WT/CFMC/W/64 15 October 2015 (15-5417) Page: 1/6 Original: French DIRECTOR-GENERAL'S CONSULTATIVE FRAMEWORK MECHANISM ON COTTON COTTON PROJECT Communication from Benin The following communication, dated 17 September 2015, is being circulated at the request of the delegation of Benin. _______________ The Permanent Mission of the Republic of Benin is submitting the project below, prepared by the Government of Benin, with a view to receiving technical and financial assistance from the cotton sector development partners in the framework of the Director-General's Consultative Framework Mechanism on Cotton. 1 PROJECT FOR THE REORGANIZATION OF THE COTTON SECTOR THROUGH ZONING IN BENIN 1.1 Context and justification 1.1. The Government of Benin has opted for an economic growth policy involving the diversification of agricultural activities. Hence the country's strategic development orientations and its growth strategy for poverty reduction in which the agricultural sector serves as a lever in the fight against poverty. The Strategic Plan to Revive the Agricultural Sector (PSRSA) 2011-2015, whose priority focus is the promotion of agricultural activities, calls for the development of 13 subsectors, which include cotton. 1.2. Indeed, for some 30 years now the cotton sector has played a leading role in the national economy. As the leading creator of wealth and jobs, it is one of the pillars of economic growth in Benin and is vital to the improvement of rural household income. Cotton represents 13.5% of Benin's agricultural production and accounts for 5% of the value added of the industrial sector and 33% of exports. 1.3. In spite of this potential and in spite of the reforms introduced in accordance with the country's economic policies, there has been a downward trend in domestic production since 2010. Having reached a peak of 427,156 tonnes of seed cotton during the record season of 2004-2005, annual cotton production fell below 200,000 tonnes during the 2009-2010 season, bottoming out at 136,958 tonnes at the end of the 2010-2011 season, in spite of the implementation of the Project to Improve and Boost the Cotton Sector in Benin (PARFCB). 1.4. This fall in production in one of the leading sectors of the national economy led to a sharp decline in domestic resources and export revenue, coupled with the negative impact of a decline in income affecting above all the rural areas and the small producers. At the same time, a number of inefficiencies emerged in the cotton sector during the 2011-2012 season. WT/CFMC/W/64 - 2 - 1.5. Reacting to this situation, the State provisionally resumed control, as from the 2012-2013 season, over the management of the cotton sector pursuant to the decisions adopted by the Council of Ministers on 29 April 2012, namely: (i) repeal of the decree on the transfer to private operators of responsibility for organizing consultations on the supply of agricultural inputs, and (ii) suspension of the framework agreement between the State and the AIC (Interprofessional Cotton Association). The objective was to regain the confidence of cotton farmers and to restore cotton production. 1.6. In spite of the problems inherent in operationalizing the palliative mechanism that characterized the former interprofessional management structures, seed cotton production progressed significantly, reaching 240,028 tonnes in 2012-2013, 307,355 tonnes in 2013-2014, and already more than 380,000 tonnes for 2014-2015. 1.7. In order to maintain this growth trend, a new, inclusive institutional framework will have to be set up to manage the sector. 1.8. Hence the project for the reorganization of the cotton sector, intended to bring about a comprehensive and extensive reform that can bring together all of the cotton sector stakeholders in an effort to strengthen a sector whose impact on economic growth has been amply demonstrated. 1.2 Potential action areas and target groups 1.9. In principle, the project covers the entire country, but should focus its activities on the cotton producing areas, i.e. mainly the regions of Alibori, Borgu, Atacora, Donga, Collines, Zou and a few communes in South Benin. 1.10. The target groups are: the producers, the distributers of inputs, the ginners, the traders and the State. 1.11. In the context of the reorganization of the cotton sector, the target groups are the different stakeholders in the sector, in particular the producers (National Federation of Village Cooperatives of Cotton Producers); the ginners; the oil extractors; the spinners; the importers/distributors of inputs; and the transporters. 1.3 Objectives 1.3.1 Overall objective 1.12. The overall objective of the project is to secure the development of the cotton sector in Benin. 