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

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national monopoly (state-owned or private) is generally in a better position toprotect its selling price.Affiliated ginners are generally more aware of market demand and have lessexposure to international price fluctuations than independent ginners becausea part of the market risk is taken by the mother company, which has the abilityto hedge price and exchange rate risks.VALORIZATION OF BY-PRODUCTS: MARKETS FORCOTTONSEED OIL AND CAKEThe ginning process separates the cotton lint from the seeds. In all of the studycountries, ginning companies buy the raw cotton and own both the lint and theseed. In all countries but Zimbabwe, ginners treat a small proportion (typicallyless than 10 percent) of the seeds and pack them for distribution back to farmersas planting seed. Ginners sell the remainder 27 for processing into oil and cakeor, in a few cases, the seeds are processed directly by the ginning company. 28The value of lint obtained from a ton of seed cotton is three to four times thecombined value of the oil and cake that are derived from processing the seeds.For this reason, oil and cake markets are often neglected in the analysis ofAfrican cotton sectors. Yet in some of the study countries, the revenue from seedsales more than covers the cost of ginning. In Cameroon, SODECOTON has sofar avoided the losses that have affected the sector in other WCA countries, inpart because of cross-subsidization from its profitable, integrated oil business.In Tanzania, more than a third of cotton ginners now have an integrated oil processingbusiness. Not surprisingly, some ginners see oil processing as their core(and most profitable) business.International Trade in Cottonseed OilIt is estimated that about 5 million tons of cottonseed oil is produced worldwideper year. This amount is similar to the production of groundnut, coconut, andpalm kernel oil, but well behind palm oil (38 million tons), soybean oil (37million tons), rapeseed oil (18 million tons), and sunflower oil (11 milliontons). Moreover, while a large proportion of the four leading oils is tradedinternationally, less than 10 percent of global cottonseed oil production is traded.World cottonseed oil prices averaged $1,600/ton during 2007/08, up from$800/ton during 2006/07 (October to September) These price increases aresimilar to those of other edible oils. For example, the World Bank’s fats and oilsprice index increased 51 percent from 2006 to 2007 and 44 percent from 2007to 2008. Cottonseed oil used to be traded with a large premium over the fourleading oils. However, the premium has almost disappeared lately because ofthe high biodiesel demand for rapeseed oil, which has also put upward pressureon soybean and palm oil prices. 2926 BAFFES AND ESTUR
Table 2.3 Summary of Indicators of Valorization of By-ProductsCountryAverage national seedcotton production,2001–06 (tons)Cottonseed oilproduction as % ofnational oilconsumption aBenin 339,500 53Burkina Faso 557,833 57Cameroon 242,966 18Mali 488,281 50Mozambique 72,178 6 (potential)Tanzania 235,000 8Uganda 78,410 4Zambia 160,000 20Zimbabwe 246,350 27Source: Calculations based on information given in the country studies.a. Estimated from the quantity of seed available for crushing (2001–06 average), aftersubtraction of seed retained for redistribution to farmers, using an oil outturn of 18 percentand an average annual oil consumption of 7 kg/person.Domestic Oil and Cake MarketsVirtually all cottonseed oil produced in the countries studied here is consumeddomestically. Because all countries are net edible oil importers (in most casespalm oil), cottonseed oil is an import competing crop. Table 2.3 estimates theproportion of edible oil consumption that can be supplied from cotton seedsin each of the nine study countries. This consumption ranges from 50 percentor more in Benin, Burkina Faso, and Mali to less than 10 percent in Mozambique,Tanzania, and Uganda.Cottonseed cake is an oil processing by-product sold as livestock feed. It israrely traded internationally because of its low value-to-weight ratio. Demandfor cake, therefore, depends heavily on the size and degree of commercializationof the local livestock (cattle, poultry) industry.MARKET CONTEXT 27
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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
Page 11 and 12: BOXES, FIGURES, AND TABLESBoxes2.1
Page 13: 5.2 Summary of Pricing Mechanisms i
Page 16 and 17: eference are limited to neighboring
Page 19 and 20: ACKNOWLEDGMENTSThis study was carri
Page 21 and 22: ABBREVIATIONS¢ U.S. centACPAgricul
Page 23: US$U shWAEMUWCAWTOU.S. dollarUganda
Page 26 and 27: output markets, improving productiv
Page 28 and 29: etween these competing needs, provi
Page 30 and 31: ■■■■■competition increase
Page 32 and 33: monopolies range from 0.98 to 1.15,
Page 34 and 35: macroeconomics, developments in com
Page 36 and 37: central body and that the state nee
Page 39 and 40: CHAPTER ONEIntroductionDavid Tschir
Page 41 and 42: The debate about how to deal with t
