51712 The Cotton Sector Of Uganda Africa Region Working Paper Series No. 123 March, 2009 Abstract T his country study is a background paper prepared for the comparative analysis of organization and performance of cotton sectors in Sub-Saharan Africa, a study carried out by the World Bank, with the objective of analyz- ing the links between sector structure and observed performance outcomes and thus draw lessons from reform experience that can provide useful guidance to policy-makers, other local stakeholders, and interested donors agencies. It de- scribes and reviews the cotton sector situation in Uganda. During the 1960s, Uganda was Sub-Saharan Africa's largest cotton producer. However, political in- stability and poor policy choices of the 1970s led the sector to its demise. At- tempts to revive the sector with lending operations during the 1980s failed, but policy reforms combined with a lending operation and the high cotton prices of the 1990s revitalized the sector. However, there is a sense that the sector lags behind its full potential. Various reports have identified low quality of cotton, lack of domestic textile industry, and low use of purchased inputs due to lack of rural credit as the key constraints. This paper argues that the fundamental problem of Uganda's cotton sector is its low profitability, which reflects the displacement of cotton by food crops. Furthermore, its earlier process reflects, in part, the forced labor conditions under which cotton was grown. The paper concludes that pro- motion of biotechnology and training of cotton growers are two areas that should receive priority. Yet, the production targets announced by the government and many other entities are unlikely to be met any time soon. Author Affiliation and Sponsorship John Baffes, Senior Agriculture Economist Jbaffes@worldbank.org The Africa Region Working Paper Series expedites dissemination of applied research and policy studies with potential for improving economic performance and social conditions in Sub-Saharan Africa. The Series publishes papers at preliminary stages to stimulate timely discussion within the Region and among client countries, donors, and the policy research community. The editorial board for the Series consists of representatives from professional families appointed by the Re- gion`s Sector Directors. For additional information, please contact Paula White, managing editor of the series, (81131), Email: pwhite2@worldbank.org or visit the Web site: http://www.worldbank.org/afr/wps/index.htm. The findings, interpretations, and conclusions expressed in this paper are entirely those of the au- thor(s), they do not necessarily represent the views of the World Bank Group, its Executive Direc- tors, or the countries they represent and should not be attributed to them. COMPARATIVE ANALYSIS OF ORGANIZATION AND PERFORMANCE OF AFRICAN COTTON SECTORS THE COTTON SECTOR OF UGANDA Paper prepared for the World Bank by John Baffes March 2009 Aknowledgements T his paper is a background paper prepared for the comparative analysis of cotton sector reform in Sub-Saharan Africa, a study carried out by a World Bank team led by Patrick Labaste (Lead Agricultural Economist, SD Department, Africa Re- gion, World Bank) and including David Tschirley (MSU), Colin Poulton (Imperial Col- lege London), Nicolas Gergely (consultant), John Baffes (DEC, World Bank), Duncan Boughton (MSU), Julie Dana (World Bank) and Gérald Estur (marketing and quality consultant). The study was funded by the World Bank and by contributions from bilateral trust funds particularly from Belgium (BPRP), the Netherlands (BNPP/CRMG), and the Swiss Se- cretariat for Economic Affairs (CRMG), as well as by the All-ACP Agricultural Com- modities Programme (AAACP) of the European Union. The author would like to thank Burcu Duygan, Gerald Estur, Donald Mitchell, Herbert Kirunda, Patrick Labaste, Christophe Ravry, Helena Tang, David Tschirley, and Muzoora Hans Windsor for comments and suggestions on earlier drafts. Information and material obtained during interviews with Martin Fowler, Jolly Sabune, as well as staff at the Cot- ton Research Station and the Kachumbala ginnery (C.N. Cotton Ltd.) is greatly appre- ciated. An earlier draft of this paper served as a background paper to the Uganda DTIS. The views expressed here are those of the author and should not be attributed to the World Bank. Contents 1. Introduction ................................................................................................................. 1 2. Historical Background ................................................................................................ 2 3. Reforms, Current Institutional Setup, And Performance ............................................ 3 4. The Sector`s Full Potential` ........................................................................................ 8 5. Policy Advice, Response, And The Way Forward ................................................... 12 6. Conclusion ................................................................................................................ 17 Endnotes............................................................................................................................ 18 Annex 1: The Gender Dimension of Uganda`s Cotton Sector ........................................ 19 Annex 2: Bibliography...................................................................................................... 20 List of Tables Table 1: Key Institutions Involved In The Ugandan Cotton Industry ............................... 5 Table 2: Post-Reform Ugandan Cotton Statistics .............................................................. 6 Table 3: Regional Breakdown of Uganda`s Cotton Production ........................................ 9 Table 4: Comparison of Cotton and Food Crop Prices .................................................... 10 List of Figures Figure 1: Uganda's Cotton Production (thousand tons) ..................................................... 2 Figure 2: Monthly Cotton Prices (A Index, nominal, $/kg) ............................................... 4 Figure 3: Post-Reform Cotton Production in Uganda (tons) ............................................. 7 Figure 4: Cotton Yields (5-year moving average, kg/hectare) .......................................... 9 Figure 5: Real (MUV-Deflated) Price Indices (1980=1.0) .............................................. 11 Figure 6: Uganda's Premium over the A Index (percent) ................................................ 13 Abbreviations BPA Bukalasa Pedigree Abler Cotton CDO Cotton Development Organization FOB Free on Board GM Genetically Modified GoU Government of Uganda IDA International Development Association Kg Kilogram Lbs Pounds MUV Manufactures Unit Value NAADS National Agricultural Advisory Development Services ROW Rest of the World SSA Sub-Saharan Africa SATU Serne Albar Type Uganda Cotton UGCEA Uganda Ginners and Cotton Exporters Association UGS Uganda Shilling (1966-1987) UGX Uganda Shilling (1987-Present) Executive Summary uring the 1960s, Uganda was Sub-Saharan Africa`s largest cotton producer. Howev- D er, political instability and poor policy choices of the 1970s led to the sector`s preci- pitate decline. While attempts to revive the sector with lending operations during the 1980s failed, policy reforms combined with a lending operation and high cotton prices revitalized the sector in the 1990s. Nevertheless there remains the sense that the sector lags behind its full potential. Various reports have linked this chronic underperformance to low quality of cotton, lack of domestic textile industry, and low use of purchased in- puts due to lack of rural credit as the key constraints. This paper argues that the funda- mental problem of Uganda`s cotton sector is its low profitability, which reflects the dis- placement of cotton by food crops. Furthermore, the earlier success of the sector reflects, in part, the fact that cotton was grown under forced labor conditions. Cotton cultivation was originally concentrated in the central part of the country but the region gradually moved to food crops like coffee and bananas. As a result, cotton in Uganda has moved east and north where other cash crops have only limited potential. These new regions now account for roughly 60 percent of total production. The reform program that Uganda began in 1987 addressed macro and sectoral issues, which coupled with high world lint prices of the mid-1990s led to considerable supply re- sponse. The surge in supply prompted the founding of a well-functioning research pro- gram and entrepreneurial activity increased enormously following the entrance of many private entities at all levels of primary processing, marketing, and trade. Despite recent progress absolute production levels are less than a third of what they were before 1970. Such lagging performance is distressing because, by most measures, Uganda took all the proper steps in terms of policy reforms. These concerns have been voiced in various reports that have in turn identified low quality of cotton, lack of domestic textile industry, a weak cooperative organization, and low use of purchased inputs due to lack of rural credit as constraints to further growth. Several aspects of the industry are, however, performing well. The industry has made great strides in research and when world prices increased farmgate prices followed suit and farmers responded by planting more cotton. This implies that the marketing and trade environments are friendly to growers. Two ongoing constraints that require attention