A USDA review of the agricultural situation in Benin has highlighted the challenges faced in the cotton sector, which accounts for “nearly 40% of GDP and roughly 80% of official export receipts”. According to USDA, Benin, which was a leading global producer of cotton between 2004 and 2006, has since experienced “a sharp fall in production and exports and has not been able to recover its former output levels”. Production in 2010/11 was “less than one-third of the installed ginning capacity of 620,000 tonnes”, while “production of cotton lint was less than half of the level recorded in 2004/2005.”

According to USDA, cotton production in 2011/2012 reached 174,052 tonnes. In 2012/13, “the government set the cotton farm gate price of 260 CFA francs (US$0.51) per kg…, up from 250 CFA/kg last season and 200 CFA/kg the season before, in an attempt to stimulate more planting.” Increased planting in the 2012/13 season was projected to lead to a 50% increase in production. However, the start of the 2012/13 season was delayed by input supply problems. According to USDA, “early reports had 225,000 tonnes of cotton… ginned from the estimated cotton production for the 2012/2013 campaign”, a 29.3% increase over production in 2011/12. Input supply problems continued into the 2013/14 season, leading the IMF to caution the government over “the need for a cotton processing management system that is more responsive to market conditions”.

Benin is now in the process of establishing a new policy framework for the cotton sector. As a part of this, in mid 2013 the Association Interprofessionnelle du Coton (the cotton sector inter-trade association) lost its role as the key input supplier and facilitator of financing. The new framework seeks to set out “new terms for public–private partnerships”. To date, the reforms initiated have included “making sure that producers/farmers are fully paid for the previous year’s crop, consolidating [farmer] organizations, creating village cooperatives, providing capacity building to small producers, and fortifying input committees to reach the goal of 600,000 tonnes of seed cotton production in the next 5 years”.

The Benin government has also taken over the export of cotton and cotton seed and now pays ginners “a fixed fee of 50 CFA/kg for processing”. However, since ginners wanted twice this amount and had previously handled all exports, this has disrupted the normal functioning of commercial relations in the sector. As a consequence, according to USDA, “the government is now faced with the challenge of rebuilding both production and exports with a dissatisfied ginning industry”.

Concerns that these domestic difficulties could be compounded by developments in global cotton markets may now be receding. The long-anticipated announcement in January 2014 by the Chinese authorities that “the state would no longer support a strategic reserve for cotton” was widely expected to reverberate through global cotton markets. However, the Chinese authorities are firmly committed to an orderly policy change, and no dramatic price declines have occurred to date. Indeed, it appears that the price gains since November 2012 have been sustained into 2014, despite the projected 4% contraction in global cotton trade arising from the decline in Chinese import demand.