Evaluation of Short and Long Run Impacts of Cotton Price on Rural Poverty of Lialibé and Kossou Producers in Cote d’Ivoire

Abstract

This paper measures, at the farm level, the short and long-term impacts of the fall in world cotton prices on agricultural incomes and the rural poverty level of cotton producers in Cote d'Ivoire. World cotton prices fell by 40% over the period from 2010 to 2018, this was felt by cotton producers. The objective of the paper is to show the relative importance of cotton for cotton producers and to draw the attention of public decision-makers to put in place public policies in the agricultural sector to support the development of the cotton sector. This paper combines farm survey data from Cote d’Ivoire with assumptions about the decline in farm-level prices to estimate the direct and indirect effects of cotton price reductions on rural income and poverty of Lialibe and Kossou Producers in Cote d’Ivoire. We used the monetary approach and the Foster-Greer-Thorbecke method to measure poverty. The results indicate that there is a strong link between cotton prices and rural welfare of Lialibe and Kossou Producers in Cote d’Ivoire. A 36.11% reduction in farm-level prices of cotton results in an increase in rural poverty of 30.43% points in the short run and 26-30% points in the long run according to elasticities. A 36.11% reduction in farm-level prices of cotton results in an increase in producer’s income of 69% points in the short run and 50-69% points in the long run according to elasticities. Overall, the study demonstrates the impact of changes in world cotton prices on rural poverty in Cote d’Ivoire, thus highlighting the likely negative effects of cotton subsidies on Cote d’Ivoire farmers.