By Allegresse Sasse
COTONOU (Reuters) - A decision by Benin's new president to loosen the government's grip on the West African nation's cotton industry has been met with caution by some in the sector who fear a repeat of mistakes made during a previous privatisation.
Known as the "King of Cotton" for having made a fortune from Benin's leading cash crop, Patrice Talon won elections in March after promising to revive the industry. And last month his new government handed control of the sector back to the professional cotton association, the AIC.
"The exceptional environment in which the cotton sector is evolving [via a state-run system] has scared away investors, and it's important to bring order," Pascal Irenee Koupaki, a senior official at the presidency, said of the decision.
The AIC, a private sector association then co-led by Talon, ran the sector beginning in 2009. Thomas Boni Yayi, who Talon replaced as president, ordered the government to take control in April 2012, however, citing governance problems and lack of transparency on the use of public subsidies.
The decision followed a falling out between Boni Yayi and Talon, formerly one of the presidents closest allies, leading some to view the move as politically motivated. But others saw declining production as evidence of real problems in the sector.
Cotton in Benin contributes 40 percent of foreign exchange earnings, 12 percent of GDP and about 60 percent of the national industrial fabric, according to the ministry of Agriculture.
Under AIC's management, seed cotton production was down at 173,000 tonnes during the 2011/12 season. Three seasons after the state took over output had rebounded to 393,000 tonnes.
The AIC said bad weather conditions, low international prices and late payments to producers, to explain the decline and the growing disaffection of farmers for cotton when it handed over the sector.
The International Monetary Fund has warned of a potential drain on state coffers, a point echoed by Talon's government.
Still, some sector players said the government had missed an opportunity to look at what was wrong with AIC's management and instead simply returned to the old system.
"The AIC was sick ... The system hasn't been corrected," said economist Albert Honlonkou. "Links between operators are not clear. We need a law to govern contracts between them."
The government's decision also did not directly address longstanding issues such as a lack of storage facilities and insufficient ginning capacity, critics said.
Benin has in the past been forced to send part of its raw cotton production to neighbouring countries to be processed, effectively excluding itself from an important part of the value chain.
"The government should have carried out a quick audit to enable people to understand the situation," said consultant Jocelyn Nenehidini.
Farmers also complained that the government had not addressed what they said were inequalities within the sector that handicapped farmers.
"We farmers have no weight. We don't have the means to be heard," said Sabi Naga Yo, the president of Benin's cotton farmers' federation.
"We ask the government to set up a panel on cotton where all the players will decide. Neither the monopoly of the state nor of the private sector is a good thing," he added.
The best solution, he said, is a zoning system in which farmers' producer associations are grouped into zones and enter into an exclusive relationship with particular ginners, a model that exists in Burkina Faso and is viewed as a success.
If the government truly wants the sector to develop, changes are needed, Farmer Amadou Dan Baba said.
"We are in favour of the establishment of the AIC, but we must reorganise it" by creating safeguards to avoid mismanagement.
(Reporting by Allegresse Sasse, Writing by Marine Pennetier, Editing by Joe Bavier and David Evans)
