Pro-Poor Agricultural Development? Linkages between Cash Crops and Food Crops –
Evidence from Ivory Coast and Cameroon
Anneke Voss, GIZ
Stefan Kachelriess-Matthess, GIZ
Roger Peltzer, DEG
Yacouba Toure, Ivoire Coton
Patrice Amon Bognan, Ivoire Coton
Fernand Sadou, Sodecoton
Introduction
Agriculture in Sub Saharan Africa (SSA) is characterized as a semi-subsistence, low-input and lowproductivity farming system (Jayne et al., 2004). The majority of African people farm on small plots of
land of less than two hectares in size and plan their output primarily for their own subsistence (Todaro
and Smith, 2011; Rauch, 2011). The established agricultural system of shifting cultivation worked well
to meet subsistence food requirement as long as the population size remained relatively stable
(Todaro and Smith, 2011). Nowadays population growth, migration, and wars are changing the
geographic distribution of the population and are putting pressure on the traditional slash-and burn
agricultural practices (Demont and Stessens, 2009). The majority of African countries depend on food
imports, as they were not able to expand their food production at the same path as population growth
and thus hunger and malnutrition are widespread (Rauch, 2011).
Whereas South Asia was able to increase its yields by more than 50% and poverty declined by
30% since the mid 1980-s, these figures remained more or less unchanged in SSA (World Bank,
2007). While South Asia increased 80% of its cereal production by increasing yields, SSA’s production
augmentation can be largely explained by an area enlargement no longer applicable as most of the
high-potential farmland is under cultivation (Kydd et al., 2004; Govereh and Jayne, 2003). In addition
the expansion was accompanied by a slight fall in fertiliser consumption because of an increase of
input prices due to a removal of subsidies and exchange rates devaluation (Kydd et al., 2004; Poulton
et al., 1998). The lack of fertiliser, increasing population growth, shorter fallows and the expansion to
more fragile land leads to today’s problem of soil degradation. This decline in soil fertility explains a
large part of Africa’s low yields (World Bank, 2007). The described poor agricultural performance is
among many reasons one explanatory factor for the high levels of poverty in SSA and its disappointing
performance in economic growth (Kydd et al., 2004). Africa has to raise the productivity of the
agricultural sector, in particular raise food crop yields which play a crucial role for poverty alleviation,
by financially and sustainably intensify the existing cropland (Govereh et al., 1999; Jayne et al.; 2004).
Implementing policies that address the rural economic development by enhancing smallholders’
agricultural productivity have proven to be a particularly successful strategy for poverty reduction and
economic growth. Asian countries, like China, Malaysia and Thailand, all followed strategies to
intensify smallholder-based agriculture which increased their productivity and resulted in poverty
reduction today known as the Green Revolution (Hazell et al., 2007; Birner and Resnick, 2010).
Smallholders are particularly important due to two reasons: one is efficiency due to the inverse
relationship between farm size and production per unit of land. The other one is equity and poverty as
small farms are mostly operated by poor people using family or rural labour. They also have more
favourable expenditure patterns for promoting growth in the local nonfarm economy (Hazell et al.,
2007). However they face higher unit transaction costs in almost all non-labour transactions including
input markets and credit services. Therefore they are relatively more constrained adopting new
technological innovations like mechanization, hybrid seeds and biotechnology compared with larger
farmers (Gebremedhin et al., 2009, Barrett et al., 2010). Cash cropping arrangements, including
extension services and interlocking input-credits can lower these transaction cost barriers that are a
hurdle for small farmers (Demont and Stessens, 2009). Especially under poorly functioning credit and
1
input markets they might represent one potential way to intensify smallholder’s crop production and
enhance the overall farm productivity.
This paper will investigate the possible linkages between cash and food crops. It will do so by
looking into the cash crop promotion schemes of two African cotton companies in Ivory Coast and
Cameroon and analyse their impact on food crop production due to the supply of fertiliser. The paper
is structured as follows: First it will give a short explanation of interlocking arrangements to then
discuss the existing literature on the relationship between cash and food crops. Then it will explain the
methodology of the research conducted and explain the particular cash crop schemes of the two
countries. Afterwards the results of the research will be discussed to then give the conclusion.
Interlocked-Input Credits
Interlocked transactions are a form of contract between a commission agent or marketing company
and a farmer. The company provides the farmer with seasonal inputs on credit, using his expected
harvest of the crop as a collateral substitute to guarantee loan repayment. It can do this because it
possesses some knowledge over the farmer’s production activities, often due to extension services, or
can excess some power over the farmer’s harvest. The farmer commits himself to sell the harvest to
that company and the loan will be settled with the crop sale. The credit limit is typically set by the
marketing firm using the farmers post harvest value and the credit is paid back at the end of the
season at harvest time. Therewith the previous year’s price of the crop is positively associated with the
maximum credit limit and the possibility to receive credit in the current year (Jayne et al., 2004;
Dorward et al., 1998).