Page 43 and 44: Figure 1.1 Map of Africa Highlighti
Page 45: hypotheses about sector performance
Page 48 and 49: to reach 25 million tons of lint in
Page 50 and 51: cotton production was introduced in
Page 52 and 53: Figure 2.2 Nominal Cotton Prices (U
Page 54 and 55: Box 2.1 (Continued)Togo, 39 percent
Page 56 and 57: Box 2.2 Cotton SubsidiesCotton subs
Page 58 and 59: efers specifically to the presence
Page 60 and 61: picking, storage, handling, or tran
Page 65: SECTION TWOHistorical Background an
Page 68 and 69: shares belonging to governments, an
Page 70 and 71: Changes Made Since the End of the 1
Page 72 and 73: long-term development strategies, (
Page 74 and 75: possible link between price-setting
Page 76 and 77: production fell further, to lows of
Page 78 and 79: all aspects of the chain from input
Page 80 and 81: suggestions (a) of establishing fas
Page 82 and 83: Figure 4.1 Decision Tree for Cotton
Page 84 and 85: Figure 4.2 African Cotton Sector Ty
Page 86 and 87: Box 4.1 Is This Typology Specific t
Page 88 and 89: 52Table 4.1 Trading Off: Strengths
Page 90 and 91: CONCEPTUALIZATION OF THE LINKS BETW
Page 92 and 93: chosen in this book and the impact
Page 94 and 95: Table 4.3 Expected Performance alon
Page 96 and 97: Box 4.2 (Continued)Second, farmers
Page 99: SECTION THREEComparative Analysis:C
Page 102 and 103: PRICING MECHANISMS IN WCAPricing me
Page 104 and 105: efore planting, price risk in the s
Page 106 and 107: Table 5.3 Summary of Producer Share
Page 108 and 109: Finally, FOT price shares in WCA ro
Page 110 and 111: 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
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Table 12.1 Summary of Expected and
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Valorization ofby-productsValue of
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Macro impact■ Total value addedpe
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across concession zones, with newer
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high yields. However, a mixed pictu
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governance and regulatory structure
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against price and exchange rate ris
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Improvements in the Delivery of Ext
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esistant, “stacked” genes), and
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Just as improved sector management
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More-competitive systems are perhap
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■■■■Interprofessional commi
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were to occur, it would most likely
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APPENDIX AStatistical Tables181
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1989/90 43 111 383 40.7 95 0.491990
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1989/90 62 150 416 41.0 95 0.671990
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1989/90 43 89 482 41.3 95 0.651990/
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1989/90 99 189 521 42.8 85 0.541990
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1997/98 31 327 95 33 to 35 2,950 83
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1994/95 82 344 238 33 207.0 40.0119
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Table A8 ZambiaSeasonLint productio
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Table A9 ZimbabweSeasonLint product
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Table A10 Ginning and FOB-to-CIF Co
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1997/98 1.64 598 210 75 49 74 7.619
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1987/88 17,609 31,238 564 414 911 4
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206 NOTES11. Important cotton secto
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208 NOTES47. Benin is not included
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210 NOTES79. In Zimbabwe and Zambia
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BIBLIOGRAPHYBadiane, Ousmane, Dhane
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and Instability, ed. A. Sarris and
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World Bank. 2007. Strategies for Co
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CFA exchange rate, 17-18b, 19fcompa
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input credit and extension in, 77-8
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firm types, 211n93fixed prices, for
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productivity, 119, 121f, 205n8,209n
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key indicators, 56-58, 57-58t,155-5
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focus group discussions by farmerty
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technology transfer, 170-71by typol
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ECO-AUDITEnvironmental Benefits Sta
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