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

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CONCEPTUALIZATION OF THE LINKS BETWEEN COTTONSECTOR ORGANIZATION AND PERFORMANCEThe previous section set out a number of expected strengths and weaknessesassociated with different forms of cotton sector organization. In this section,the key links between cotton sector organization and various dimensions ofperformance are discussed more systematically. The section culminates in discussionof a series of indicators by which cotton sector performance will beassessed within this book. Figure 4.3 presents the conceptual framework thatunderlies much of the subsequent analysis in the book.Given the various links in the chain, one can think of cotton sector performanceat various levels. First, there are the processes and services that are underthe direct control of cotton companies and other stakeholders within the cottonsector. These processes and services include the public goods generation withinthe sector, the services delivered to cotton farmers, the seed cotton pricing decisions,and the mechanisms that companies and other stakeholders put in placefor controlling and enhancing cotton quality. These areas are shown in the rectangularboxes near the top of figure 4.3. Performance at this level focuses primarilyon the quality of services provided to farmers and the prices paid. Theprocess indicators for assessing performance at this level are analyzed in sectionIII of the book.At the company level, the extent and efficiency of these processes and servicesinfluence the overall cost of operations. More extensive preharvest servicesraise company costs, but so too does paying a higher price for seed cotton. Costof operations is also heavily influenced by the efficiency of ginning, which, theorysuggests, is likely to be closely linked to cotton sector organization. Cost ofoperations may be thought of as an intermediate performance indicator, butone that has a major influence over both company profitability and the competitivenessof the sector in final markets.Meanwhile, at the farm level, the public goods generated and the services deliveredby cotton companies are major determinants of seed cotton yields (althoughexogenous factors such as soil fertility also come into play—portrayed with dottedovals in figure 4.3). 41 As with cost of company operations, seed cotton yieldsmay be thought of as an intermediate performance indicator. Along with seed cottonprices, yields are a major determinant of farm-level profitability of cotton production.At this point, an important feedback loop comes into play, whereby highprofits and cash incomes from cotton can facilitate the acquisition of capitalassets, such as draft power and related equipment, that can further enhance thescale and efficiency of cotton production and of the whole farm enterprise.Section IV of this book analyzes performance at both company and farmlevels, focusing on outcome indicators. At the farm level, yields and returns tofarmers are examined. At the company level, the focus is on cost efficiency andthen on overall competitiveness in the lint market, which is a function of thecosts of production and the price that a sector realizes for its lint.54 POULTON AND TSCHIRLEY
Figure 4.3 Linking Cotton Sector Organization and PerformanceExtensionInputprovisionResearchCreditrecoveryQualitycontrolProducerpriceSoil fertilityAvailabletechnologyGinningoutturnGinneryoverhead costsYieldAsset accumulation(animal traction, otherequipment)Cost baseTaxes/subsidiesBy-productvalorizationProfitabilityof farmersProfitabilityof companiesCompetitiveposition in finalmarketPoverty effects(farmer household income,consumption multipliers,casual labor employment)Macro impact(export revenues, valueaddition, budgetary impacts)InvestmentclimateInputs to improved performance, focus of process indicatorsFinal outcomes, focus of outcome indicatorsFactors largely exogenous to sectorIntermediate indicatorsIndicators (process or outcome) partly influenced by external factorsSource: Authors.Ultimately, the goal would be to link organization of a cotton sector to itscontribution to poverty reduction. However, many exogenous factors mediatethe impacts of cotton on poverty reduction within an economy, andmodeling the impact on poverty within the focus countries is beyond thescope of this book. The analysis is, therefore, restricted to outcome indicatorsbecause there are indications of clear relationships between the indicatorsA TYPOLOGY OF AFRICAN COTTON SECTORS 55
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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
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BOXES, FIGURES, AND TABLESBoxes2.1
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5.2 Summary of Pricing Mechanisms i
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eference are limited to neighboring
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ACKNOWLEDGMENTSThis study was carri
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ABBREVIATIONS¢ U.S. centACPAgricul
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US$U shWAEMUWCAWTOU.S. dollarUganda
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output markets, improving productiv
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etween these competing needs, provi
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■■■■■competition increase
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monopolies range from 0.98 to 1.15,
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macroeconomics, developments in com
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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 62 and 63: national monopoly (state-owned or p
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 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
Page 112 and 113: Significant in Mozambique, the comp
Page 114 and 115: Zimbabwe transitioned during the 19
Page 116 and 117: Box 6.1 (Continued)A move from a co
Page 118 and 119: 82Table 6.1 Summary of Input Supply
Page 120 and 121: 84Table 6.1 (Continued)IndicatorsCo
Page 123 and 124: CHAPTER SEVENQuality ControlGérald
Page 125 and 126: Tanzania Competitive 1 2 Very lax n
Page 127 and 128: Figure 7.1 Estimated Premium for To
Page 129 and 130: all fiber coming from Africa—are
Page 131 and 132: Box 7.1 (Continued)newly liberalize
Page 133 and 134: CHAPTER EIGHTValorization of SeedCo
Page 135 and 136: competitive market in some of the o
Page 137 and 138: a few years, it indicates that some
Page 139 and 140: 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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