Interlocked transactions are mutually benefiting both parties of the contract as they lower
transactions costs. The trader guarantees himself a certain market output and reduces searching
costs for farmers willing to sell at the end of the season. The farmer on the other hand obtains access
to credit for inputs they could otherwise not obtain on the particular contract conditions or not at all
from other sources. Only a small minority of peasants have sufficient savings to buy suitable quantities
at the start of the growing season and the majority require credits in order to purchase the needed
inputs (Poulton et al. 1998: 87; Dorward et al., 1998). The financial sector is often not willing to lend to
small farmers as the business is seen to be too risky. This is because property rights are
unambiguously allocated to farmers so that land is mostly not adequate to serve as collateral and
farmers lack other assets being acceptable to lenders. Besides there is a lack of crop insurances that
could secure the volatile end-of season harvest to the financial institution. In addition high covariance
of yield risks, one bad season will adversely affect all farmers in the area, and because of information
costs within one locality such insurances do not develop. Also agricultural loans are characterised by
seasonality and synchronicity, meaning that in a given rural area most loans will be required at the
same time mostly at the beginning of the cropping season when depositors also wish to withdraw their
deposits (Dorward et al., 1998). Thus the cash crop marketing companies in a way facilitate a rural
financial market with their interlocked-input credits (Demont and Stessens, 2009). In addition cash
crop production tied to interlinked transactions and service provision has proven to be quite successful
to generate income for millions of farmers (Hounkonnou et al., 2012).
Why are such extension services and interlocked-input credits not provided for food crops as
well? Commercialisation programs for food crops have seldom been established due to the
characteristics of food crops and their market structure. Food crops can be stored and processed on
the farm itself for longer periods than cash crops posing greater difficulties for the company to ensure
delivery (Govereh et al., 1999). Additionally the number of potential buyers is so large that
coordination and cooperation among the purchasers breaks down. Hence recovering loans and upfront service costs becomes extremely difficult. In Kenya for example cash crop marketing firms
accounted for 83% of the agricultural input loans provided to small producers in contrast to 3% of input
loans for food crops by a parastatal finance corporation (Jayne et al., 2004).
However, if these interlocking schemes are not designed properly several problems can occur.
Opportunistic producers may decide to use the inputs for their food crops or sell them to other farmers,
or their harvest to other trades. The problem of side-usage of inputs is worse for fertilizers, as
alternative uses and demand is greater than for pesticides and herbicides. This diversion of inputs
2
leads to a lower cash crop yield than expected and calculated by the cash crop marketing firm and
farmers typically risk being black listed by the company and not allowed credit in the next season
(Jayne et al., 2011; Dorward et al., 1998). The problem can be overcome by cooperation and
coordination among the buyers.. The problem of side-usage can be solved by additionally providing
input credit for food crops, which is part of some interlinked credit programs. Cash crop companies
that can limit the incentive to breach the interlocking arrangement are more successful in establishing
synergies between cash crops and food crops (Govereh et al., 1999; Jayne et al., 2004).
Linkages between Cash Crops and Food Crops
In 1989 Maxwell and Fernando tried to give a first and so far only comprehensive overview over the
“cash crop versus food crop debate”. The proponents say that cash cropping will contribute towards
growth and employments whereas the opponents say that it will have negative drawbacks on food
security concerning the distribution and dependency on food imports. Maxwell and Fernando
concluded that both extreme positions are flawed and that the “food first” lobby denies the positive
effects for sustainable growth and the “cash crop” lobby the short term negative effects for distribution,
nutrition and the environment (Maxwell and Fernando, 1989).
The comparative advantage literature says that the increased income, due to cash crop
cultivation, will relax the household’s budget constrained and thus increase the allocation of food
purchases. This theoretical assumption might be flawed as a study of tobacco liberalization in Malawi
shows, because the theory assumes that households will change their expenditure and consumption
behaviour. The study of 410 households affirms that tobacco households had higher income than their
non-cash crop counterparties and with increasing tobacco income the value of food purchase
increases. But their per capita calorie intake was lower compared to the food crop households. Either
cash crop households spend the additional income on foods with relative low caloric content or cash
crop revenue influences the budget constraint in a different way than theory assumes. Cash crop
revenue is a lump-sum income tying up farm household’s resources over much of the cropping season
and coming with a considerable time lag after harvest. Household’s ability to smoothen consumption is
therewith hampered and the income is more likely used to buy durable consumption or make
investments rather than spend it on additional alimentation (Masanjala, 2006). Furthermore, it is
mostly male headed households controlling the additional cash income, who are more likely to use it
for non-food items rather than food purchases. Moreover peasant households are not used to save
such relatively large sums of cash and efficient saving measurements especially in rural areas do not
exit. Therefore households find it difficult to stretch or save the income to purchase food in the future
(Kiriti and Tisdell, 2003).
The direct positive income effect might be questioned though the increased income can have an
indirect impact on food security. Under the prevalence of poorly functioning credit markets cash crop
income is a vital source to accumulate capital to purchase productivity-enhancing farm assets such as
oxen, animal traction equipment or draught power (Govereh and Jayne, 2003; Dorward et al, 1998).
