Crisis Continues For African Cotton Producers
March 10, 2009 The cotton sector in Africa, especially West and Central Africa, and the issue of cotton have become the key factors to the success of the Doha Round.
While the development aspect of Doha Round negotiations is important, it is impossible to forget the commercial aspect of this matter – the cotton subsidies granted by developed countries.
Let me point out briefly the importance of cotton for African countries. For the past 20 years, African cotton production has reached a considerable level, thus making Africa a reliable and available origin with excellent fiber characteristics. With a production of 1.7 million metric tons per year, 85% of which is exported worldwide, Africa is now the second exporter behind the United States. Today, African cotton is an essential part of the world cotton industry. There are very few cotton traders and spinners nowadays who are not dealing in African cotton.
African cotton is one of the most competitive in the world – without government subsidies. In African countries, cotton production is handled by small farmers on small areas of about 3-6 hectares. Today, about 20 million people make a living from the cotton production. This industry brings income, jobs and foreign currency to many African countries. It is a major factor of modernization and improvement of the agricultural production and rural economy.
However, the cotton sector in Africa is facing tremendous difficulties because of low prices on the world market. These low prices are the consequence of over supply of cotton encouraged by huge subsidies in developed countries. Such government measures disturb the market rules and prevent free competition.
Subsidies in Developed Countries Depress Prices
The current worldwide cotton crisis is due to several factors. However, the fundamental reason remains the extensive use of subsidies by certain more developed countries. All aspects of this policy must be denounced: it cannot be justified from an economical point of view because it goes against free trading. By encouraging over-production and export-dumping, these subsidies are driving down world prices at their lowest levels.
This policy is perverse in its effects: the lower the world prices drop, the higher the subsidies get, the bigger the world production will be and yet again prices will drop. We are in an infernal and vicious circle, and the first victims are the Third World farmers and particularly those of Africa.
From a social point of view, the current cotton crisis is dramatic because it compromises the development of our countries and accelerates poverty. Today, we are not talking about the cotton activity in Africa in terms of profitability but in terms of survival.
African producers are therefore disappointed and revolted when they have the most efficient and competitive cotton in the world, with excellent technological characteristics of the fiber, and yet they see, year after year, all their efforts ruined by unfair commercial practices.
That is the fundamental reason that four African countries (the C4) introduced to the WTO in May 2003 the cotton initiative “poverty reduction: sectoral initiative in favor of cotton.”
Initially the cotton initiative was centered on four key demands:
• Tackling the cotton subsidies in the early harvest
• Reduction and eliminating the cotton subsidies
• Establishing a transitional compensation mechanism to offset the damages caused by subsidies to least developed countries’ (LDC) cotton exporters pending their elimination
• Considering cotton as a specific product, so it must be managed outside the global agriculture negotiations.
The WTO conference in Cancùn failed in September 2003 mainly for cotton issues. Since Cancùn, several meetings, conferences, workshops and seminars were organized in different parts of the world but nothing substantial was gained by developing countries. We lost ground in August 2004 in Geneva when the representative of African countries accepted to abandon the specificity of the cotton against the promise to see cotton handled rapidly, specifically and ambitiously.
In Hong Kong, December 2005, nothing substantial was obtained: the elimination of export subsidies “Step 2” was the result of a dispute between Brazil and the U.S.
Recently in Geneva, it was established that the Doha Round was currently failing.
In September 2006, the EU court of justice asked the EU to reconsider its decision taken in April 2004. This decision of the EU court of justice is very bad news for millions of African cotton farmers. All these failures prove the lack of goodwill of developed countries to tackle the subsidies problem. Today, African cotton producers have lost their trust in the developed countries’ promises.
Soon or later, these subsidies will be eliminated – they are unfair competition and accelerate poverty in African cotton producing countries. Withdrawal of these subsidies would allow African cotton to gain market share and would have a direct influence on poverty reduction. We are not asking a favor in this cotton initiative, but we are asking for the respect of the international fair trade rules. According to some studies, West and Central African cotton-producing countries lose around $250 million every year because of these subsidies. Therefore, it is well understood that cotton subsidies are one of the roots of the diseases facing African cotton sector.
GET THE NEWSLETTER TODAY!
