Cotton and Products Annual

An Expert's View about Cotton in Senegal

Posted on: 27 Apr 2012

Post forecasts MY (Oct-Sept) 2012/13 seed cotton production to increase 17 percent (205,000 tons) compared to MY 2011/12 Post estimates.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 4/18/2012 GAIN Report Number: Senegal Cotton and Products Annual West Africa Cotton and Products Update Approved By: Joani Dong, Regional Agricultural Attaché, West Africa Prepared By: Russell Knight, Deputy Regional Agricultural Attaché Fana Sylla, Agricultural Specialist Report Highlights: Post forecasts MY (Oct-Sept) 2012/13 seed cotton production to increase 17 percent (205,000 tons) compared to MY 2011/12 Post estimates. MY 2012/13 farm gate seed cotton prices have not been released yet, except for Mali?s 255 F CFA ($0.51) per kg. Despite unfavorable rainy conditions in the Sahel with late and irregular rains that ceased earlier than expected, MY 2011/12 seed cotton production may increase 40 percent (341,000 tons) compared to year before. MY 2011/12 farm gate prices drove farmers back to cotton fields and expand area planted. The big news is Mali could reach a record 445,000 tons (83 percent increase), followed by Burkina Faso at 400,000 tons (18 percent increase). Only Senegal?s seed cotton production dropped (23 percent) in MY 2011/12. Page 2 of 9 Table of Contents West African Cotton MY 2011/2012 Update on Selected Countries . . . . . . . . . . . . . . . 3 Burkina Faso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .. .. . . . . 3 Mali . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Cote d?Ivoire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Chad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .5 Senegal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Table 1: Seed Cotton Production: MY 2010/11 ? MY 2012/13 . . . . . . . . . . . . . . . . .. 6 Table 2: Official Farm Gate Price for First Quality Seed Cotton MY 2010/11 ? MY 2012/13 . . . . . . . . . . . .. . . . . .. . . . . .. . . . . .. . . . . . .. . . . .6 Production, Supply, and Demand Data Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 List of Acronyms . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9 Page 3 of 9 West African Cotton MY 2011/2012 Update on Selected 1 Countries Burkina Faso MY 2011/12 seed cotton production should increase 62,000 tons from MY 2010/11 (338,000 tons). Mali has surpassed Burkina Faso as top cotton producer in West Africa (See table 1). At the beginning of the campaign, the Government of Burkina Faso (GOBF) set the initial target for seed cotton production at 600,000 tons, but several factors prevented it from reaching its initial goal hampered by farmers? refusal to plant at the beginning of the season unless they received a 174 percent increase from last year?s 182 F CFA per kg. farm gate price. In addition, lack of rains and short duration prevented latest capsules from maturing which lead to cotton yield decrease expected to reach only 0.770 tons per hectare compared to 0.845 tons per hectare the previous year. On April, 4, 2012, Burkina Faso organized a 4-day meeting to address the sustainable recovery of cotton production to improve its contribution to the national economy. This event assembled more than 450 partners involved in the cotton sector including GOBF, donors, and private sector. It addressed: organizational and institutional arrangements in the cotton sector seed cotton farm gate price fixing mechanism and smoothing mechanism inputs supply procedures, pricing and credit Post expects MY 2012/13 farm gate cotton price and forecasts to be announced by end of April. Post understands that the draft of the biosafety law is being revised by the National Biosafety Agency (NBA) to incorporate comments from partners and slated to be adopted at the next national assembly session on April 19, 2012. However, Post has heard the deadline will likely be extended again. Mali MY 2011/12 seed cotton production increased considerably despite lack of rains and early cessation of rainfall. It is estimated to reach 445,000 tons, an 83 percent increase compared to the previous year (243,000 tons), making Mali the top cotton producer in West Africa this year (See table 1). Yield was lower than expected but higher than the previous year (0.933 tons compared to 0.852 tons per hectare). This campaign?s production increase is due mainly to efforts by the Government of Mali (GOM) and the Compagnie Malienne pour le Développement des Textiles (CMDT) to motivate farmers to grow more cotton by: 1 Includes Burkina Faso, Chad, Cote d?Ivoire, Mali and Senegal. Benin is now covered by FAS Lagos. (Note - For more information on the history and structure of the cotton sector in West Africa, refer to GAIN reports SG7011, SG7020, SG8001, SG8012 and SG8020 and http://gain.fas.usda.gov/RecentGAINPublications/CottonandProductsAnnual_Dakar_Senegal_3-25- 