WORLD TRADE  
ORGANIZATION   
WT/CFMC/37 
1 November 2012 
 (12-6003) 
 Original: French 
  
 
DIRECTOR-GENERAL'S CONSULTATIVE FRAMEWORK 
MECHANISM ON COTTON 
 
Communication from Chad 
  
 The following communication, dated 19 October 2012, is being circulated at the request of the delegation of Chad.  
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NOTE ON THE REFORM OF THE COTTON SECTOR IN CHAD 
 
 1. Chad's cotton sector, like that of several ot her African countries, has been facing severe 
difficulties since the mid-1980s.  In order to remedy them the Government, in the wake of several 
other attempts, adopted a "Strategy document on cott on sector reform in Chad" at the end of 1999;  
this led to the development of a road map in  August 2005, followed one month later by the 
establishment of a technical team responsible for its implementation.  The road map contains a 
number of measures directed firstly at reforming th e sector with a view to its recovery, and secondly 
at withdrawing the State from Chad's cotton company, CotonTchad. 
I. EVOLUTION OF COTTON PRODUCTION AND OF PRODUCERS' INCOMES 
2. Chad, which was one of the leading cotton-pr oducing countries in French-speaking Africa, 
is now one of the smallest.  Seed cotton production ranged from 17 tonnes in 1928/1929 to 108,482 tonnes in 1970/1971 when CotonTchad was se t up.  After that it showed sharp variations, 
peaking at 263,000 tonnes of seed cotton in 199 7/1998 and dropping to a low of 35,000 tonnes 
in 2009/2010 - its worst ever level for 101,200 hectares, representing a decline in production of 
around 87 per cent in 12 crop seasons (7.25 per cen t a year).  Production picked up slightly 
in 2010/2011 and 2011/2012, rising to 52,570 and 78,895 tonnes respectively - an increase of around 50 per cent a year.  This 50 per cent a year  increase is set to continue in 2012/2013, 
with production forecast at 118,000 tonnes. 
3. Similarly the producers' cash incomes, i.e. th eir earnings from the sale of the seed cotton, 
fell from CFAF 50 billion in 1997/1998 to CFAF 6 b illion in 2009/2010, an 88 per cent drop in the 
cotton producers' purchasing power over 12 years. 
4. Cotton lint production reached a record level of  around 103,000 tonnes in 1997/1998;  it then 
began to fall, standing at 14,000 tonnes in 2009/2 010 (less than 15 per cent of the peak figure).  
Almost all of the lint produced each year is e xported, at a price which has varied between 
CFAF 737 per kg in 1999/2000 and CFAF 912 per kg in 2011/2012, with a record price of CFAF 1,315 per kg in 2010/2011;  the lowest price was CFAF 602 per kg in 2004/2005.  The remaining lint - an extremely small amount - is sold locally, at a price ranging between WT/CFMC/37 
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  CFAF 500 per kg and CFAF 525 per kg over the same pe riod, peaking in 2010/2011 at the same level 
as the export price (CFAF 1,315 per kg).  There are also sales to the Nouvelle Société Textile du 
Tchad  (NSTT):  128 tonnes in 2009/2010 and 300 tonn es in 2010/2011, at CFAF 703 per kg and 
CFAF 1,319 per kg, respectively. 
5. The causes of the decline in Chad's cotton production are both exogenous, as experienced by 
the cotton sector throughout Africa, and endogeno us to the country and its cotton company. 
II. CAUSES OF THE DECLINE IN COTTON PRODUCTION 
6. The main causes of the decline in production ar e the poor yield in the field and the reduction 
in the size of the areas sown.  The average yield pe r hectare is the worst in West and Central Africa.  
The reasons for this weak performance are, in  addition to poor soil  and weather shocks: 
(a) Production factors acquired late and in insu fficient quantities, because of the partial 
and late implementation of productivity credit; 
(b) delays in the collection of, and payment for seed cotton, because of 
the late implementation of seasonal credit; 
(c) producers' non-compliance with cotton cr op management techniques, because of 
inadequate guidance; 
(d) a shortage of pure seed, resulting in the sowing of HX seed (outside the seed 
production zone); 
(e) inadequacy and/or lack of permanent liaison between the cotton company and the 
cotton producers; 
(f) high price of inputs and agricultural equipment, despite partial State subsidies;  and 
(g) joint and several guarantees, and the admini strative management of the arrears of the 
village associations concerned. 
7. To all this must be added the world cotton crisis , and in particular the drop in international 
cotton lint prices and the weakness of the dollar agai nst the euro prior to the 2010/2011 crop season.  
The fall in cotton prices on the international market is the direct result of the United States' and 
European Union's policies of subsidizing their cotton producers. 
