| This week we are bringing you large extracts from summary of the “Louis Goreux Report” This report was financed by The Conference of Ministers of Agriculture of West and Central African Countries (CMA/WCA). It is a consequence of the recommendations made at the Meeting of the CMA/WCA, held in Abidjan at the end of June. This report was prepared by Louis Goreux who was financed by the French Ministry of Foreign Affairs. The cost of production of cotton in West and Central Africa (WCA) is lower than in most other countries. African producers are well able to compete with the developed countries on the world market, provided that the competition is not distorted by massive subsidies. Africa is not asking for special treatment here. It asks for respect for the law of the market and conformity to the fundamental principals of the World Trade Organisation (WTO). The share of the WCA countries in world exports has increased faster for cotton than for any other produce. Compared to other places, the Sahel has the advantage in cotton farming and the rapid growth in its production has shown that the African producers can profit from this advantage. This growth in cotton farming has had beneficial effects for West and Central Africa. It has resulted in the improvement of the lives of millions of its inhabitants who live on less than a dollar a day per person. A report by the World Health Organisation (WHO) has shown that cotton production has been the main contributor to the improvement in health in this region. Cotton is the most financially rewarding farming activity and the main source of financial income for the Sahel region. So it is that the production of cotton has had a dynamic effect in the heart of the cotton producing regions and this effect has spread through the rest of the economy in many countries, especially Benin, Burkina Faso and Mali. Nevertheless, the remarkable progress of these last 30 years might well be ruined by the drop in world prices. These have fallen to their lowest level in thirty years. The fall in prices for cotton has been caused partly by the competition of synthetic fibres, the down turn in the world economy and the favourable climatic conditions which resulted in a bumper harvest in 2001/02. However, subsidies have played their part too. In 2001/02, the subsidies provided by the USA, China, Greece and Spain to their cotton farmers attained six billion dollars: the same value as world exports in cotton for the same year. It is clear that such high subsidies contributed to the fall in market prices. Given that the WCA countries export almost all their cotton production, their income from exports fell and it is estimated that they have suffered a loss in revenue of 250 million dollars in 2001/02 and an average decrease of 200 million dollars annually over the past five years. This loss of revenue has been estimated as the loss of export income, taking into account the cost of imports needed for cotton production and its exportation: fertilisers, pesticides and transport. The comparison of real results against expected results has been tested in many simulations. The USA, by far the largest exporter in the world, gave about 4 billion dollars in subsidies to their cotton growers in 2001/02. These subsidies could well increase after the adoption of the new Agriculture Law of May 2002…/… China contributed to the instability of the world market by subsidising its cotton growers to the tune of 1.2 billion dollars in 2002/02. China is not only the largest producer and consumer, but it is also the country with the largest stock piles of cotton. Over the last 20 years China has changed from being a net importer to a net exporter of cotton. Greece and Spain only account for 2.7% of world production. However, their subsidies were higher than 0.7 billion dollars in 2001/02, because their subsidies per kilogramme of cotton are the highest in the world. As the countries of West and Central Africa can produce cotton more cheaply than the USA and China, and especially Spain and Greece, a reduction in production in these four countries, compensated by an increase in the non-subsidised countries (including WCA), would lead to a better use of the world’s resources. The advantage of such a solution would be even greater because it is easier to change from cotton production to something else in the developed countries than it is in the Sahel. Subsidies in the industrialised countries have an adverse economic effect which was condemned by the secretariats of the OECD and the IMF; in the social domain they have disastrous results…/… In the countries of WCA cotton is grown on family farms with, on average, less than three hectares of cotton. The American subsidies to cotton producers have succeeded in raising a few thousand individuals above the poverty line in the USA, but they have also deepened the poverty of millions of individuals in Africa. It is clear that the countries of WCA have been seriously hurt by the subsidies given to the cotton producers of the USA, China, Greece and Spain. This wrong will not disappear of its own accord. In fact, it will probably get worse as a result of the new Agriculture Law which came into force in the USA in May 2002. The countries of WCA hold an excellent portfolio on the questions of principals, economy and above all the fight against poverty. They need to exploit this file as best they can, taking into account the restrictions of the calendar of the WTO…/… …/… By combining their options in an appropriate manner, the countries of the WCA could insist on compensation in cash while waiting for a reduction in subsidies which would only come about slowly…/… Louis Goreux, 25 March 2003 | 