2011.pdf). Page 4 of 9 organizing a national forum on May 2011 and an awareness campaign to convince all cotton producers in the country to return to cotton production or increase area planted to boost seed cotton production in the country, increasing MY 2011/12 farm gate price by 38 percent to $0.51 (255 F CFA/kg.) compared to $0.37 (185 F CFA/kg.) in MY 2010/11. This lead to an increase in area harvested by 67 percent (477,000 ha in MY 2011/12 compared to 286,000 ha in MY 2010/11), subsidizing input prices ($25 for 50 kg fertilizer bag), increasing input subsidy prices, estimated at $38 million (19 billion CFA) for MY 2011/12 compared to $20 million (10 billion CFA) in MY 2010/11, settling all debts from MY 2010/11 of CMDT to its cotton producers and within farmer?s cooperatives before April 2011, and delivering total inputs before start of the campaign. For MY 2012/13, CMDT forecasts a 24 percent increase (550,000 tons) in seed cotton production. However, Post believes it may reach 500,000 tons in MY 2012/13, if rainy conditions are good. Seed cotton farm gate price for MY 2012/13 will be fixed at the same price as the previous year (255 F CFA ~ $0.51 per kg). CMDT has not completed the privatization process of its four subsidiaries. The bidding process started in 2010 and the Chinese company, Yue Mei, was selected last year to buy two subsidiaries located in the west (Kita region) and south (Sikasso and Bougouni regions). This had been slated to be completed by the end of this year, but this is uncertain. The two other subsidiaries located in the center (Fana region) and northeast (Koutiala and San regions) are not privatized. The government is planning to have a new tender and complete sales by the end of 2012 for either two subsidiaries or all four (if the negotiations with Yue Mei do not succeed). Given the current political and security situation in Mali, it is worth noting that cotton production lies in the government controlled portion of the country, and there is little foreseeable impact on the next marketing campaign. However, over the coming months, the situation could change and estimates revised accordingly. Cote d?Ivoire Cote d?Ivoire?s cotton production is the main source of revenue in the north and the center of the country and also has socio-economic impact. Since the crisis, the cotton sector, representing 7 percent of the agricultural export revenue in 2001, dropped dramatically from $200 million (100 billion CFA) in 2001 to $58 million (29 billion CFA) in 2009. The previous administration?s 2007 strategic plan to boost cotton production to 350,000 tons came up short of target. Page 5 of 9 The cotton sector has rebounded significantly, and the Government of Cote d?Ivoire (GOCI) expects to produce 240,000 tons in MY 2011/12 representing 37 percent increase compared to MY 2010/11 with a yield of 0.921 tons per hectare compared to 0.804 tons per hectare the previous year (See table 1). Since May 2011, the new president of Cote d?Ivoire, Mr. Alassane Dramane Outarra, has been working to reform the cotton sector. In Bales of June 2011, the farm gate cotton price was Ivorian cotton loaded for transport increased 26 percent compared to the previous (Source: FAS Dakar) year, the highest price in the region. Input prices were reduced by 25 percent for MY 2011/12 [$26.67 (12,000 F CFA) per 50 kg bag of urea; to $29.17 (13,125 F CFA per 50 kg bag of fertilizers)] representing government subsidies for $14 million (7 billion CFA). Subsidies were paid to cotton companies for $20 million (10 billion CFA) during MY 2008/09 and MY 2009/10. The 2011 registration fees $0.005 per kg (2.5 F CFA/kg) of exported fiber were suspended. These measures motivated farmers to return to cotton (70,000 to 73,000 farmers), increase area planted and seed cotton production for MY 2011/12. Post believes that GOCI can produce 300,000 tons in MY 2012/13 if farmers continue to be motivated. Chad In MY 2011/12, Chadian farmers were motivated to grow more cotton after the Government of Chad (GOC) settled all debts owed to farmers from the previous campaign. In addition, the MY 2011/12 seed cotton farm gate price increased after being fixed for many years [215 F CFA ($0.43)/kg. against 180 F CFA ($0.36)/kg.]