aboutthese subsidies began in 2003 with Brazil, which challenged U.S. subsidies andwon its case in 2004. Also in 2003, Burkina Faso presented the WTO with a cottonproposal on behalf of itself, Benin, Chad, and Mali calling for the eventualelimination of all developed-country cotton subsidies, coupled with financialcompensation for cotton farmers in developing countries. Within Africa, publicdebate about subsidies has focused almost entirely on these four West Africancountries, know as the “C4” (Cotton-4).Predating this trade and subsidies debate has been another debate, now lastingmore than two decades, on whether the highly integrated approach to cottonsupply chain development in countries of West and Central Africa (WCA)needed to be reformed. The WCA approach, which typically featured “singlechannel”systems built around public monopoly cotton companies, has driventremendous growth in cotton production in the region; the International CottonAdvisory Council (ICAC) data indicate that total lint production in theCommunauté française d’Afrique (CFA) Franc Zone rose from 50,000 tons in1960 to about 220,000 tons in 1980, to an average of about 1.1 million tons in2004 and 2005. The crop has also played a major role in rural development,facilitating input supply for other crops in cotton zones and helping farmers investin animal traction and other equipment that improved overall farm productivityand incomes.However, these single-channel systems have also suffered from seriousand perhaps growing problems. During the years immediately following thedevaluation of the CFA franc in 1994 (Pursell 1999; Badiane et al. 2002),cotton sectors in WCA were seen to pay lower prices to farmers than sectorswith more competitive arrangements. Many studies commented on the stagnationof WCA farm yields starting about 1990, although these yieldsremained higher than in most other areas of Africa. The parastatal ginningcompanies were also seen to be increasingly inefficient and opaque in theiroperations (Pursell 1999; Badiane et al. 2002; World Bank 2007). In Mali,farmers boycotted the crop in 2000/01 because of low prices and perceivedcorruption within Compagnie Malienne de Développement des Fibres Textiles(CMDT), and top managers in CMDT were eventually sent to jail forfinancial mismanagement.In a world market where real prices have fallen by about half since 1980, 2the problems described above can threaten the survival of cotton production,processing, and trade. These concerns have come acutely to the fore since thebeginning of the 2000s, as high prices to farmers, combined with high operatingcosts of the ginning companies and stagnant farm yields, have led to massivesectoral deficits in most countries. In Burkina Faso and perhaps other countries,these deficits threaten nationwide macroeconomic stability. Meanwhile,farmers continue to complain that the prices they receive are too low.4 DAVID TSCHIRLEY