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July 08, 2008

Mali's cotton sector heads for crisis

Surveying his cracked, dry fields near the village of Ouesselebougou in Mali's southern cotton belt, Somala Doumbia is waiting for the rains and wondering what to do.

"I'm not planting cotton this year because last year was so bad," he says. "The rains were bad, I lost more than $100. I'm very discouraged."

He is not alone. Some 57,000 cotton farmers have switched to other crops since 2005 - a sign that the sector which makes up a quarter of Mali's exports could be heading for crisis.

The problems come at a time when Mali's cotton industry is on the verge of being privatised - a process advocated by the IMF and the World Bank since 2001. The hope was that the process could mimic privatisation in Burkina Faso, which has seen some success.

But huge delays are making Mali's plan look shaky - a deadline of 2008 has effectively been abandoned, with insiders saying it may even be difficult before the 2009 harvest.

"We are very worried about the delays," says Olivier Durand, an agriculture specialist with the World Bank in Bamako. "We're not sure if we will get a good privatisation at the end - we may not be able to find serious investors."

Their concern is a debt of up to $200 million, accumulated by the Malian Textile Development Company (CMDT ) - a state-run body which buys, sells and processes the cotton on behalf of farmers - the very body up for sale in the privatisation. Even if the world cotton price is currently looking better, with every month that passes, the debt is accumulating.

It is not yet clear what will happen to that debt when the CMDT is offered up for sale. An official from the Malian Cotton Restructuring Programme says authorities have admitted that there have also been technical delays and insufficient planning.

Mali's cabinet has adopted the project, an important step in getting it passed into law. But experts say that is not helping farmers to maintain equipment and buy fertiliser.

"For sure we will find some buyers, but I am not sure they will pay the real price," says Mr Durand. "They will pay for what they see as a second-hand factory, and they may only pay half price. I don't think the government will accept that."

But how did the CMDT get into such trouble?

The debt is symptomatic of the troubles faced by the sector - the 2007 rains arrived late and ended early, resulting in a poor harvest - 247,000 tonnes of cotton, compared with an average of 600,000 in the 1990s. Farmers are also affected by subsidies paid out to farmers in rich countries, and the fall of the dollar on the world market.

In order to compensate for these losses, the CMDT has been promising a guaranteed price for farmers for several years, but it is struggling to pay up. Somala Doumbia in Ouelessebougou is just one of nearly half of Mali's cotton producers who still have not been paid for the 2007 crop.

Campaign and advocacy groups such as Oxfam are worried that despite awareness campaigns, many farmers are not prepared or even aware of the implications of privatisation.

Many producers say their opinions have not been taken into account.

"There are no strong farmers' organisations which can negotiate on a level playing field with the private sector managers," says Oxfam's Abdoulaye Dia. "Are the producers in a strong enough position today to negotiate if the price goes up or down?"

If the political arguments over privatisation are distant to farmers, lack of income is not.

"My impression is that it [privatisation] could be a good thing for farmers if it means we get paid," says Seydou Doumbia, another farmer in Ouelessebougou.

There is little chance of the privatisation project being abandoned, but unless the problems at the heart of the industry are tackled, it could be too little too late for farmers who may just choose to give up on cotton altogether.

BBC

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