Agricultural mechanisation contributes to food crop production in two ways. On the one hand it relaxes
the labour and land constraint allowing for an area expansion. On the other hand it can improve yields
because of on-time land preparation, planting, and weeding (Govereh and Jayne, 2003). In addition
cash crops are generally accompanied by the use of improved technologies, such as hoes and
seeders that allow the household to expand its cultivatable frontier (Goetz, 1993). Demont and
Stessens (2009) found that farmers often first had to adopt the cash crop, in order to generate
sufficient financial resources, before they adopted animal traction (Demont and Stessens, 2009). In a
study of cotton farmers in Zimbabwe peasants not growing that cash crop had less than half the draft
equipment and other physical assets as the rest of the sub-sample of animal tillage users, the cotton
producers (Govereh et al., 1999).
Moreover, a viable and sustainable cash crop marketing arrangement can intensify food crop
production by establishing an access to inputs. This condition is even stronger under constraint access
to farm credit or limited working capital (Govereh and Jayne 2003: 41; Govereh et al. 1999: 3).
Therewith the absence of credit and input markets in rural areas can make the decision to grow cash
crops non-separable from the demand of inputs for food crops (Govereh et al. 1999: 7-8). Cash
3
cropping is positively associated by higher input use not only on the cash crops, but also on food
crops. Jayne et al. found out that for the entire sample of their studied farmers in Kenya, the fertiliser
nutrient use on their food crops increased by 45% over three years. They further show that farmers
participating in interlinked-input credits apply 81% more fertiliser per acre on cereals than similar
households not receiving input-credit. This additional application of fertiliser on food crops by the
participating households does not necessarily represent a diversion of inputs from cash crops. The
participating households also applied more fertiliser on their cash crops than their counterparts as they
also received inputs for their food crops (Jayne et al., 2004).
Even if cash crop schemes are designed in a way that food crops do not directly benefit they
have a positive effect on food crops because cash crop production is usually accompanied by crop
rotation. The food harvest indirectly benefits from the cash crops residual fertiliser in the soil. As an
example, maize is often cultivated after an export crop as it responds well to the remaining fertilisers
(Demont and Stessens, 2009; Govereh et al., 1999; Govereh and Jayne, 2003; Dorward et al,. 1998).
Thus cash crop households tend to have higher grain yields than non-cash crop households, but
because they devote relatively less land to food crops the amount of grain produced is about the
same. This shows that cash crops are grown at the expense of food crops. In a study of cotton
producers in Zimbabwe about 60% of the non-cotton producers were self-sufficient as opposed to 41%
of households predominantly producing cotton. The same study shows that cotton households have a
higher per capita income allowing them theoretically to buy residual food from local markets (Govereh
and Jayne, 2003).
As indicated cash crops compete with food crops for scarce land and as the area under cash
crop cultivation increases this might jeopardise households’ food security especially under food market
failure (Jayne et al., 2004). Another concern is that with increasing cash crop production rural
households produce less food and local demand might raise, causing a rise in food prices. As poor
households spend a higher percentage of total income for food this might have a negative impact on
them (Kiriti and Tisdell, 2003). One argument against these concerns might be that Govereh and
Jayne showed in their study that non-cotton households had a greater share of fallow land than cotton
households as cash cropping is associated with higher farm mechanisation allowing to cultivate a
larger area (Govereh and Jayne, 2003).
Methodology
The paper was written in collaboration with the cotton project Competitive African Cotton Initiative
1
(COMPACI) . COMPACI is an African-wide cotton project, implemented in eight African countries
including Ivory Coast and Cameroon, aiming to enhance the agricultural productivity of cotton farmers
in these countries. The two cotton companies being of interest for that study, namely Ivoire Coton in
Ivory Coast and Sodecoton in Cameroon, are taking part in that cotton project.
The paper is based on a qualitative data analysis for which semi-structured interviews were held
with employees of the cotton companies and cotton farmers in the beginning of 2012. Therefore
information of the latest agricultural campaign 2012/2013 is not available for that study. This method
was chosen to allow for a, as far as possible, free flow of conversation. Furthermore it allowed the
interviewer to ask ad-hoc questions and respond to topics that were not anticipated. The author
predominantly tried to formulate open-end questions to allow the interviewee to express himself in his
own words. However the author was also interested in some quantitative data and therefore also used
closed questions. A total of eleven interviews were held over a period of two weeks, two interviews
respectively with employees of the cotton companies and three group interviews in Côte d’Ivoire and
four group interviews in Cameroon with cotton farmers. All interviews were expert interviews and the
paper refers to the definition of Gläser and Laudel (2010) according to which an expert is someone
who commands in the specific role as the interviewee of in-depth knowledge that is important to
answer the study question. The interviewing language was French; though for the farmer interviews
the author needed a translator as most of the farmers do not speak French, but their local language.
