|
Welcome
to AFRICABIZ, 
Welcome
to Africabiz Online Synopsis
RSS Feed edition. Previous issue available at this
link
Dear faithful reader,
THERE
IS NO REASON TO EXULT ABOUT WTO RULING AGAINST COTTON SUBSIDIES
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.
Indeed,
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.
THE
DECLINE OF THE INTERNATIONAL PRICE OF COTTON IS STRUCTURAL
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.
WHICH
SOLUTION THEN? TO PROCESS AGRICULTURE'S RAW MATERIALS TO HIGHLY ADDED-VALUED PRODUCTS
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
Click here to get email address
|
| Business
Opportunities
TROPICAL ROOTS AND
TUBERS (PART VII): B- MONETARY EVALUATION OF GARI POTENTIAL
MARKET IN AFRICA
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.
Adobe
Acrobat Reader Is Available here
Control Your Desktop
YOU NEED THE RIGHT CODECS FOR YOUR DVD PLAYER
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:
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.
REMARK: 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.
|