are a better understanding (and subsequent policy action) of the male-female productivity gap and an accelerated efforts to introduce GM technology. i 1. INTRODUCTION In 2004/05, cotton exports accounted for USD $41 million, the highest export level since the mid-1970s, making it the fifth largest commodity by export earnings (after fish, gold, coffee, and tea). The industry is concentrated among smallholders with an average farm size of less than 0.5 hectares and it is the main source of income to some 250,000 low- income households.1 In Uganda, cotton is a rain-fed crop with minimal use of purchased inputs. The average grower produces no more than 100 kilograms of lint cotton per annum, equivalent to a gross income of about USD $70. Introduced in the early 20th century, cotton quickly became Uganda`s foremost cash crop; yields reached 60,000 tons during the early 1930s and growers were able to sustain that level of production for four decades (valued at approximately USD $300 million per an- num in today`s terms). The political and economic turmoil of the 1970s drastically reduced output, which fell from 78,000 tons in 1972 to 14,000 tons in 1976, reaching a record low of 2,000 tons in 1987. Since 1987 Uganda has passed reforms to address both macroeconomic and sectoral issues (Collier and Reinikka 2001). The reforms introduced in the cotton sector in 1993 coupled with high prices of the mid-1990s led to considerable supply response with cotton produc- tion reaching 20,000 tons in 1996. The surge in supply prompted the founding of a well- functioning research program. Growers began receiving payments promptly while entre- preneurial activity increased enormously following the entrance of many private entities at all levels of primary processing, marketing, and trade (Baffes 2001). Despite these achievements there is a sense that the sector lags behind its full potential. This is a legitimate concern, especially considering that recent production levels are less than a third of what they were prior to the 1970s. Worryingly this lagging performance comes despite Uganda`s regional leadership in sector reform. Reflecting upon these con- cerns, various reports have identified constraints that impede further growth of the sector. Such constraints include, but are not limited to, low quality of cotton, lack of domestic tex- tile industry, weak cooperative movement, and low use of purchased inputs due to lack of rural credit. This paper conjectures that the fundamental problem of Uganda`s post-reform cotton in- dustry is its low profitability which, in turn, reflects low productivity due to displacement of cotton by higher priced food crops (especially in areas with productive soils) and the fact that cotton is a new` crop in the sense that many farmers have been growing the crop for only a few years, thus having limited knowledge of its growing requirements. Further- more, the pre-1970 success of the sector partly reflects the fact that cotton was a forced- labor crop. The remainder of this paper proceeds as follows. The next section looks at the history of Uganda`s cotton industry. Section 3 discusses the reform process, the industrys current in- stitutional set up, and its post-reform performance. Section 4 outlines the reasons behind the large gap between the sector`s full potential` and its actual performance. Section 5 dis- 1 cusses the policy advice that the industry has been given, the response to such advice and the way forward. The last section draws some policy conclusions. 2. HISTORICAL BACKGROUND Uganda first experimented with cotton cultivation in 1903.2 Cotton was produced for commercial purposes after the construction of the 1,400 kilometer Mombasa-Kisumu rail- way and later increased with the completion of the Busoga railway that connected the Lake Kyoga region with Kampala and substantially reduced the cost of transporting goods from Kampala to Mombasa (Carr 1982).3 Cotton production received a further boost following the introduction of a poll tax by the colonial government, which served the dual purpose of collecting revenue and supplying raw material to the British textile industry-- at the time, cotton was the country`s only cash crop hence the only way peasants could pay the poll tax was by cultivating cotton. The tax, UGS 15 per year, equivalent to 100 lbs of seed cotton, in effect, made cotton a forced-labor crop. The initial genetic material for cotton came from American varieties, which after extensive research and experimentation gave way to varieties better suited to local growing condi- tions. In the two decades following the crop`s introduction, output exceeded 30,000 tons-- contemporary world production was six million tons. Cotton production grew further to reach 60,000 tons during the mid-1930s. The post-farmgate private sector, generally of In- dian origin, was handling most aspects of the industry, including primary processing, mar- keting, and trade. Government responsibilities were confined to research, extension, seed multiplication, and quality control. Figure 1: Uganda's Cotton Production (thousand tons) Source: ICAC from 1924 to 1993 and Cotton Development Organization from 1994 to 2006 To further increase production, a number of initiatives were promoted, including the use tractors, block farming, and the formation of cooperatives. These initiatives, however, failed miserably. Carr (1982, p. 35), for example, noted that a cotton mechanization project involved only 0.2 percent of farmers and 0.15 percent of the cotton crop at its peak. Anoth- 2 er project that involved the purchase of tractors by the Ministry of Agriculture to be used on a hire basis also failed, not surprisingly, since the small size of plots made it difficult for tractors to be used efficiently; also tractors could only be used for a limited set of activities since most aspects of cotton cultivation could only be performed by hand.4 Following independence in 1962, a number of structural changes were introduced to the sector. First, a decision was made to limit competition in the ginning industry. A few years later, all ginning operations were taken over by cooperatives. While research and seed mul- tiplication were kept under the Ministry of Agriculture, cotton seed for both planting and oil milling were under the newly created parastatal, the Lint Marketing Board, which later undertook marketing and regulation responsibilities. Initially, the sector`s performance im- proved. The area under cotton reached 900,000 hectares in 1969 with a record output of 84,000 tons, making Uganda the third largest cotton producer in Africa, behind Egypt and Sudan. However, the success was short-lived since such performance was not based on productivity gains but instead reflected area expansion due to unsustainably high prices paid to growers. In the 1970s output collapsed under the pressure of chronic political instability, a failure by cooperatives to make timely payments to cotton growers, the disruption of research, the decimation of the animal population, and poorly maintained ginning operations. The Lint Board offers a telling illustration of this confluence of negative trends, with administrative expenses for one bale of cotton rising from UGS 66 in 1970 to UGS 618 in 1979, an al- most 10-fold increase. By 1987, only 2,000 tons of cotton was produced nation-wide. In effect, sub-Saharan Africa`s largest cotton producer was producing no cotton at all. 3. REFORMS, CURRENT INSTITUTIONAL SETUP, AND PERFORMANCE Reforms were first contemplated in 1985 when the Government of Uganda (GoU), in col- laboration with the World Bank, undertook a comprehensive review of the industry. Two follow-up studies resulted in the formation of the Cotton Task Force whose objective was to identify institutional impediments and prepare investment proposals. As a result, the Emergency Cotton Production Program was launched in 1986/87, co-financed by the World Bank (USD $9.44 million), other donors (USD $5.6 million), and GoU (USD $1.34 million). Its key objectives were to increase cotton production, revitalize research, initiate a system of seed multiplication, and rehabilitate primary processing facilities (Bibangambah 1996). In the meantime, the cotton sector received additional assistance worth USD $22.2 million, part of the USD $71.3 million International Development Association (IDA) Agri- cultural Rehabilitation Project whose chief objectives were to increase marketing efficien- cy and assist GoU to implement marketing reforms and formulate sector development strategies for all major export crops (World Bank 1983). Another lending operation (USD $13.9 million) that began in 1984, the Ginnery Rehabilitation Project which was co- financed by IDA and the Africa Development Bank, involved rehabilitation of 12 ginne- ries. Despite the generous financial assistance (more than USD $50 million in sectoral lending plus various adjustment operations) the sector performed poorly. To a limited degree, the poor performance reflected the 1985 collapse in cotton prices. Cotton output from 1985 till 3 1994 averaged 5,200 tons, the lowest 10-year average in the history of the sector. The val- ue of cotton during this 10-year period totaled no more than USD $65 million, roughly equivalent to the value of donor assistance. Figure 2: Monthly Cotton Prices (A Index, nominal, $/kg) Source: World Bank, Commodity Price Data It became apparent that investment lending in the absence of a proper policy environment was ineffective. To that end, GoU engaged in full liberalization of the economy that in- cluded a complete trade reform