WORLD TRADE  
ORGANIZATION  WT/L/646 
18 May 2006 
 
 (06-2429) 
 Original:   French 
  
 
DIRECTOR-GENERAL'S CONSULTATIVE FRAMEWORK: 
COTTON DEVELOPMENT ASSISTANCE 
 
Communication from Benin
 
 
 
 The following communication, dated 27 April 2006,  is being circulated at the request of the 
delegation of Benin.  
_______________ 
 
  The Permanent Mission of the Republic of Beni n to the Office of the United Nations and 
other International Organizations based in Gene va presents its compliments to the World Trade 
Organization and has the honour to attach hereto a document entitled:  "Status of cotton sector 
reforms in Benin" . 
 
 Essentially, this document takes stock of the measures taken since 1991 to reform the cotton sector in the Republic of Benin.   It also looks at how the institutional refo rms in the sector might be harmoniously and 
resolutely pursued during 2006. 
  The document highlights the actions and initiatives that have been identified in order to build 
cotton production and processing capacity.   It sets out specific needs for technical and financial assistance to meet the objectives of 
increased production, improved competitiveness and poverty alleviation. 
  The Government of Benin hopes that the WTO Member countries will support it in its efforts 
to strengthen the cotton sector in the Republic of Benin.  
 The Permanent Mission of Benin requests the WTO Secretariat to circulate this Note Verbale 
and the attached document among WTO Members,  in the three working languages of the 
Organization.   The Permanent Mission of Benin to the Office of the United Nations a nd other International 
Organizations based in Geneva thanks the World Tr ade Organization for its cooperation and takes this 
opportunity to renew the assurances of its highest consideration.  WT/L/646 
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  STATUS OF COTTON SECTOR REFORMS IN BENIN
 
 
 
I. INTRODUCTION 
1. Benin's cotton sector is the main source of the country's economic growth for several reasons.  
Average annual seed cotton production, estimat ed at 350,000 tonnes, represents around 
CFAF 70 billion, which is paid out to more than 325,000 farmers thus providing an income for some 
3 million people.  Cotton exports constitute 80 per cent of official export earnings.  The sector 
accounts for 45 per cent of tax revenue (ex customs) and in value added terms its share of GDP is 
13 per cent.  As to industry, cotton represents about  60 per cent of Benin's industrial fabric, with 
18 ginneries, 5 textile units, 3 cotton seed crushing factories and 1 cotton wool factory.  Ginning 
activities in the course of a season of roughly six mont hs generate more than 3,500 jobs countrywide.  
The multiplier effects of cotton revenue also create j obs in transport, arts and crafts, commerce and 
construction. 
2. In rural areas, social and community infrastru cture (health centres, schools, roads, wells, 
warehouses) have been put in place thanks to the re venue generated by cotton.  Finally, cotton has 
served as a launching pad for the private sector and fa rmers' organizations.  This is why the sector is 
viewed as a powerful strategic tool in the alleviation of poverty. 
3. The cotton sector in Benin was for a long time unde r the control of a state-owned enterprise, 
the National Company for Agricultural Promo tion (SONAPRA), which managed the sector and 
oversaw all activities from the importation and dist ribution of seeds and agricultural inputs, the 
provision of services to cotton producers and the ma rketing and ginning of seed cotton, to the export 
of cotton fibre. 
4. However, faced with what by the end of the 80s had become an unsustainable macroeconomic 
imbalance, Benin had to undertake both structural and sectoral reforms.  In 1989, it signed its first 
Structural Adjustment Programme (SAP) with the International Monetary Fund (IMF).  In accordance 
with the programme, the Government of Benin un dertook to withdraw from all production and service 
provision. 
5. Thus a vast programme to reform the cotton sector went into operation in the 1990s.  The 
reform consisted of the State's withdrawing from th e collection and primary marketing of seed cotton, 
the management of the agricultural inputs and gi nning, in favour of producers' organizations or 
private operators. 
II. PRIORITY REFORM MEASURES 
6. By its Letter on Rural Development Policy (L DPDR) of 1991, Benin launched a process of 
liberalization of the cotton sector in which: 
 (a) Responsibilities were transferred to farm ers' organizations in the course of the 
Agricultural Service Restructuring Project (PRSA); 
 
