The cotton and textile sector in Africa has entirely collapsed following the IMF's infamous Structural Adjustment Program and the destructive tsunami of “liberalization” and privatizations (i.e. economic re-colonization) that followed. The cotton sector is the backbone of the economy in many African countries and provides employment to millions of cotton farmers and their families.
Bt cotton: Panacea to revive the cotton sector...?
The biotech industry and their cronies fraudulently claim that Bt cotton increases yields, decreases pesticide use and therefore increases farmers’ income and profitability by increasing output and reducing production costs while reducing environmental destruction.
In fact the exact opposite is true and several independent studies and empirical evidence have clearly and repeatedly debunked this fraudulent claim. In fact, cotton pests have naturally and predictably developed resistance to Bt cotton. As a result, cotton farmers have to increasingly use more expensive and toxic pesticides to combat pest resistance, which increases both their production costs and insecticide use leading to environmental destruction, while decreasing yields, income and profitability for cotton farmers. Many publicly available research papers have been written and published on these issues.
We have of course also heard and read about the infamous and tragic waves of mass suicides of Bt cotton farmers in India, rightly termed “genocide” by Vandana Shiva. In fact, according to official statistics from the government of India, over 200,000 indian cotton farmers have tragically committed suicide in India over the last decade.
As Vandana Shiva herself states: " Every suicide can be linked to Monsanto. Monsanto’s GMOs do not improve farmers’ lives. They have pushed farmers to suicide. Over 200,000 Indian farmers have committed suicide in the last decade. 84% of the suicides in Vidharbha, the region with highest suicides are linked to debt created by Bt–cotton. While Monsanto claims its GMO Bt cotton gives 1500 Kg/acre, the average is 300–400 Kg/acre. The claim to increased yield is false because yield, like climate resilience is a multi–genetic trait. Furthermore, pesticide use has increased 13 times as a result of the use Bt cotton seeds in the region of Vidharbha, India. GMOs are non–renewable, while the open pollinated varieties that farmers have bred are renewable and can be saved year to year. The price of cotton seed was Rs 7/kg. Bt cotton seed price jumped to Rs 1,700/kg. This is neither ecological nor economic or social sustainability. It is ecocide and genocide." source: http://www.goal-2025.com/2011/02/26/climate-change-and-agriculture-by-dr-vandana-shiva/
Monsanto and the biotech industry of course vehemently deny any responsibility in this “genocide.” I will not debate this controversial issue in this paper since no amount of sterile debate or public outcry will bring an end to the ongoing “genocide” of cotton farmers in India. Instead I wish to move beyond the debate and the outcry to identify, address and resolve the root economic, structural and political causes behind the collapse of the cotton sector in Africa, India and around the world. In fact, Bt cotton does not address let alone resolve the root economic, structural and political causes behind the collapse of the cotton sector in Africa, India and around the world.
I therefore hereby wish to concentrate on identifying and briefly explaining the root economic, structural and political causes behind the global collapse of the cotton sector with a particular emphasis on the economics of Bt cotton. In fact, most of the research and public debate on Bt cotton has revolved around and been limited to contentious issues of yields, pest resistance and pesticide usage, and of course on the infamous and tragic suicides of cotton farmers in India. However, to my knowledge there has not been any research or public debate on the economics of Bt cotton.
I therefore wish to provide a brief overview and explanation on the economics of Bt cotton in this brief paper. I have tried to explain it as simply and as comprehensibly as possible for those with limited knowledge of economics. I hope that the debate on Bt cotton can shift from the contentious issue of yields, pest resistance and pesticide usage to an economic angle and debate so that practical solutions can be identified, developed and implemented to end the tragic plight, suffering and suicides of cotton farmers around the world.
As briefly mentioned above, the industry fraudulently claims and argues that Bt cotton increases yields and decreases pesticide use, and therefore increases cotton farmers’ income by increasing output and reducing production costs. Of course, Bt cotton has not been genetically modified to increase yields, and scientific research and empirical evidence indicates that it does not increase yields. Furthermore, offering to increase yields and production – using expensive patented and sterile seeds and a cocktail of toxic pesticides and herbicides - in a context of structural over supply of cotton on the world market significantly worsens the plight of both cotton farmers and cotton producing/exporting countries.
