Importance of cotton production and trade

1
Sahel and West Africa Club / OECD

• Importance of cotton production and trade
• in West Africa
• Karim Hussein
• Principal Administrator, SWAC, OECD
• Contribution to WTO Regional Workshop on Cotton,
  Cotonou 23-24 March 2004

2
SWACs coverage in West Africa
Mauritanie
C.Vert
Niger
Senegal
Chad
Mali
Burkina
Gambie
G. Bissau
Guinea
Nigeria
S. Leone
Liberia
Benin
Togo
Ghana
C. dIvoire
Cameroon
Cities and roads
gt 2000 000 inhabitants
1 à 2 000 000 inhabitants
500 000 to 1 000 000 inhab.
100 000 à 500 000 inhabitants
Main paved roads
3
Where is cotton produced?
1.2 million tons in 2003 (lint)
3 main areas
Mali, Burkina Faso, Côte dIvoire51
Chad - Cameroon13
Togo - Benin20
Source SWAC / OECD drawing on FAO data
4
Production trends for cotton lint 1961 2003 (Mt)
1200 000 t
1000 000 t
WEST AFRICA
800 000 t
600 000 t
400 000 t
MALI BKF CIV
TOG - BEN
200 000 t
CHAD - CAM
1961
1970
1980
1990
2000
2003
Source FAO.See http//apps.fao.org/faostat/
5
Export trends for cotton lint1961 2001 (Mt)
Logarithmic scale
WORLD
5 900 000 Mt
3 700 000 Mt
700 000 Mt
WEST AFRICA
100 000 Mt
Source FAO. See http//apps.fao.org/faostat/
6
Cotton and the transformation of West African
agriculture

• Most agricultural cotton production by family
  farms
• Trend of increased production of key export crops
• Cotton linked with increased cereals production
• Reliance on traditional export crops is risky
• Population growth and urbanisation increased
  demand
• Cotton remains central to many farming systems
• Increased importance of producer voice
• Key issue Has cotton generated an agricultural
  revolution? Where? How?

7
Economic and social importance of cotton in West
Africa

• Draws on West African comparative advantage high
  quality, low cost, internationally competitive
  until recently
• Complements production of staples and cereals
• Facilitates access to cash income, jobs and
  improved livelihoods (traditional textiles
  industry, education, health)
• Capitalises on existing infrastructure (e.g. FCFA
  zone)
• Fosters agricultural innovation, even beyond
  cotton
• Contributes to community development and strong
  POs
• But
• Risks climate, volatile markets

8
From cash crop production to commercial farming
Sikasso zone (Mali) 1962 - 1997
Cotton yeld (kg/ha)
Maize Production (Mt)
1500
70 000
1000
30 000
500
10 000
62
76
84
97
Source SWAC /OECD (ECOLOC Study of SIKASSO)
9
Mali maize and cotton production 1961 2003
(Mt 000)
Maize
Cotton
Source FAO. See http//apps.fao.org/faostat/
10
Key stakes according to regional actors

• Cotton is special limited alternatives in the
  Sahel. It is urgent to find solutions to address
  price volatility
• Diversification is important but insufficient
• Actions needed to preserve quality and
  competitiveness (cost/price)
• Scepticism on value-added of new reforms after
  liberalisation
• Foster regional demand and processing
• Raise public awareness of potential negative
  impacts of international trade and agricultural
  policies
• Work to address related challenges facing other
  sub-sectors and African agriculture as a whole
  as it integrates with the global economy

11
New initiatives some examples

• Regional approaches agricultural support,
  developing markets, demand, processing capacities
  and the textile industry
• Diversification identify opportunities to
  develop alternative agricultural and
  non-agricultural value-added activities that
  generate hard currency
• Risk management / insurance scheme against price
  volatility
• Mechanisms to monitor impact of subsidies
• Trade capacity building initiatives initiatives
  to enhance developing country / private sector
  and producer voice
• ..

12
Challenges and questions new initiatives need to
address
(i) What are the empirical impacts of
international agriculture and trade policies on
West Africa? (ii) How can West Africa address
new competition generated by the adaptation of
existing policies and trade regimes? (iii) How
can processing really foster a profitable and
competitive textile industry in W.A.? Lessons
from the past? Who will invest? (iv) How might
diversification provide alternative opportunities
for adding value - particularly for small farms ?
(v) What conditions are required to attract
local and foreign investment? (vi) What
institutional issues need to be addressed to
ensure international negotiation processes help
foster agreement that addresses African and
international concerns? (vii) Regional
initiatives and regional integration?
13
Thank you
Additional resources SWAC web pages on
agricultural transformation and
cotton www.oecd.org/sah (icon -
cotton) www.sahel-club.org/en/agri/index.htm www.s
ahel-club.org/fr/index.htm OECD initiative on
Policy Coherence for Development www.oecd.org/deve
lopment/policycoherence DAC guidelines on
strengthening trade capacity www.oecd.org/dac/tra
de
14
Annexes Supplementary data
15
Cotton lintShare of National Export
Revenue2001 Examples 6 key producers
Source FAO
16
The Mali case From cash crops to commercial
farming in Sikasso 1962-1997
Cotton yield (kg/ha)
Maize Production (Mt)
1500
70 000
1000
30 000
500
10 000
62
76
84
97
Source SWAC /OECD (ECOLOC Study of SIKASSO)
17
Mali Maize and cotton production 1961 2003
(Mt 000)
Maize
Cotton
Source FAO
18
Agricultural innovation and cotton production in
Mali

• Cotton support system favoured high access to
  agricultural innovation by farmers in the CMDT
  area- long term financial and technical support
  - demand-led innovation process- close
  extension support- efficient upstream and
  downstream agricultural services
• Agricultural revolution in this zone
• CMDT facing new reforms, cuts and privatisation
  what perspectives for cotton farmers?