package (Collier 1997). The reforms in the cotton sector were supported by a USD $26.5 million lending operation, co-financed by IDA (USD $14 million) and the International Fund for Agricultural Development (USD $12.5 million). Under the program GoU redefined its role, taking on new responsibilities--especially dur- ing the transitional phase--while shedding other activities (World Bank 1994). Prior to the reforms the cooperatives were saddled with debt. Theoretical ginning capacity was much higher level than actual capacity as dilapidated ginneries required infusions of new capital. Moreover, management was inexperienced with the process of restructuring. To address this problem, the GoU established a temporary Business Advisory Service which, together with a number of cooperatives, drew up business plans to restructure their operations in return for limited debt relief. In addition, temporary lines of credit through the Bank of Uganda were established to provide working capital to the restructured firms. In some cases, the cooperatives were able to sell some assets to finance smaller but more efficient business. Others chose to find foreign partners and enter into joint ventures. While many ginneries went back to operation, some businesses were simply liquidated. Under the Cotton Development Statute of 1994, the Lint Marketing Board was liquidated and a new regulatory agency was established, the Cotton Development Organization (CDO). CDO began to issue ginning and export licenses and manage a fund for the collec- tion, processing, and distribution of cotton seed for planting. Often, CDO`s functions are now carried out in collaboration with other institutions with broader mandates including the Uganda Ginners and Cotton Exporters Association (UGCEA), the Cotton Research In- stitute, and various ministries. 4 Table 1: Key Institutions Involved In The Ugandan Cotton Industry Institution/Entity Status Main Functions And Responsibilities Cotton Development Or- Statutory Established in 1994, it took over some of the functions of the former Lint ganization (CDO) Body Marketing Board. Its objective is to regulate the industry as well as collect and disseminate statistics. It is financed by a levy imposed on all cotton ex- ports. Its Board of directors consists of the Chairman (appointed by the Mi- nister), representatives from MFPED, MAAIF, and NARO, and six private sector representatives from cotton-related industries. The Managing Director is appointed by the Board. Uganda Ginners & Cot- Private Sec- Formed in 1997 with compulsory membership for all cotton ginners, its ob- ton Exporters Associa- tor jective is to coordinate activities such as input financing, operating demon- tion (UGCEA) stration plots, and providing a forum for discussing issues affecting ginners and exporters. Cotton Research Institute Statutory All cotton research activities take place at the Cotton Research Station, lo- Body cated in Serere (Soroti district), about 300 kilometers NE of Kampala. Its main responsibilities consist of studying and controlling cotton diseases, seed multiplication, and introduction of new varieties. Audit, Control, and Ex- Private Sec- This international inspection and collateral management company monitors pertise (ACE) tor all investments in production promotion as well as all procurement activities by the ginners. It provides CDO with documents and statistics. It has repre- sentatives in all ginning operations. National Agricultural Statutory Established by the National Agricultural Advisory Services Act of 2001 as a Advisory Services Body statutory corporation, its mission is to promote market-oriented agriculture (NAADS) through provision of extension services. Ministry of Agriculture, Government Its mandate is to promote, support, and guide the agricultural sector. Most of Animal Industry and Fi- its cotton-related activities are performed through the Cotton Research Insti- sheries (MAAIF) tute. Ministry of Finance, Government It oversees the planning of strategic development initiatives in order to facili- Planning and Economic tate growth, efficiency, stability, and poverty eradication. It also mobilizes Development (MFPED) resources for public expenditure programs. Ministry of Tourism, Government Three departments within the Ministry (Trade, Cooperatives, and Industry) Trade, and Industry deal with cotton-policy issues such as value addition, enhancement of com- (MTTI) petitiveness, and extension services. Cotton research became a top priority during the reform process. All research activities were transferred to the Cotton Research Institute, which has made numerous achievements. First, the Institute replaced two earlier varieties (BPA and SATU). Second, the institute began updating and disseminating new varieties through an effective seed multiplication mechanism. Third, most of the planting seed used now is delinted and treated thanks to the Institute. As one industry representative explained: cotton research in Uganda is far ahead of what growers and ginners can use. (Interview, September 23, 2005). The restructuring of the industry, which was aided by the 1994-95 recovery in world pric- es, paid off quickly. Cotton output exceeded 20,000 tons in just two years. The response created a climate of exaltation. But the trend was not sustainable during the next six sea- sons, as output fluctuated around 20,000 tons with no discernable upward trend. The ina- bility of the sector to enjoy sustained growth was attributed to inadequate use of purchased inputs. Prior to the collapse of the sector, seeds and chemicals were handled by the cooper- atives with the price of seed cotton being adjusted to account for the costs of inputs. As the Lint Board held a monopoly, the system worked quite well. Following liberalization, GoU retained the function of providing free seeds to farmers but chemicals had to be purchased. Growers` very limited use of these chemicals, is believed to reflect their high cost of fi- 5 nancing. To remedy this, a number of input credit mechanisms were introduced. In 1996/97 one of the leading ginners launched a scheme under which credit to growers was extended through middlemen with the expectation that when middlemen would purchase cotton later in the season, the cost of chemicals would be recovered. The scheme, however, performed very poorly because of extensive side-selling by cotton growers to traders representing other ginneries. The rate of default was also exacerbated by the fact that 1997 was an El Niño year which caused a sharp decline in cotton production--from 20,480 tons in 1996/97 to 5,920 tons in 1997/98. In 1998/99, UGCEA collaborated with the CDO to launch another scheme, with a loan guaranteed by the Bank of Uganda. However, the scheme did not adequately address the prevailing problems and the GoU eventually stepped in to cover the losses (Gordon and Goodland 2000). In light of the poor performance of the various credit mechanisms and with cotton output fluctuating around 20,000 tons, the CDO along with UGCEA decided to limit competition in ginning. Under the Ginners` Production Support Program of 2003, the country was di- vided into 11 cotton zones, with each zone consisting of 2-3 ginneries. While cotton could move freely within zones, it could not move across zones. Each ginner had to contribute capital to a UGCEA-managed fund (proportional to its historical ginning quantities) in or- der for free seeds and chemicals (at lower than market prices) to be distributed to growers.5 Two factors ensured that each ginner would gin cotton in proportion to the capital their growers required for inputs and extension services: cotton could not move across zones and, once a ginner met its quota, it could no longer buy cotton, All physical and monetary transactions were monitored by a private company, Audit, Control, and Expertise. It was initially thought that zoning would lead the sector on a sustainable growth path. In- deed, in 2003/04 cotton production reached almost 30,000 tons while in 2004/05 it reached 47,000 tons, record-setting levels for the post-reform period. This prompted GoU to make zoning mandatory. However, the supply response was short-lived and in 2005/06 output dropped to less than 19,000 tons. A cursory inspection of the data reveals that the increased output was a lagged response to prices paid to cotton growers: UGX 476/kg in 2002/03 and UGX 615/kg in 2003/04, up from UGX 262/kg in 2001/02. Table 2: Post-Reform Ugandan Cotton Statistics Cotton Exchange Consumer World Price of Cotton Farmgate Price (seed) Production Rate Price A Index (lint), nominal Nominal Real Year (tons) (UGX/US$) Index (UGX/kg) (US$/kg) (UGX/kg) (UGX/kg) 1994/95 6,105 941 0.73 1,789 1.90 400 545 1995/96 10,437 993 0.80 2,017 2.03 350 439 1996/97 20,480 1,049 0.86 1,835 1.75 320 374 1997/98 5,920 1,112 0.91 1,879 1.69 404 442 1998/99 15,170 1,296 0.91 1,776 1.37 313 343 1999/2000 21,645 1,497 0.97 1,718 1.15 253 260 2000/01 18,500 1,709 1.00 2,290 1.34 360 360 2001/02 22,200 1,749 1.02 1,687 0.96 262 257 2002/03 20,350 1,835 1.02 2,033 1.11 476 468 2003/04 29,600 1,967 1.10 2,915 1.48 615 561 2004/05 46,990 1,762 1.13 2,207 1.25 350 309 2005/06 18,981 1,806 1.23 2,262 1.25 400 325 2006/07 24,790 1,824 1.31 2,316 1.27 450 344 2007/08 27,750 1,710 1.37 2,445 1.43 450 329 6 When prices returned to their earlier levels, cotton output reverted to its 20,000-ton aver- age. Indeed, an OLS regression of cotton production on price received by growers gave a supply elasticity of 0.71; in other words, when prices change, cotton growers act accor- dingly.6 The decision was made to