Senegal cotton firm sees survival via fair trade

Senegal's cotton company Sodefitex hopes to weather depressed market prices by driving up yields and expanding its new "fair trade" sector to give farmers a better deal, its director said.
Sodefitex, owned by the government and French state cotton producer Dagris, is drawing up a 2007-15 strategic plan focusing on modernising cotton farming and diversifying its operations, including growing sunflower seed to make biofuels, Managing Director Ahmed Bachir Diop told Reuters late on Wednesday.
Last season Senegal harvested a record 52,421 tonnes of seed cotton - still only one-tenth of the average crops of nearby Mali or Burkina Faso, but a lifeline for the many who depend on the country's 40,000 cotton-growing family smallholdings.
West Africa's cotton producers have long complained that subsidies to US farmers keep world cotton prices so low that African farmers struggle to make ends meet.
"For four years, our operations have been loss-making. The persistent weakness in world prices means we can't cover our costs, but having a cotton support fund has allowed us to survive the crisis," Diop said in an email interview.
The Price Risk Management Fund is now being relaunched with a 1.6 billion CFA franc ($3.33 million) government grant and 5 million euro ($6.83 million) loan from the French Development Agency, Diop said. But even with a 2.78 billion CFA franc injection from the fund, Sodefitex lost 766 million francs in 2006, he said.
The company is now implementing an "austerity budget" to bring its costs down to 655 CFA francs per kg of cotton fibre - near to current world market prices - and a state-funded modernisation programme to intensify farming and raise yields.
The programme, providing farmers with supplies and equipment at affordable rates, had increased yields by 184 kg per hectare, raising gross farm incomes by 55,000 CFA per hectare, Diop said.
Marketing cotton at a premium under the "Fair Trade" banner to clothe ethically-minded consumers can provide double that benefit to farmers, but at present accounts for a tiny part of Sodefitex's output despite being registered for three years. Fair Trade registration requires a producer to meet a wide range of specific standards regarding labour and other areas.