Vicious trap cycle
In fact, to make up for the loss in revenue resulting from structural over supply of cotton on the world market which result in constantly declining real prices of cotton, farmers produce and export more cotton, which in turn results in creating a further excess supply of cotton on the world market, further reducing both lint and farm gate prices of cotton, thus further marginalizing and impoverishing both cotton farmers and cotton producing and exporting nations, in conformity with King’s Law of Demand.
King’s Law of Demand
King’s Law of Demand clearly states that a surplus/deficit in a commodity will lead to a proportionally greater decline/increase respectively in the price of the said commodity relative to the surplus or deficit. In other words, a surplus of 10% in the supply of cotton will lead to a decline of more than 10% in the price of cotton, and vice-versa.
Therefore, increasing cotton yields and production will further increase the supply of cotton on the world market and translate into a further decrease of cotton prices, in conformity with King's Law of Demand, further impoverishing both cotton farmers and cotton producing/exporting countries. Increasing cotton yields and production will therefore worsen the plight of cotton farmers and cotton producing/exporting countries. Therefore, simply increasing yields of Bt cotton will not resolve the plight of cotton farmers and/or of cotton producing/exporting countries, contrary to deceitful claims made by Monsanto, the biotech industry and their cronies.
This flawed and deceitful argument promoted by Monsanto and parroted and forcefully imposed and dictated by the IMF, the World Bank and so-called “donors” to countries producing and exporting unprocessed so-called “cash crops” such as cotton , coffee, cocoa, etc., is used to loot and export valuable raw materials for processing and consumption in affluent countries and to further plunge entire countries and continents into debt slavery and economic servitude.
As the Brandt Commission warned over 30 years ago: “ Structural over-supply in the commodities markets lies at the heart of global poverty and instability” (Willy Brandt, Brandt Report).
Furthermore, there are several other exogenous economic, structural and political factors which individually and collectively influence and determine the price of cotton on the world market and the profitability of cotton farmers, which Bt cotton does not address let alone resolve. I have briefly outlined and explained some of these factors below:
US/EU (illegal) cotton subsidies
- + $US 5 billion/year; artificially stimulates production in the US/EU which leads to structural overproduction of cotton on the world market (Supply > Demand). Excess production “dumped ” on the world market ( i.e. sold below cost of production).
Results: - Collapse of both cotton lint prices on the world market and collapse of farm-gate cotton prices. As a result, hundreds of millions of small-scale (non-subsidized) cotton farmers cannot profitably produce and sell their cotton on the world market, despite having an Absolute Comparative Advantage in producing cotton, and sink deeper into endless poverty, hunger and misery.
$US Exchange Rates
- Cotton lint sold in US dollars on the world market. Thus, a devaluation in the US dollar translates into further loss in revenue for both cotton farmers and for cotton producing/exporting countries.
Increase in the price of oil & inputs
- Inverse relationship between the US dollar and oil prices (i.e. a devaluation in the value of the US dollar leads to an increase in the price of oil – to offset the loss in export revenue from the devaluation of the US dollar.)
Increase in the price of transport and oil-based farm inputs (fertilizers, pesticides, etc.) resulting from an increase in the price of oil and from unfair Terms of Trade. Furthermore, an increase in the price of oil translates into an increase in the cost of transport, thereby increasing production and shipping costs. Thus, the inverse relationship between a devaluation of the US dollar and the increase in the price of oil increases the cost of production of cotton farmers on the one hand, while significantly decreasing both the real price of cotton and therefore the revenue and profitability of cotton farmers.
- IMF Structural Adjustment Programs (SAP) which have dismantled local subsidies to African cotton farmers/agriculture and privatized the sector, added to World Bank suicidal economic policies dictated and imposed on African countries and blindly followed à la lettre by so-called African "leaders", which deliberately promote the monoculture, overproduction and export of cotton which keeps African economies and countries trapped in the Colonial Pact and in the vicious trap cycle of debt slavery, economic servitude, so-called "aid" and unending poverty, hunger and endless misery.