abandon zoning beginning in the 2007/08 season fol- lowing political pressure from small ginneries, who felt that they received insufficient quo- tas, and the realization that the short-lived supply response was not due to zoning. Figure 3: Post-Reform Cotton Production in Uganda (tons) Source: Cotton Development Organization 7 4. THE SECTOR'S FULL POTENTIAL' There is a widespread belief that the sector lags behind its full potential. This sentiment is expressed in numerous reports. FOODNET (2002, p. 60) noted that the sector has the po- tential to dramatically increase its contribution to value addition and employment. You and Chamberlin (2004, p. 48) concluded that Uganda could produce 56,000 tons by 2005. SCOPE (2005, p. 3) recommended that Uganda should increase its cotton production from 30,000 tons in 2003/04 to at least 130,000 tons by 2010. More optimistically, the CDO 2001-02 Annual Report noted that under the Cabinet-approved strategic export commodi- ties program, cotton`s production target was set to 185,000 tons by the year 2006, a target that turned out to be eight times higher than actual production. As recently as January 2008, the CDO remarked in its website that, [w]ith application of appropriate technologi- cal packages, Uganda's cotton production potential rates are over 1 million bales [185,000 tons] annually. Similarly, Sabune (2005, p. 6) argued that Uganda`s cotton potential should be in the range of 185,000 tons given the unutilized land that could be brought into cotton production.7 Although the full potential` seems high, it should not be deemed unreasonable. For exam- ple, consider that India doubled its cotton production from 2.3 to 4.6 million tons within a four-year period (2002-06). This is a significant achievement given the size of the Indian cotton sector: roughly 100 times larger than that of Uganda. On the other hand, even if the 1930-70 production trends continued, Uganda`s cotton output would only exceeded 110,000 tons today. Similarly, if Uganda`s current share in the global cotton market was similar to that of the 1940s and 1950s, its cotton output would be some 150,000 tons. In fact, cotton production averaged 22,500 tons, only 15 percent of its stated full potential` during the last decade. The rest of this section outlines the likely reasons behind such gap. While the pre-1970 performance appears impressive, a closer examination of the data re- veals that the sector`s productivity was deteriorating. Between 1950 and 1970 the sector experienced a 20 percent decline in yields, implying that the impressive production gains solely reflected area expansion. World cotton yields increased by 1.8 percent per annum during this same period. 8 Figure 4: Cotton Yields (5-year moving average, kg/hectare) Source: International Cotton Advisory Committee Uganda`s yields were 40 percent of the global average during the 1950s. They dropped to 15 percent by the early 1970s. Even after the post-reform productivity gains, ... cotton yields in Uganda are the lowest in the world. No other country where cotton is grown on over 100,000 hectares has yields as low as Uganda, according to ICAC (2002). A key reason behind the low yields has been the shift in the crop`s regional distribution from more to less productive areas. Cotton cultivation was initially concentrated in Central Uganda, which accounted for half of the country`s output. Following the Second World War, however, cotton in Central Uganda was gradually replaced by coffee, bananas, and other food crops. Cotton expanded in the Eastern and Northern regions (Bibangambah 1996). Currently, these areas account for about 60 percent of cotton production while Cen- tral Uganda produces only four percent of the country`s total. It appears, therefore, that cotton is grown in places where other cash crops have limited potential. Table 3: Regional Breakdown of Uganda's Cotton Production S/Eastern N/Eastern Northern West Nile Central Western TOTAL Cotton lint (tons) 1998/99 2,844 2,843 5,452 2,459 596 864 15,057 1999/2000 4,067 5,571 7,344 3,084 561 1,626 22,253 2000/01 2,820 6,658 9,372 2,553 1,313 2,390 25,105 Average 3,244 5,024 7,389 2,698 823 1,626 20,805 Share (percent) 1998/99 19 19 36 16 4 6 100 1999/2000 18 25 33 14 3 7 100 2000/01 11 27 37 10 5 10 100 Average 16 24 36 13 4 8 100 Another way of assessing the sector`s profitability is to compare grower prices for cotton with prices of the key food crops (beans, maize, matoke, and sorghum). Data reported in 9 Table 4 show that during the 15-year period 1989/90-2003/04, nominal cotton prices re- ceived by farmers increased by an annual average of 3.1 percent while the corresponding increases of the four food crops were much higher: 5.3 percent for beans, 6.1 percent for maize, 5.3 percent for matoke, and 7.8 percent for sorghum. This should not be surprising since food commodities respond to domestic demand conditions which are primarily dri- ven by increases in Uganda`s per capita income while cotton responds to world market conditions (characterized by declining real world prices, see Figure 5). Table 4: Comparison of Cotton and Food Crop Prices Matoke Maize Sorghum Beans Cotton Nominal farmgate prices (UGX/kg) 1989/90 28 40 36 100 220 1990/91 35 64 59 137 340 1991/92 50 120 166 251 340 1992/93 75 102 96 189 200 1993/94 125 114 136 285 300 1994/95 104 105 111 306 400 1995/96 98 163 155 289 350 1996/97 140 275 292 299 320 1997/98 115 285 268 537 404 1998/99 160 252 369 429 313 1999/2000 171 240 383 389 253 2000/01 118 154 382 471 360 2001/02 83 180 380 419 262 2002/03 177 264 382 460 476 2003/04 152 290 448 551 615 Nominal farm gate price indices (1989/90 = 1.0) 1989/90 1.00 1.00 1.00 1.00 1.00 1990/91 1.27 1.58 1.65 1.37 1.55 1991/92 1.82 2.97 4.65 2.51 1.55 1992/93 2.73 2.52 2.68 1.89 0.91 1993/94 4.55 2.81 3.80 2.85 1.36 1994/95 3.78 2.60 3.11 3.06 1.82 1995/96 3.56 4.04 4.34 2.89 1.59 1996/97 5.09 6.79 8.16 2.99 1.45 1997/98 4.18 7.04 7.49 5.37 1.77 1998/99 5.82 6.23 10.30 4.29 1.82 1999/2000 6.21 5.93 10.69 3.89 1.36 2000/01 4.31 3.81 10.68 4.71 1.91 2001/02 3.03 4.44 10.61 4.19 1.23 2002/03 6.42 6.52 10.68 4.60 2.27 2003/04 5.54 7.18 12.51 5.51 2.73 10 Figure 5: Real (MUV-Deflated) Price Indices (1980=1.0) Source: World Bank, Commodity Price Data Cotton`s low profitability relative to other crops has been confirmed by numerous authors. Bibangambah (1996), for example, based on 1994 data concluded that cotton ranks lowest in terms of relative profitability among the key crops grown in Uganda. Lundæk (2002) re- ported that more than half of cotton growers surveyed in the Mbale district in 2001 in- curred negative returns. Based on NAADS data, You and Chamberlin (2004, p. 29) com- pared cotton`s profitability with more than 20 cash and food crops and concluded that cot- ton ranked the lowest. An earlier study reported that returns to family labor for cotton are lower relative to competing crops (GoU 1992, p. 32). A similar profitability analysis car- ried out for the 1994-97 period concluded that hand-hoe cotton without spray (along with four other commodities) were not competitive--arabica coffee was the most competitive crop (Rosetti 1998, p. 39). More recently Duygan (2006), based on the 1999/2000 National Household Survey data, concluded that a 20 percent increase in production of coffee, cot- ton, fish, and tourism would lead to a 0.2 percent decline in the poverty incidence for cof- fee areas, very small in the case of fishing and tourism (0.02 and 0.01 percent, respective- ly), and negligible for cotton, a finding which further confirms cotton`s low net returns. Gordon and Goodland (2000, p. 68) argued that Ugandan farmers grow cotton despite its questionable profitability and attributed it to the timing of crop sales, which coincide with Christmas and new school year expenditures. Tulip and Ton (2002) also noted the correla- tion between the timing of receiving cash from cotton sales and Christmas. In principle, farmers could borrow money for the Christmas and school expenditures and repay later when other sources of income become available. A decision not to borrow, therefore, would imply that the returns from growing cotton are higher than the difference between 11 the cost of credit and the returns from other cash crops, if they are available. Alternatively, if no other sources of cash income are available, the opportunity cost of labor (beyond what is required to grow subsistence crops) is effectively zero in which case cotton`s prof- itability depends on the cost of purchased inputs (which are limited) and the opportunity cost of land (which is low if the soils are poor). Therefore, it appears that the decision to grow cotton reflects either the high cost of credit or, more likely, the absence of alternative sources of cash income. Lastly, it should be noted that cotton used to be grown under forced labor conditions, since it was the only crop that could generate cash in order for Ugandans to pay the poll tax im- posed upon them by the colonial government. Although the tax was removed (at least on paper) prior to Second World War, it appears that cotton maintained its status as a forced- labor crop until independence. In interviews during a field visit in February 2007, several older farmers confirmed this and said that the peasants who refused to cultivate 0.25 of an acre of cotton (the minimum requirement) faced one week jail time. In fact, when a former village chief was asked how many non-compliant farmers did you send to jail? he re- sponded many! Therefore, the performance of the sector up until independence reflected, at least in part, the forced-labor nature of the crop.8 5. POLICY ADVICE, RESPONSE, AND THE WAY FORWARD Numerous reports have proposed strategies to assist the sector replicate its earlier success. Some argued that cotton quality has deteriorated and is in need of improvement.9 Although data that can directly assess the quality of cotton (and changes thereof) are not readily available, numerous facts appear to be inconsistent with quality deterioration. First, it should be noted that since not much cotton was produced prior to liberalization, any quan- titative comparison between pre- and post-reform periods is likely to be misleading unless it is placed in the proper context. Second, during the last three seasons (the only period during which detailed data is available), Uganda`s premium has not shown any downward trend.10 Third, currently there is one cotton variety for the entire country and new varieties are being released frequently, two factors that are inconsistent with quality deterioration. Fourth, the share of delinted and treated cotton to be used for seeds has been increasing, which should be consistent with higher cotton quality. Finally, GoU established a Ginning Training School in 1998 with the aim of training ginnery technicians. As a result, the quality of ginning had improved, thus contributing to the high quality of Ugandan lint (Sabune 2005, p. 13). 