Essays on cotton production in sub-Saharan Africa

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2023-05
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Toppar, Miracle-Rose
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Hoffman, Elizabeth
Plastina, Alejandro
Kedagni, Désiré
Zhang, Wendong
Sanders, Eulanda
Eike, Rachel
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Economics
Abstract
Did transgenic cotton reform increase cotton production in Burkina Faso?: Quasi-experimental evidence from West and Central Africa Sub-Saharan African farmers are aware that Bt cotton can resist some insects and abate the need to buy insecticides. While some argue in favor of the cost savings, others speculate that transgenic cotton will keep them at the mercy of powerful foreign companies and locally untested technologies. I collect data from multiple French and English sources like the International Cotton Advisory Committee (ICAC), Food and Agriculture Organization Corporate Statistical Database (FAOSTAT), United Nations International Trade Statistics Database (UN COMTRADE), Burkinabé annuaires statistiques agricole, cotton company report from CotonTchad, and several sub-Saharan Africa cotton sector World Bank documents. I estimate the impact of Bt cotton on cotton lint production in Burkina Faso by comparing observed production in 2007 to 2014 against an unobserved counterfactual scenario where Bt cotton is not adopted by Burkina Faso, created with the synthetic control method illustrated by Abadie, Diamond, and Hainmueller (2010). I find that Bt cotton adoption increased cotton lint production by an estimated 16.3% to 46%. This translates into an additional 26,064 to 123,211 tonnes of cotton lint annually produced and an additional export revenue of approximately 43 million to 171 million USD in Burkina Faso. The cumulative effect of Bt cotton adoption over 2007 to 2014 is estimated at an additional 529,430 metric tons of cotton lint and 765.61 million USD in export revenue for Burkina Faso, over the entire period. The annual treatment effects are statistically significant at the 1\% significance level. This suggests some initial success for transgenic cotton in Burkina Faso. Ex-ante welfare effects of Bt cotton adoption in Chad Only four African countries, Burkina Faso, Kenya, South Africa, and Sudan, commercialized Bt cotton by 2020 to control the destructive bollworm pests. Smallholder cotton farmers are skeptical about completely relying on foreign technology. I develop counterfactual scenarios of Bt cotton adoption in Chad, modeled from yield increases and pesticide reduction statistics from Burkina Faso field trials, created with the constant-elasticity power supply function. My results suggest that under the assumptions of a 20% yield increase and a 1% increase in cotton harvested area, the aggregate impact of Bt cotton adoption on smallholder farmers’ total surplus in Chad would have been in the range of 128 to 292 USD/ha or 22 to 79 million USD. My results also suggest that under the alternative scenario with a 20% yield increase and a 10% increase in cotton harvested area, the aggregate impact of Bt cotton adoption on smallholder farmers’ total surplus in Chad would have been in the range of 131 to 313 USD/ha or 24 to 90 million USD from 1998 to 2017. My results also suggest that in the scenario with a 20% yield increase, a 10% increase in cotton harvested area, and the Burkinabé technology fee, the introduction of Bt cotton would generate between 9.3 and 31.9 USD/ha or 2.1 and 9.1 million USD in technology fees over the period 1998 and 2017. Furthermore, net producer gains in the range of 19 to 64 USD/ha or 4.2 to 18.3 million USD would be obtained by smallholder farmers. Thus, incentives are in place to have a strong corporation lobby to promote adoption of Bt cotton, which may increase welfare for smallholder farmers and seed companies. Under moderate increases in yield (+20%), harvested area (+1% and +10%), and the 50-50 split and Burkinabé technology fees, Bt cotton adoption would have been profitable, which implies that, based on the analysis, Chad made the wrong decision to not adopt Bt cotton, but could have benefitted from adopting it from 1998 to 2017. However, I find that technology fees as high as the South African technology fee engender net producer loses, which become larger loses from 2009 to 2017; this suggests that Bt cotton adoption would not have been profitable. Does cotton input diversion to maize production reduce maize yield in Burkina Faso? Many smallholder farmers are suspected of collecting subsidized inputs such as fertilizer on credit and diverting some to produce cereals, especially, maize. In a Generalized Linear Model, I apply a Bayesian framework to predict maize yields for Benin and Burkina Faso. Driven by the average national prices for NPK triple 15 and urea, I conjecture that countries with higher maize fertilizer prices may be associated with higher cotton input diversion rates among smallholder farmers. I find what appears to be an insignificant effect of the diversion of cotton fertilizer on maize yield in Burkina Faso and Benin. The results are not relevant for policy analysis due to the low predictive power of the model. Further research is required to assess the true state of cotton input diversion, farmers' behaviors regarding input diversion, and resulting impact on yield.
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