All interviews were recorded using a voice recorder and afterwards transcribed. To analyse the data
1
For more information about the project, please refer to http://www.compaci.org/index.php/fr/
4
the author used the qualitative content analysis. Therefore categories and sub-categories
corresponding to the study question of this paper were formulated. Then the interviews were screened
according to these categories. Most of the sub-categories and some main categories emerged during
the actual screening process itself. Sentences or text passages were extracted and allocated to one
category.
The Interlocked-Input Credit Scheme of Ivoire Coton
Ivoire Coton was created in 1998 after the partial privatization of the cotton sector being part of the
structural adjustment process induced by the World Bank. In 2000, the whole sector was deregulated
which amongst others allowed the installation of new factories from outside operators. The
deregulation occurred as planned, but due to a change of the business environment, e.g. producer
organizations claimed more power, the coup d’état and the division of the country, full privatization has
not been carried out yet. In Côte d’Ivoire cotton is mainly produced in the North of the country, where
st
Ivoire Coton is also operating. During the production peak in the beginning of the 21 century, cotton
was the main economic engine in the rural North, being a direct source of livelihood for about 180,000
producers and about 2.5 million inhabitants (Gergely, 2010). Since then it is losing its importance
relative to other agricultural products, especially cashew nuts. This is due to the political instability of
the country and the de-facto isolation of the North after the division of the country in 2002, which
increased production costs and disrupted the new organisation of the sector (World Bank, 2012). As of
today there exist seven different operators involved in the cotton business. Two stable and vertically
integrated private cotton companies (Ivoire Coton and OLAM) are holding a natural area of influence,
one without a geographically defined area, an umbrella producer organization, and three other
operators facing financial and operational problems.
Table 1: Ivoire Coton Basic Facts
Basic Facts
Cotton Farmers
Area under cotton cultivation (ha)
Average cotton area per farmer (ha)
Average food crop area per farmer (ha)
Cotton yield (kg/ha)
st
Cotton price 1 choice (CFA/kg)
nd
Cotton price 2 choice (CFA/kg)
Fertiliser price NPK (CFA/kg)
Fertiliser price urea (CFA/kg)
Fertiliser recommendation per cotton hectare
Campaign 2010/11
29,212
89,596
3.1
881
210
180
285
260
Campaign 2011/12
36,577
103,396
2.8
4.0
919
265
240
262.5
240
200 kg NPK, 50kg urea
Source: Authors’ own compilation based on Ivoire Coton’s Rapport du projet COMPACI période du 1ère Avril 2011 au 30
Septembre 2011
Ivoire Coton is working in the North West of Côte d’Ivoire and has it’s headquarter in Abidjan.
In the campaign 2011/12 a cotton farmer had an average cotton yield of 919 kg/ha (see table 1).
About 41% of his total farm land is under cotton and 59% under food crop cultivation. He got paid 265
st
FCFA/kg for cotton of 1 choice quality which is an increase of 26% compared to the previous
campaign. This price increase might explain that in 2011/12 Ivoire Coton had one quarter more cotton
farmers under contract than the year before. The cotton company recommends applying 200 kg of
NPK and 50 kg of urea on one hectare of cotton. The fertiliser price in the campaign 2011/12 was
subsidized with 25% by the government, explaining the prize drop of the inputs.
Contract farmers of Ivoire Coto can obtain interlocked-input credits for their cotton and food crops, and
2
can also be granted a loan for cattle . The inputs are fertilisers, pesticides and herbicides specific to
2
Ivoire Coton and Sodecoton also supply their farmers with agricultural equipment via interlocked credits, which are not of
further interest of this study.
5
cotton, maize and rice. Ivoire Coton sells them to the farmers at wholesale price adding transportation
costs, but neither includes a margin nor takes an interest rate. They inherited this credit scheme in
1998 from the former state-owned company and maintained it since then. From the cotton campaign
2006/07 onwards until 2008/09 Ivoire Coton suffered from a high decrease of cotton farmers and an
increase of outstanding debts, like several other companies in West and Central Africa. Risking
bankruptcy the company changed their previous group lending system to one of individual lending. It
now calculates an individual debt ratio for each farmer. This individual debt ratio is fixed at a maximum
threshold of 70% for all credits in one campaign, including the ones for oxen, and cotton and food crop
inputs. It is calculated by the agricultural advisors based on the farmer’s previous and current
expected cotton yield. This new measurement has resulted in higher per unit administration costs and
more work load for especially the agricultural advisors, but helped to lower the outstanding debts. The
extension service advises each farmer, based on their possible debt ratio, how much inputs one
should obtain for the upcoming cotton campaign. The management board of the cooperative has to
agree to the input distribution based on these calculations. The input-credit for the food crops is paid
back at the end of the campaign with the cotton harvest. The credit threshold might be altered due to
current cotton and input prices, but must never exceed the 70%.
