11 June 2004
Source: LiquidAfrica

The International Fund for Agricultural Development has advised countries in East and Southern Africa to develop local markets for their cotton produce to combat the adverse effects of American and European agricultural subsidies.

Edward Heinemann, an Ifad regional economist for East and Southern Africa Division, said in a recent interview in Mwanza that millions of cotton farmers in the region suffered as a result of the EU and US subsidies because there were no local markets for cotton.

These countries should revive their collapsed textile industries and create more opportunities for new industries, said Mr Heinemann.

At its peak, the cotton industry was Tanzania's largest employer, with 14 textile and spinning mills, employing nearly 35,000 people.

Today its contribution to the national economy is insignificant as most of the factories have closed down.

The country's cotton belt stretches across Mara, Mwanza, Shinyanga, Tabora and Kagera regions.

Mr Heinemann said, ''The salvation of millions of cotton farmers in this region lies in the establishment of more textile mills, to enable the poor farmers to get permanent markets for their produce.

He said that a new study conducted by the International Cotton Advisory Committee (ICAC) in 2002 has shown that one of the major crops adversely affected by agricultural subsidies in the US and Europe was cotton in Africa, where farmers lost about $250 million annually.

The study, titled ''Production and Trade Policies Affecting the Cotton Industry,'' says that the losses incurred by Africa's cotton sector were directly related to the subsidies by the West.

The world cotton industry is currently experiencing its lowest prices in 30 years ? at 84 US cents per kg.

Some 25,000 American cotton producers are paid $4 billion a year in subsidies, according to the World Bank. The Bank estimates that were the subsidies to be removed, ''the cotton price would improve by 24 US cents per kg, translating into $250 million a year for East, Central and West African farmers.''

Governments in East, Central and West Africa spend up to $60 million to help their own cotton farmers, money that should have been going into building schools, the health and other social sectors, says the Bank.

However, Mr Heinemann said that African cotton farmers should not expect the US and Europe to stop subsidising their farmers in order to create fair trade in the world market.

He challenged African governments to attract investors to the textile industry to revive and ensure domestic sustenance of cotton production.

Mr Heinemann said, ''The future will only become bright for African cotton farmers if their governments stop the fruitless debates about subsidies in the US and European countries and start building their domestic markets for cotton.

''By attracting more foreign and local investors to the textile industry, it will create better market opportunities for African cotton farmers, he said.

Such a development, he added, would also enable African countries to export processed and semi-processed cotton products to the US, Europe and Asian markets.

Countries that subsidise their cotton farmers account for 53 per cent of the world's cotton output.