 (b) as from 1992, the inputs subsector was liberalized as private importers and 
distributors were accredited; 
  (c) the ginning subsector was liberalized as private economic operators were authorized 
to construct and operate ginneries and to freely export the cotton fibre; 
  WT/L/646 
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   (d) in 1999, organization of tendering for the import and distribution of agricultural 
inputs was transferred to the private sector. 
 7. With the liberalization of ginning, private opera tors now own eight of Benin's 18 factories and 
account for around 47 per cent of ginning capacity. 
8. During 2000, this process of liberalization recei ved a major impetus as the Government opted 
for an integrated and countrywide private sector based on the following principles: 
 (a) The sale of cotton inputs to producers at a single price throughout the country; 
  (b) the purchase of seed cotton at a single price throughout the country; 
 
 (c) the requirement that producers sell the entire cotton output to ginning companies in 
Benin; 
  (d) the requirement that ginners buy the entire cotton output. 
 
9. The transfer of management responsibilities fro m the State to the private sector was carried 
out through two decrees and their implementing orders: 
 (a) Decree No. 99-537 of 17 November 1999 transferring to the private sector 
responsibility for consultati ons on supply of inputs; 
 
 (b) Decree No. 2000-294 of 23 June 2000 abolishing SONAPRA's monopoly on seed 
cotton marketing; 
  (c) Interministerial Order No. 20 03-016/MICPE/MAEP/MFE/DC/SG/DCCI of 
14 March 2003 determining the conditions fo r the import and distribution of cotton 
inputs in Benin; 
  (d) Interministerial Order No. 2003- 022/MICPE/MAEP/DC/SG/DCCI of 7 May 2003 
organizing the marketing of seed cotton in the Republic of Benin. 
 
III. INSTITUTIONAL ORGANIZATION OF THE COTTON SECTOR 
10. In order to implement the reforms and assume the functions transferred to them by the State, 
private operators in the sector formed occupationa l associations for each branch of the sector and 
created technical institutions to be responsibl e for managing the main functions of the sector. 
The Occupational Association of the Sector
 
 11. Originally, there were three such associ ations covering the various branches: 
 (a) The Federation of Producers' Unions of Benin (FUPRO-BENIN).  This is the 
umbrella structure of the network of farmers' organizations present at village, commune and department levels.  Its mission is to ensure the production and primary 
marketing of seed cotton through its branches at village level (village groups) and to 
defend the interests of producers.  It is the producers' consultation forum. 
 
 (b) The Occupational Association of Cotton Ginners of Benin (APEB), the consultation 
framework for ginners.  Its mission is to buy and gin the entire seed cotton production. WT/L/646 
Page 4  
 
   
 (c) The Occupational Group of Distributo rs of Agricultural Inputs (GPDIA), the 
consultation framework for firms distributing inputs.  It represents the distributors of agricultural inputs in interoccupational negotiations. 
 
12. Following various disagreements, other such asso ciations were created alongside the original 
ones:  the Association of Producers' Groups (A GROP), the National Federation of Agricultural 
Producers (FENAPRA) and the National Federation of Producers' Groups (FENAGROP). 
13. In the case of distributors of inputs too, other input distribution firms created the Agricultural 
Input Distributors Association of Benin (ADIAB). 
Technical institutions for the reform of the sector
 
 
14. Implementation of the reform led to the creation of professional and technical bodies: 
 (a) The Agricultural Input Supply and Ma nagement Cooperative (CAGIA) created in 
1998 by the sub-prefectural producers' unions (now the communal unions) making up 
the network of the Federation of Unions of  Producers (FUPRO).  Its mission is to 
organize and manage tenders for the supply and distribution of good quality inputs at 
lowest possible cost for the benefit of producers' groups; 
  (b) The Inter-occupational Cotton Association (AIC) bringing together various branchces 
of the cotton sector, created in 1999 by the Federation of Producers' Unions of Benin 
and the Occupational Association of Cotton Ginners of Benin (APEB).  In 2002, it 
merged with the Occupational Association of Distributors of Agricultural Inputs (GPDIA); 
  (c) The Agency for Guaranteeing Paym ent and Collection (CSPR), created in 
October 2000 following the abolition of SONAPRA's monopoly of seed cotton 
marketing by Decree No. 2000-214 of June 2000 .  Its mission is to control physical 
and financial flows during the cotton ginni ng season.  It ensures payment for seed 
cotton to producers, the recovery of input credits from producers and the levying of charges for critical functions and the roads programme. 
 
