West and Central Africa 
West's cotton subsidies cost Africa US$ hundreds of millions

A new study by the International Cotton Advisory Committee (ICAC), titled 'Production and Trade Policies Affecting the Cotton Industry,' unveils the large losses Africa's cotton sector suffers from due to subsidies by the West. The substantial West African cotton producers lose in two ways; cotton prices are far lower than the world market would imply and African governments have to spend money on subsidies to compete. 

The world cotton industry is suffering through one of its most painful periods for producers with average cotton prices hitting a 30-year low of 42 cents per pound, halving the incomes of many developing country cotton producers, says the study. 

One of the principal reasons is the high level of government subsidies received by competing farmers outside Africa. Global cotton farmers receive a total of US$ 4.8 billion in subsidies annually. Only US cotton farmers received subsidies worth US$ 2.1 billion in 2001. 

The World Bank estimates "the cotton price would improve 12 cents a pound and translate into revenue gains of US$ 250 million a year for West and Central African farmers" if only US subsidies were cut. Further, governments in West and Central Africa are spending as much as US$ 60 million a year subsidising their own cotton farmers, "money that instead could be used to build schools, train doctors or immunise children," the world Bank holds.

- The World Bank is concerned about events in the cotton industry and the negative effects it is having on poor cotton farmers in developing countries around the world, Ian Johnson of the Bank said as the ICAC study was presented. Not only Africa is affected. Cotton producers in all developing countries "face annual losses of about US$ 9.5 billion as a result of subsidies benefiting rich countries," the study concludes.

Poor West African countries were however most affected. For example, 22 percent of Benin's income is tied to cotton. In Burkina Faso, it represents the most important export product with 60 percent of the total export market, employing two million people directly. Other heavily affected countries of the region include Cameroon, Central African Republic, Chad, Côte d'Ivoire, Ghana, Guinea, Mali, Nigeria, Senegal, and Togo, according to ICAC. 

In the CFA franc zone countries in West and Central Africa, the recent fall in the world price of cotton additionally has come at the same time when many of these countries are reforming their cotton sectors to make them more competitive and less state dependent. These reforms could be jeopardised. 

West and Central Africa in theory should be one of the world's most successful cotton producing zones, the ICAC study implies. The region by international standards produces good-quality cotton, high average crop yields, and high ginning ratios. Local environmental conditions, cheap labour and a good organisation of the sector speak for West Africa's competitiveness. The region however cannot compete on other regions' subsidies level. 

Major producers outside West Africa that have programs aimed at supporting local cotton production include Brazil, China, Egypt, Greece, Mexico, Spain, Turkey and the US. These subsidising countries account for an estimated 53 percent of the world's cotton output. The European Union provides the most generous assistance to cotton growers - more than 100 percent of world prices.

Sources: Based on ICAC/World Bank and afrol archives

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