1.3.2 Specific objectives 1.13. The specific objectives are: a. to create a sustainable participative/inclusive management framework for the sector; b. to improve productivity and production to cover the processing capacities of the ginning plants in Benin; c. to introduce a permanent transparency and traceability mechanism so as to ensure a fair redistribution of income to the different stakeholders groups; d. to create favourable conditions for improved local processing of cotton products. WT/CFMC/W/64 - 3 - 1.3.3 Results 1.14. The main results to be expected are: a. For the producers: i. availability and accessibility of quality inputs; ii. reinforcement of the professional organization; iii. guaranteed involvement of producers in decision making at every stage of the process; iv. guaranteed inclusion of producers among the shareholders of the semi-private and private ginning companies; v. availability of crop loans; vi. increase in producers' output and income. b. For the ginners: i. increase in raw materials and income; ii. proper conditions for ginning and decent sale prices; iii. guaranteed transparency in the management of the cotton sector. c. For the State: i. re-establishment of the State's authority in the management of the sector; ii. renewed confidence among the different stakeholder groups; iii. guaranteed representation of all of the players in the sector's interprofessional organization; iv. increased production and improved productivity; v. increase in the income of stakeholders; vi. improved processing of cotton products; vii. availability of a producer income support mechanism. 1.4 Overview of zoning and the role of the different players 1.15. In order to meet the objective of ensuring a balance among production zones without disregarding the specificities, we propose the four following zones: Zone 1: Banikoara, Ségbana, Karimama, Malanville, Kandi and Gogounou Estimated production potential: 156,000 tonnes. Total ginning capacity: 88,000 tonnes (one plant in Benikoara and two plants in Kandi). WT/CFMC/W/64 - 4 - Zone 2: Bembèrèkè, Kalalé, Nikki, Pèrèrè, Tchaourou, Parakou, Sinendé and N'Dali Estimated production potential: 85,000 tonnes. Total ginning capacity: 250,000 tonnes (one plant in Bembèrèkè, one plant in Nikki, one plant in N'Dali and three plants in Parakou). Zone 3: Kouandé, Tanguiéta, Péhunco, Matéri, Cobly, Ouaké, Boukoumbé, Toucountuna, Kérou, Natitingou, Copargo, Djougou and Bassila Estimated production potential: 82,000 tonnes. Total ginning capacity: 25,000 tonnes (one plant in Péhunco). Zone 4: Ouèssè, Bantè, Savalou, Glazoué, Savè, Dassa, Bohicon, Abomey, Agbangnizoun, Zagnanado, Djidja, Covè, ZaKpota, Aplahoué, Djakotomey, Dogbo, Klouékanmé, Lalo, Toviklin, Lokossa, Kétou, Pobè and Adja-Ouèrè Estimated production potential: 60,800 tonnes. Total ginning capacity: 224,500 tonnes (two plants in Savalou, one plant in Glazoué, one plant in Paouignan, two plants in Bohicon, one plant in Avogbanna, one plant in Kétou, one plant in Hagoumé). 1.16. Roles and responsibilities will be shared between the State and the players involved in the new organization of the sector as follows: a. The role of the State will be to ensure: i. the maintenance of rural tracks by introducing an appropriate mechanism involving contributions from all of the sector's stakeholders; ii. the introduction of an efficient agricultural extension/advisory system; iii. the development of research work; iv. the production, certification and distribution of cotton seed with the establishment of a new ginning and delinting plant; v. the control and certification of phytosanitary products; vi. certification of the price of seed cotton; vii. quality control of seed cotton; viii. quality control and classification of cotton fibre; ix. the permanent monitoring of compliance with the rules and regulations of the sector; x. the introduction of an income support mechanism; xi. the follow-up of the organization of primary marketing; xii. the collection and production of statistics. b. The private stakeholders, including the producers, will have the following role: i. production of seed cotton; ii. marketing of seed cotton; WT/CFMC/W/64 - 5 - iii. production, importation and distribution of inputs; iv. transport; v. ginning; vi. spinning, weaving; vii. oil extraction and any other forms of processing of seed cotton and byproducts; viii. marketing of finished products; ix. more generally, the supply to the sector of goods and services that are unconnected to government services. c. In addition, the States and private operators will be sharing the following functions (non-exclusive): i. funding of cotton research; ii. maintenance of rural tracks; iii. follow-up/support/advice for producers; iv. setting seed cotton prices; v. follow-up/evaluation. 1.5 Implementation strategy 1.17. An organizational mechanism has been set up to implement the project to reorganize the cotton sector, and a road map has been prepared. 1.18. Specifically, a production zone will be assigned to a cotton company responsible for the promotion and regional development of the cotton sector, based on an agreement with the State in conformity with the institutional framework for the management of the cotton sector in the Republic of Benin. It is clear, however, that the success of the zoning will require political will on the part of the government, the cooperation of stakeholders, and permanent consultations.