A Liberalized Cotton Sector
March 16, 2009
The major cotton producing countries in the East African region are Zimbabwe, Tanzania, Zambia, Mozambique, Uganda and Malawi. The cotton industry is liberalized in all these countries, unlike West Africa where the bulk of the industry is state controlled. Liberalized industry means that the private sector is responsible for input supplies, seed cotton buying, ginning and marketing with minimal intervention and support from the government.
The major challenges faced by the cotton industry in these regions can be identified as crop production and yields, while quality standards and shipping and logistics infrastructure are also areas of concern. In today’s competitive world, countries in the region must struggle to increase acreage and yield, otherwise they are susceptible to being pushed out of the global market by important players due to the marked improvements being made by the U.S., Brazil, India, the Commonwealth of Independent States and other West African countries.
Cotton Acreage Stagnant
Acreage will grow only if the realization from cotton is higher than the production cost and the profits in comparison to other competing crops. Due to the depressed international cotton prices in the last decade, the farmers have been getting very low prices and there has been no incentive to increase the acreage. Since 2007, the international prices have firmed up, but the prices of the other competing crops have risen in much higher proportion.
The total acreage has remained in the range of 1,400 to 1,500 hectares. Tanzania and Zimbabwe have shown some increase, but there has been a substantial decrease in Zambia and Uganda. In Uganda, the major reasons for the fall have been the break of the zoning system previously in place and, therefore, no proper seed distribution to the farmers.
The crops’ yields are dependent on the quality of seeds, fertilizers and pesticides used, the timeliness of sowing and the weather in the cotton growing season. Average yield in the region is currently 251 kilograms per hectare (Kgs/Ha), as opposed to the world average of 783 Kgs/Ha.
The quality of seeds used in this region is very poor, mostly because no Bt seed is allowed to be used. Zimbabwe and Zambia have better yields because there the state regulatory authorities control the quality of seeds that can be used. As we have seen in India, if the governments consider allowing Bt seed, the region could improve the yields dramatically. Additionally, all countries should adopt methods to ensure proper planting seeds are used.
Another reason for the poor yield is that the farmers are dependent on the ginners to distribute seeds and sometimes there are delays by the ginners. This leads to late sowing and, hence, low yields. Fertilizers and pesticides are also distributed or sold by the ginners or ginner associations to the farmers, which sometimes leads to uneven, late distribution and improper usage, again resulting in low yields. If the aim is to increase yields, regulatory authorities and ginners associations should ensure that the input distribution schemes are well managed and proper inputs reach the farmer in time.
The cotton industry in this region has huge potential in terms of increase in acreage and the doubling of yields to increase the sale price realization of East African Cotton. All this could lead to higher investment in the industry, which will further boost the yields and production in the region. Increasing the yields, and hence the cotton production, should be the main focus for all the players in the cotton sector.