By a Thread: To Soothe Anger Over Subsidies, U.S. Cotton Tries Wooing Africa

SCOTT KILMAN and ROGER THUROW – THE WALL STREET JOURNAL

Americans Offer Help, Advice
As Poor Nations Urge WTO
To Kill Federal Farm Aid
Mr. Butler’s Gunfire Greeting
Copyright THE WALL STREET JOURNAL
August 5, 2005; Page A1
WEREKELA, Mali — Drummers and dancers greeted Jim Butler when he arrived at this settlement of dirt roads and mud houses in January. The deputy undersecretary at the U.S. Department of Agriculture met with local cotton farmers and promised American help to boost productivity. He presented the village headman with a pewter paperweight embossed with a USDA seal. The headman, who has neither a desk nor paper, hid it for safekeeping.
The trip was part of an extraordinary effort to lend a hand to African cotton farmers. But the prime motivation wasn’t altruistic. West African nations, newly assertive in global trade negotiations, are agitating for the abolition of subsidies essential to the prosperity of many American farmers. By offering tips on improving mills, analyzing dirt and chasing away bugs, the U.S. cotton industry is hoping to win some regional goodwill and maintain its domestic privileges a little while longer.
“Our goal is to help make their lives a little better,” says Andrew G. Jordan, vice president of technical services at the National Cotton Council, the industry’s powerful trade group. “Our goal is not to make Africa a big cotton producer.”
This delicate public-relations campaign has been prompted by a seismic shift in the politics of trade. For centuries, rich Western countries had their way. In recent decades, the U.S. and Europe spent billions to help their farmers better compete on the world stage. Such subsidies encourage overproduction, lower prices and hurt nonsubsidized farmers in developing nations.
Now, the U.S. is fending off an uprising by have-nots such as Mali and Benin, and emerging farm powers Brazil and India, which are turning the rules of the World Trade Organization to their advantage. In February 2003, Brazil challenged a host of U.S. cotton subsidies in the WTO on the grounds that they distort trade. Earlier this year, the WTO ruled in Brazil’s favor against a U.S. subsidy that aids cotton exports, the first time an American farm subsidy has been struck down. Congress is mulling changes to the program to conform with the decision.
At the same time, a bloc of developing nations helped torpedo progress on an all-encompassing WTO trade deal in CancĂșn, Mexico, in September 2003 when their demands for ending subsidies weren’t met. West African nations were upset about the lack of action on cotton, now a key battleground in the trade debate. In the latest WTO talks in Geneva, which are laying groundwork for a December summit in Hong Kong, West African nations are again demanding a marked reduction of cotton subsidies. They also want compensation from the U.S. for recent losses.
President Bush has said the U.S. will work with European nations to scale back farm subsidies; the White House is sensitive to the divisive nature of cotton aid. But zapping the U.S.’s network of cotton subsidies, or immediately scaling them back, isn’t a politically viable option. The cotton industry has powerful Congressional supporters who don’t want cotton singled out ahead of other subsidized crops.
This unstable landscape has prompted U.S. cotton to adopt an “if you can’t beat ’em, join ’em” strategy. By offering technical and scientific help they’re hoping the Africans will drop their demands and instead accept a gradual reduction in subsidies. Under WTO rules, any agreement must be a consensus of all 148 member nations.
Cotton producers have joined with the Bush administration, which is mobilizing the Agriculture Department, the U.S. Trade Representative’s Office, the U.S. Agency for International Development and even the National Security Council. The U.S. is offering to share biotechnology breakthroughs with West African farmers and is introducing them to gadgets such as optical scanners that measure the quality of cotton fiber.
Americans Jim Butler and John E. Pucheu Jr. visit Malian cotton farmers.
Government and industry officials have taken West African dignitaries on tours of the U.S. cotton belt. The Africans have been treated to stays at the Peabody hotel, in Memphis, Tenn., famous for a daily parade of ducks through the lobby, and a beef barbecue in Texas, where Mali’s ambassador to the U.S. showed off a shiny, cowboy-style belt buckle. Plans are afoot to launch a school in West Africa to teach new techniques in cotton ginning, the process of separating cotton seed from lint.
The Cotton Council, which represents 25,000 mostly white cotton farmers, as well as processors and exporters, has even reached out to Tuskegee University, the historically black Alabama school famous for agricultural research. The two institutions have had little contact over the years. Now the Cotton Council and the U.S. government are sponsoring West African scientists taking courses there.
“The National Cotton Council is in a vise grip,” says Arthur Siaway, a Tuskegee agricultural economist helping to organize the visits.
That’s what brought Mr. Butler, the Agriculture Department official, to Mali in January. He was accompanied by John E. Pucheu Jr., an American cotton farmer and Cotton Council official. The Americans had two days of talks with West African government ministers where they presented a long list of recommendations on everything from using better seeds to changing tax laws. “We are trying to show we can reach out to them and have things to offer them,” Mr. Pucheu says.
On the first day, the Malians took the two men to see a typical cotton-farming village. The welcome reception in Werekela included a salute from men shooting old rifles into the air. The Americans were treated to a banquet of skewered fish, rice stew, beef with couscous and dessert of papaya and other fruit.
“It was a great day when the Americans came here,” says Etienne Traore, a local farmer. “We told them about our difficulties in farming cotton, about the low prices.”
Africa’s Clean Cotton
