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Business News of Tuesday, 5 February 2008

Source: Chronicle

Govt Blamed For Collapse of Cotton Industry

The government has been accused of not showing serious interest in the socio-economic advancement of the three Northern regions.

According to Mr. Mohammed Kwaku Doku, Executive Director of the Centre for Empowerment of the Vulnerable (CEV), it was wrong for the government to willingly allow cotton and sheanut production, which are the main economic commodities in the three regions, to suffer severe setbacks.

Speaking at a dialogue meeting, with members of the Cotton Growers Association of Ghana, and other stakeholders in Tamale, the CEV Director indicated that cotton had the potential to reduce the poverty situation in the north by 45%, if given the needed boost and attention by government. The BUSAC Fund sponsored the meeting.

He disclosed that some countries like Burkina Faso, Togo, Mali, Benin, Nigeria and Senegal had gained so much income from the cotton industry, because their governments had given it the desired attention and supports. Cotton, which is serving as the main export commodity and providing valuable foreign currencies, also accounts for about 5 to 10% of the Gross Domestic Product (GDP). It is on record that Benin receives 80% of its export revenue from cotton.

Mr. Doku further disclosed that cotton production in Burkina Faso increased by 175%, between 1993 and 1998, which in turn increased incomes and reduced the incidence of poverty from 50% to 42% in cotton growing areas of the country.

However, he said, the government of Ghana seemed to be virtually swallowing every deadly bait, from some of its development partners, in the form of grants and succumbing to pressures from the local textile manufacturers to import cheap lint cotton from the US, where the home government has given subsidies to its local farmers.

"Another serious issue compounding the problems of the industry, is the unfriendly policy environment in which we are operating, particularly in relation to the over liberalization of the economy, compelling government to withdraw its support and funding to the cotton industry. The decision of government to lift tariffs on imported lint cotton, since 2006 is a policy that has dealt a final and most devastating blow to the industry, thus throwing businesses out of competition and plunging our membership into serious debt crises."

Mr. Mohammed Doku, on the other hand, suggested to government to create investor motivation and friendly policies, to attract private investors into the industry, and to also review its decision, that led to the withdrawal of its support and the lifting of tariffs on the importation of lint cotton.

The National Secretary of the Cotton Growers Association of Ghana, Mr. Mohammed Nashiru, also gave a brief history about the industry and the association.

He also blamed the government for difficulties facing cotton farmers.

Mr. Nashiru appealed to the government, and its partners, to allocate some amount of money for research into how the cotton industry could be transformed to benefit the rural poor.

At the Dialogue Meeting, Mr. Hamadeh Ramez, Managing Director of the Inter-continental Farmer Limited (INCOF), disclosed that the few cotton companies assisting the farmers in three northern regions were going through hell in recovering the huge loans given to farmers.

He cited instances where farmers sell out farming inputs, allocated to them, including fertilizers, cotton seeds and chemicals, whilst others invest them in their stomachs or divert inputs into maize and pepper farming.

Mr. Ramez, who is also the Northern Regional Manager of Consar Construction Limited, indicated that the situation has therefore crippled most cotton companies financially, since farmers still continued to repay their debts.

The farmers on the other hand, blamed the cotton companies for not helping them to achieve the desired results, after collecting loans from them to go into cotton farming. The outcome of the meeting suggested that capacity building workshops ought to be organized for cotton farmers, and cotton companies, to enable both sides know what was expected of them, and what each was to contribute towards the progress of the sector. Participants also proposed for the setting up of a National Association of Cotton Growers, which would seek to explain problems of farmers.