Friday, February 23, 2007
THE ROOT CAUSE BEHIND THE COLLAPSE OF THE COTTON SECTOR IN (WEST) AFRICA
Contrary to claims made by cotton producing and exporting nations in West Africa ( i.e. C4: Benin, Burkina Faso, Mali, Chad), the collapse of the cotton sector in West Africa is not exclusively linked to US cotton subsidies. Although US trade distorting cotton subsidies are creating a structural over-supply of cotton, resulting in a decline of cotton lint prices on the world market, they are not at the root cause of the collapse of the cotton sector in West Africa; furthermore, their elimination alone will NOT revive the cotton sector in West Africa and will NOT improve the economic and the social welfare of the small-scale West African cotton farmers, contrary to claims made by the (so-called) and self-appointed representatives of West African cotton farmers.
In fact, a study conducted by Brazil on the impact of US cotton subsidies on the world market price of cotton (lint) clearly indicates that an outright suppression of US cotton subsidies will only have a marginal impact on the price of cotton. According to the findings of this report, a suppression of US cotton subsidies will only increase the world price of cotton lint by an average of $50 per metric ton, which is clearly insignificant to revive the cotton sector and/or to improve the economic and social welfare of the small-scale cotton farmers in West Africa. Furthermore, any initial relative increase in the price of cotton resulting from the suppression of US cotton subsidies will be naturally offset by the “invisible hand” of the market (equilibrium forces of supply and demand).
Thus, as the above findings clearly reveal, the collapse of the cotton sector in West Africa is not exclusively related to US cotton subsidies and the outright suppression of US cotton subsidies by itself is NOT the solution to revive the cotton sector in West Africa.
“A well defined problem is half resolved” (Einstein)
The root causes of the collapse of the cotton sector in West Africa
1) NO-LOCAL VALUE ADDITION OF COTTON :
The governments of cotton producing and exporting nations in West Africa have failed – over the last +40 years since (so-called) independence - to put in place the infrastructures and policies to process the cotton locally throughout the supply chain, from spinning yarn, weaving fabrics, printing & dyeing, designing to garment manufacturing.
Local value-addition of cotton would create desperately lacking and needed employment and would generate income within the sector and throughout the economy, thereby effectively reducing poverty among the local population. Furthermore, local value-addition would create a local market for cotton, thus enabling cotton producing nations in Africa break-free from the vicious trap cycle of trade distorting US cotton subsidies and from the dictate of the world market. West Africa only produces around 5% of the global cotton supply; thus, it has no influence over the price of cotton on the world market ( price taker). Finally, local value-addition of cotton would provide decent and affordable clothing to the local population, made with African cotton using Afican labor and designs that reflect African cultures and traditions, thus breaking the trap cycle of neo-colonial economic policy which consists of exporting raw cotton and importing used clothing in return – at a financial loss - for the local population (to add insult to injury!)
2) EXPLOITATION OF COTTON FARMERS BY THE STATE
The cotton sector in West Africa has been under State control since (so-called) independence and the State has exploited its cotton farmers over the last + 40 forty years, by paying them extremely low prices for their cotton seed ( if they paid them at all!), collecting high taxes and other coercive fees, selling farm inputs to cotton farmers at extremely high prices, etc., and getting extremely rich in the process at the expense of the farmers.
3) MISMANAGEMENT OF COTTON SECTOR BY THE STATE
The State has mismanaged the entire sector over the last + 40 years: It has failed to provide extension services, research, training, seeds, capital, equipment and other farm inputs to cotton farmers to help them increase their yield and improve their income. The State has limited itself to exploiting the cotton farmers through extremely low-farm gate prices, high input prices, high taxes, etc. while securing a monopoly over the purchase of seed cotton, the expensive supply of farm inputs, and the processing, marketing and exporting of cotton lint, generating huge profits for itself in the process, at the expense of the cotton farmers.
As a direct result of all of the above, and the more recent world price decline of cotton resulting from the effects of US cotton subsidies, the entire cotton sector in West Africa has collapsed, throwing millions of cotton farmers deeper into poverty.
Today, with cotton lint prices at a record low, the State and its coercive, parasitic and exploitative State-owned cotton organizations in West Africa are entirely blaming US cotton subsidies for the collapse of the cotton sector in their respective West African countries and are pretending to be representing, defending and fighting for the economic and social welfare of their cotton farmers. In reality, they themselves are entirely to blame for the collapse of the cotton sector – due to their own exploitation of their cotton farmers and mismanagement of their cotton sectors- and for the misery and extreme poverty of the cotton farmers in their respective countries. In fact, they are only fighting for their own economic interests (i.e. loss of profit from exports of cotton lint due to low world price). in the name of the welfare of the West African cotton farmers.
The solution to revive the cotton sector in West Africa and to improve the social and economic welfare of both local cotton farmers and the local population at large lies in LOCAL VALUE ADDITION. *Local value-addition of cotton would create desperately lacking and needed employment and would generate income within the sector and throughout the economy, thereby effectively reducing poverty among the local population. Furthermore, local value-addition would create a local market for cotton, thus enabling cotton producing nations in Africa break-free from the vicious trap cycle of trade distorting US cotton subsidies and from the dictate of the world market. Last but not least, it will provide decent clothing to the local population made with local cotton by Africans using designs that reflect African cultures, designs and traditions. Thus, processing the cotton locally would revive both the cotton and textile sector and positively reduce poverty among the local population.
Note: *Local value-addition in this context refers to hand-processing techniques used to process cotton - from the cotton fields to spinning yarn, weaving fabrics, printing & dyeing to making garments - using very simple and inexpensive hand-operated machinery and tools that can be operated in the cotton growing villages without the use of electricity, using environmentally-friendly and ecologically-sustainable production methods and non-exploitative labor practices. (Production by the masses vs mass production.)
As Gandhi said: " You cannot build a non-violent society on a factory civilization; exploitation is the essence of violence."
( For details, please see complete analysis of the collapse of the cotton & textile sector in sub-Saharan Africa and proposed solution for its revival on this blog. Document title: The collapse of the cotton and textile sector in sub-Saharan Africa)