12 Figure 6: Uganda's Premium over the A Index (percent) Source: Cotton Outlook (Uganda quotations were not made during the missing months) Another recommendation has been the expansion of domestic cotton consumption through value addition, specifically textiles and clothing: The low level of domestic value addition which exposes farmers to fluctuations in the world market prices [is a challenge] (Sabune 2005, p. 14); The [cotton] industry would benefit from programs aimed at addressing the low level of domestic consumption of cotton (SCOPE 2005, p. 16); The most visible way forward is to increase productivity in cotton production, value addition to cotton, and to increase its consumption in the domestic market (Rudaheranwa 2005).11 As argued in a recent paper which examined Uganda`s coffee industry, domestic value addition, while beneficial and desirable from an employment generation perspective, is unlikely to trans- late into higher welfare for growers since their products will be sold at the same (world- determined) price regardless of whether they are exported or consumed domestically (Baffes 2006). In a similar context, You and Chamberlin (2004) simulated the effects of three development strategies: area expansion, productivity increases, and increase in do- mestic consumption. They concluded, not surprisingly, that increases in domestic cotton consumption have very small impact on domestic cotton prices.12 Therefore, any invest- ment action or policy advice regarding textiles and clothing should be judged on the profit- ability of these industries alone rather than the assumption or expectation that they will generate higher prices for cotton growers. Strong cooperation among farmers has been advocated as a way to boost the sector`s per- formance. Two ways in which farmers have been encouraged to cooperate are the forma- tion of producer organizations and the development of block farms. Indeed, successful co- operatives offer numerous benefits including access to credit on favorable terms, econo- 13 mies of scale in acquiring and distributing inputs, and wider and more efficient dissemina- tion of information and new technologies. However, when it comes to cooperatives, Ugan- dan peasants have bitter memories, which reflect their belief that cooperatives are respon- sible for the mismanagement and eventual collapse of the industry. It is not uncommon for farmers to wave old receipts and demand payment for cotton deliveries made in the 1970s when government or donor officials discuss the need to strengthen producer organizations. Therefore, while promoting cooperatives is an attractive idea, it may take some time before a genuine cooperative movement is put into place. Another way to promote cooperation has been the development of block farming, the key idea of which is that many farmers work in one piece of land (block`) by sharing resources (such as mechanized equipment) and expertise, consequently increasing productivity. The 2001-02 CDO Annual Report (p. 11) announced the establishment of 23 UGCEA- supported block farms with an average size of 90 acres and total participation of 694 far- mers. During the previous year and in line with GoU strategic intervention to transform the small-scale system of cotton production, a 100-acre Block Farm at Busitema College of Agricultural Mechanization was expanded to 260 acres. One way to evaluate the potential of block farming is to compare it with the Soviet-type farm, the kolkhoz, with which it shares several characteristics. Craumer (1992, p. 161) reported that when mechanical cot- ton harvesting was introduced in the Soviet Union, the adoption rate initially (i.e. in the early 1980s) reached 70 percent. It declined, however, to 50 percent in less than a decade; currently, virtually all cotton in the Central Asian republics is hand-picked. Pomfret (2002) argued that the introduction of such technology was a misplaced policy move and con- cluded that its costs may have exceeded USD $1 billion in 1960 prices. Therefore, the pre- sumed benefits of block farms through sharing of mechanized resources are unlikely to be realized, especially in view of Uganda`s low wage rates. Lastly, one should bear in mind the revolution` in agricultural growth of China came about when peasants were allowed to cultivate their own plots. At the start of each marketing season (typically end of November or beginning of Decem- ber), the CDO in consultation with industry stakeholders announces indicative prices on the basis that they help farmers negotiate a fair share of world prices. 13 In practice, indica- tive prices are set at conservative levels and gradually catch up with their FOB. counter- parts as the marketing season progresses. Yet, when farmers` opinion was solicited on the usefulness of indicative prices, the response was overwhelmingly positive, which begs the question, why farmers would favor them if they are set consistently at conservative levels. A comparison with Tanzania may be instructive. The cotton sectors of both countries went through policy reforms at about the same time and the Cotton Board of Tanzania (as is the case with CDO) started announcing indicative prices (Baffes 2004). Yet, indicative prices in Tanzania became ineffective and were discontinued in the 2005/06 season (Poulton and Maro 2007). This may reflect the fact that Tanzania`s cotton sector is about four times larger than Uganda`s which means that cotton sales in Uganda are part of a thin` market, i.e. only a few transactions take place, in turn implying that Ugandan cotton growers value information much more than their Tanzanian counterparts. In other words, because of the size of the sector (and consequently the large number of transactions), price discovery in Tanzania takes place much quicker than in Uganda. Nevertheless, given that Ugandan cot- 14 ton farmers favorably view indicative prices along with CDO`s stated objective to assist them in receiving a higher share of world prices, indicative prices should, first, be set at le- vels consistent with world prices and, second, be updated frequently. In view of the desirability of indicative prices, there have been discussions in favor of in- stituting a stabilization fund. For example, Coulter and Laker-Ojok 2005 (p. 49) recom- mended the creation of an industry-managed stabilization fund, to be supported by levies on cotton sales. However, stabilization funds are likely to face difficulties, especially in view of the highly volatile nature of commodity prices. For example, consider that during the seven 12-month intervals between March 1995 and March 2002, cotton prices declined six times and remained at the same level once, without experiencing any increase. Under such circumstances, any stabilization fund is likely to go bankrupt no matter how well it is run. Conversely, if prices experience sustained increases, the stabilization fund is likely to be misused, as was the case in the mid-1970s when the sector was driven to its demise while world prices were booming. However, if there is enough demand for price predicta- bility and stability, then it may be useful to explore the possibility that ginners use market- based risk mitigation devices, in which case indicative prices will become minimum guar- antee prices. Uganda is similar to other SSA countries in that it has no GM (genetically modified) cot- ton. Yet, research has shown that, on balance, GM cotton users are better off compared to users of conventional cotton (FAO 2004).14 A recent study argued that the benefits from the full adoption of GM cotton by African cotton producing countries may be even greater than the benefits of the removal of all cotton subsidies by the US and the EU (Anderson and Valenzuela 2007). Despite such well-documented benefits, initially CDO chose to pro- ceed cautiously by examining the pros and cons of this technology. Slow progress on GM cotton policy has been identified by several reports as a factor constraining the sector`s growth (e.g., SCOPE 2005, p. 22). The Cotton Research Institute, which is less skeptical than CDO, has repeatedly emphasized the need to venture into this area (Cotton Research Institute, p. 11). During a USAID-sponsored regional workshop in May 2005, companies were invited to examine various GM cotton-related packages. As of 2007, two companies have begun working on confined trials. Experts working on the project acknowledged that even if everything goes well, it will take, ...between seven and ten years for the first far- mers to grow GM cotton. (Interview, February 7, 2007). As the major cotton producing countries have already embraced the technology, those who have not are already at a strategic disadvantage or, as a recent report put it, The downward pressure on global prices of high adoption rates in the ROW [i.e., countries which use GM cotton] creates a distinct possibility that West African countries will have to adopt the technology just to be able to compete in a global market (Falck-Zepeda, Horna, and Smale 2007, p. 24). It is important to note that India and China, both early (and heavy) us- ers of GM cotton, increased their combined production by 57 percent within a 4-year pe- riod (from 7.2 million tons in 2002 to 11.3 million tons in 2007). It is therefore imperative that Uganda (as well other SSA countries) accelerate their efforts to adopt GM cotton tech- nology. 