 (d) The Arbitration and Conciliation Chamber (CAC), created in 2005 for the internal 
settlement of any disputes arising in conn ection with contracts concluded within the 
framework of cotton-related activities.  This  body is still not opera tional (diagram of 
new management scheme attached). 
 IV. THE DIFFICULTIES OF REFORM 
15. Notwithstanding this regulatory framework a nd the specialized occupational and technical 
structures, major functional problems arose in the various branches, associations and bodies, creating 
difficulties that affected the smooth running of the system.  For example: 
 (a) The various branches split up into a multitude of producers', ginners' and input 
distributors' organizations; 
 
 (b) producers were demotivated by poor management on the part of their leaders;   (c) seed cotton production was low in rela tion to the capacity of the ginneries; 
  WT/L/646 
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   (d) not all players in the sector are represented in the AIC; 
  (e) there were no internal provisions to sanction players failing to comply with the rules.  16. Matters became so worrying that in 2004 the Government, acting with the support of all the 
various players, put in place special arrangements for a seed cotton marketing campaign to be 
conducted as a temporary measure, with the creation of a special fund as a means of financing it. 
17. Because these problems had arisen despite the ex istence of the various structures, it was felt 
that there was a need "to distinguish clearly betw een the roles and responsibilities of the State and the 
private sector, to support private sector initiatives w hose purpose is to create an efficient sectoral 
organization based on interoccupational management and to organize relations between the State and 
the private sector in the interoccupational organization for cotton".
1 
18. A framework agreement was accordingly concl uded between the State and the AIC and has 
been in place since 20 December 2004. 
V. OUTLOOK 
19. It was understood that the machinery for the reform would continue to operate normally 
throughout the 2005-2006 crop year and bring about an improvement in comparison to previous years.  But the setbacks in this season, in particular the de lay in payments to producers, the failure to release 
in a timely manner the State subsidies paid to producers to lessen the effects of the decline in 
international prices and the application of the so lidarity guarantee have cau sed cotton production to 
plummet.  This has led certain producers and co tton ginners to renew their opposition to the CSPR 
mechanism. 
20. The Government intends to withdraw from commercial activity in the cotton sector, in 
particular the ginning of seed cotton and the mark eting of cotton fibre, in accordance with the 
commitments made to its development partners, the International Monetary Fund and the World 
Bank, whose conditions include the privatization of SONAPRA.  However, the privatization process, 
initially scheduled for completion by October 2005, ran into a number of difficulties, so that on 
15 March 2006 the Government cancelled the transfer of parcels of SONAPRA's industrial assets with 
a view to starting a new process as soon as possible b ased on privatization by zone.  The advantage of 
this strategy is that it favours the development of zones, and agricultural basins in particular.
2 
21. Provision is also being made to devise a mech anism for sanctions in order to facilitate the 
implementation of the Framework Agreement between the State and the AIC.  Furthermore, the latter 
has been advised to open up membership to certain  branches of the sector that are not currently 
represented in it, including seed  crushers and transporters. 
VI. STRATEGIC AXES FOR THE SUSTAINABLE DEVELOPMENT OF THE SECTOR 
22. Following the implementation of the reforms a nd the withdrawal of the State, the cotton 
sector (the driving force behind the national econom y) is now developing as an integrated private 
sector in which private players are acquiring mo re and more responsibilities and the State is the 
supreme supervisory and regulatory authority. 
                                                      
1 Framework Agreement between the State and the Interoccupational As sociation for Cotton, Preamble. 
2 Agricultural basins are large production zones, id entified by socioeconomic criteria such as sector 
diversity, areas and production, yields, production infrastructure and equipment, etc. WT/L/646 
Page 6  
 
