By Cam Simpson and Alan Katz
Amado Kafando tilted his head back, smiled and pumped his fists into the west African sky. “We praised God, and said, ‘At last!’” said Kafando, 45, standing amid the mud huts where he lives with 11 children and no electricity.
His elation followed news on March 7 that the price of cotton, a crop he plants each summer in rows broken by a cow- tethered plow, hit a record $2.197 a pound, capping a two-year surge of 430 percent. Finally, he said, cotton could fulfill the promise of its nickname in his homeland of Burkina Faso: white gold.
Within weeks, Kafando was clenching his fists again, this time in anger.
The government and regional cotton monopolies, which Burkinabe farmers must sell to, announced they would charge growers 38 percent more for fertilizer — and pay them as little as 39 percent of the world price at the time for their crop.
“It was as if they pulled our legs out,” he said.
Thousands of the nation’s farmers took to the streets in May, threatening to do the unthinkable — boycott planting the top cash crop in one of the world’s poorest countries.
A few days earlier, on the other side of the Atlantic Ocean, Jerome Vick settled into an oxblood-colored leather chair and declared that he would do precisely the opposite. “We’re going to put in as much cotton as we can,” said Vick, 61, waving his gnarled hands toward the 5,000 acres his family farms in Wilson, North Carolina.
Profit Locked In
The Vicks have already locked in a price of about $1.25 a pound – more than double what Kafando will get – for about 40 percent of their harvest late this year. If the Carolina weather continues to cooperate and prices stop their recent slide, they expect a profit as high as $1 million, enough to add 300 acres.
The divergent fortunes of Kafando and Vick aren’t the result of differences in product quality. As it’s grown in the field, hand-picked west African cotton can be superior to that sprouting on the flatlands of North Carolina or Texas.
Nor is it about subsidies. Throughout much of the last decade, U.S. price supports were credited with Vick’s prosperity and blamed for the poverty in Kafando’s country. They artificially depress world prices, the argument went, robbing African farmers of the only cash most get each year. It was a debate that derailed World Trade Organization talks in 2003.
With cotton prices reaching record levels even though U.S. support programs remain, it’s clear the conventional narrative ignored more significant forces right outside the gates of African farms, said John Baffes, a senior economist at the World Bank who studies the global cotton trade.
Cutting Payments
Burkinabe farmers have no choice but to sell to government- sanctioned monopolies whose shareholders include trading firms such as Paris-based Geocoton and Paul Reinhart AG of Winterthur, Switzerland. In March, as cotton was hitting its highest price since the U.S. was recovering from the Civil War, a committee dominated by the monopolies altered the formula for setting the price each farmer gets. That cut payments for last season’s crop by 39 percent and reduced the base price announced in April.
This should have been a year “when people can finally get a few dollars and put a metal roof on their house,” said Thomas J. Bassett, a geography professor at the University of Illinois who has been studying and writing about west African cotton farmers for more than 20 years. “These mechanisms result in poverty for producers and wealth for companies and traders. It’s subtle and it’s dastardly.”
Regional Monopolies
Representatives for the three regional cotton monopolies in Burkina Faso – SOCOMA, Faso Coton and Sofitex – d eclined multiple requests for interviews for this story. They also denied requests for financial statements or other disclosures.
Among the biggest shareholders in SOCOMA and Faso Coton are closely held international commodities trading firms. They enjoy privileged positions, according to an unpublished April 2010 report done for the United Nations’ Food and Agriculture Organization, sitting in the middle of a supply chain stretching from African cotton fields to factories that make bluejeans, t- shirts and other clothing.
Yannick Morillon, chief executive officer of Paris-based Geocoton, the majority shareholder of SOCOMA, defended changes to the price formula this year. SOCOMA would have suffered a 6 million euro ($8.4 million) loss if the formula hadn’t been changed, Morillon said. Cotton companies in Burkina Faso had contracted to sell most of their fiber before the price surged in the second half of 2010, according to a March 31 report by consultants hired to propose changes to the formula.
Cotton ‘Collapse’
“The economic equation wasn’t possible any longer,” he said in an interview at Geocoton’s headquarters off the Champs Elysees. “And if the entire industry collapses, it’s the farmers that are affected.”
Any loss of cotton profits cuts deep in the rural and often impoverished villages of west and central Africa, where the livelihood of about 10 million people depends on the fiber. About 3 million of them are in Burkina Faso, a landlocked country where one out of six citizens relies on cotton, according to the World Bank.
(Source: www.cotton247.com )