This blog analyzes the potential travesties Malians may face regarding their cotton crop due to COVID-19.
Being the primary source of livelihood for over four million farm households, cotton is a key cash crop in Mali. It is mostly grown by smallholder farmers on rainfed plots that average two hectares. Cotton ranks second to gold in terms of export revenue. The Malian cotton sector is managed by the parastatal CMDT (Compagnie Malienne pour le Développement du Textile), which is responsible of purchasing all cotton production at a guaranteed price announced before the planting season. The mechanism to set the guaranteed price considers the world price of cotton.
For the 2020/21 campaign, the guaranteed price was initially set at 275 CFAF/kg. However, it has been since revised downward to account for fluctuations in the world price of cotton due to the COVID-19 pandemic. The world price of cotton fell approximately 20% from January (pre- pandemic) to April. In later trading, the market recovered about half of those losses. Due to persistent price uncertainty, the CMDT guaranteed price was reduced to 200 FCFA/kg on April 30 th . This 27% drop in the guaranteed price generated discontent among farmers.
In response to the lower guaranteed price, the farmers threatened to boycott cotton production and reallocate land to cereal crops. In an attempt to appease growers, the guaranteed price was increased to 215 FCFA/kg (also on April 30 th ) and then to 250 CFAF/kg in early June. These upward revisions have not been enough to dissipate the threat cotton production boycotts. Farmers are still pushing for the initial guaranteed price (275 FCFA/kg). Malian farmers have boycotted cotton production before. In 2000/01, cotton production was cut in half due to farmer protest. It took years for the cotton production to bounce back. Given the COVID-19 pandemic and its impact on global cotton demand and therefore global cotton prices, there is uncertainty about what price CMDT may be able to pay and whether the current cotton production target of 800 000 tons can be achieved in Mali this year. A boycott of cotton production has the potential to have a significant effect on export revenue and, in turn, the national budget. The planting season begins soon, and that should provide an indication of whether the Malian cotton sector faces a crisis.