Trading And Investing In & Out Africa

MAY 15 - JUNE 14, 2004

Dr. Bienvenu-Magloire Quenum
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On April 26, 2004, a World Trade Organization (WTO) panel ruled U.S. cotton subsidies violate international trade rules. The decision hands a potentially major victory to developing countries about the problem of subsidies granted by major players of the international trading (The United States of America and the European Union) to American and European producers of agricultural products and particularly to cotton's growers. Remember, the subsidies' issue was one of the main reason Cancun WTO Round of Negotiations (September 10-14, 2003) collapsed.

the ruling concerns one of the most contentious issues between rich and poor countries. It deals with the huge subsidies (amounting to US$ one billion per day!) paid each year by the United States, the European Union and Japan to their farmers. These subsidies that give incentives to farmers to plant greater amounts of crops than they would otherwise, create production's gluts on cash crops commodities' world markets that depress prices and deprive farmers from sub-Saharan Africa, Latin America and South Asia's regions to earn a descent living.

Therefore, the ruling issued by WTO on April 26, 2004 sounds like a victory for the developing countries.

However, is that ruling a true victory for developing countries? Or is it a false victory?
There is much more to say about it.

First, the ruling is not yet final. It is an interim ruling that needs confirmation through lengthy and tortuous negotiations between the two parties: the developed world and the "poor dwellers of the world".

Years and years will pass by before the ruling is final and binding. US had already vowed to fight and initiate challenging Appeals that will certainly delay the final decision to ending the subsidies "lavishly" granted to American farmers. US Trade Representative Robert Zoellick declared - on April 28, 2004 - to a House Agriculture Committee's hearing, the appeals process will protect the subsidy system: "There is no immediate impact for farmers and ranchers around the country," he said. "This is a marathon, it is not a sprint." (Source: Associated Press)

Second, let us further scrutinize cotton's international market to analyze the usefulness of the WTO ruling against subsidies.

A string of factors do influence the offered world's purchasing price of cotton. Namely:

a) The levels of production and demand worldwide.
b) The price of artificial fibres - increasingly used as substitutes to cotton.
c) The subsidies granted to their producers by a major producer - the United States of America.

All that said, the main cause behind the drop of cotton's price on the international marketplace is the harsh competition from artificial fibres.


Indeed, according to the Chief Executive of the International Textile Manufacturers Federation (ITMF) the consumption' share of cotton in the global supply of fibres (natural and artificial) had gradually declined over the past 60 years from 60% to 40% nowadays.

Thus, even if in the future an eventual WTO ruling ever yields "positive results" for poor countries (that produce cotton fibre), those would be only reprieves. The same if the compensation scheme provided for by Article 68 of the European Union-ACP Cotonou-Agreement is used.

Indeed, the dropping price of cotton on the international marketplace is structural, closely linked to the competition exercised by artificial fibres that is nibbling cotton' share, year in year out. The question remains to see if that loss of market share will stabilize or worsen. Only a thorough market study of the global international market of fibres could give a precise picture about the trend for the coming years. Further, just reading the trade's press renders one "pessimistic" about the future of cotton produced by developing countries because developed world's professionals increasingly think that: Technical Fibre Innovations May Be the Key to Survival for Companies in High Cost Countries. Click here to search "Textile Intelligence" for the full article

Thus, any "remedy" to stopping Cotton's price nosedive that will not consider the competition exercised by artificial fibres will not resolve anything.

African countries' producers would be just moving between bad and worse if they bank on WTO ruling that deals only with the problem created by subsidies granted by the developed world's governments to Northern Hemisphere's farmers. And finally the day of reckoning will come down heavily on them.

The local industrial processing of the raw material (cotton fibres) might provide regular and "stable" revenues to African producers. However, even that option is only a temporary reprieve.


The deliberations in above paragraphs about Cotton lead us to consider the problem of the extreme dependency of African traditional cash crops to external markets.

Indeed, 90% to 99% of cash crops (coffee, cotton, cocoa, timber - to name the few most important) are exported as bulk raw materials because rare are industrial units set up in Africa to process them into high-added valued products such as: chocolate bars, ground coffee, woven textiles, furniture and food products.

However, let us remark that even the industrial processing (in Africa) of the traditional cash crops will not grant them the characteristics pertaining to "economic catalysts" as here defined.

Indeed, these traditional cash crops do not and cannot fulfill the first condition: To provide Cash to farmers - on a progressive manner - monthly preferably and in national currency. Currently, farmers have to wait up to one year from harvest to earn revenues.

To be in the position to reverse the nosedive trend of traditional cash crops on the international marketplace, African countries need to diversify agricultural productions and process resulting crops into high-added valued products.

The quickest they act, the best because "salvation" would not come from the "international community" as proved by the successive failures of WTO Rounds of negotiations - Seattle-1999, Doha-2001 and Cancun-2003.

African countries will gain more turning around their economies if they diversify their agricultural productions and locally process the crops instead of attending - every three years - gigantic international meetings, which concept and the high number (2,000 to 5,000) of participants make it impossible to reach any "fair" agreement.

