The Impact of Subsidies on the Cotton Sector in Mali - Research Paper Example

Mali is a country that is heavily dependent on Cotton and gold and whose economy faces the challenge to do with diversification in agriculture. According to Crandall (2015), cotton production here is a whole production system that is also the backbone of food security. The agricultural sector has faced a lot of hurdles before the government intervention with farm prices and even after the introduction of subsidies. According to the CMDT website, the government gave a grant amounting to CFAF 18,225,340,267 on the prices of both cotton and maize fertilizers in the season 2014/2015.

For example, there was a period where cotton was considered to be of a lower quality because of the contamination of plastic. As is the case with such occurrences, the cotton was heavily discounted in the world markets and therefore incurs lesser income for chain actors(Ripoche 2015, 43).Mali’s poor rural economy does not only affect the exportation of cotton because in an actual sense the cotton in Mali is directly tied to food. According to smallholder farmers, they use the income they generate from farming cotton to pay for all of their bills and basic needs such as clothing and shelter.

Thus a dent in the production of cotton leads to suffrage throughout all the other industries because consumption lessens. According to the CMDT, revenue generated from forwarding sales is used for essential inputs like fertilizers. Cotton is strategic to the Malian economy because it guarantees the supply of fertilizers which means that farmers who do not grow cotton do not benefit.The world trade organization has received complaints about subsidies from cotton producers in Africa(Thomas and Chantal 2017, 225).

It is a subsequent cycle that then negatively influences world prices on cotton making them too low. It is estimated that more than ten million cotton growers on small scale in West Africa suffer economically as a result of the low prices in the world market. The vitality of prices in the world market affects the Malian economy.