africa – eu cotton partnership seminar on: cotton in africa seminar on cotton in africa trends,...

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Africa – EU Cotton Partnership Seminar on: Cotton in Africa Seminar on Cotton in Africa Trends, Incentives and Institutions: What works, What doesn’t work and Why? NGO & Private Sector Final Remarks Jonathan Edmonds TechnoServe Tanzania

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2 Each country needs to develop an Industry Strategic Plan (ISP) that assess demand & supply side of the economic equation and outlines an action plan for stakeholders to work together to increase industry profitability. We need to start with the end in mind…And focus on how we can maximize value for all stakeholders… Industry Strategic Plan 1.Who are our customers (current & future) and what is it that they need? 2.How can the national stakeholders work together to deliver the customer demand in a cost effective manner? 3.What regional and continental alliances can strengthen the overall African cotton product offering and drive economies of scale? Increase Revenue Increase price Maximize Stakeholder Value Increase Profitability Grow volume Manage (Decrease) Costs Ginner Costs Spinner Costs Farmer Costs Optimize Capital Working Capital Infrastructure Goodwill

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Page 2: Africa – EU Cotton Partnership Seminar on: Cotton in Africa Seminar on Cotton in Africa Trends, Incentives and Institutions: What works, What doesn’t work

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The true competition is not producer against ginner against spinner, nor is it West Africa versus East Africa, rather it is Africa against the rest of the world…

0

1

2

3

4

05/06 06/07, est. 07/08, for.

05/06 3,928 751 1,020 1,011 429 628

06/07, est. 2,830 960 980 933 283 480

07/08, for. 3,563 1,118 875 667 615 249

USA India Uzbek. CFA Zone Brazil Australia

Million tons

0

2

4

6

8

10

80/81 85/86 90/91 95/96 00/01 05/06

USA

Africa

World

Million tons

World Cotton demand has grown significantly over the past 25 years…

However, we have recently seen the demand for African cotton decrease…

Source: Africa’s Cotton in the World, ICAC & Gerald Estur

Page 3: Africa – EU Cotton Partnership Seminar on: Cotton in Africa Seminar on Cotton in Africa Trends, Incentives and Institutions: What works, What doesn’t work

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Each country needs to develop an Industry Strategic Plan (ISP) that assess demand & supply side of the economic equation and outlines an action plan for stakeholders to work together to increase industry profitability.

We need to start with the end in mind… And focus on how we can maximize value for all stakeholders…

Industry Strategic Plan

1. Who are our customers (current & future) and what is it that they need?

2. How can the national stakeholders work together to deliver the customer demand in a cost effective manner?

3. What regional and continental alliances can strengthen the overall African cotton product offering and drive economies of scale?

Increase Revenue

Increase price

Maximize Stakeholder

Value

Increase Profitability

Grow volume

Manage (Decrease)

CostsGinner Costs

Spinner Costs

Farmer Costs

Optimize Capital Working Capital

Infrastructure

Goodwill

Page 4: Africa – EU Cotton Partnership Seminar on: Cotton in Africa Seminar on Cotton in Africa Trends, Incentives and Institutions: What works, What doesn’t work

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The studies on what needs to be done are out there, now the challenge is to convert the findings into action.

Source: Comparative Analysis of Cotton Sector Reforms in SSA – Preliminary Results, Colin Poulton (SOAS, University of London) Leading Change – Why Transformation Efforts Fail, John P Kotter, Harvard Business School Press

SSA countries could increase revenues and benefits from cotton in the future, but subject to three major challenges:

• Achieving greater value through improved quality, marketing, and valorization of by-products,

• Bridging performance and competitiveness gaps through farm-level productivity and ginning efficiency, and

• Improving the sector’s sustainability through institutional development and capacity-building of stakeholders, as well as strengthening of governance structures and management systems. ”

Estimated Average Ginning Costs at 2006 Capacity Utilization Rates in Study Countries

0.00

5.00

10.00

15.00

20.00

25.00

cent

s/kg

lint

cot

ton

variable costs/kg of lint

f ixed costs/kg of lint

Source: company accounts (WCA), project interviews (ESA)

Total Labour Input into Group 1 Farms, mandays per hectare

0

50

100

150

200

250

man

days

transport of seed cottonharvestingspraying

herbicide + weedingtop dressing applicationthinning and gap filling

planting + basal fertilisermanureland preparation

clearing old plants

Source: project focus group exercises

Action Plan

• Establish a sense of urgency– Examine market & competitive realities

• Create the guiding coalition– Assemble a group with enough power to lead the

industry transformation– Define roles & responsibilities and behavior

• Develop a vision and strategy– Realistic short-term and long-term milestones– Performance targets

• Communicate strategy to all internal and external stakeholders

• Empower stakeholders to act on the vision– Strengthen capacity to achieve target– Equip stakeholder with necessary tools– Remove obstacles

• Generate short-term wins

• Institutionalize new approach in the industry culture

Page 5: Africa – EU Cotton Partnership Seminar on: Cotton in Africa Seminar on Cotton in Africa Trends, Incentives and Institutions: What works, What doesn’t work

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The writing in on the wall, all we need to do now is to turn the talk into action and realize the true value of the African cotton industry for all stakeholders – farmers, ginners, spinners, governments etc.

Coordination Cooperation

Trust

Team WorkCollaboration

Leadership

Common Language

Fact Base

VisionCreative

Innovation

R&D

Discipline

Commitment

ActionNetwork

Marketing

Integration

Page 6: Africa – EU Cotton Partnership Seminar on: Cotton in Africa Seminar on Cotton in Africa Trends, Incentives and Institutions: What works, What doesn’t work

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