Democracy and Development in Mali

Cotton in Mali: The “White Revolution” and Development

Cotton in Mali: The "White Revolution" and Development JAMES TEFFT I t is no oversimplification to state that as cotton goes, so go the prospects for development in Mali. Cotton has always figured predominantly in the country 's economic and social life, and a good year for cotton production and marketing is also usually a good year for food production and overall economic progress. But the contribution of cotton to Malian development continues to be risky and uncertain. From the mid-1970s through the late 1980s, cotton production grew rapidly, despite large fluctuations in world prices and some unprofitable years. In the early 1990s, low world prices, an overvalued CFA1 franc and low productivity growth created a crisis situation that, in retrospect, was averted only by the January 1994 50 percent devaluation of the CFA franc and the subsequent doubling of world market prices for cotton. Helped by good rains, the area under cultivation and the production of seed (unginned) cotton production rose dramatically. Exports increased and despite farmers' increased production costs, net income rose for most of them. In the same manner, although the cost of producing cotton lint (ginned cotton) has more than doubled since devaluation , higher world prices have permitted the parastatal production and marketing agency, the CMDT (Compagnie Malienne pour Ie Developpement des Fibres Textiles), to earn windfall profits. Although cotton has performed relatively well since the 1994 devaluation, the continued reliance on cotton to drive the country's development raises three key challenges. First, the large expansion in the area under cultivation, the decreased use of fallow periods between cropping cycles, and the absence of sufficient organic and inorganic fertilization suggest that environmental degradation and soil fertility problems may constrain both cotton and cereals production over the long term. Second, the volatility of world cotton prices and 213 214 JAMES TEFFT the competitive nature of international markets mean that continuing efforts must be made to improve productivity at both farm and industrial levels. Since the solution to these first two challenges will undoubtedly require substantial financial resources, deciding how to use subsector profits for reinvestment in the cotton subsector, for financing the government's budget, or for strategic investment in other sectors of the economy presents a third major challenge for the Malian government. The manner in which the government addresses these issues will depend greatly on the future evolution of the structure and organization of cotton production and marketing as well as the complementary public development activities in the cotton zones. More specifically, continued improvements in the productivity of cotton will be directly affected by the government's decision either to maintain its current integrated system of production and marketing , or to follow demands from the IMF-World Bank for the liberalization of the cotton subsector and the privatization of the CMDT.2 In the discussion on restructuring the subsector, the fundamental question comes down to this: What is the best way of organizing individual and collective action to improve productivity at different levels of the subsector, and to improve coordination among those levels, while taking into account economies of scale and avoiding rent-seeking behavior? In short, restructuring the cotton subsector involves determining the appropriate roles for various actors (CMDT, farmers, private business, and government agencies) and empowering them with the legal, financial, organizational, and technical resources needed to successfully carry out those roles.3 The ability of the government to effectively analyze these different issues and future options facing the cotton subsector depends, in turn, on the development of an independent policy analysis capacity capable of examining the complex and dynamic interactions between government policies, technological change, institutional reform, human capital, and their relationship to external factors in the international and national economy. The information presented in this chapter on the response of farmers and the CMDT in the post-devaluation period (1994-98) discusses factors affecting current and future subsector performance and offers some insights on guidelines for future investment. Following a brief historical overview of the cotton subsector, the second part of the chapter discusses the 1994 devaluation of the CFA and the responses to this devaluation by farmers and the CMDT. The chapter concludes with a look at the kinds of constraints, opportunities, and challenges raised by the production of cotton for development in MalL COTION IN MALI: THE "WHITE REVOLUTION" AND DEVELOPMENT 215 Foundations of the "White Revolution" The historical success of cotton in Mali can...