Ivoire Coton decided on that measure due to several reasons. One reason was that they had
the impression that farmers tend to obtain too many inputs. This in turn led to excessive debts and
farmers valued cultivating cotton no longer as a good business activity. Another problem was and still
is the side-selling of cotton inputs on the black market which adds to the problem of farmers’ overindebtedness. This is due to two reasons: first, cotton acreages do not get the scheduled amount of
inputs resulting in a lower expected yield. Secondly, farmers sell the inputs at lower prices than the
purchase price of the input. The personal debt ratio shall help to prevent debt overloading and assist
the cooperatives to better control their finances. The cotton company also hopes to hinder side-selling
on the black market by restraining the input supply. That 70% threshold was chosen to allow the
farmer obtaining the required amount of inputs on credit for the area under cotton cultivation, and
allow him obtaining a certain amount of inputs for his food crops. If they would have limited the ratio at
lower levels farmers might not been able to acquire inputs for their food crops any longer or even the
required amount for their cotton production. As the ratio must never exceed the 70% it can happen
that if cotton prices were relatively low and input prices relatively high, that farmers might not be able
to obtain inputs for their food crops. Ivoire Coton is aware of that limitation. Even with today’s relative
favourable cotton prices and subsidized input prices not all farmers can equally benefit from the input
credits.
For Ivoire Coton having the input-credits for food crops is a strategic measurement to secure
their cotton production and allow to sustainably staying in business. They realized that the farmer has
to feel at ease to produce cotton which means he has to secure a certain level of food crop production.
Giving inputs additionally for food crops shall allow the farmer to produce more food crops and make
him stay for a long time in the cotton business. And as said above they therewith hope to minimise the
side-usage of cotton inputs on food crops.
The Interlocked-Input Credit Scheme of Sodecoton
In 1974, Sodecoton was created and granted a monopoly for developing cotton in the North and
Extreme North, also called the “cotton belt”. This belt is the poorest part of the country and represents
one quarter of total population. It is isolated from major transport routes and difficultly linked to the
main port of Doula and thus effectively landlocked (Gergely, 2009). Cotton is among the most
important agricultural exports products together with cocoa, coffee and bananas. Sodecoton is a
parastatal organisation with the majority of capital belonging to the government (59%) and the minority
to a French (30%) and a local holding company (11%). It was privatized in 1994 upon pressure from
the International Monitory Fund and the World Bank as part of the structural adjustment process.
However the process was cancelled in 2002, following the bankruptcy of the investor and a legal
dispute. The privatization is still on the government’s agenda, but there is no updated schedule and
attitude towards it in the government is mixed inside.
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Table 2: Sodecoton Basic Facts
Basic Facts
Campaign 2010/11
Extreme
North
North
97,651
108,472
79,636
63,277
0.82
0.58
1.94
1.61
1,157
966
200
190
340
340
Campaign 2011/12
Extreme
North
North
91,194
74,525
97,822
51,066
1.07
0.69
2.18
1.98
1,226
905
255
245
376
376
Cotton Farmers
Area under cotton cultivation (ha)
Average cotton area per farmer (ha)
Average food crop area per farmer (ha)
Cotton yield (kg/ha)
st
Cotton price 1 choice (FCFA/kg)
nd
Cotton price 2 choice (FCFA/kg)
Fertiliser price NPK (FCFA/kg)
Fertiliser price urea (FCFA/kg)
Fertiliser recommendation per cotton
200kg NPK plus 50kg urea for farmer in the North
hectare
Source: Authors own compilation based on Sodecoton’s Rapport Campagne Agricole 2011/12
The cotton yield of an average farmer is about 1,200 kg/ha in the North and 950 kg/ha in the
Extreme North (see table 2). This spread can be explained by different climate conditions and soil
fertility of the two regions. The farmer dedicated about one third of their land to cotton and two thirds
st
for food crops. In the campaign 2012/2012 farmers are paid 255 FCFA/kg for their cotton 1 choice
and they pay 376 FCFA/kg for their fertiliser. The recommended amount of fertiliser varies in the two
regions, as Sodecoton does not recommend urea for the Extreme North. Fertilisers were subsidised
by the government and the cooperative structure in both agricultural campaigns, however they were
still more expensive than the ones for farmers in Côte d’Ivoire. In the current campaign Sodecoton
excluded about 24% of their cotton producers in the Extreme North due to cotton side-selling to
Nigerian buyers. Sodecoton is bigger than Ivoire Coton in terms of cotton farmers and the area under
cotton cultivation. It has about four and a half times more cotton producers, though only 1.4 times
greater area under cotton cultivation. The cotton farmers in Côte d’Ivoire have bigger land holdings
than the ones in Cameroon.
Sodecoton supplies their contract farmers in two ways with inputs for food crops. They can
obtain them through a loan or buy them over the counter. The latter option is mostly used by farmers
to buy herbicides. Fertilisers do only account for 15% of all over the counter sales. These sales are
also restricted as only farmer expressing an interest of buying fertilisers this way beforehand and
being associated with the cotton cooperative, are allowed to purchase inputs that way. The volume of
the over the counter sales represent 7% of the total volume of inputs supplied by Sodecoton. Because
of the liquidity constraints the majority of farmers face, the supply of inputs via interlocked-input credits
is more important than the direct sale. Like Ivoire Coton the Cameroonian cotton company does not
charge an interest rate for their interlocked-input credits, but they sell the inputs with a little margin.
