Increasing Cotton Farmers Incomes in Mali West Africa: Eliminate Subsidies in DevelopedCountries or Productivity Increase in Mali?

Abstract

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 African cotton production productivity has stagnated after rapid gains in the first two decades after independence (1960-1980). Constructing a farm model based upon farmers’ definition of their decision making framework we compare the effects of the elimination of US subsidies with various productivity increasing measures for cotton and diversification in Mali. In the farm model we take into account the elasticity of transmission of a change in the world cotton price to the farm gate price. The gains to eliminating US subsides are very small unless the transmission elasticities of world cotton price to the farm gate price are substantially increased. In contrast the various technological alternatives including Bt cotton introduction, the use of higher and more regionally defined fertilization levels for cotton, and the introduction of a new technology and marketing package for sorghum all have substantially higher returns for the cotton farmers in the West African site of Dioila, Mali. Even with substantial improvement in the mechanisms enabling farmers to benefit from the higher prices of the elimination of US subsidies, there are still much higher returns to the various types of productivity increases. Maybe West Africa needs to act more now on increasing their productivity as protracted trade negotiations continue.