- Total deficit of intelligent leadership, intelligent economic policies and political will from so-called African “leaders” and governments to revive the sector. Total deficit of intelligent government policies to protect and support local cotton farmers and to promote local value addition and consumption of local cotton/textiles to revive the local cotton and textile industry.
- Absence of public and industrial infrastructures (energy, inexistant/outdated industrial cotton processing machinery, roads, etc.) which translates into high energy costs, high production/processing costs, high transport costs, high taxes, etc., which result in loss of competitiveness and profitability for cotton farmers, ginners, weavers and for the entire textile sector.
- Dumping of "kifua" ( used imported clothing which literally translates into "dead white mens' clothing in Swahili/Tanzania) on the local market which destroys the local cotton and textile industry.
No local value-addition
- Cotton lint exported raw (non-processed) and thus the price of cotton lint is subjected to the dictate of the world market/casino, distorted by Western cotton subsidies and the “ invisible hand ” of speculators and multinationals through IMF & World Bank policies that deliberately promote overproduction and export of monoculture so-called "cash" crops ( i.e. cotton, coffee, cocoa, etc.) to repay the so-called “debt”...
- No local value-addition in cotton producing countries ( over 80-90% of cotton exported raw/nonprocessed) = no local employment creation, no revenue generation, no wealth creation, no economic growth generated within the sector and in the economy as a whole.
Reliance on lint exports: vicious trap cycle
- Thus, Africa’s exclusive reliance on cotton lint exports (+80%-90%) makes it entirely dependent on the dictates of the world market and on exogenous economic/structural/political factors over which Africa has no control ( i.e. Western cotton subsidies, structural oversupply, $US exchange rate, oil prices, input costs, price of cotton lint on the world market, etc.)
- Cotton sector trapped in the “ Colonial Pact ” ( i.e. export raw cotton and import (used) clothing at a loss (to add insult to economic injury.)
Example: Cotton sector in Tanzania - "Kifua" economy...
According to statistics published by the Tanzanian Cotton Board, the cotton sector in Tanzania used to provide employment to over 40% of the population, contribute 15%-20% to the GNP and was the second largest source of foreign exchange, before the IMF's infamous Structural Adjustment Program completely bankrupted, liberalized and privatized the sector.
Tanzania cotton & textile trade
Over 80% of the cotton produced in Tanzania is exported raw (non-processed ) in the form of lint. According to statistics published by the Tanzanian Cotton Board, the Tanzanian government generates on average $US 40 million annually in cotton lint exports, but annually imports over $US 80 million of textiles and garments, out of which 62% constitutes used imported clothing known as“kifua.”
Thus, such self-defeating and mediocre economic policies not only generate huge financial loses for the people of Tanzania, but also floods the market with cheap " kifua/dead white mens' clothing " which destroys the local textile industry. Furthermore, lack of local processing and local value addition fails to create crucially lacking and desperately needed local employment and generate income within the sector and economic growth within the economy. To add insult to economic injury, local inhabitants are left with no other alternative than to wear their humiliation daily in the form of “ kifua”
As the late President of Tanzania Julius Nyerere rightly said: « Africans produce what they do not consume and consume what they do not produce. That has become the basis for African economic enslavement. »
In fact, the architecture of African economies has not changed over the last +100 years, since the infamous Berlin Conference. Indeed, Africa is still in its essence a plantation (and a mining) colonial economy trapped in the Colonial Pact. And sadly, over fifty years after so-called "independence", Tanzania and other African countries still “ produce what they do not consume and consume what they do not produce.”
As briefly explained in this paper, simply increasing cotton yields without addressing the root economic, structural and political causes behind the collapse of the cotton sector will not put an end to the plight, suffering and mass suicides of cotton farmers. On the contrary, it will further worsen their plight. We must therefore urgently shift the global debate on Bt cotton from the contentious issues of yields, pest resistance and pesticide usage to an economic debate to identify, address and resolve the root economic, structural and political causes behind the collapse of the cotton sector in Africa, India and around the world.