This finances the management part of the cooperative structure. Similar to Ivoire Coton they also
suffered from a sharp drop of farmers and cotton production, and an increase in outstanding debts. As
an impact of the crisis they also altered their credit scheme, but in contrast to Ivoire Coton maintained
group lending.
Sodecoton grants group loans to cooperatives which are guaranteed by themselves in two
ways. First, between three to 14 producers cultivating at least five hectares of cotton form a liability
group, or a big cotton farmer cultivating between six to eight hectares of cotton can form his own one.
These liability groups must be recognized by the general assembly of the cooperative which will settle
the debt in case of credit default. In addition a farmer has to be on the so called “blue list” to be
granted input-credit. Being on that list is based on two conditions: no arrears from the last cotton
campaign, and an acceptable cotton harvest. The amount of inputs one group can obtain for their food
crops depends on the area under cotton cultivation. The minimum criterion is that a cotton farmer has
to cultivate at least 0.5 hectare of cotton to be granted an input-credit for his food crops. The schemes
7
details are as following: based on one hectare of cotton a cooperative having had difficulties in the
past is allowed 25 kg of urea for half a hectare of sorghum, and one never experienced any problems
can have 50 kg of urea for one hectare. For one hectare of cotton the cooperative is allowed inputs for
half a hectare of maize, which are 50 kg of NPK and 50 kg of urea. Only farmers in the North can get
inputs for their maize. The soil in the Extreme North is not considered to be applicable for maize
production. In theory, farmers in the North and Extreme North can get input credits for their sorghum,
3
but in practice Sodecoton’s food crop input credits are divided geographically with the majority of
input credit for sorghum being in the Extreme North and the majority of credit for maize inputs in the
North.
In addition, they installed certain measurements that shall secure a higher payback rate as well
as lower the burden on cotton by separating the input repayment for cotton and food crops. First, since
the campaign 2008/09, Sodecoton is demanding a 30% advance payment for food crop inputs. This
can be paid by the farmer and/or by the cooperative. Secondly, it is intended that the maize inputcredit shall be paid back by maize revenue instead of cutting the credit amount from the cotton
revenue as done before. As maize is a relatively input intensive crop the company installed a
warehouse system, by which the farmer has to deposit two bags of maize for one bag of fertiliser as a
guarantee. The warehouse system shall also allow the farmer to sell the maize not directly after the
harvest, when maize supply is high and prices are low, but to store the maize and sell it at better price
conditions. However the warehouse system and the separation of repayments do not work well as
farmers are not willing to store their corn harvest and in most cases Sodecoton has to get back to the
cotton harvest for the credit repayment.
For the 2012/2013 campaign Sodecoton wants to further modify the interlocked-input scheme.
To obtain the input-credit for sorghum a farmer has to produce at least 800 kg/ha of cotton in the
Extreme North and 950 kg/ha of cotton in the North. The amount of input-credit is then staggered in
three stages based on the cotton yield. For the input-credit for maize the input amount will depend on
whether the farmer repaid the credit with maize or cotton revenue. Despite these problems Sodecoton
proceeds in giving the input credits for food crops in order to secure food security.
Results
The possibility to access inputs on a loan base is a decisive factor for some of the interviewed farmers
to cultivate cotton. This becomes even more important under the absence of functioning input and
credit markets. None of the interviewed peasants stated another official source then the cotton
companies to obtain inputs, apart from the black market and neighbouring countries. However these
alternative sources cannot satisfy demand as the fertilisers on the black market are originated from the
cotton company, supplied from side-selling by contract farmers. The alternative input market sourced
by neighbouring countries neither can stimulate the demand, because most farmers lack the financial
resources to obtain a sufficient amount of fertiliser at the beginning of the agricultural season. The
cash crop income is spent soon after harvest for mostly larger investments. The interlinked input-credit
is also the most obvious aspect that creates a linkage between cash crop and food crop production as
it is designed by both cotton companies to supply inputs for food crops in addition to cotton. But also
without this special feature cash crop cultivation would increase smallholder’s agricultural productivity.
On the one hand the residual fertiliser in the cotton field also has a positive effect on food crops yields
if they are grown the following year. Thus on the other hand, farmers divert fertiliser from the cotton in
addition to what they obtain officially from the cotton company. Therefore the access to inputs alone,
without the official part of the scheme, is already important to increase the agricultural productivity of
the smallholders.
In the following the impact of the two cotton schemes on food crop production shall be
assessed. Therefore the following section will derive the possible amount of fertilisers a farmer can
obtain in the respective cotton scheme to then look into the actual food crop area that received
fertiliser. For the following this and last campaigns are of interest to show how the calculations
changes when prices vary.
3
The calculations latter on in chapter 6.2 will be based on this practical division.
8
Table 3: Possible Input Credit for Food Crops for the average Farmer of Ivoire Coton
Campaign 2010/11
Campaign 2011/12
Cotton price
Cotton price
Cotton price
Cotton price
st
nd
st
nd
1 choice
2 choice
1 choice
2 choice
Maximum input credit possible
based on net cotton income
185,514
125,769
299,569
254,107
(FCFA/kg)
Input costs for food crops
213,310
213,310
183,571
183,571
(FCFA/kg)
Excess/Deficit
-14%
-41%
+63%
+38%
Source: Authors own compilations based on her research and data provided by Ivoire Coton.
