The International Monetary Fund will meet cotton producers in Africa later this month to find ways to help governments and struggling farmers cope with falling prices and growing output from China and Brazil. Large African producers Benin, Burkina Faso, Mali and Chad are also being strangled by US and European farm subsidies and a weakening US dollar, said IMF's African director Abdoulaye Bio Tchane. "We are quite worried because there are a number of countries that are in financial and fiscal distress because of the situation," Bio Tchane told Reuters in an interview on Wednesday.
Falling revenue from lower cotton prices was squeezing already-tight government budgets and social programs in impoverished African countries. Smaller producers like Senegal, Tanzania and Togo were also feeling the pinch, he said.
Bio Tchane, a former Benin finance minister, said cotton output for many of the larger African producers represented between 9 and 10 percent of their gross domestic product.
The impact of the 25 percent fall in global cotton prices shaved about 1.5 to 2 percent off GDP, he said.
"The IMF wants to be part of the solution, but we are not the only ones and are mindful that the WTO, World Bank and European Union and some of the others have a role to play in this," Bio Tchane added.
"We believe it should be a global effort," he said.
The World Trade Organisation in March rejected a US appeal against earlier rulings prompted by Brazil that Washington was breaking world trade rules with the subsidies it paid to cotton farmers, which totalled $4 billion in 2001.
Global lenders like the IMF and World Bank have long urged rich nations to open their markets to developing world to help promote growth.
IMF Managing Director Rodrigo Rato will travel to Benin for the May 18 meeting to discuss with cotton producers and governments what can be done to help. By visiting the countries, the IMF is training a spotlight on the global impact of cotton subsidies.
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