Liberalization and globalization: Trojan Horse for the cotton traders' domination in Francophone Africa

Michel Fok ()
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Michel Fok: Cirad-CA-UPR 10 Systèmes cotonniers - Systèmes cotonniers en petit paysannat - CA - Département Cultures annuelles - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement

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Abstract: The Francophone African Countries (FACs) exclusively fight for the abolition of subsidies applied by a few big cotton producing countries. Although legitimate, it is doubtful that the outcome could be so much satisfactory because subsidizing countries have room in re-arranging measures of their support policies. The FACs are missing the effect of market structure on price formation. Market power of trading Multinational Companies (MNCs) is getting stronger and stronger. It concerns cotton too and there are signs that an international price index serves as an expression of this power. The FACs were protected from MNCs in the cotton trade. Within less than one decade, and thanks to the implementation of the liberalization process, these companies have become totally dominant. Liberalization then served as Trojan Horse for the MNCs penetration.Negative price impact resulted. Unilateral and unfair change of cotton transaction rules took place. Historical private regulation systems are being pushed down to the sole benefit of traders and at the expense of cotton producers.It is worth noting the paradox of exacerbated concentration of the commodity trade at the international level while developing countries were forced to go into a fragmentation movement by abolishing marketing boards or public monopoly companies which provided some price protection to farmers. This fragmentation movement made easier the domination of trading MNCs in developing countries through power in price formation and adjustment of transaction rules.

Keywords: Cotton trade; Africa; Multinational companies; transaction rules; price capture (search for similar items in EconPapers)
Date: 2006-08-12
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00325019
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Citations: View citations in EconPapers (2)

Published in International Association of Agricultural Economists Conference, Aug 2006, Gold Coast, Australia

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