WORLD TRADE  
ORGANIZATION   
WT/CFMC/33 
12 October 2011  
 
(11-4996) 
 Original:   French 
  
 
DIRECTOR GENERAL'S CONSULTATIVE FRAMEWORK MECHANISM  
ON COTTON 
 
Domestic Cotton Sector Reforms 
 
Communication from Burkina Faso 
 
  The following communication, dated 7 October 2011, is being circulated at the request of the 
delegation of Burkina Faso. 
 
_______________ 
 
 
NOTE CONCERNING THE COTTON SECTOR REFORM MEASURES 
IN BURKINA FASO 
 
 
1. The main reform measure worth mentioning involves the introduction of weather risk 
insurance.  With the support of the World Bank, Burk ina Faso's cotton industry is currently exploring 
the feasibility of introducing an index-b ased weather risk insurance for cotton. 
2. The aim of this study is to examine the possibl e scope of index-based and mutual insurances 
to manage climate-related risks affec ting the cotton sector in Burkina Faso. 
3. From an operational point of view, the following groups are working in synergy to that end: 
(a) Cotton producers; 
(b) cotton companies; 
(c) insurance companies; 
(d) banks; 
(e) meteorologists; 
(f) university researchers; 
(g) the government. 
4. These groups are backed in their efforts by international consultants recruited by the 
World Bank. WT/CFMC/33 
Page 2  
 
  5. The study is made up of three parts: 
(a) Project coordination with activities such as: 
(i) identification of pilot areas; 
(ii) setting up a working group; 
(iii) data specification; 
(iv) monitoring of data collection in the pilot areas and the cotton companies; 
(v) validation of the project database;  and 
(vi) analysis of the results and decisions with respect to the different options. 
(b) Creation of the mutual associations with activities such as: 
(i) preparation of the relevant work plan; 
(ii) inventory of mutual associations in Burkina Faso; 
(iii) examination of the international structures of the mutual associations; 
(iv) composition of working groups; 
(v) analysis of data on the pilot areas; 
(vi) preparation of proposals on mutual contributions and reimbursements; 
(vii) detailed planning of implementation; 
(viii) development of rules governing mutual  contributions and reimbursement;  
and 
(ix) identification of risks to be covered and proposal of a legal framework for 
mutualization. 
(c) Preparation of the meteorological index insurance and the area yield insurance index 
for the pilot areas, w ith activities such as: 
(i) development of a detailed work plan; 
(ii) aggregation and monitoring of meteorological data; 
(iii) development and promotion of an agro-meteorological model; 
(iv) creation of an index product; 
(v) determination of a covera ge trigger, of limits, and of the premiums; 
(vi) drawing up of insurance contracts; 
(vii) determination of structural options (mutual or processor linked);  WT/CFMC/33 
 Page 3 
 
 
  (viii) design and operation of the organizational mechanism; 
(ix) reinsurance; 
(x) approval of legal and/or regulatory arrangements; 
(xi) determination of the feasibility of the index-based weather insurance; 
(xii) planning of implementation; 
(xiii) analysis of the available data on GPC production in the pilot areas; 
(xiv) provision for the assessment of yield losses; 
(xv) study of the spatial distribution of local risks; 
(xvi) search for data relating to rainfall surpluses and floods;  and 
(xvii)  feasibility study of index-based area yield insurance. 
6. Work in these different domains is proceeding sa tisfactorily and the sector hopes to be able to 
implement this important tool in due course in order to protect the income of cotton producers. 
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