WT/CFMC/42  
7 June 2013  
(13-2957)  Page: 1/3  
 Original: French  
 
  DIRECTOR-GENERAL'S CONSULTATIVE FRAMEWORK  
MECHANISM ON COTTON 
COMMUNICATION FROM CHAD 
 The following communication, dated 5 May 2013, is being circulated at the request of the 
delegation of Chad.  
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  1  MEASURES RELATING TO DOMESTIC COTTON SECTOR REFORM IN CHAD 
1.1.  Cotton is of major economic and social importance to Chad and its population. It has a direct 
impact on the majority of the population in the country's Southern Zone in terms of income and services. It has an obvious impact on the daily life of an estimated population of some 
four million inhabitants, who derive the bulk of thei r income directly or indirectly from this activity. 
1.2.  The Government of Chad has therefore undertaken to draw up and implement a strategy for 
this reform, in which the dissolution of Cotontchad remains a prerequisite. Accordingly, pursuant 
to the decisions of the Council of Ministers of 6 October 2011, Cotontchad was dissolved and a new 
company, Cototchad Société Nouvelle (Cotontchad SN), was created in its place. 
1.3.  The Board of Directors, at its meeting of 14 September 2012, appointed high-level officials 
to the new company's Board and senior management posts. 
1.1  Action required for the new company 
1.1.1  Upgrading of industrial equipm ent and increased production 
1.4.  An investment programme of CFAF 45 billion over five years is essential. Without such 
a programme, it would be impossible to reach a leve l of production that would enable the company 
to balance its accounts and return to profit, bear ing in mind the state of industrial equipment 
and the need to improve output and production levels. 
1.1.2  Provision of sufficient working capital 
1.5.  As soon as it has started up, the new company will be expected to purchase inputs for the 
next season, to collect the seed cotton from the current season, and to meet its daily operational expenses. This can only happen smoothly and withou t crippling the company from the very outset 
if it has sufficient working capital. 
1.6.  In view of the seasonal nature of the acti vity and the system of pre-financing inputs, 
the problems surrounding the working capital are likely to recur. Because production is expected 
to rise sharply, even if the company balances its cashflow at the end of the financial year, there 
will be a structural period of approximately fo ur months during which it will be faced with 
an operating cash deficit. WT/CFMC/42 
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  1.7.  The current system of productivity loans and seasonal loans - which is one of the factors 
contributing to the late purchase and supply of inputs - having shown its limits, other solutions will clearly have to be found. 
1.1.3  Possible solutions 
 Assessment of a maximum estimated cashflow gap during 2012 and 2013 to be 
incorporated in the start-up funding.  
 A balancing subsidy at start-up to provide the company with initial working capital. 
 
 A mechanism for the temporary advancement of funds by the shareholders at the 
beginning of each financial year to cover the anticipated cost of production, ultimately 
to be reimbursed, since it is entered in the new company's balance sheet as a liability. 
1.1.4  Objectives to be attained pr ogressively by the fifth year 
 Recovery of production to 300,000 tonnes of seed cotton for a sewn surface 
of 400,000 ha. 
 
 Strengthening and rehabilitation of the vehicle fleet, including the road brigade, in order 
to be able to provide for 50% of local transport needs. 
 
 Rehabilitation and upgrading of ginning factories in order to limit the season to the dry 
period, i.e. 150 days (December to April) and increase the factory output to 42.2% for 
a total production of 127,000 tonnes of lint. 
 
 Modernization and upgrading of the oil–soap plant with a view to achieving its normal 
crushing capacity of 100,000 tonnes of seed and increasing neutral oil production 
to 17,000 tonnes, and oil cake production to 42,000 tonnes.  
 Export marketing of 99% of the lint produced  and recovery of some 90% of the local 
market share for oil mill products to achieve export sales of CFAF 100 billion and local market sales of CFAF 20 billion, i.e. a total turnover of CFAF 120 billion. 
1.1.5  Financial results 
1.8.  The financial outlook of the new company could, under certain conditions, be positive enough 
to enable it in the long-term to do away with constant State support. 
Table: Evaluation of the main financia l indicators for the period 2012-2016 
Indicators in 
CFAF/year 2012 2013  2014  2015 2016  
Turnover 46,385 67,122  93,931  132,814 171,391  
Current income 8,244 5,808  9,560  17,920 30,275  
Operating cashflow 18,068 9,881  15,062  23,826 36,343  
1.9.  In the context of a multinational cotton sector support project (PAFICOT) for 
the C4 countries, funded by the ADF to the t une of UA five million for Chad, approved 
on 29 November 2006, and the Memorandum of Understanding signed on 7 February 2007, 
the completed and ongoing activities are focused on: 
a. Improvement of production and productivity: 
i. For the dissemination of good agricultural practices, 64 farmer field schools have 
been set up. A number of different technical and organizational improvements have 
been taken aboard, in particular the improvement of output through better dosing of organic materials and the organization of producers around these field schools 
to ensure better agricultural practices. WT/CFMC/42 
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  ii. Environmental mitigation measures were examined at the meeting held 
from 25 to 28 May 2012 to validate the subject matter. The agreement signed with the Plant Protection Directorate is currently being implemented. 
b. Support for marketing and processing: 
i. For the rehabilitation of rural dirt ro ads, the opening of bids took place 
on 20 September 2012, the bids are already being examined together with the bids for a small ginning plant and for weaving equipment. 
ii. For the small-scale processing of lint, a National Support Centre for Small-Scale 
Processing in the Cotton Sector has been set up. 
c. Capacity building: 
i. Producer training workshops were organised in the framework of the literacy 
programme, together with the related report validation workshops. 
ii. Equipment for the village literacy centres is also in the process of being purchased. 
1.10.  In addition, several cotton producers' organizations were created in Chad, known as "local 
coordination committees" (CCL). A total of nine CCLs have been set up in addition to 
the Village Associations (AV). 
1.11.  An association known as the National Union of Cotton Producers of Chad (UNPCT) was 
created, and is governed by Ordinance No. 27/INT/SUR of 28 July 1962. It was entered in the 
Register of Associations on 26 September 2007 under Year 2009 folio No. 014. All CCLs and other producers' associations in Chad are ex officio members of the UNPCT. 
1.12.  The purpose of the Union is to improve the economic and social conditions of cotton 
producers and their organizations by boosting the production and sales of the members of 
the Village Associations (AV).  
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