Developing a Sustainable Economy in Cameroon

4 - Cotton Supply Response in Cameroon

4 Cotton Supply Response in Cameroon Emmanuel Douya Introduction After more than two decades of accelerated growth, arising from a period of global stability in terms of trade as well as the expansion of agricultural and oil exports, Cameroon has suffered an ongoing economic crisis since the second half of the 1980s (FAO 1995). Among the most cited causes of this crisis are the degradation of the terms of trade, resulting from a fall in the prices of the major export products, the overvaluation of the CFA franc against the US dollar and certain internal distortions (Blandford et al 1995, Tybout et al. 1996). The impact of the crisis can be appreciated on both aggregate and sectoral levels. On the aggregate level, there was a decline in gross domestic product (GDP) by an average of 4 per cent per annum between 1985/86 and 1992/93, a growing deficit in the balance of payments and an increase in both internal and external debts. On the sectoral level, the crisis appears to have spread in a different manner. Table 4A.1 (see appendix to this chapter) shows that the agricultural sector has outperformed the industrial sector. However, behind this general performance by agriculture lie great disparities among the main agricultural exports, with cocoa and coffee outputs continuously falling between 1989 and 1993 while that of cotton was increasing (see Table 4A.2). At the level of the cotton sector, some disparities are also found. In terms of the trend of cotton production, sustained aggregate growth is only derived from the compensation between a decrease in production of some farmers and the rise by others. In fact, peasant profiles are not comparable since production is increasing for some farmers and either constant or fluctuating for others. Since the purchase price of cotton is the same for all farmers, fluctuations in production as much as differences among farmers seem to indicate that there exist factors other than price that significantly affect producer behaviour. This chapter attempts to identify and evaluate the factors that impact on cotton production in Cameroon and differentiate producers’ behaviour. A description of 65 Douya: Cotton Supply Response in Cameroon producers’ behaviour is made in order to identify their main characteristics, which should shed light on the relationships between cotton supply, the main producers’ characteristics and some price and non-price variables. An inventory of ongoing sectoral agricultural policies is presented and suggestions are made for formulating alternative policies. The next section presents both a review of agricultural policies and the cotton sector in Cameroon. The third section is a literature review while the fourth presents the methodology. Discussion and interpretation of the empirical findings is followed by the conclusion and policy recommendations. The Cotton Sector in the Agricultural Policies of Cameroon From independence in 1960 up to 1999, Cameroon has experienced two main agricultural policies, namely state intervention to 1987 and liberalization thereafter. These policies are reviewed before the cotton sector is analysed in more detail. Review of Agricultural Policies State interventions in the agricultural sector were both indirect or direct. In terms of indirect interventions, these can be seen as the continuation of French and British colonial policies through marketing boards, which had a monopoly over the agricultural export trade. Through the National Produce Marketing Board (NPMB), this strategy allowed the government to retain a fraction of the nominal world market prices of export crops to finance public consumption and investment needs. Nevertheless, this policy was coupled with guidance of farmers by providing subsidized inputs through parastatals such as SODECOTON and SOCAPALM. Direct intervention involved state corporations controlling activities formerly carried out by the private sector. The government sought to increase agricultural productivity through the establishment of a modern sector involving the expansion of plantation farming by organizations like CDC and CAMSUCO. The second phase started in 1988 with adoption of the structural adjustment programme (SAP) whose main objectives were to redefine the role of government and reduce its interventions in the economy. In the agricultural sector, many functions formerly handled by corporations under state control were privatized. Even under this new policy, however, the cotton sector is still controlled by a parastatal while other crops such as coffee and cocoa have been liberalized. In fact, the introduction of an export tax in 1994 and the withdrawal of the government in fixing purchase prices to farmers are the only major changes in the cotton sector. The Cotton Sector in Cameroon Using figures from the FAO, Cameroon’s cotton...