. The newly formed cotton processing company Cotontchad SN, in which GOC is the main shareholder, is expected to process 70,000 tons of seed cotton for MY 2011/12 on 170,000 ha harvested (See table 1). Cotontchad SN forecasts a 43 percent increase to 100,000 tons for MY 2012/13. Consequently, MY 2012/13 fertilizers have been ordered on time, and half of it has already been delivered. The remaining is on its way and will reach the country before the campaign starts. Post believes that this forecast may be reached if farmers continue producing cotton with an attractive farm gate price. Senegal Page 6 of 9 Senegal was hit by lack of rains in MY 2011/12 which lead seed cotton production to fall short of its initial target of 50,000 tons. Only 20,000 tons were produced in MY 2011/12 representing only a 23 percent decrease compared to the previous year (26,000 tons). Yields decreased 22 percent (0.771 ton per hectare) compared to 0.944 tons per hectare in MY 2010/11 (See table 1). The area harvested also decreased 3 percent compared to the previous year and 26 percent compared to the 5 previous years. Post believes seed cotton production could reach 30,000 tons for MY 2012/13 if rainy conditions are good, and yield improves. Table 1: Seed Cotton Production: MY 2010/11 ? MY 2012/13 2010/11 2011/12 2012/13 2010/11 2011/12 2012/13 USDA Post and Post USDA Post and Post Official Government Forecast Official Government Forecast Production data Production Production data Production Production Production (000 Bales) (000 Bales) (000 Bales) (000 Tons) (000 Tons) (000 Tons) Burkina 400 Faso 652 772 869 338 450 Mali 445 470 858 965 243 500 Cote 240 d?Ivoire 337 463 580 175 300 Chad 70 100 135 193 52 100 Senegal 20 50 39 58 26 30 Total 1,610 2,267 2,664 834 1,175 1,380 *1 Bale = 480 lbs. (Source: FAS Dakar estimates and official country data) Table 2: Official Farm Gate Price for First Quality Seed Cotton MY 2010/11 ? MY 2012/13 Official 2010/11 Farm Gate Official 2011/12 Farm Gate Official 2012/13 Farm Gate Selected Price for First Quality Price for First Quality Price for First Quality Countries (F CFA) (F CFA) (F CFA) Burkina Faso 182 ($0.36) 245 ($0.49) Not determined yet Mali 185 ($0.37) 255 ($0.51) 255 ($0.51) Cote d?Ivoire 210 ($0.42) 265 ($0.53) Not determined yet Chad 180 ($0.36) 215 ($0.43) Not determined yet Senegal 205 ($0.41) 255 ($0.51) Not determined yet (Source: Official sources; $1= 500 F CFA; F CFA per kg) Production, Supply and Demand Data Statistics Burkina Faso 2010/2011 2011/2012 2012/2013 Market Year Begin: Market Year Begin: Market Year Begin: Aug 2010 Aug 2011 Aug 2012 Page 7 of 9 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 400 400 400 308 450 Beginning Stocks 169 169 140 141 38 Production 650 652 700 772 869 Imports 0 0 0 0 0 MY Imports from 0 0 0 0 0 U.S. Total Supply 819 821 840 913 907 Exports 675 675 625 870 860 Use 4 5 4 5 5 Loss 0 0 0 0 0 Total Dom. Cons. 4 5 4 5 5 Ending Stocks 140 141 211 38 42 Total Distribution 819 821 840 913 907 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA Mali 2010/2011 2011/2012 2012/2013 Market Year Begin: Market Year Begin: Market Year Begin: Aug 2010 Aug 2011 Aug 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 260 286 480 477 0 Beginning Stocks 92 92 92 77 50 Production 475 470 800 858 965 Imports 0 0 0 0 0 MY Imports from 0 0 0 0 0 U.S. Total Supply 567 562 892 935 1,015 Exports 450 460 600 860 915 Use 25 25 25 25 25 Loss 0 0 0 0 0 Total Dom. Cons. 25 25 25 25 25 Ending Stocks 92 77 267 50 75 Total Distribution 567 562 892 935 1,015 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA Cote d'Ivoire 2010/2011 2011/2012 2012/2013 Market Year Begin: Market Year Begin: Market Year Begin: Aug 2010 Aug 2011 Aug 2012 USDA New USDA New USDA New Page 8 of 9 Official Post Official Post Official Post Area Harvested 200 217 220 260 276 Beginning Stocks 160 160 148 42 55 Production 340 337 425 463 580 Imports 0 0 0 0 0 MY Imports from 0 0 0 0 0 U.S. Total Supply 500 497 573 505 635 Exports 302 405 300 400 510 Use 50 50 50 50 50 Loss 0 0 0 0 0 Total Dom. Cons. 50 50 50 50 50 Ending Stocks 148 42 223 55 75 Total Distribution 500 497 573 505 635 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA Chad 2010/2011 2011/2012 2012/2013 Market Year Begin: Market Year Begin: Market Year Begin: Aug 2010 Aug 2011 Aug 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 100 104 115 177 200 Beginning Stocks 23 23 18 18 18 Production 100 100 115 135 193 Imports 0 0 0 0 0 MY Imports from 0 0 0 0 0 U.S. Total Supply 123 123 133 153 211 Exports 90 90 75 120 180 Use 15 15 15 15 15 Loss 0 0 0 0 0 Total Dom. Cons. 15 15 15 15 15 Ending Stocks 18 18 43 18 16 Total Distribution 123 123 133 153 211 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA Senegal 2010/2011 2011/2012 2012/2013 Market Year Begin: Market Year Begin: Market Year Begin: Aug 2010 Aug 2011 Aug 2012 Page 9 of 9 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 27 27 40 27 32 Beginning Stocks 9 9 14 9 3 Production 50 50 77 39 58 Imports 0 0 0 0 0 MY Imports from 0 0 0 0 0 U.S. Total Supply 59 59 91 48 61 Exports 25 42 45 40 55 Use 20 8 20 5 5 Loss 0 0 0 0 0 Total Dom. Cons. 20 8 20 5 5 Ending Stocks 14 9 26 3 1 Total Distribution 59 59 91 48 61 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA List of Acronymes CMDT Compagnie Malienne pour le Développement des Textiles GOBF Government of Burkina Faso GOC Government of Chad GOCI Government of Cote d?Ivoire GOM Government of Mali
Posted: 27 April 2012

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