15 A number of interesting findings emerged during a field visit to the South-Eastern cotton producing region following interviews with several groups of cotton growers.15 First, the majority of cotton growers had planted cotton for only a few years, implying that cotton is a relatively new crop. This is not surprising given the hiatus the sector experienced be- tween the early 1970s and the post-reform recovery as well as the shift in production that has taken place. Moreover, when growers were asked whether they preferred more training or higher prices, they overwhelmingly responded that training benefits them more than higher prices. Poor training along with limited experience in cotton growing is also consis- tent with the desirability of indicative prices (the less farmers know how to grow cotton, the less they know how to market it, especially considering that the small quantities they produce would correspond to one or two transactions per season). Therefore, training is an area that should receive more attention. A second interesting finding was the large productivity gap between male and female cot- ton growers with males often achieving yields 3-4 times higher than their female counter- parts (see Appendix A). The finding was discussed with experts and policy makers in Kampala who, while expressing surprise at the magnitude, confirmed that such gap indeed exists not only in the cotton sector but in other sectors as well, something which has been well-documented in numerous contexts by Ellis, Manuel, and Blackden (2006). While the reasons behind such gap in the cotton sector may be complex and not well-understood with the information at hand, certainly this is an area where more research should be undertaken in order to confirm and accurately measure the productivity gap, identify its key causes, and ultimately design likely investment and policy actions. A third key finding was that the cost of chemicals­half of which are pre-financed by gin- ners­comprised only a small share of the total cash expenses incurred by cotton growers (on average, the cotton growers who participated in the interview sprayed three times per season).16 Most of the cash expenses went to hired labor, renting land, and hiring animal traction. If this is the case for the entire sector, then policies based on the assumption that provision of credit is the key constraint (as identified in most reports and subsequent policy actions) is likely to lead to the wrong policy conclusions. Zoning, for example, was insti- tuted under the assumption that if ginners were protected from side-selling, that would lead to supply response. Yet, the supply response observed upon instituting zoning turned out to be a (lagged) response to higher producer prices. Indeed, when prices returned to earlier levels, production followed suit and zoning was abolished. 16 6. CONCLUSION During the 1960s, Uganda was SSA`s largest cotton producer. However, political instabili- ty and poor policy choices led to the collapse of the sector. Despite generous donor assis- tance during the late 1980s, the sector kept performing dismally. It was only after exten- sive policy reforms, a lending operation, and the cotton price boom of the mid-1990s that the sector recovered to 25,000 tons, up from a low of 2,000 in 1987. The sector is yet to match historic production highs. While there are undoubtedly signifi- cant opportunities to improve output, the sector`s true productive potential may not be as high as it commonly believed for at least two reasons. First, cotton has been displaced by more profitable food crops. Second, the earlier success of the sector reflected, at least in part, the fact that cotton was grown under forced labor conditions, since it was the only crop that could generate cash in order for Ugandans to pay the poll tax mandated by the co- lonial government. Most reports identify quality, low level of domestic consumption, lack of cooperative movement, and the high cost of credit among the sector`s key constraints. Not surprisingly, the policy response (consistent with these constraints) has been the promotion of input cre- dit schemes (the latest of which was accompanied by zoning), formation of block farming, expansion of textile and clothing industries, announcement of indicative prices, and setting production targets (often as high as eight times compared to actual production levels). Reflecting the stylized facts, policy advice, and subsequent response, this paper argued that the industry`s key problem is low on-farm profitability. Several aspects of the industry are performing quite well. For example, the industry has made solid achievements on the re- search front. When world prices increased from 2001/02 to 2003/04, farmgate prices fol- lowed suit and farmers responded accordingly, implying that the marketing and trade envi- ronment are friendly to growers. Two areas which require attention are a better understand- ing (and subsequent policy action) of the male-female productivity gap and an accelerated efforts to introduce GM technology. 17 Endnotes 1 Estimates regarding the number of households involved in the Ugandan cotton sector vary widely. For example, Gor- don and Goodland (2000) reported that there are approximately 300,000 to 400,000 cotton producers. FOODNET (2002, p. 60) quoted 2.5 million people. While most of this variation reflects the unit of measurement (i.e., whether person or household is counted), the figures of the high end of the range may also reflect estimates when the sector was much larg- er. The 250,000 figure used in this paper reflects the most commonly used number in Uganda now. 2 Following the disruption of cotton supplies from the US due to the civil war, England undertook concerted efforts to keep its textile mills running by promoting cotton production in its colonies. Crawford (1924, p. 141), for example, noted: But England did not submit tamely to the situation. This has never been her habit. She rimmed the globe with cotton plantations. Wherever cotton could be grown, there her deep purse and far sighted policy planted it, and many of the plantations thus founded, have remained fruitful to this day ... This was a great commercial achievement, and one in which British merchants and statesmen of those tempestuous times may well take pride. 3 Kisumu is a Kenyan city located in the eastern shore of Lake Victoria. The railway was constructed by the British East African Company using labor brought from India. These railway workers were the first Asian immigrants who brought the technical and entrepreneurial skills. Later they were involved in cotton ginning and exporting activities. 4 For an extensive discussion of the structure and performance of the pre-independence cotton sector in Uganda see Carr (1982). 5 Ginners also agreed to offer extension services modeled according to the concept of demonstration plots and lead far- mers. That is, each ginner trains a number of lead farmers in a demonstration plot close to the ginnery. The lead farmers, in turn, train about 20-30 other farmers (in return they receive a free kit with seeds and fertilizer). The practice of demon- stration plots was introduced by the UGCEA and was further expanded under a USAID-supported program. 6 Cotton production was regressed on prices received by growers (lagged, deflated by the CPI) and a time trend for the 1993-2006 period. The results are as follows [t-ratios in square brackets]: log(Qt) = 1.95 [1.70] + 0.71 [1.64] log(Pt-1) + 0.05 [5.27] TIME, adj-R2 = 0.65. Although 14 observations along with the simplistic form of the regression are far for making this equation a proper supply response function, the size of the elasticity, 0.71, along with the explanatory power of the model, 0.65, indicate a strong response to price incentives. 7 Of course, unutilized land can be used for any crop, not just cotton. 8 Most farmers complied with the minimum cotton growing requirement because it was considered embarrassing to go to jail. Therefore, compliance was enforced by social norms. 9 [L]iberalization has resulted in a decline in cotton quality (SCOPE 2005, p. 9); raising the quality of cotton lint (Coulter and Laker-Ojok 2005, p. 2); there has been a decline in Uganda premium, of around US cents 7 per lb., over the last three years (FOODNET 2002, p. 63); Maintenance of quality control program that ensures quality (COMPETE 2001, p. 8). 