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West Africa |
ECONOMY
A joint action against the cotton crisis was recently launched in West African Economic and Monetary Union (UEMOA) countries
On 1 March in Lome, Togo, the West African Development Bank (BOAD) held a meeting in order to find out the reasons for the present crisis which, for some years now, has been striking right at the heart of the cotton industry in UEMOA countries. Taking part in the meeting were those in charge of cotton producing, ol-eaginous, spinning and weaving companies; investors, farming organisations and NGOs. The situation is now described as «alarming» for it has caused a loss of earnings estimated at some 100 billion CFA francs per annum for these countries. Togo’s Prime Minister who opened the sessions, said: «The year 2001 was particularly traumatic for cotton producers. There are 95 million people in UEMOA countries, of whom some 12 million earn their living by growing cotton. This brings in 300 billion CFA francs.»
Internal and external reasons for the crisis
There are many reasons why the cotton industry is in such bad shape. Prices fell sharply in 2001, plunging from 64 cents in January 2001, to 38 cents nine months later, i.e. a 41% decrease, but that doesn’t explain everything. Those working in the cotton industry think that the main reason as far as West Africa is concerned, is because of subsidies paid by northern countries and China to their own producers. Perhaps, also, the lack of organization in the industry, is partly to blame as well.
Statistics show that of the 800,000 tons of cotton produced per annum in these countries, only 5% are processed on the spot. The rest is exported, thus exposing producers to the ups and downs of the international market. Every aspect of the industry is at risk: producers, cotton ginners, truckers and those in the textile industry.
Most UEMOA countries have been forced to take on board a Structural Adjustment Programme and this means a general cut-back in training and supervisory staff, resulting in a major upheaval in production. Taking into account the fact that cotton is used as a pace-setter for agriculture production in West Africa, the countries in question have gone ahead with letting everyone produce it, even in the barely profitable zones. This means it’s extremely difficult to find the necessary funds to help all those beginners who need fertilisers, seed etc.
All this means an increase in cost prices and less funding available for important research in improving the cotton industry. Cotton producers will not be able to profit from research into: Ways and means of increasing their crops; when and where cotton must be planted; the correct use of fertilisers. In the long-run, the competitiveness of cotton production in West Africa has suffered badly.
At a time when there was a decrease in the amount of cotton being produced, the number of cotton gins increased, causing an upsurge in cotton prices. The output of these factories is generally around 40%.
Experts tell us that the primary market of cotton marketing, is, generally speaking, badly organized, thus increasing the cost of collecting the crop from the farms. The more so as companies in the transport industry are not ready to work together. An even worse scenario is when the tracks leading to the cotton gins are in such a bad state, that the drivers refuse to go there and the cotton is left to rot in piles.
In the textile industry, the spinning machines are mostly ill-adapted for the needs of the West African market. On the one hand, the mills are not suitably equipped, and on the other, the mills tend to produce large-sized unbleached cloth, whereas the local market needs small pieces of cloth for clothing. This tends to encourage cotton mill owners to increasingly look to the export market, to the detriment of providing local industry with suitable cloth for printing.
Other facets which have a major influence on West Africa’s textile industry are: The large amounts of second-hand clothing imported from other countries into West Africa; the over-production of cheap Nigerian products, thus putting the local textile industry to the test; the traditional competition between cotton fibre cotton and artificial fibre.
Cotton planters are exposed to crucial financing problems, as they lack the means of providing guarantees for bank loans. Likewise when it comes to processing the cotton crop, firms have to look for alternative financing outside the UEMOA region when they want to provide adequate equipment for their factories.
The real reason why the cotton industry is going through a crisis period in West Africa is because some countries and groups of countries, in particular the European Union, China and the United States, continue to grant colossal subsidies (2 billion dollars in China and 750 million dollars in the United States between 1997 and 1999) to their own producers, in obvious violation of World Trade Organisation regulations. The BOAD‘s president, Dr. Yayi Boni, says: «For most UEMOA countries, cotton is the main export industry whereby foreign currency can be earned».
Strength lies in unity
Participants at the Lome meeting recommended that member countries, working together with the cotton companies and UEMOA‘s commission, should take emergency measures for improving cotton production. This will be achieved by: Providing training programmes for cotton producers; intensifying research and development of the industry; looking for ways and means for protecting the cotton while it’s growing.
Participants also called for adequate investment in a modernization programme, necessary for improving productivity and the quality of the fibre. So as to promote and develop the cotton industry and in the long-run, the entire textile industry, participants invited member States to continue their efforts into reducing energy, water, and transport costs, so as to make their products more competitive. According to Ibrahima Macodou Fall, president of the Organization of UEMOA‘s Cotton and Textile-Producing Countries, «the fact that there is so little cooperation within UEMOA‘s textile industry, is a major handicap for achieving any progress.»
Cotton farmers were urged to see how they can work together so that in times of crisis they can help each other. They were also urged to cooperate among themselves so as to achieve a stabilisation of cotton prices on the world market. This means setting up appropriate structures managed privately and financed by UEMOA countries, together with cotton ginners, local commercial banks and development agencies, and donor organisations involved in development issues. Countries were urged to take necessary measures for protecting their textile industries against imports of secondhand clothes, and UEMOA was asked to organise a member-wide framework for fighting against fraud in the cotton industry. Finally the Lome meeting recommended that a follow-up committee (to be established) would ensure that all these decisions and recommendations are complied with, so that the cotton industry can emerge from its present crisis.
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