KIRUKU: Bring calico back and give cotton farmers reason to smile
By Anne Kiruku, East African News Agency
The outcomes of the 10th Ministerial Conference of the World Trade Organization (WTO) held last month in Nairobi call for celebration by farmers in the region, even though a lot still needs to be done to make farming an attractive venture.
The meeting, the first of its kind to be held on African soil in more than two decades, brought good tidings, especially to cotton farmers. It will now be possible for these farmers to export their products to international markets duty free.
Although none of the five EAC countries is a major exporter of cotton, it is Tanzania’s largest export crop after coffee, contributing USD90 million to export earnings and providing more than 500,000 jobs to rural households. Most of the casual workers in cotton farms and local textile mills are women and the youth, many others having been rendered jobless by the collapse of the industry.
An agreement was arrived at in Nairobi to allow cotton farmers unfettered access to the markets of rich nations, greatly boosting the few cotton farmers remaining. They will also have a level playing field with their counterparts from rich nations, with the ministers agreeing to remove all export subsidies provided to cotton farmers in rich nations. This move is likely to revive the industry.
Cotton farmers from Africa, especially from the cotton “fours” – Burkina Faso, Chad, Benin, and Mali – have for a long time complained of the unfairness and imbalance in international markets that has contributed to the near-collapse of cotton farming on the continent.
But the challenges of the cotton industry are not just at the international level. The collapse of the local textile industry has led to the closure of textile mills, pushing the cotton farmers to absolute poverty. Efforts to revive the industry through subsidies, privatisations and joint ventures have been futile.
Now that the market will have fairer competition, we need to ensure that cotton farmers in the region are supported so as to benefit from the newly-opened frontiers.
Of paramount importance is the immediate revival, upgrading and development of the railway transport system across the region. . Due to bulkiness, cotton can only be transported in large quantities via rail. So far, the progress in expansion of the railway system has been promising. This, though, will need proper planning and management to avoid collapse in the future. Greater efficiency in the rail transport system will greatly lower the cost of production, leading to higher profit margins.
To boost the sector even further, the road network in the EAC countries should be improved and upgraded. Most of the roads in the region are in dire need of upgrading. In Mwanza region in Tanzania, where most cotton is produced, the roads require considerable work. As with rail, road transport improvements will increase efficiency and reduce costs, thereby leading to higher producer prices.
As in every other agricultural sector, middle men have seriously affected the amount of profits trickling down to farmers. Governments should streamline operations in the sector by authorising single cotton boards, which should be mandated with collecting and disseminating information to farmers as well as with handling marketing and price negotiations.
Although no sector can avoid taxation, oppressive tax enforcement and harassment of tax payers is irksome. The demands for unnecessary levies and cesses are seriously hurting the sector. Worse still, lack of transparency and accountability on how taxes are spent by the relevant authorities is annoying. Taxes should be reduced substantially, the tax code simplified, taxes consolidated and rationalized, and tax rates made uniform across all exports. A more equitable distribution of the tax burden would help to induce a supply response. Lowering taxes would serve to improve compliance and boost tax revenues.
At the regional level, the Economic Partnership Agreement (EPA) negotiations between the East African Community and the European Union should be speeded up and a review of the Protocol on the Rules of Origin (RoO) presented by the European Commission considered.
The EAC must also harmonize positions on the EPA and RoO with regional trading blocs such as COMESA and SADC. The EAC team must consult, too, with the African Cotton and Textiles Industry Federation (ACTIF) on the industry’s position on the preferred RoO for cotton and textiles.
These efforts will go a long way in boosting cotton farming in the region and help improve the livelihoods of rural people who depend on the sector.
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