The limiting factor for farmers of Ivoire Coton is the 70% threshold that maximises the credit
value. That threshold is not binding in the campaign 2011/12 as the average farmer has the possibility
4
to obtain the full dose of fertiliser for his food crops regardless of the cotton quality prices (see table
3). The same can be said for the interviewed farmers. The relatively good price levels of cotton and
fertiliser explain that the average debt ratio of the farmer is 40% to 45% in 2011/12 according to the
regional director. However this looks differently for the average farmer in the last campaign with lower
cotton and higher input prices. Here the normal farmer would not be able to get the full amount of
fertiliser as it exceeds the 70% threshold by 14% or 41% depending on the cotton price. From the
interviewed farmers two of them theoretically could not obtain inputs for the whole area under food
crop cultivation when only paid the cotton price for second choice in the campaign 2010/11. The
interviewed farmer with the smallest area under cotton cultivation ( two hectares) could not access the
full amount of fertiliser for his food crops in the campaign 2010/11 and two others neither if they were
only paid the cotton price for second choice.
Table 4: Possible Area receiving Fertilizer for the average Farmer of Sodecoton
Campaign 2010/11
Campaign 2011/12
Average Farmer Average Farmer Average Farmer Average Farmer
North
Extreme North
North
Extreme North
Cotton area (ha)
0.82
0.58
1.07
0.69
Actual maize/sorghum
0.57
1.32
0.69
1.63
area (ha)
Allowed maize/sorghum
0.41
0.58
0.53
0.69
area for fertilizer (ha)
Deficit
-29%
-56%
-23%
-58%
Source: Authors own compilations based on her research and data provided by Sodecoton.
In contrast to the Ivorian farmer it is not so much the input price, but the area under cotton
cultivation determining the possible quantity of fertiliser. A farmer of Sodecoton has to produce at least
half a hectare of cotton in order to be able to obtain an input-credit for his food crops. A little more than
half of all farmers (56%) have the cotton area under cultivation to do so in 2011/12. Thus 46% are
already excluded from taking input credit for food crops. Due to this restriction the average farmer in
the North region cannot obtain fertiliser for his total maize area of 0.69 ha but only for 0.53 ha, which is
5
a deficit of 23% (see table 7). The deficit for the average farmer in the Extreme North is higher with
58%, as he is less diversified than the farmer in the North. Sorghum accounts for two thirds of his total
area under cultivation, in contrast to one third of maize in the North. In 2010/2011, the deficit is about
the same for the average farmer. Out of the four interviewed cooperatives two had a deficit of more
4
Note that the calculation is made under the assumption that no farmer has had outstanding debts from the previous campaign
and neglects credit for agricultural equipment and cattle. This would decrease the credit value.
5
Note that the calculation is made under the assumption that no farmers has any outstanding loans and that the farmer in the
North can get fertiliser for half a hectare of maize and the farmer in the Extreme North for one hectare of sorghum if cultivating
cotton on one hectare.
9
than half the area (-56% and -58%) and two were nearly deficit free (-1% and -7%), in each case from
the two regions. The input prices for food crops account for 15% to 21% in the North and 10% to 14%
of the cotton income in the Extreme North for this and last campaign. The advance payment does not
exceed 6% of the cotton revenue in both regions and years. However the farmers said that since the
advance payment has been established, obtaining fertiliser for their food crops has become more
difficult and some farmers cannot pre-finance one third of the total fertiliser amount at the beginning of
the season.
Table 5: Food Crop Area that received Fertiliser
Area received fertiliser
†
Food Crop
Ivoire Coton
Sodecoton
2010/11
2011/12
2010/11
2011/12
Maize
12% - 19%
24% - 34%
30%
29%
Rice
7% - 8%
14% - 16%
Sorghum
27%
29%
Source: Authors own compilations based on her research and data provided by Ivoire Coton and Sodecoton.
†
The lower bound accounts for the area that received NPK and the upper bound for the area that received urea.
Table 5 shows the area under food crop cultivation that received fertiliser based on the actual
amount of fertiliser supplied to the farmers. In both countries and campaign years up to one third of
that area received fertiliser, depending on the cereal. These calculations show that not all farmers are
benefiting from the input scheme part that supplies them with inputs for food crops. Thus the supply of
fertiliser is not efficient, as also remarked by the farmers in both countries. In Côte d’Ivoire prices are
the limiting factor whereas in Cameroon it is the area under cotton cultivation. This is also visible when
comparing the fertiliser area of food crops with the total area under food crop cultivation. As
highlighted in table 8 the scheme of Sodecoton supplied fertiliser for about one third of the maize and
sorghum area in both agricultural campaigns. As the supply is fixed to the cotton area and the
conditions have not changed in the two campaigns the ratio has been quite constant. In contrast the
food crop area that received fertiliser is more volatile in Côte d’Ivoire. The low coverage in the
campaign 2010/11 can be explained by relative low cotton and relative high input prices. Thus as the
price constrained relaxed in the campaign 2011/12 farmers were able to fertiliser a greater area. So
what is the impact of the additional fertiliser supply on the region?