  23. Seven strategic axes have been defined to secu re a sustainable improvement in performance 
and hence improved productivity a nd competitiveness.  They are: 
 (a) The sustainable improvement of production and productivity; 
  (b) the improvement of the quality of seed cotton and cotton fibre and the promotion of 
the Coton Bénin  label; 
  (c) implementation of an ope rational data collection and in formation management system 
for the sector; 
 
 (d) implementation of an integrated financ ial management system for the sustainable 
development of the sector; 
  (e) quality inputs delivered on time and at a lower cost;  
 (f) strengthening of the management and intervention capacities of farmers' 
organizations; 
  (g) dispute prevention and management.   For each of the above strategic axes, actions  have been defined for attainment of the 
objectives set. 
 
Axis I:  Sustainable improvement  of production and productivity
 
 
• Drafting and implementation of a research programme closely involving farmers' 
organizations, ginners a nd input distributors; 
 
• Creation of cotton varieties that meet inte rnational quality sta ndards and the demands 
of the players in the sector; 
 
• development of new technical procedures, in particular plant health treatment 
programmes in order to increase significantly cotton productivity in the centre and the south of the country; 
 
• strengthening the capacities of the staff in organic cotton research; 
 
• extension of varietal trials to organic cotton producers; 
 
• start up of research into genetically modified cotton; 
 
• development of technical procedures that employ organic and mineral technology for 
the sustainable management of soil fer tility in conventional cotton production; 
 
• development of an efficient system of training for producers; 
 
• recruitment of new staff by the State to strengthen existing personnel; 
 
• staff capacity-building; 
 
• development of extension tools;  WT/L/646 
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• strengthening the technical capacity of producers; 
 
• more intensive training for producers; 
 
• drafting of techno-economic references; 
 
• continued implementation of the target ed application management programme; 
 
• close involvement of the technical services of the Ministry of Agriculture, Livestock 
and Fisheries in the drafting and implemen tation of a joint targeted application 
management development programme; 
 
• ensuring funding for the targeted application management programme by the 
producers, the interoccupational association and the State; 
 
• sensitizing input importers and distributors to  the promotion of targeted application 
management; 
 
• implementation of the joint programme; 
 
• updating of indicators to monitor extension performance; 
 
• implementation of an efficient seed production and distribution system; 
 
• completion of the ongoing study in 2006 at the latest; 
 
• set up new seed production and distribution system by end 2006; 
 
• sale of certified seeds to cotton producers as of the year 2006-2007; 
 
• update specifications for breeders;  supervision of seed gardens; 
 
• creation of seed storage centres in each seed cotton production area; 
 
• implementation of an effective cotton input supply and distribution system; 
 
• completion of the ongoing study before the end of 2005; 
 
• set up the new cotton inputs supply and distribution system before the end of 2006. 
 
Axis II:  Improvement of the quality of seed  cotton and cotton fibre and promotion of Coton 
Bénin  Label  
 
• Ensure compliance with production cycle technical procedures; 
 
• improvement of harvesting and storing techniques; 
 
• improvement of the conditions of seed cotton transportation; 
 
• strengthen the seed cotton grading and classifying system; WT/L/646 
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• improvement of wrapping and packing; 
 
• development of the traceability of the Coton Bénin  label; 
 
• sensitize players in the sector to the importan ce of quality in the marketing of cotton; 
 
• document and promote the superior quality of Beninese cotton. 
 
Axis III:  Implementation of an operational  data collection and information management 
system in the sector  
 
• Implementation and management of a data base containing statistical information on 
the sector; 
 
• implementation of the communications plan of the AIC; 
 
• implementation of a permanent scheme for th e collection, processing and analysis of 
information in the sector; 
 
• regular updating of data for determining pr oduction costs (seed cotton, cotton fibre 
and other cotton-based products); 
 
• strengthening the capacities of the players at  different levels of data collection; 
 
• publish a bulletin on the world cotton and cotton inputs market. 
 