10 Note that this quality premium applies to comparable types of cotton, representing about half of Uganda`s crop. 11 See also, the need to develop value addition in the sector..." (FOODNET 2002, p. 61); 12 Yet, the report recommended (p. 44) that The three development strategies studied here need to be promoted simulta- neously to achieve the production target. The target was 300,000 bales [56,000 tons] of cotton lint by 2005. 13 In 2006/07 indicative prices were announced in June (i.e., planting season). 14 More than 40 percent of the global area allocated to cotton in 2007/08 was under biotech varieties, accounting for al- most half of world production (Edwards 2007). Biotech cotton in the US, where it was first introduced in 1996/97, ac- counted for about 93 percent of the area allocated to cotton in 2007/08. Other biotech cotton producers are Argentina (about 25 percent of cotton area), Australia (90 percent), Brazil (about 10 percent), China (70 percent), Colombia (45 percent), India (over 40 percent), Mexico (about 60 percent), and South Africa (90 percent). Countries that are at a trial stage include Burkina Faso, Kenya, and Uganda. Zimbabwe had initiated trials but no progress has been made to com- mercialize biotech cotton. Many countries are considering experimenting with biotech cotton and some, like Pakistan and Egypt, are in the process of developing their own varieties. Illegal spread of biotech cotton is of concern to the industry. 15 The interviews were conducted during February 8-10, 2007 in the South-Eastern cotton producing region of Uganda. A total of 178 farmers were interviewed in 6 groups. 16 The cost of one pack of chemicals equivalent to one application for one acre of cotton is UGX 4,000 (approximately USD $2.40), half of which is paid in cash and the rest of the cost is recovered through a lower price of cotton. 18 Annex 1: The Gender Dimension of Uganda's Cotton Sector During a field visit on February 8-10, 2007, the team interviewed 158 cotton growers in the South-Eastern cotton producing region of Uganda. The interviews took place in 6 groups (in 5 of the 6 groups the records allowed for male/female performance). Although no extensive questionnaire was prepared in advance, there are some important findings that may shed some light into the reasons behind the poor performance of the sector. The key messages of interviews were the following: The majority of cotton growers had planted cotton for only a few years while most expe- rienced very low yields. Most cotton growers identified poor training as the key problem to low productivity (even after being asked to compare higher prices with more training). There is a large productivity gap between males and females cotton growers, with males of- ten achieving yields 3-4 times higher than their female counterparts. Several farmers confirmed that cotton growing in Uganda was compulsory up to indepen- dence, (i.e., each farmer in cotton growing regions had to plant at least 0.25 acres of cot- ton). Non-compliant farmers faced one week in jail. The cost of chemicals (half of which is pre-financed by ginners) comprised only a small share of the total cash expenses incurred by cotton growers. With a few exceptions, most farmers had small plots. Results regarding the productivity gap between males and females are highlighted in Ta- ble B1. Although the sample is by no means random, and thus should be treated with cau- tion, the results indicate some important differences. In all cases where the male/female distinction was made, the males always outperformed the females in terms of yield per- formance. For example, for the February 09, Group C (76 cotton growers, 24 males and 52 females), the median male yield was 242 kgs of cotton seed per acre for males and 50 kgs for females. Similar results hold for the other groups as well. These results were cor- roborated by most farmers and ginners. 19 Annex 2: Bibliography Anderson, Kym and Ernesto Valenzuela (2007). 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Crompton ARWPS 13 Conflict Diamonds February 2001 Louis Goreux ARWPS 14 Reform and Opportunity: The Changing Role March 2001 Jeffrey D. Lewis and Patterns of Trade in South Africa and SADC ARWPS 15 The Foreign Direct Investment Environment in March 2001 Miria Pigato Africa ARWPS 16 Choice of Exchange Rate Regimes for Develop- April 2001 Fahrettin Yagci ing Countries ARWPS 18 Rural Infrastructure in Africa: Policy Directions June 2001 Robert Fishbein ARWPS 19 Changes in Poverty in Madagascar: 1993-1999 July 2001 S. Paternostro J. Razafindravonona David Stifel 23 Africa Region Working Paper Series Series # Title Date Author ARWPS 20 Information and Communication Technology, August 2001 Miria Pigato Poverty, and Development in sub-Sahara Africa and South Asia ARWPS 21 Handling Hierarchy in Decentralized Settings: September Navin Girishankar A. Governance Underpinnings of School Perfor- 2001 Alemayehu mance in Tikur Inchini, West Shewa Zone, Oro- Yusuf Ahmad mia Region ARWPS 22 Child Malnutrition in Ethiopia: Can Maternal October 2001 Luc Christiaensen Knowledge Augment The Role of Income? Harold Alderman ARWPS 23 Child Soldiers: Preventing, Demobilizing and November Beth Verhey Reintegrating 2001 ARWPS 24 The Budget and Medium-Term Expenditure December David L. Bevan Framework in Uganda 2001 ARWPS 25 Design and Implementation of Financial Man- January 2002 Guenter Heidenhof agement Systems: An African Perspective H. Grandvoinnet Da- ryoush Kianpour B. Rezaian ARWPS 26 What Can Africa Expect From Its Traditional February 2002 Francis Ng Exports? Alexander Yeats ARWPS 27 Free Trade Agreements and the SADC Econo- February 2002 Jeffrey D. Lewis mies Sherman Robinson Karen Thierfelder ARWPS 28 Medium Term Expenditure Frameworks: From February 2002 P. Le Houerou Concept to Practice. Preliminary Lessons from Robert Taliercio Africa ARWPS 29 The Changing Distribution of Public Education February 2002 Samer Al-Samarrai Expenditure in Malawi Hassan Zaman ARWPS 30 Post-Conflict Recovery in Africa: An Agenda for April 2002 Serge Michailof the Africa Region Markus Kostner Xavier Devictor ARWPS 31 Efficiency of Public Expenditure Distribution May 2002 Xiao Ye and Beyond: A report on Ghana`s 2000 Public S. Canagaraja Expenditure Tracking Survey in the Sectors of Primary Health and Education ARWPS 34 Putting Welfare on the Map in Madagascar August 2002 Johan A. Mistiaen Berk Soler T. Razafimanantena J. Razafindravonona ARWPS 35 A Review of the Rural Firewood Market Strategy August 2002 Gerald Foley in West Africa P. Kerkhof, D. Ma- dougou ARWPS 36 Patterns of Governance in Africa September Brian D. Levy 2002 24 Africa Region Working Paper Series Series # Title Date Author ARWPS 37 Obstacles and Opportunities for Senegal`s Inter- September Stephen Golub national Competitiveness: Case Studies of the 2002 Ahmadou Aly Mbaye Peanut Oil, Fishing and Textile Industries ARWPS 38 A Macroeconomic Framework for Poverty Re- October 2002 S. Devarajan duction Strategy Papers : With an Application to Delfin S. Go Zambia ARWPS 39 The Impact of Cash Budgets on Poverty Reduc- November Hinh T. Dinh tion in Zambia: A Case Study of the Conflict be- 2002 Abebe Adugna tween Well Intentioned Macroeconomic Policy Bernard Myers and Service Delivery to the Poor ARWPS 40 Decentralization in Africa: A Stocktaking Survey November Stephen N. Ndegwa 2002 ARWPS 41 An Industry Level Analysis of Manufacturing December Professor A. Mbaye Productivity in Senegal 2002 ARWPS 42 Tanzania`s Cotton Sector: Constraints and Chal- December John Baffes lenges in a Global Environment 2002 ARWPS 43 Analyzing Financial and Private Sector Linkages January 2003 Abayomi Alawode in Africa ARWPS 44 Modernizing Africa`s Agro-Food System: Ana- February 2003 Steven Jaffee lytical Framework and Implications for Opera- Ron Kopicki tions Patrick Labaste Iain Christie ARWPS 45 Public Expenditure Performance in Rwanda March 2003 Hippolyte Fofack C. Obidegwu Robert Ngong ARWPS 46 Senegal Tourism Sector Study March 2003 Elizabeth Crompton Iain T. Christie ARWPS 47 Reforming the Cotton Sector in SSA March 2003 Louis Goreux John Macrae ARWPS 48 HIV/AIDS, Human Capital, and Economic April 2003 Channing Arndt Growth Prospects for Mozambique ARWPS 49 Rural and Micro Finance Regulation in Ghana: June 2003 William F. Steel Implications for Development and Performance David O. Andah of the Industry ARWPS 50 Microfinance Regulation in Benin: Implications June 2003 K. Ouattara of the PARMEC LAW for Development and Per- formance of the Industry ARWPS 51 Microfinance Regulation in Tanzania: Implica- June 2003 Bikki Randhawa tions for Development and Performance of the Joselito Gallardo Industry ARWPS 52 Regional Integration in Central Africa: Key Is- June 2003 Ali Zafar sues Keiko Kubota 25 Africa Region Working Paper Series Series # Title Date Author ARWPS 53 Evaluating Banking Supervision in Africa June 2003 Abayomi Alawode ARWPS 54 Microfinance Institutions` Response in Conflict June 2003 Marilyn S. Manalo Environments: Eritrea- Savings and Micro Credit Program; West Bank and Gaza ­ Palestine for Credit and Development; Haiti ­ Micro Credit National, S.A. AWPS 55 Malawi`s Tobacco Sector: Standing on One June 2003 Steven Jaffee Strong leg is Better than on None AWPS 56 Tanzania`s Coffee Sector: Constraints and Chal- June 2003 John Baffes lenges in a Global Environment AWPS 57 The New Southern AfricanCustoms Union June 2003 Robert Kirk Agreement Matthew Stern AWPS 58a How Far Did Africa`s First Generation Trade Re- June 2003 Lawrence Hinkle forms Go? An Intermediate Methodology for A. Herrou-Aragon Comparative Analysis of Trade Policies Keiko Kubota AWPS 58b