- 12 -

Table 4. Cotton Fiber: Ratio of Domestic Producer<sup>Price to Intemational Price1/</sup>

||Benin|Burkina|Cameroon|Chad|C6te|Mali|Togo|Average|
|---|---|---|---|---|---|---|---|---|
|||Faso|||d'lvoire|||countries|
|1988/89-1993/94|52|54|48|48|51|46|49|50|
|1994/95-1996/97|41|39|38|35|41|36|40|39|
|1997/98-2000/01|59|_51_|50|49|55|48|57|53|

Sources: Data on producer prices are from Pursell.<sup>_"Cotton Policies in Francophone Africa ",_presentedat a</sup> World Bank workshop, May 2001; intertemational price series<sup>arefrom IMF, World EconomicOutlook</sup> database; and recent producer prices are from IMF desk economists.

<!-- Start of picture text --> Fige 3. West ard Cetal Afta Rati ofOpeting Cost to Total Cost l/<br>(In percent)<br>43 - 43<br>42 -42<br>41 - 41<br>40 40<br>39 39<br>38 38<br>37 37<br>36 36<br>35 , 35<br>1995/96 1996/97 19997/98 1998/99 1999/00 2000/01<br>I/AveaWnio is for Beni for Beni Beni BAina Fash, Oiadand Mli. Oparatingots inclu all s,<br>excxptthe pihieprioceofsemdcotton. Costsam onanfobbasis.<br><!-- End of picture text --> The relatively large gap between the domestic producer prices and lint 43 - equivalent export prices of seed cotton is 42 -42 explained primarily by (a) the rising 41 - operating costs of the cotton companies 40 (Figure 3); (b) the implicit subsidies to 39 other areas of the sector offered by the 38 cotton parastatals (to private ginneries, for 37 example, as well as to the domestic oil and 36 meal processing companies); and (c) the 35 , provision of a variety of public services 1995/96 1996/97 (for example, infrastructure maintenance, I/AveaWnio is for Beni for Beni Beni provision of schooling, and health **excxptthe** services) by the cotton companies in the cotton growing<sup>regions.</sup>

# **3. The International Competitiveness and Growth**<sup>**Potential of WCA's CottonSector**</sup>

The competitiveness of the region's cotton sector is evidenced<sup>by thelow levelof costs when</sup> compared to other countries, and by the strong growth<sup>inproductionoverthelasttwo</sup> decades. Comparisons of the costs of production by the various<sup>cotton producersof the world</sup> are difficult to make because of incomplete data. The most<sup>comprehensivesourceisfrom the</sup> International Cotton Advisory Committee (ICAC), which<sup>performedasurveyof thecostof</sup> producing raw cotton in 2001-02 in 28 countries, including<sup>thelargestproducers(China,the</sup> United States, India, Pakistan, and Uzbekistan), four<sup>countriesinWCA,andsixothersin</sup> Sub-Saharan Africa. It should be stressed that these<sup>dataare also imperfect, however,the</sup> survey revealed that WCA countries were among<sup>theworld'slowestcostproducers. The</sup> current decline in world prices has illustrated the<sup>levelof competitivenessof WCA'scotton</sup> sector. Although subsidies in the order of US $50<sup>to$60million wererequiredfor thezone</sup> as whole to cushion the effect of falling world prices, the<sup>nationalcottonsectors wouldhave</sup> been profitable if the international price had exceeded<sup>50centsper pound.Fewother</sup> countries can produce cotton profitably at this price level.