Axis IV:  Implementation of an integrated fi nancial management system for the sustainable  
development of the sector  
 
• Installation of a price-stabilizing mechanism; 
 
• definition of a triennial contribution syst em for the funding of critical functions; 
 
• completion of a study on a development fund for the sector and setting up of the fund; 
 
Axis V:  Quality inputs delivered on time and at a lower cost  
 
• Respecting the timetable for the supply of inputs; 
 
• provision and updating of grassroots training on the input management cycle; 
 
• review the selection criteria for input importers and distributors taking account of 
their financial capacity; 
 
• review of procurement (direct order by the Agricultural Input Supply and 
Management Cooperative [CAGIA]); 
 
• separation of input import and distribu tion functions (transfer of distribution 
functions to CAGIA); 
  WT/L/646 
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  • assess the treatment programme in the central zone. 
 
Axis VI:  Strengthening of management and in tervention capacities of farmers' organizations  
 
• Activities involving specific leadership training, the restructuring of farmers' 
organizations at grassroots level with a view to improved management of the 
solidarity guarantee. 
 
Axis VII:  Dispute prevention and management  
 
• Measures to make the AIC Conciliation and Arbitration Chamber operational. 
 
VII. TECHNICAL AND FINANCIAL SUPPORT NEEDS 
24. Prior to implementing the various actions identified, specific studies should be carried out to 
define priority measures that will contribute to a sustainable improvement in the productivity and 
competitiveness of the sector.  In the case of the axes referred to, technical and financial support 
consists of: 
• For cotton:  CFAF 37.472 billion, or €57.12 million; 
 
• for diversification:  CFAF 4.7 billion, or €7.16 million; 
 
• infrastructure and social initiatives:  CFAF 14 billion, or €21.34 million. 
 25. The total financial support necessary is estimat ed at CFAF 56.173 billion, or €85.63 million 
and is comprised of: 
• Support for strengthening the competencies of cotton farmers' organizations in Benin, 
CFAF 6.4 billion, or €9.76 million over 5 years; 
 
• supervision and training for producers, CFAF 1.7 billion, or €2.59 million over 
5 years; 
 
• support for diversification of agricultu ral production, CFAF 4.7 billion, or 
€7.16 million over 5 years; 
 
• support for the establishment of Farmers' Schools promoting the adoption of technical 
procedures, CFAF 4 billion, or €6.1 million over 5 years; 
 
• support for the improvement of the quality of cotton fibre and its brand image in 
order to promote the Coton Bénin  brand, CFAF 4.732 billion, or €7.21 million over 
5 years. 
 
• improvement of access roads in cotton growing zones (880 km), CFAF 3.5 billion, or 
€5.34 million over 5 years; 
 
• support for the improvement and maintena nce of soil fertility in cotton growing 
zones, CFAF 1.8 billion, or €2.74 million over 5 years; 
 
• strengthening of research capacities (var ietal research and implementation of 
technical procedures), CFAF 1.250 b illion, or €1.91 million over 5 years; WT/L/646 
Page 10  
 
   
• mechanization of agriculture to strengt hen and develop farms employing draught 
animals, the promotion and support of cooperatives for the use of agricultural equipment, CFAF 3.68 billion, or €5.61 million over a period of 5 years; 
 
• implementation of a data collection and management system for the cotton subsector 
in Benin, CFAF 3.910 billion, or €5.96 million over 5 years; 
 
• institutional support for the various players ( operation of the Joint Sector Monitoring 
Committee, the Interministerial Cotton Unit, interoccupational technical bodies - SP/AIC, CSPR, CAGIA) in the sector, CFAF 5 billion, or €7.62 million over 5 years; 
 
• contribution to the implementation of a cotton sector reserve fund, CFAF 5 billion, or 
€7.62 million over 5 years; 
 
• support for the construction of warehouses for agricultural inputs at village level, 
CFAF 4.5 billion, or €6.86 million over 5 years; 
 
• support for the Conciliation and Arbitra tion Chamber for dispute management, 
CFAF 1.7 billion, or €2.59 million over 5 years; 
 
• support for implementation of an environment management plan, CFAF 4.3 billion, 
or €6.56 million over 5 years. 
 
