Cotton - Big in volume, small in price

The head of a delegation from the main cotton buying company in Burkina Faso, Sofitex, recently met with some 200 local farmers under a mango tree in western Burkina Faso to explain to them that they should expect to get 150 CFA (US 30 cents) a kilo for their next harvest, or 9 percent less than they got for the previous year.

But as he started to talk the farmers interrupted him. "Excuse me," said one of them, "but if what you are telling us is true then we are all going to stop growing cotton."

The other farmers stood up to applaud, drowning out the Sofitex representatives as he tried to get the farmers to understand that there is nothing he can do about world cotton prices. "The price is determined by external market trends and those trends today clearly show a durable tendency for lower price," Jonas Bayoulou of Sofitex said.

The cotton industry provides more than a quarter of the 13 million people in Burkina Faso, one of the world's least developed countries, with some income.

But these and other cotton farmers are not in a mood to listen. The price of cotton has fallen every year since 2003 when it was 210 CFA (US 42 cents, converted at the current rate). The industry, which counts for 60 percent of Burkina Faso's cash exports, provides more than a quarter of the 13 million people in one of the world's least developed countries, with some income.

"Where are we going to send all these [soon-to-be-unemployed] people? He is talking about the youth and cotton farmers as well," said Celestin Tiendrebeogo, the manager of Sofitex in Burkina's cotton capital Bobodioulasso, adding that the consequences of lower production is likely to have a ripple effect on other industries and the economy as a whole.

Cotton buying companies in the region are struggling to survive. Sofitex's expenses were around 40 billion CFA (US $80.45 million) more than its income over the last two years, Tiendrebeogo said.

He expects things to get worse. With more farmers giving up cotton, Burkina Faso's production is likely to drop next year by more than 12 percent to less 700,000 tons.

"Our Tsunami has come and we now need help from the international community", Francois Traore, the president of the Union Nationale des Producteurs de Coton du Burkina told IRIN.

Blaming the West

Cotton buying companies in the region are struggling to survive. Sofitex's expenses were around 40 billion CFA Francs (US $80.45 million) higher than its income over the last two years.

The consensus among NGOs and African leaders has been that the cause of the low cotton prices has been the United States, which has subsidized 25,000 of its cotton farmers.

According to the NGO Oxfam, Washington paid US $4.2 billion in subsidies in 2004-05 while sub-Saharan lost around US $400 million a year in revenue, money that would have benefited some 10 million poor people in the region.

In October, the president of Burkina Faso, Blaise Compaore, told US farmers and congressmen in a videoconference organized by the World Bank that cotton was essential to alleviating poverty in his country as well as Benin, Mali and Chad. "But our economies have been reformed so that there are no forms of subsidies for farmers," he said. "While alas, certain [Western] countries have chosen to flout the rules of the market."

Along with ending subsidies, African governments are asking western countries to provide an emergency fund to compensate for depressed cotton prices and technical and financial assistance for Africa's cotton sector. Benin's president Boni Yayi said on Radio France International in December that he has personally asked US President George W. Bush to help.

The US government said is not will consider ending subsidies to its cotton farmers separately from an overall World Trade Organization (WTO) deal on agriculture. However it may increase aid to boost the productivity of African cotton farmers and improve their ability to trade.

Beyond Ending Subsidies

Some experts say the cotton industry in sub-Saharan Africa would still face problems even if the West were to stop subsidizing its farmers. For one thing, the low value of the US dollar, compared to the CFA, makes US exports more competitive.

The consensus among NGOs and African leaders has been that the cause of the low cotton prices has been the United States, which has subsidized 25,000 of its cotton farmers.

One good thing about low cotton prices, Bachir Diop, president of the Dakar based Association des Cotonculteurs Africains (ACA) told IRIN, is that it is forcing farmers to become more efficient.

Burkina Faso's government research institute INERA (l'institut National de l'environnement et de recherches agricoles) has produced genetically modified cotton seeds which it says yield up to 3,000 kg of cotton per hectare, instead of the current average of only 1000 to 1500 kg. The government said it plans to distribute the seeds to farmers in 2007.

Efforts are also underway to turn cotton seeds into cooking oil as well as fuel for local consumption. "Such endeavours would mitigate the impact [of low international prices] and our dependence on them" Bachir said.

The West African Development Bank (BOAD) has also been supporting efforts to increase the manufacture of local textiles. Currently 95 percent of the cotton is exported as raw material.

However, Diop said that sub-Saharan countries may find it hard to compete international because of their high energy costs and because the WTO ended world quotas on textile in 2005, which has allowed China to start flooding world markets.

Many Burkina Faso farmers have tried to grow cereals such as corn, millet and soybeans, instead of cotton but cereal prices are even more volatile. This year a 100 kg bag of maize cost just 3,000 CFA (US $6.03) compared to two years ago when the price was a high as 25,000 CFA (US $50.28 at the current rate).

Cotton may still be farmers' best hope. "We cannot replace it," said farmer Francois Sirima. "It's the only reliable way we know to get cash."




Reprinted with permission from IRINnews.org © IRIN. This article does not necessarily reflect the views of the United Nations or its agencies.

To read another Global Envision article about cotton farming in Africa, see Uganda: Helping Cotton Growers to Their Feet.



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