Further, the major players in international trading - the United States of America and the European Union - are not willing to give away part of their market shares. That is normal.

One cannot expect a wealthy merchant willfully handing over hard-won markets' shares to a new- comer. Yet, that is exactly what the poorest countries are trying - since decades - with the United States of America and the European Union. It will not work.

The more SSA countries wait - begging Northern Hemisphere's countries to give them pieces of the pie - the more they are wasting precious time to reorganize their economies and become competitive traders on the international marketplace.

You will certainly agree that a new comer to the international trade, in any line of business, has to fight to gain market' share as the Asian tigers did. They strove to supply to the world at large products of good quality at competitive prices because, at the end of the trading, what matters to consumers boils down to the quality and price of the product on sale.

Consumers do not buy any product to make a "poor" seller a rich merchant. They buy simply because the product is of good quality and affordable (for their wallet).

"CONTRIBUTOR'S GUIDELINES" are available here. We invite you to contribute to AFRICABIZ ONLINE MONTHLY ISSUE - with articles related to "How Africa Could Bridge The Developing Gap".

Many thanks for subscribing to Africabiz. See you on June 15, 2004.

Dr. B.M. Quenum
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Business Opportunities


Starting from Issue 60, four deliveries (A - Introduction B- Market C - Plantation's creation and D - Medium-scale industrial production unit) deal with the production of a granulated cassava flour that is a popular food in Africa: GARI

The conservatory Gari's market in the main consumption area here outlined gives a total of 5,697,275 metric tons of Gari - produced by traditional methods - per annum - for a population of 186,138,000 people pertaining to following countries: Nigeria, Benin, Ghana and Togo.

At the average current pricing of Gari in the area (US$ 180 per metric tons "ex-works") that production amount represents a market value of US$ 1,025.460 billion.

Considering first, the "readiness" of the flour to be used as diet's complement (for a variety of African sauces and cooking); and, second, the long conservation's period (up to one year in dried and normal atmospheric conditions) - it is possible to expand the consumption's area to covering Central, Eastern and Southern African countries.

Taking into account the population level in sub-Saharan Africa (680 million people in 2003) one calculates there is a huge Gari market in Africa. A minimum of 20 millions metric tons of Gari per year for a minimal market value (ex-works) of US$ 3,750 billions.

1- Roots & Tubers Market in Qatar
2- Roots & Tubers Market in Europe
3- Food Security: In Sub-Saharan Africa
In Latin America and the Caribbean
4- Roots and Tubers: A Vegetable Cookbook
by Kyle D. Fulwiler
Tuber Crops
by N. M. Nayar

6- Roots, Tubers, Plantains and Bananas in Animal Feeding
Proceedings of the Fao Expert Consultation Held in Ciat, Cali, Colombia 21-25 January 1991
7- Pest Management for Tropical Roots & Tubers Workshop on the Global Status of and Prospects
8- The Tropical Tuber Crops
Yam, Cassava, Sweet Potato, and Cocoyams by I. Chukuma Onwueme

Adobe Acrobat Reader Is Available here

More on Gari's market

Control Your Desktop


Most of computers are now bundled with a DVD player. Some are combo of DVD and CD-R and all the flavors of CD players here outlined

Sometimes, particularly under Windows XP, the DVD or Combo is not recognized by the operating system. Consequently, the Combo or the standalone DVD player fails playing DVD movies. So you may need to download the right CODECS - Coding Decoding Software to solve the problem.

Things are complicated because most often DVD disks are not encoded the same way that is using one and unique CODECS. There are many and several CODECS around and if you miss the right one your DVD device cannot perform. What to do? Update your CODECS library visiting:

1- Microsoft Codecs updating page.
2- This specific site or
3- This one that gives links to free Codecs

However, you should be careful not packing your system with redundant Codecs from several developers. How to achieve that? There is a piece of utility called GSpot that help you spot the right CODECS for a particular DVD. Drag any *.avi or DivX video into GSpot and it will tell you which audio and video codecs were used to encode the video.

Get GSpot and save yourself the time of loading unnecessary codecs. It is free.

When on the website scroll down to make sure you download Version 2.21. The stable version and not the Beta Version 2.5 at the beginning of the page.

More  on DVD and CODECS

Freebie Of The Month


Search engines' war is raging. Microsoft MSN, Yahoo!, Google to name only the big players.

The gorillas are offering for Free Search-Bar Add On to the browser. Well, well, which one to choose? They are all good stuffs. However, in our opinion, it is a small player (as always!) that is offering the best Search-Bar. To compete with the gorillas, Advanced Searchbar is giving away its Search-Bar normally priced 19 bucks.

If you want to have the best, give a try to Advanced Searchbar's Search-Bar. You will keep it. No doubt. It comes packed with the possibility to querry 60 search engines. That only is already a must. Further, there are other goodies.

No much talk. Just get it
. It works perfectly with other gorillas' clients from MSN, Yahoo! or Google.


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