Chapter 2. A historical comparative analysis of commodity development models in West Africa 65
total liberalization of the system proved too difficult to withstand; hence, there was a protracted period
of half measures and attempts at partial liberation measures. Meanwhile, many cotton producers began
reducing cotton acreage, turning to alternative crops (rice, sesame, maize, etc.).
D. Lessons learned from these case studies
The export commodity model illustrated by the three cases just analysed has a number of common
features. It is state-run (usually led by a parastatal that intervenes across the value chain) and the private
players (agroprocessors and farmers) have relatively little bargaining power whether they are organized
(as in groundnuts and cotton) or not (as in cocoa).
Initially, export commodity producers were benefiting, as yields improved through investments in
research and provision of inputs, and as long as world prices were much higher than received prices, even
accounting for variability (see Figure 11 for cocoa and Figure 13 for cotton). For example, cocoa farmers
in Côte d’Ivoire “rarely received more than 50 percent of the export price” (Varangis and Schreiber,
2001). Also, as long as world prices fluctuated above the floor (received) price, farmers could count on
this price stability and continue to engage with these commodities, especially as the alternatives (food or
cash crops) offered less revenue. However, over time, the parastatals reduced the fixed producer prices
(from their stable position in the 1980s) as world prices kept falling, sometimes by half, as in the case of
cocoa in Côte d’Ivoire. Losses to income were simply passed on to farmers.
Apart from the basic processing activities off the farmgate (ginning for cotton, or roasting for cocoa),
most of the private actors were intermediary marketers and traders who had established business
relations with European importers. These intermediary actors ensured profit margins for themselves and
thus were less vulnerable to price fluctuations. This was not the case for producers, who not only had to
face declining price factors over time but had to contend with rising input prices, further squeezing their
margins and revenues. Therefore, under this value chain model, producers absorbed much of the risk.
In all three cases analysed, producers have been the big losers when commodity markets were in crisis.
This is partly the consequence of the monopolistic structure of the export commodity model, as well as
the lack of attractive alternative enterprises for producers. Another important finding was that even when
producer organizations existed (groundnut cooperatives in Senegal, cotton farmer groups in Mali) they
were largely ineffective in leveraging their organizational power and therefore could be easily controlled
by the state agencies. This suggests a serious organizational weakness in these producer organizations
and a need to establish different forms of governance and structure, suitable for economic and market-
oriented approaches. All this requires a serious look at how these organizations should be structured
and governed, and how their internal capacity can be enhanced in order to become credible economic
partners fully capable of engaging with the market (see Chapter 7 for a full treatment on this subject and
the methodology proposed to create such market-oriented organizations).
The governance structure of the export commodity model was skewed in such a way that too little of the
income extracted from the value chains (captured disproportionately by the parastatals and, to a lesser extent,
the intermediate marketers) could find its way back as investment for improving farm-level productivity,
maintaining competitiveness of the value chain and introducing risk mitigation measures (such as insurance)
to strengthen farmers’ resilience against risks and uncertainty and thus ensure sustainability.
When these internal factors were combined with external trends (long-term price declines, rising
competition, emergence of substitutes, etc.), returns from these export commodities dwindled, putting