VIII.  CONCLUSION 
26. In order to strengthen and finalize the process of  reforming the sector in Benin, the Beninese 
Government has taken certain measures which largel y rely on the preparation of a multi-annual cotton 
research programme, the improvement of the management of the seeds and inputs subsector, the 
strengthening and training of producers' organizations   with a view to improving their standard of 
organization, the proper implementation of the solidar ity guarantee and the management of inputs, the 
requirement for all players to respect the rules (a  framework agreement was signed by the State and 
the AIC to this effect, defining the role of each pa rty and allowing the State to ensure legal training 
for the AIC and all players in the subsector), pe rmanent monitoring of the priority components of 
management and the functioning of the sect or, in conjunction with all the players. 
27. But these reforms encountered a number of diffi culties.  For example, poor seed management 
led, among other things, to inadequate control over th e management of physical flows;  the neglect of 
technical support and failure to apply the recommenda tions;  the malfunctioning of the joint guarantee 
scheme;  poor management of inputs and fraudul ent management of funds by the producers' 
organizations;  misunderstandings among the ginners on the distribution of seed cotton owing to the 
discrepancy between the still insufficient production and a ginning capacity that considerably exceeded production;  and failure to build up reser ves to support producers' purchase prices, with the 
State intervening only in the case of a serious and prolonged crisis. 
28. The Framework Agreement between the State and the AIC came just in time to clarify the 
roles and establish a certain discipline among th e different actors.  However, a number of 
malfunctions persist owing to the continuing disputes among the different branches, and particularly 
among the different networks:  producers, dist ributors, importers of inputs, and ginners. 
29. Moreover, the private actors that enjoy a large turnover from the sector show little interest in 
participating in the management of the risks and s hocks which, owing to the fluctuations in world  WT/L/646 
 Page 11 
 
 
  fibre and input prices, occasionally afflict the cott on industry.  Their remark able participation in 
setting up a support and stabilization fund through th e National Agricultural Revenue Support Office 
(ONS) should help to remedy this situation.  Fi nally, to ensure sustainability, a number of new 
projects and programmes were identified, including the promotion of sustainable production of cotton 
(LEC, technical itineraries, varietal improveme nt, certified seed production);  the promotion and 
continuous improvement of the productivity an d competitiveness of the industry (training and 
technical support of producers on itineraries and fa rm management counselling, improvement of the 
quality of seed cotton and cotton fibre, on-the-spot  processing of seed cotton and fibre);  building up 
the management and intervention capacity of the OPs (targeted training to develop leadership and to 
enhance negotiating capacity in the sector and basic r estructuring of the OPs for better management of 
the joint guarantee scheme);  and setting up of a reserve fund and an insurance scheme for producers 
(to be financed by the various actors in the industr y – State, private sector, development partners) as 
well as an agricultural trust fund to help producers to deal with natural disasters and other damage. 
  
  WT/L/646 
Página 12 
ANNEX:  DIAGRAM OF NEW COTTON SECTOR MANAGEMENT SCHEME 
 
 
 
      
1- DIFFICULTÉS 
 
 
    
 
    
 
     
 
    
 
  
__________  STATE 
AIC 
APEB 
CSPR-GIEFUPRO-BENIN 
GV-USPP-UDP 
CAGIA-BENIN 
GPDIA 
 
Input importers and 
distributors  Organize the legal and regulatory 
framework 
 Sign the agreements with the AIC 
 Supervise the proper functioning of 
the system  Represent the sector before the State and sign agreements 
 Framework for consultation between branches 
 Definition of appointment of seed cotton 
 Carrying out of critical functions (research, seeds, training, 
quality, roads, fixing of prices) 
Framework for 
consultation for 
producers, marketing 
Selection of input 
distributors through 
calls for tender Monitor supply of 
inputs 
Train producers in use 
of inputs 
Supply inputs, provide 
training for producers on 
use of inputs Apply apportionment of 
seed cotton 
Provide CSPR with 
financial resources Gin the seed cotton 
Market cotton fibre for 
export Provide local industries 
with seeds and cotton fibre 
Implementation of seed cotton marketing agreements 
Management of sector physical and financial flows 
Recovery of input credits.  Payment of seasonal credits Ginners 
GV
IDI banks