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September 24, 2012

Can cotton farming in Africa be made viable again?

Chido Makunike

Cotton farming in many African countries has declined over the decades.  Once a lucrative export crop whose farming was accessible to even small scale farmers, the cotton sectors in many African countries are a shadow of their former selves.

Among the challenges are global prices that are no longer as consistently profitable for farmers, the rising cost of inputs, comparatively low yield productivity, and the challenge of competing against countries that subsidize their cotton sectors. Many African countries that used to have important cotton ginning operations have seen them shrivel in the face of hard-to-beat competition (China), leaving the farmers even more vulnerable to distant market forces.  

An important part of Burkina Faso's coping strategy is to now rely on gene-modified seed for up to 40% of its cotton planting to try to increase per hectare yields. Good overall cropping conditions in the current 2012/13 growing season have yielded forecasts of 532,000 tonnes of cotton in the versus 414,000 tonnes last year.

In some countries organic cotton provides an interesting niche market for small numbers of farmers. But generally, the fortunes of African cotton farmers have been declining over the years.
Cotton farmers and buyers were this year engaged in price stand offs with each other in at least two countries; Zambia and Zimbabwe. Buyers were accused by farmers of offering much lower prices than they had promised at the start of the season. The buyers protested that a global cotton glut had driven down prices.
Governments had to be seen to intervene, and they made threatening noises against the buyers, but short of subdising the farmers in one way or another, which is always short term, there is little they can do. Regulating the sector can address various important issues, but price is the least amenable to regulation.

Rakesh Machanda explains some of the difficulties the cotton sector in Zambia faces, but his example could apply to many other countries. In that country a group of cotton farmers outraged at prices set on fire a truck carrying cotton lint. As in other countries, the 2010/11 prices had encouraged more cotton farmers to plant the crop, accounting fora rise in out put from 180,000 tonnes to this year's 200,000 tonnes.
He explains that the farmgate price of cotton In Zambia this year was half that of 2011. Smallholder cotton farming is labour-intensive at every step, and wages in Zambia in 2012 are double what they were in 2011, according to Machanda. Even before factoring in all other costs, this is obviously a losing proposition for the cotton farmer.

In an article entitled 'Cotton farmers’ return to field in doubt,' the Sunday Mail (Zimbabwe) said many discouraged farmers were likely to abandon growing the crop in future seasons, which is not at all surprising given the economics of farming it. This death of the cotton sector by attrition has been observed in many other countries over the years.

According to the article, 'Most farmers said they got an aver­age of $120 per hectare’s production, which was less than half the cost they incurred on inputs. This year cotton marketing was dis­rupted by a price impasse between gin­ners and farmers, with the former offer­ing as low as $0,29 per kg while the latter wanted at least $0,85.'

The price gap between farmers and buyers was huge, "and this season proved that even government cannot save us," said one farmer. The Zimbabwean government in July tried to help the farmers by decreeing prices of between 77 and 84 US cents per kilo for their cotton, but buyers ignored this and offered an average 35 cents a kilogramme.   

The cotton marketing situation was much the same in Malawi. Farmers were left grumbling about merchants' price offers (average US 36 cents/kg), which were below their costs of production and half the average prices of the 2010/11 season. That season's prices actually enticed many more farmers to grow cotton this season, causing Malawi's 2011/12 cotton harvest to rise to 244 000 tonnes compared to only 52 000 tonnes in 2012/11, according to a report President Joyce Banda presented to parliament in May.

Many of the farmers who took to growing cotton did so after having abandoned maize, whose bumper harvests in Malawi in recent years have lowered prices. Not even government assistance with various inputs was enough to make the farmers break even.

The problems of cotton farmers in some parts of Malawi (Zambia and Zimbabwe too) were compounded by long dry spells early in the 2011/2012 rain season, forcing some of them to replant up to three times.

The governments of the three neighbouring countries have pledged to get together to see how they could 'protect the interests of cotton growers.' But the various market and production forces they are trying to cushion their farmers against are probably more powerful than anything they can. 

Farmers in Malawi also suspect collusion between the cotton buying companies because they were said to all be offering the same price. If so, this would be a real-world example of how the 'free market' gospel often doesn't work as intended in undeveloped markets, and why governments often feel compelled to intervene in the marketing of crops.

The harsh environments (hot, dry, often marginal soils) in which cotton is often grown are not readily suitable for other crops, and certainly not many that fetch hard currency on the international market.

Burkina Faso's location in the dry, arid Sahel and cotton's role as the second most important foreign currency earner mean that despite the declining economy of farming it, there are no quickly, easily obvious alternatives. So the country has gladly received a $90 million grant from the World Bank to increase its cotton production, but it remains to be seen whether this will improve the sector's intrinsic viability/competitiveness in the face of global cotton trends, or whether the money would have been better spent to begin to explore how Burkina Faso can earnestly begin to reduce its economic dependence on cotton.  

The good/bad cotton marketing season of recent years are of course entirely normal. But the general trend over many years suggests that small scale cotton farmers in most African countries will find cotton an increasingly difficult crop from which to make a viable, let alone profitable living. It is time to help cotton farmers identify new niche crops.  

African Agriculture

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