How Far Did Africa`s First Generation Trade Re- June 2003 Lawrence Hinkle forms Go? An Intermediate Methodology for A. Herrou-Aragon Comparative Analysis of Trade Policies Keiko Kubota AWPS 59 Rwanda: The Search for Post-Conflict Socio- October 2003 C. Obidegwu Economic Change, 1995-2001 AWPS 60 Linking Farmers to Markets: Exporting Malian October 2003 Morgane Danielou Mangoes to Europe Patrick Labaste J-M. Voisard AWPS 61 Evolution of Poverty and Welfare in Ghana in October 2003 S. Canagarajah the 1990s: Achievements and Challenges Claus C. Pörtner AWPS 62 Reforming The Cotton Sector in Sub-Saharan November Louis Goreux Africa: SECOND EDITION 2003 AWPS 63 (E) Republic of Madagascar: Tourism Sector Study November Iain T. Christie 2003 D. E. Crompton AWPS 63 (F) République de Madagascar: Etude du Secteur November Iain T. Christie Tourisme 2003 D. E. Crompton AWPS 64 Migrant Labor Remittances in Africa: Reducing Novembre Cerstin Sander Obstacles to Development Contributions 2003 Samuel M. Maimbo AWPS 65 Government Revenues and Expenditures in Gui- January 2004 Francisco G. Carneiro nea-Bissau: Casualty and Cointegration Joao R. Faria Boubacar S. Barry AWPS 66 How will we know Development Results when June 2004 Jody Zall Kusek we see them? Building a Results-Based Monitor- Ray C. Rist ing and Evaluation System to Give us the An- Elizabeth M. White swer 26 Africa Region Working Paper Series Series # Title Date Author AWPS 67 An Analysis of the Trade Regime in Senegal June 2004 Alberto Herrou- (2001) and UEMOA`s Common External Trade Arago Policies Keiko Kubota AWPS 68 Bottom-Up Administrative Reform: Designing June 2004 Talib Esmail Indicators for a Local Governance Scorecard in Nick Manning Nigeria Jana Orac Galia Schechter AWPS 69 Tanzania`s Tea Sector: Constraints and Chal- June 2004 John Baffes lenges AWPS 70 Tanzania`s Cashew Sector: Constraints and Chal- June 2004 Donald Mitchell lenges in a Global Environment AWPS 71 An Analysis of Chile`s Trade Regime in 1998 July 2004 Francesca Castellani and 2001: A Good Practice Trade Policy Bench- A. Herrou-Arago mark Lawrence E. Hinkle AWPS 72 Regional Trade Integration inEast Africa: Trade August 2004 Lucio Castro and Revenue Impacts of the Planned East African Christiane Kraus Community Customs Union Manuel de la Rocha AWPS 73 Post-Conflict Peace Building in Africa: The August 2004 Chukwuma Obideg- Challenges of Socio-Economic Recovery and wu Development AWPS 74 An Analysis of the Trade Regime in Bolivia August 2004 Francesca Castellani in2001: A Trade Policy Benchmark for low In- Alberto Herrou- come Countries Aragon Lawrence E. Hinkle AWPS 75 Remittances to Comoros- Volumes, Trends, Im- October 2004 Vincent da Cruz pact and Implications Wolfgang Fendler Adam Schwartzman AWPS 76 Salient Features of Trade Performance in Eastern October 2004 Fahrettin Yagci and Southern Africa Enrique Aldaz- Carroll AWPS 77 Implementing Performance-Based Aid in Africa November Alan Gelb 2004 Brian Ngo Xiao Ye AWPS 78 Poverty Reduction Strategy Papers: Do they mat- December Rene Bonnel ter for children and Young people made vulnera- 2004 Miriam Temin ble by HIV/AIDS? Faith Tempest AWPS 79 Experience in Scaling up Support to Local Re- December Jean Delion sponse in Multi-Country Aids Programs (map) in 2004 Pia Peeters Africa Ann Klofkorn Bloome AWPS 80 What makes FDI work? A Panel Analysis of the February 2005 Kevin N. Lumbila Growth Effect of FDI in Africa AWPS 81 Earnings Differences between Men and Women February 2005 Kene Ezemenari in Rwanda Rui Wu AWPS 82 The Medium-Term Expenditure Framework: The April 2005 Chukwuma Obideg- Challenge of Budget Integration in SSA coun- wu tries 27 Africa Region Working Paper Series Series # Title Date Author AWPS 83 Rules of Origin and SADC: The Case for change June 2005 Paul Brenton in the Mid Term Review of the Trade Protocol Frank Flatters Paul Kalenga AWPS 84 Sexual Minorities, Violence and AIDS in Africa July 2005 Chukwuemeka Anyamele Ronald Lwabaayi Tuu-Van Nguyen, and Hans Binswanger AWPS 85 Poverty Reducing Potential of Smallholder Agri- July 2005 Paul B. Siegel culture in Zambia: Opportunities and Constraints Jeffrey Alwang AWPS 86 Infrastructure, Productivity and Urban Dynamics July 2005 Zeljko Bogetic in Côte d`Ivoire An empirical analysis and policy Issa Sanogo implications AWPS 87 Poverty in Mozambique: Unraveling Changes August 2005 Louise Fox and Determinants Elena Bardasi, Katleen V. Broeck AWPS 88 Operational Challenges: Community Home August 2005 N. Mohammad Based Care (CHBC) forPLWHA in Multi- Juliet Gikonyo Country HIV/AIDS Programs (MAP) forSub- Saharan Africa AWPS 90 Kenya: Exports Prospects and Problems September Francis Ng 2005 Alexander Yeats AWPS 91 Uganda: How Good a Trade Policy Benchmark September Lawrence E. Hinkle for Sub-Saharan-Africa 2005 Albero H. Aragon Ranga Krishnamani Elke Kreuzwieser AWPS 92 Community Driven Development in South Afri- October 2005 David Everatt Lulu ca, 1990-2004 Gwagwa AWPS 93 The Rise of Ghana``s Pineapple Industry from November Morgane Danielou Successful take off to Sustainable Expansion 2005 Christophe Ravry AWPS 94 South Africa: Sources and Constraints of Long- December Johannes Fedderke Term Growth, 1970-2000 2005 AWPS 95 South Africa``s Export Performance: Determi- December Lawrence Edwards nants of Export supply 2005 Phil Alves AWPS 96 Industry Concentration in South African Manu- December Gábor Szalontai Jo- facturing: Trends and Consequences, 1972-96 2005 hannes Fedderke AWPS 97 The Urban Transition in Sub-Saharan Africa: December Christine Kessides Implications for Economic Growth and Poverty 2005 Reduction AWPS 98 Measuring Intergovernmental Fiscal Performance May 2006 Navin Girishankar in South Africa David DeGroot Issues in Municipal Grant Monitoring T.V. Pillay AWPS 99 Nutrition and Its determinants in Southern Ethi- July 2006 Jesper Kuhl opia - Findings from the Child Growth Luc Christiaensen Promotion Baseline Survey 28 Africa Region Working Paper Series Series # Title Date Author AWPS 100 The Impact of Morbidity and Mortality on Mu- September Zara Sarzin nicipal Human Resources and Service Delivery 2006 AWPS 101 Rice Markets in Madagascar in Disarray: September Bart Minten Policy Options for Increased Efficiency and Price 2006 Paul Dorosh Stabilization Marie-Hélène Dabat, Olivier Jenn-Treyer, John Magnay and Zi- va Razafintsalama AWPS 102 Riz et Pauvrete a Madagascar Septembre Bart Minten 2006 AWPS 103 ECOWAS- Fiscal Revenue Implications of the April 2007 Simplice G. Zouhon- Prospective Economic Partnership Agreement Bi with the EU Lynge Nielsen AWPS 104(a) Development of the Cities of Mali June 2007 Catherine Farvacque- Challenges and Priorities V. Alicia Casalis Mahine Diop Christian Eghoff AWPS 104(b) Developpement des villes Maliennes June 2007 Catherine Farvacque- Enjeux et Priorites V. Alicia Casalis Mahine Diop Christian Eghoff AWPS 105 Assessing Labor Market Conditions In Madagas- June 2007 David Stifel car, 2001-2005 Faly H. Rakotomana- na Elena Celada AWPS 106 An Evaluation of the Welfare Impact of Higher June 2007 Noro Andriamihaja Energy Prices in Madagascar Giovanni Vecchi AWPS 107 The Impact of The Real Exchange Rate on Man- November Mireille Linjouom ufacturing Exports in Benin 2007 AWPS 108 Building Sector concerns into Macroeconomic December Antonio Estache Financial Programming: Lessons from Senegal 2007 Rafael Munoz and Uganda AWPS 109 An Accelerating Sustainable, Efficient and December Hans P. Binswanger Equitable Land Reform: Case Study of the Qedu- 2007 Roland Henderson sizi/Besters Cluster Project Zweli Mbhele Kay Muir-Leresche AWPS 110 Development of the Cites of Ghana January 2008 Catherine Farvacque- ­ Challenges, Priorities and Tools Vitkovic Madhu Raghunath Christian Eghoff Charles Boakye AWPS 111 Growth, Inequality and Poverty in Madagascar, April 2008 Nicolas Amendola 2001-2005 Giovanni Vecchi 29 Africa Region Working Paper Series Series # Title Date Author AWPS 112 Labor Markets, the Non-Farm Economy and April 2008 David Stifel Household Livelihood Strategies in Rural Mada- gascar AWPS 113 Profile of Zambia`s Smallholders: Where and June 2008 Paul B. Siegel Who are the Potential Beneficiaries of Agricul- tural Commercialization? AWPS 114 Promoting Sustainable Pro-Poor Growth in June 2008 Michael Morris Rwandan Agriculture: What are the Policy Op- Liz Drake tions? Kene Ezemenary Xinshen Diao AWPS 115 The Rwanda Industrial and Mining Survey June 2008 Tilahun Temesgen (RIMS), 2005 Survey Report and Major Findings Kene Ezemenari Louis Munyakazi Emmanuel Gatera AWPS 116 Taking Stock of Community Initiatives in the June 2008 Jean Delion Fight against HIV/AIDS in Africa: Experience, Elizabeth Ninan Issues, and Challenges AWPS 117 Travaux publics à Haute Intensité de Main d` August 2008 Nirina H. Andrianja- Oeuvre (HIMO) pour la Protection Sociale à Ma- ka dagascar : Problèmes et Options de Politique Annamaria Milazzo AWPS 118 Madagascar : De Jure labor Regulations and Ac- August 2008 Gaelle Pierre tual Investment Climate Constraints AWPS 119 Tax Compliance Costs for Businesses in South August 2008 Jacqueline Coolidge Africa, Provincial Analysis Domagoj Ilic Gregory Kisunko AWPS 120 Umbrella Restructuring of a Multicountry Pro- October 2008 Nadeem Mohammad gram (Horizontal APL) Restructuring the Multi- Norbert Mugwagwa country HIV>AIDS Program (MAP) in Africa AWPS 121 Comparative Analysis of Organization and Per- October 2008 Gérald Estur formance of African Cotton Sectors AWPS 122 The Cotton Sector of Zimbabwe February 2009 Colin Poulton Benjamine Hanyani- Mlambo AWPS 123 The Cotton Sector of Uganda March 2009 John Baffes 30