Few farmers work with as many disadvantages as those in West Africa. Farming practices are exhausting the soil and there’s little in the way of a government safety net for low prices or failed crops. The Werekela farmers each scratch a living from a few acres of arid land. Mr. Pucheu works 3,500 acres of irrigated land.
Yet cotton does well here. Because it’s picked by hand, African cotton is unusually clean. It’s also inexpensive to produce because labor and land are cheap. U.S. and European trading companies are eager to expand in West Africa, the source of 12% of the world’s cotton exports.
“There is tremendous potential for cotton in Africa,” says Billy Dunavant, chairman of closely held Dunavant Enterprises Inc., a Memphis-based cotton merchandiser, which has explored acquiring cotton-processing assets in West Africa. Because his company buys cotton in both the U.S. and Africa, Mr. Dunavant says he isn’t taking sides in the subsidy dispute. Still, he says: “The Africans at times are justified to complain.”
The U.S. spends more money on cotton subsidies than any other nation. The U.S. cotton industry last year collected $4.5 billion in subsidies on a crop worth $5.9 billion, according to the USDA. This system enables U.S. farmers to export three-quarters of their harvest and control about 40% of world trade. That’s despite the decline of their traditional customer — the U.S. textile industry — and the fact that others produce cotton at lower cost.
Some cotton leaders accept that subsidies have hit a high-water mark and are now trying to manage the rate of decline. “In the long-term, it will go in the direction they want: lower and lower,” says Mr. Pucheu.
America’s subsidized bounty hits hardest in countries such as Mali, where cotton accounts for nearly 50% of the country’s exports. Because it has few other cotton-related industries, Mali exports almost its entire crop, making the nation vulnerable to world prices.
Several months after Messrs. Pucheu and Butler visited Werekela, the villagers’ enthusiasm had dissipated. “If we all go to the market together, the Americans have no problem with the low price, because they get subsidized support,” says Mr. Traore, who is missing his front teeth. “But for us, cotton sales are all we have.”
He’s sitting under a big shade tree with five other farmers escaping the afternoon heat. Chickens scratch in the dirt at their feet. “The Americans,” he says, “promised they would help us develop. But they never mentioned subsidies.”
Adds fellow farmer, Niantili Fomba: “The only thing we’ve gotten since is lower prices.”
In the spring, Mali’s government said the state’s cotton monopoly, run with France’s Dagris Group, will buy this season’s crop for about 14 cents a pound. The cooperative provides seeds and chemicals to Malian farmers on credit and then buys and exports their cotton. Last year, growers received about 18 cents a pound but the state lost close to $50 million. Development-aid donors said they wouldn’t cover such a loss this year.
The Mali farmers reluctantly acquiesced. But government ministers say low prices can’t be tolerated for many more years. “Cotton is important for the social peace and strengthening of democracy in Mali,” says Agriculture Minister Seydou Traore. “Continued losses will lead to social and political unrest.”
U.S. officials say some of the woes of West African farmers can be laid at the doorsteps of these ungainly state-run organizations. The West Africans reply that efforts to privatize their cotton industries are gummed up by America’s price-depressing subsidies.
Skepticism Remains
The Africans remain skeptical of the U.S. cotton industry’s wooing. Twice in the past two years, Mali’s Minister of Industry and Commerce, Choguel Kokalla Maiga, has been squired around American cotton fields by members of the Cotton Council. He says he took home the message that the U.S. wants to help West Africa’s cotton farms.
But on Africa’s two main demands — eliminating subsidies and establishing a fund to compensate African farmers for low prices — “we haven’t seen any big results,” Mr. Maiga says. During an interview in his office in Bamako, Mali’s capital, he adds: “What interest do we have in joining in an international agreement if the only commodity we have to participate in international trade — cotton — isn’t satisfied and treated justly?”
Lacking these concessions, Mr. Maiga says Benin, Burkina Faso, Chad and Mali are prepared to once again hold up the WTO negotiations in Hong Kong later this year.
U.S. cotton leaders, resentful of being blamed for the hardships of African farmers, are reluctant to discuss their African outreach efforts. Woody Anderson, a Texas farmer who traveled to Burkina Faso as the Cotton Council’s 2004 chairman, hung up on a reporter when asked about his trip. Woods E. Eastland, the current chairman of the Cotton Council, declines to comment, as does John Maguire, the group’s Washington lobbyist.
The White House doesn’t have the option of simply dismantling U.S. cotton subsidies to win West Africa’s votes. Although cotton farmers are a tiny group, they have the right friends in Congress.
The chairman of the Senate Appropriations Committee is Thad Cochran, a Mississippi Republican with close ties to his state’s cotton farmers. He succeeded the late James O. Eastland, the father of the Cotton Council’s current chairman.
“I don’t think America should sacrifice American farmers,” says Sen. Blanche Lincoln of Arkansas, a cotton-growing state. The Democrat says many farmers won’t be able to stay in business without them.
It’s not even clear Congress would accept the sorts of cuts that would allow the West Africans to claim a moral victory. “Our people have become addicted to subsidies,” says Cal Dooley, a former California Congressman who has long pushed for farm reform.
Drissa Diallo, the Malian regional cotton administrator who hosted the Werekela delegation, says that attitude will ultimately backfire on U.S. farmers. “We have a saying here,” he says: “A rich man among nine poor men has all the chances of becoming the 10th poor man.


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