Lower purchase prices for seed cotton and the rising cost of inputs are fueling the cotton crisis and discouraging more and more farmers. Yields are plummeting in Africa’s main producer countries.

Cotton is cultivated in some 30 ACP nations, but only West African producer countries feature in the international league table, supplying about 4% of global output and 12% of world exports. They account for more than 70% of ACP production, compared with approximately 25% for Tanzania, Zambia and Zimbabwe combined. Cotton is one of the very few products for which Africa’s share of global exports has actually increased over the past 20 years. Between the early 1980s and the peak of 2005, cotton production has progressed twice as quickly in Sub-Saharan Africa as elsewhere in the world.

For decades, cotton has been seen as a sure path for rapid development in the rural areas of producer countries: improved and more secure incomes for farmers, better literacy rates, the introduction of animal traction and fertiliser, improved growing techniques... In the general enthusiasm, however, some of this sector’s less appealing side effects tend to have been overlooked. Among these are the growing use of massive quantities of costly inputs (pesticides and fertilisers) and the accelerated rate of soil degradation on land used for this type of single-crop farming. A recent study by French development agency AFD calls into question the general premise that cotton growing areas are the wealthiest regions of cotton-producing countries, way ahead of the poorer food producing regions.

A deep crisis

For some years now, cotton has ceased to play a major role in the economy of producer countries, though it remains of key importance in their national economies: in West Africa, more than 15 million people earn their livelihoods from this crop, which often accounts for over half of all export revenues. Today, cotton is in deep crisis, with almost all the cotton companies - which control the sector by distributing inputs on credit and buying output - effectively bankrupt, propped up by public money from government and international sources.

For their part, producers are having to contend with constantly declining prices for the cotton they grow, ever increasing delays in payments and a rise in the cost of chemical inputs linked to hikes in oil prices. They are also finding themselves badly affected by stagnating yields and the restructuring of cotton companies. Many farmers are now taking the decision to abandon this sector and shift to growing food crops. In some places, output has fallen by as much as 50% in the space of one year, thereby exacerbating the problems of cotton companies even further. In Cameroon, the last harvest produced 145,000 t, compared with an average of 300,000 t in recent years. Henri Clavier, joint director-general of Cameroon cotton company SODECOTON attributes this dramatic fall in output to the number of farmers leaving the cotton sector. “About 100,000 of them gave up growing cotton between 2005 and 2009”, he observes. Previously, some 350,000 farmers worked in the sector. It is no coincidence that the price paid to producers has fallen by 40% over the past 5 years.

In Burkina Faso, once famous for its impressive cotton results, a similar trend is in full swing: output has halved in 3 years, dropping from 750,000 t in 2004-2005 to 360,000 t in 2007-2008, whilst prices paid to farmers fell by more than 30% during the same period. The impact on the country is severe given that cotton accounts for 60% of its export revenues. The most spectacular fall was seen in Mali where output declined by 50% between the harvests of 2006-2007 and those of 2007-2008.

Early last year, rising cotton prices created a glimmer of hope, but it was soon to evaporate. The current outlook is grimmer than ever. Latest estimates from the International Cotton Advisory Committee (ICAC) warn of serious global over-production for the 2009-2010 season, which is expected to lead to a further 10% fall in prices, on top of the 18% decline already seen in 2007-2008. The situation could become even more critical in the CFA franc zone (which is linked to the euro) if the over-valuation of the European currency against the US dollar (the currency in which cotton is traded) continues. At the same time, prices for inputs have soared in the wake of the 2007 oil price hikes, though this increase has been slightly buffered in the CFA zone by the rise of the franc against the dollar.

Outside help

US subsidies are widely blamed for this permanent state of over-production and the subsequent fall in world prices. Cotton farmers in the USA benefit from a guaranteed purchase price which keeps their level of output at an artificially high level. For years, these subsidies have been hotly debated within the World Trade Organization (WTO), with persistent complaints lodged by Brazil and later by four African countries grouped under the C-4 banner (Benin, Burkina Faso, Chad and Mali) which launched a “Cotton Initiative” during the WTO Cancun Summit in 2003. After 6 years of trade disputes over cotton subsidies between Brazil and the USA, the WTO finally ruled in favour of Brazil. Its verdict, announced on 31st August 2009, recognised the merits of the Brazilian claim, in theory putting an end to the battle. However, the US Farm Bill (part of the USA’s new agricultural policy) continues to make provision for cotton subsidies.

In response to the African Cotton Initiative, the EU launched the EU-Africa Cotton Partnership in 2004, aimed at supporting this endeavour in WTO and national cotton sector fora. The partnership works through various initiatives and projects. Meanwhile, in June 2007, the African Development Bank (ADB) launched a 5-year project to support the cotton sector in the C-4 countries, funded by a €40 million loan.

The USA responded to African requests by creating the West African Cotton Improvement Programme (WACIP) which particularly targets the C-4 countries. WACIP advocates use of genetically modified (GM) cotton to increase yields and cut production costs. US biotechnology company Monsanto has been carrying out trials on GM cotton in Burkina Faso since 2001, and, together with researchers from the country’s national agricultural research institute INERA is attempting to adapt its seeds to local conditions. The first wide-scale cultivation of GM cotton began in the 2008-2009 season. The programme involves planting 15,000 ha so as to produce enough seed to plant between 100,000 and 400,000 ha in 2009-2010. Mali has in turn just authorised trials for this cotton, while Monsanto has already been working for some years now with the country’s national rural institute IER. In Benin, however, MPs recently renewed the anti-GMO moratorium for a further 5 years.

Whilst research into GM cotton is making rapid advances, the crisis has slowed down public research into more traditional aspects of cotton cultivation. These include lutte étagée ciblée (LEC), an integrated pest management technique designed to reduce the use of pesticides and improve soil fertility management.

Regional advantages

The global economic crisis has also caused a dramatic downturn in demand for cotton, leading to fears of further falls in African cotton output in the future. Competition from synthetic fibres could increase if oil prices continue to decline following the sharp rise in 2007. Neither technological innovations (GMOs), nor cultural ones (organic cotton), nor socio-economic shifts (fair trade) can offer a global solution to this crisis. As for negotiations on cotton at the WTO, these have reached deadlock.

ACP cotton production (in thousands of tonnes)

One interesting option remains the regional marketplace. In the long term, an alternative to the current situation could be for producer countries to process cotton and trade textile products for local and regional markets, which represent several hundred million consumers. But this will only prove viable if African manufacturers succeed in being competitive in their own markets, since they will be up against the ever formidable Chinese and their cheaper clothes.

Some producers may want to try penetrating the fair trade and/or organic cotton niche markets that are gaining ground, especially in Burkina Faso (see Field Report p.10) and Mali.

But a shift towards food crops is likely to prove the most realistic option. For that to happen, there will have to be real effective government policies to support this type of agriculture.



 
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