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Organisation change and African agricultural development? Eessais on cotton sector reforms and index-based insurances

Abstract : The African agricultural sector has been neglected by development aid during the last fifty years. It has not undertaken a green revolution, as it happened in Asia. The continent has a great potential for agricultural production but yields and technology adoption are still very low. Moreover many recent threats to food security represent a challenge for future development in Africa. Demographic growth, increase in commodity prices and price volatility, land use pressure and climate change are probably the most latent threats. In such context, it is necessary to develop new patterns of development for African agriculture. Those patterns should draw the consequences from past policies, which either relied on large investments and in favouring a development of the same nature that the one observed in rich or emerging economies. It seems that improving institutions and the environment to foster the evolution of African agriculture would be more adapted than previous strategies that consist in applying the same methods employed in the past. Food security can be achieved by improving rural households' income. Those households is composed by a vast majority of smallholders, for which agricultural production is a major resource for living. The necessary transition for stimulating production in remote areas seem to rely on fostering technology adoption and improve incentives for investments that would increase the productivity or the value added to smallholder production. We study two major organisational changes that are the reforms of cotton sector market structure in sub-Saharan Africa and index-based insurances. In both cases the point is to look at the potential of every organisation choice, reduce vulnerability and its effect, in particular the poverty trap phenomenon. The final objective is improve long run yield by foster investments, in spite of the risks borne by farmers and the tied budget constraint, consequence of the absence of financial (especially credit) markets. The cotton sectors inherited from the institutions of the colonial era, characterised by the concentration in cotton purchasing activities, often made by a parastatal at the national level. Those institutions contributed to generalise cotton production and to the diffusion of new technologies and agricultural practices, especially thanks to the distribution of quality inputs on credit, with future cotton production as collateral. Cotton production and technology adoption were also probably driven by the existence of a minimum guaranteed price set at the beginning of the cultivation season, the investments in infrastructures, research and extension services at the same national level. However, the concentration of the purchasing of cotton also poses some problems, reducing the bargaining power of producers and the proximity of the cotton. We look at the productivity response to cotton sector reforms that took place since 1985 in sub-Saharan Africa using the data from 16 cotton producers on the 1961-2008 period. We compare the performance of those countries with regard to their institutional choices. We first put into perspective the role of pre-reform investments before showing that if reforms may increase yields it could be to the cost of a shrinking area cultivated with cotton. In a second part we study the potential use of meteorological indices to smooth consumption over time and space. Such insurance policies are able to allow quick indemnifications for farmers enduring meteorological shocks. The realisation of the index is independent from the action of the principal and the agent, limiting moral hazard issues and the need for costly damage assessment arising from information asymmetry in traditional insurance contracts. Those insurance however suffer from the limited correlation between the index and the observed yield. We will study the potential of meteorological indices to limit the risk growers face in millet cultivation in Niger and cotton cultivation in Cameroon. We study, in particular, the index choice, the calibration of insurance contract parameters, the necessity of observing the sowing date and the level of basis risk. The large spatial variability of rainfall over the sudano-sahelian zone is a good reason to use such insurance, it however also explain the high level of basis risk of a given index that is observed using a network of rain gauges, itself installed at a cost. We discuss in both cases the relative importance of basis risk and the potential of such insurance to pool yield, and compare them to other risks, such as intra-village yield and price shocks.
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https://tel.archives-ouvertes.fr/tel-00765746
Contributor : Antoine Leblois Connect in order to contact the contributor
Submitted on : Monday, December 17, 2012 - 4:06:50 PM
Last modification on : Friday, October 8, 2021 - 4:26:40 PM
Long-term archiving on: : Monday, March 18, 2013 - 3:43:56 AM

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  • HAL Id : tel-00765746, version 1

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Antoine Leblois. Organisation change and African agricultural development? Eessais on cotton sector reforms and index-based insurances. Environmental and Society. Ecole des Hautes Etudes en Sciences Sociales (EHESS), 2012. English. ⟨tel-00765746⟩

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