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Increasing incomes of Malian cotton farmers: Is elimination of US subsidies the only solution?

  • Baquedano, Felix G.
  • Sanders, John H.
  • Vitale, Jeffrey
Registered author(s):

    In a WTO battle and the press the argument is often made that eliminating US cotton subsidies would have a large effect on the incomes and competitive position of farmers in developing countries. In Francophone West Africa cotton productivity has stagnated after rapid gains in the first two decades following independence (1960-1980). A farm model was constructed based on farmers' definition of their decision-making framework which they use to respond to income and weather risks. With this model the effects on farmers of eliminating US subsidies are compared with various productivity increasing measures for cotton and sorghum in Dioila, Mali. Dioila is located in a representative cotton region producing 16% of the cotton in Mali. We include sorghum due to its importance for consumption and the observation of Malian farmers substituting cereals (sorghum and maize) for cotton as the returns to cotton have fallen in the 21st Century. In the farm model, the elasticity of transmission of a change in the world cotton price to the farm gate price is taken into account. The gains from eliminating US subsides are small. In contrast, the various technological alternatives including Bt cotton introduction, the use of higher fertilization levels for cotton, and the introduction of improved sorghum cultivars and moderate fertilization along with a marketing package all have substantially higher returns Even with substantial improvement in the mechanisms enabling farmers to benefit from the higher prices resulting from elimination of US subsidies, there are still much higher returns resulting from the various types of productivity increases.

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    File URL: http://www.sciencedirect.com/science/article/B6T3W-4YXMP5Y-2/2/b1bb27d1272b3d72b8152e56d26c387d
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    Article provided by Elsevier in its journal Agricultural Systems.

    Volume (Year): 103 (2010)
    Issue (Month): 7 (September)
    Pages: 418-432

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    Handle: RePEc:eee:agisys:v:103:y:2010:i:7:p:418-432
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    1. Baffes, John, 2007. "Distortions to Cotton Sector Incentives in West and Central Africa," Agricultural Distortions Working Paper 48526, World Bank.
    2. Kym Anderson & Ernesto Valenzuela, 2007. "WTOÂ’s Doha Cotton Initiative: A Tale of Two Issues," Centre for International Economic Studies Working Papers 2007-06, University of Adelaide, Centre for International Economic Studies.
    3. Jeffrey D. Vitale & John H. Sanders, 2005. "New markets and technological change for the traditional cereals in semiarid sub-Saharan Africa: the Malian case," Agricultural Economics, International Association of Agricultural Economists, vol. 32(2), pages 111-129, 03.
    4. Badiane, Ousmane & Ghura, Dhaneshwar & Goreux, Louis & Masson, Paul, 2002. "Cotton sector strategies in West and Central Africa," Policy Research Working Paper Series 2867, The World Bank.
    5. Felix G. Baquedano & John H. Sanders, 2006. "Introducing inventory credit into Nigerien agriculture: improving technology diffusion," Agricultural Finance Review, Emerald Group Publishing, vol. 66(2), pages 297-314, September.
    6. Abdoulaye, Tahirou & Sanders, John H., 2006. "New technologies, marketing strategies and public policy for traditional food crops: Millet in Niger," Agricultural Systems, Elsevier, vol. 90(1-3), pages 272-292, October.
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