III. CONSEQUENCES OF THE DECLINE IN COTTON PRODUCTION 
8. The decline in production has huge repercussions  for all stakeholders in the cotton sector, 
causing significant losses across the boa rd.  Those worst affected are the cotton producers and their 
organizations, the Société cotonnière du Tchad  (CotonTchad) and its principal shareholder (the State). 
A. T
HE COTTON PRODUCERS AND THEIR ORGANIZATIONS  
9. The cotton producers' cash incomes,  i.e. their earnings from the sale of the seed cotton, enable 
them to meet various needs such as paying for their children's schooling and for agricultural 
equipment, purchasing food, building up savings in local micro-finance institutions, and other necessities of life.  These incomes have fallen significan tly, leading to a decline in the cotton farmers' 
purchasing power.  This forces them to fall back on their food crops, sell their agricultural equipment 
and/or cattle and resort to moneyl enders, thus being drawn into a downward spiral of impoverishment.  WT/CFMC/37 
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  B. COTON TCHAD  
10. The low levels of seed cotton production made  it impossible for CotonTchad to absorb its 
fixed costs;  the result was a disastrous financial s ituation which contributed to the company's loss of 
credibility vis-à-vis  third parties.  The subsidies provided by the State each year were not enough to 
turn the company around and set it on the path to wards financial equilibrium, despite commendable 
efforts made (implementation of draconian savings measures and staff cuts). 
C. THE STATE  
11. CotonTchad's disastrous financial situation caused  the State to introduce a policy of providing 
balancing subsidies for the company.  Between 2001/2002 and 2009/2010, the amount of the subsidies granted to CotonTchad ranged from CF AF 2 billion to CFAF 24.7 billion a year;  these 
subsidies amounted to a total of around CFAF 100 billi on at the end of 2011.  The State also incurred 
tax revenue losses as a result of the decline in the business activities of CotonTchad and its partners 
(various suppliers, carriers, banks, forwar ding agents, insurance agencies, etc.). 
12. The national economy in general has been advers ely affected by the losses sustained by the 
producers, CotonTchad, the State, and all the comp anies working with CotonTchad which have found 
it difficult to consolidate their busin ess activities, leading to low earnings. 
13. In an attempt to turn this situation around by revitalizing cotton production, the State 
embarked upon a radical restructuring of the cotton company, involving the dissolution of the old company and the creation of a new one, called the Société Cotonnière du Tchad Société Nouvelle  
(CotonTchad SN). 
IV. RESTRUCTURING OF COTONTCHAD 
14. The CotonTchad Restructuring Plan provided fo r the creation of CotonTchad SN, to which all 
of CotonTchad's operating assets and liabilities w ould be transferred, and the dissolution of 
CotonTchad, with the State acquiring its rema ining assets and assuming its remaining liabilities;  
the Plan was approved by the Government in September 2011. 
15. On 30 December 2011, the Board of Directors and an Extraordinary General Meeting (EGM) 
of CotonTchad shareholders approved:  (i) the cr eation of CotonTchad SN;  and (ii) the conclusion 
of an agreement between CotonTchad and CotonTch ad SN on the transfer of cotton-related business 
activities.  The Extraordinary General Meeting also  decided on the dissolution-merger of CotonTchad. 
16. In application of the CotonTchad EGM deliber ations of 30 December 2011, CotonTchad SN 
was validly constituted as a limited liability company.   CotonTchad's business and, more broadly, 
all of its cotton-related assets and activities, were  transferred to CotonTchad SN under the terms 
of a transfer agreement concluded on 25 January  2012 between CotonTchad as transferor, on the 
one hand, and CotonTchad SN as transferee, on the other.  Non cotton-related assets, together with 
existing financial liabilities, were excluded from the scope of the transfer and remained on 
CotonTchad's balance sheet, to be passed on to th e State on completion of the dissolution-merger of 
CotonTchad. 
17. At an Extraordinary General Meeting of the shar eholders of CotonTchad SN on 3 April 2012, 
the new company's shareholders approved a capital increase reserved for CotonT chad in an amount of 
CFAF 5 billion.  They also decided that CotonT chad SN would be administered by a Board of 
Directors and led by a Chairman and Chief Executive Officer. WT/CFMC/37 
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  18. By Decree No. 1113/PR/PM/MCI/2012 of 24 July 2012, the State appointed the Directors of 
CotonTchad SN;  by Decree No. 1132/PR/PM/MCI/2012 of the same date, the State acquired the remaining assets and assumed the remaining liabilities of CotonTchad, and by Decree 
No. 1137/PR/PM/MCI/2012 the State assumed responsib ility for financing the strategic liabilities of 
CotonTchad which have been transferred to CotonTchad SN. 
