The "Cotton Problem" in West and Central Africa: The Case for Domestic Reforms

Cotton subsidies have received considerable attention during the past four years, primarily triggered by the excessive government support received by the cotton sectors in the United States and the European Union. In response to that support, four cotton-producing countries in West and Central Africa -- Benin, Burkina Faso, Mali, and Chad -- have requested that the Doha round of negotiations on trade liberalization contain financial compensation for WCAcountries for as long as those Western subsidies remain in place. Brazil also brought a case to the World Trade Organization, claiming that the U.S. subsidies cause a reduction in the world prices of cotton, thus reducing the income of Brazilian cotton growers.
Western cotton subsidies should be abolished, but not much attention has been paid to another, perhaps more important, issue. Many African cotton-producing countries, especially in WCA, must reform their cotton sector in order to allow a greater share of the world price to reach the growers and must foster a policy environment that is conducive to the promotion of new technologies. For the most part, the cotton sectors of the WCA countries are managed by government-owned parastatals. Competition by private entities is limited -- with deleterious consequences for the efficiency of the cotton sectors.