Table 6: Average Food Crop Yields with and without Fertiliser Application
Yield
Maize (kg/ha)
Rice (kg/ha)
Sorghum (kg/ha)
Ivoire Coton
without
with
fertiliser
fertiliser
1,200
2,400
800
Sodecoton
without
with
fertiliser
fertiliser
1,000
2,600
1,600
933
2,000
Source: Authors own compilation based on the interviews with farmers of Ivoire Coton and Sodecoton
The data in the table presents the average of the farmer’s statements. Just for comparison according to FAOSTAT maize
yields (kg/ha) are 2,154 in Côte d’Ivoire and 2,323 in Cameroon, the rice yield (kg/ha) is 1,688 in Côte d’Ivoire and the
sorghum yield (kg/ha) is 1,268 in Cameroon.
Based on the results in table 5 and table 6 the additional food crop production due to fertiliser
6
application can be calculated . In Côte d’Ivoire an additional 24% or 384 kg per household of maize
has been produced in 2011/12 as opposed to no fertilizer application. For rice this would be an
additional 14% or 107 kg per household. As the fertiliser dosage is higher for Sodecoton’s farmers, so
is the additional food crop production. Due to fertiliser application 259 kg per household for maize
6
Note that this calculation shall only give the reader an idea of the additional food crop production and that it cannot make a
conclusion about the actual food intake per capita.
10
(+76%) and 130 kg per household for rice (+62%) have been additionally produced in contrast to no
fertilizer application at all. According to the interviewed farmers an average household needs between
2,000 kg to 3,000 kg of cereals per year in order to well nourish the family. Thus the surplus of food
crop production due to the application of fertiliser alone can secure between 16% to 25% of the yearly
nutrition needs for an average cotton producing household in Côte d’Ivoire, and between 14% to 20%
for the average cotton producing household in Cameroon. Therewith Ivoire Coton and Sodecoton both
contribute a share to the increase of food production in the region. However it is not enough as the
farmers stated that not everybody is food self-sufficient. Nevertheless the cotton scheme allows
farmers to access inputs for their food crops and therewith intensifies their agricultural activities. Under
the conditions of input and credit market failure the two particular cash cropping schemes are
designed in a way to enhance overall agricultural productivity and therefore have a positive impact on
food production.
Conclusion
As history and the recent success story of the Green Revolution in Asia shows it is inevitable for SSA
to transform its agricultural sector from the one of a low-productivity, subsistence farming system
towards a modern one like in industrial nations. During that continuous process it is important to tackle
the productivity of smallholders and intensify their agriculture in order to allow for a pro-poor
development. Cash crop schemes can be a solution for the problems facing the agricultural sector for
so long, as they establish an access to seasonal finance for their cash crop producers. They allow the
farmer to move from the first stage of low-productivity and mostly subsistence agriculture to the next
stage of a more mixed family system with increasing productivity and production for the market.
Interlocked-input credits, that are part of the scheme, lower the transactions costs for
smallholders to adopt the cash crop by supplying the farmer with inputs on credit. This mechanism
becomes even more important under the absence of input and financial markets. In the research
regions of Côte d’Ivoire and Cameroon the cotton companies are the only source for farmers to access
inputs with the possibility of pre-financing. The smallholders have limited working capital and savings,
and as there are no financial institutions supplying them with a credit. The two schemes focus on
smallholders and thus agricultural development can be pro-poor as they demonstrate.
Furthermore the two schemes are designed in a way that they not only increase the
smallholder’s cash crop productivity. Cotton farmers have the possibility to obtain fertiliser for their
food crops through the interlocking arrangement and therewith increase their food crop production.
The fertilisers applied on cotton fields have also an indirect effect on food crops due to crop rotation
and residual nutrients in the soil. Therefore the paper concludes that a linkage between cash crop
production and food crop production exists. In the light of stagnant cereal yields this feature of the
scheme is notably important. Nevertheless the design of the two schemes does not allow all farmers to
access the needed amount to fully fertilise their food crop area under cultivation. In Côte d’Ivoire and
Cameroon up to one third of the total area under food crop production received fertilisers in this and
last agricultural campaign. Both schemes are designed to support and promote cotton. The aim for
them is to secure that cultivating the “white gold” remains profitable not only for them, but also for
smallholders. Without neglecting the contribution of the two cotton companies to the region’s food
security, the thesis shows that cash cropping schemes contribute to the intensification of agriculture,
but cannot entirely solve the problem of low-productivity. Further research is needed to study what
mechanisms create the strongest linkages between cash crops and food crops and how cash crop
promotion schemes could be exploit by the government to increase food crop production. In addition
another study question could be which programmes components have best worked to establish this
particular linkage in Africa.
11
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