19. On that basis, CotonTchad SN has been defi nitively constituted and is  currently working on 
the implementation of its Business Plan, draw n up for the period from 2012/2013 to 2015/2016. 
V. COTONTCHAD SN BUSINESS PLAN 
20. Efforts to revitalize cotton production must c ontinue, given the cotton production potential 
in Chad:  availability of cultivable land, produ cers' eagerness to resume cotton growing, etc. 
21. For the four crop seasons (2012/2013, 2013/2 014, 2014/2015 and 2015/ 2016) covered by 
the Plan, CotonTchad SN has set itself the short- term and medium-term goal of gradually increasing 
production, starting at 100,000 tonnes of seed co tton in 2012/2013 and ri sing to 300,000 tonnes 
in 2015/2016.  Achievement of this goal of in creased production will be dependent on improvements 
in a combination of factors and production conditions: 
(a) The total area sown to cotton is exp ected to increase from 200,000 hectares 
in 2012/2013 to 400,000 hectares in 2015/2016; 
(b) the proportion of this area which is under high-productivity cultivation is projected to 
rise from around 40 per cent in 2012/2013 to 50 per cent in 2013/2014 and should continue to progress, reachi ng 70 per cent in 2015/2016; 
(c) the quantity of inputs will rise as the area under high-productivity cultivation 
increases; 
(d) whereas the yield from enhanced traditiona l cultivation is expected to remain 
at 350 kg/hectare, the yield from high-productivity cultivation is projected to increase gradually from 750 kg/hectare in 2012/2013 to 930 kg/hectare in 2015/2016;  and 
(e) the number of cotton sector field officers will increase from 102 in 2012/2013 to 150 
in 2015/2016. 
22. Given its economic and social importance to the country, cotton must naturally play a key 
role in rural development.  As cotton growing is cu rrently the most organized sector, it is a driver for 
the modernization of agriculture. 
23. The Plan to revitalize cotton production in the short and medium term 
(2012/2013-2015/2016) is r easonable given normal climatic conditi ons;  however if it is to succeed, 
interventions will be required of all the agricultura l development actors, and measures will need to be 
applied to the cotton sector stakeholders.  Th ese areas of intervention and measures include: 
(a) Strengthening of cotton production ex tension activities, and of guidance for 
cotton producers; 
(b) making inputs available to the cotton producers in sufficient quantities and in a 
timely manner; 
(c) assisting producers with the acquisition of agricultural equipment;  WT/CFMC/37 
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  (d) collection of the seed cotton crop in its en tirety and in a timely manner, and payment 
as and when the seed cotton is collected; 
(e) input backlogs to be processed as rapidly as possible;  and 
(f) provision of support for the reorganization of cotton producers into cooperative 
enterprises whose internal management is organized and efficient. 
VI. OVERVIEW OF THE 2012/2013 CROP SEASON 
24. In a bid to revitalize cotton production, CotonTch ad SN has taken a number of steps aimed at 
increasing production in 2012/2013.  They include  collecting and paying for all 2011/2012 seed 
cotton in a timely manner, as in 2010/2011, releasing significant quantities of seed for sowing, ordering inputs, recruiting field officers, etc. 
25. The harvestable area (minus flooded fields, representing about 10 per cent) recorded at the 
end of September was 256,821 hectares, of whic h some 70,000 hectares (27 per cent) are under 
high-productivity cultivation.  The harvestable area is 49 per cent greater than in the 2011/2012 crop year. 
26. Given the small proportion of this area whic h is under high-productivity cultivation, the 
average yield in the field should be around 460 kg/hectare.  A crop of roughly 118,000 tonnes of seed 
cotton is therefore forecast. 
VII. CONCLUSION 
27. Achievement of the objectives as set out in the 2013-2016 Business Plan should bring in more 
than CFAF 25 billion for the producers in the 2012/2 013 crop year, with this amount rising to around 
CFAF 67 billion in 2015/2016.  A total of CFAF 170  billion is estimated over the period of the Plan, 
i.e. an average of CFAF 42.5 billion a year, wh ich is double the average for the past 15 years. 
28. It is clear that the resources generated by cott on will not just be maintained;  they are set to 
double in four years.  This will significantly impr ove the lives of four million people living in the 
cotton-growing zone.  Cotton is the only business that directly distributes cash income of this order in 
the rural environment. 
29. Similarly, the impact on the construction of rural infrastructure, job creation, food security, 
the modernization of agriculture, the State's tax revenue and the incomes of all the entreprises 
working with the cotton company, will be considerable. 
30. While it is true that these goals for the revita lization of the cotton business are ambitious, they 
are realistic because they are part of a proactive a pproach based on the farm ers' eagerness to resume 
cotton growing, the quality of Chad's lint, and above  all the proven support of the State, at the level 
and within the time-frames required. 
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