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

Box 4.1 (Continued)international cotton merchants and commodity-based multinationals whenthey see opportunities at the country level. However, this is not to say thatconvergence in modes of sector organization is imminent. The organizationof cotton sectors in Africa faces specific challenges as a result of two factors:(a) the high input intensity of cotton production, and (b) the weakness ofmarkets for input and—arguably even more important, given the lack of capitalof most African smallholder households—seasonal finance in Africa. Aslong as the seasonal finance constraint remains, the issue of the optimal formof cotton sector organization in Africa will continue to be complicated, andconvergence toward forms of cotton sector organization observed in otherparts of the world will remain partial.PREDICTED STRENGTHS AND WEAKNESSES OF DIFFERENTSECTOR TYPESPoulton et al. (2004) identified four main challenges facing smallholder-basedAfrican cotton sectors:■■■■provision of input credit to farmers,maintenance of quality control,maintenance of a high-quality research system and effective extension ofresulting research knowledge and products, andpayment of an attractive seed cotton price.Table 4.1 summarizes some of the strengths and weaknesses hypothesizedabout different sector types. In the absence of a strong, high-capacity governmentregulatory agency, Poulton et al. (2004) hypothesized that coordinatedsectors (national and local monopoly, concentrated) will be more likely torespond effectively to the first three of these challenges, whereas competitivesectors will be more likely to generate attractive seed cotton prices for farmers.These hypotheses are further explored in this book.Although these hypotheses assume the absence of a strong, high-capacitygovernment regulatory agency, the earlier summary of historical experiencein WCA and ESA serves to emphasize the importance of sector governanceto good performance in all five sector types. Concentrated sectors can performwell with minimal input from the state. Good performance thendepends on private coordination among the dominant ginning firms. However,farmers are reliant on these companies’ continued ambitions forA TYPOLOGY OF AFRICAN COTTON SECTORS 51