Price adjustments and the cattle sub-sector in Central West Africa

Abstract

Cattle produced in the Sahelian countries were traditionally supplied to domestic markets as well as to foreign markets in the more densely populated coastal areas of West Africa. In the so-called central West-African corridor, substantial cattle trade flows from Mali and Burkina Faso benefitted from the competitive advantages on the consumer markets in Côte d'Ivoire, Ghana and Togo in contrast to beef from world market sources. Since the mid 1970s, these advantages have gradually disappeared as a result of droughts in Sahelian countries, falling world market prices, and - since the mid 1980s - the increasing overvaluation of the CFA franc. Moreover, the European Union (EU) initiated an aggressive trade policy to deal with its meat surpluses in the early 1980s. When dairy quotas were introduced in 1984, European beef production peaked as a result of massive slaughter of dairy cows, and large quantities of beef receiving substantial export subsidies were dumped on the world market (Jado t and Rolland, 1996). In 1994, the relative position of Sahelian livestock on the coastal West-African beef markets suddenly improved as a result of two major policy changes. Restitution payments (export subsidies) on beef to West Africa were reduced by 15 percent in June 1993 as a result of pressure from European non-governmental organizations (NGOs). More reductions followed and early 1994 the total reduction amounted to about 30 percent. In addition, the CFA franc was devalued by 50 perc ent on 12 January 1994: the fixed exchange rate changed from 50 CFA franc to 100 CFA franc per French franc. These two sudden policy changes resulted in price shocks that had a large impact on the competitiveness of Sahelian cattle on the coastal markets in West Africa, and as a result on cattle trade flows in the central West-African corridor. The effects on cattle production in the Sahel and on the utilization of rangelands are less directly observable. The purpose of this paper is to exa mine in more detail the effects of the CFA franc devaluation and the reduction in EU restitution payments on cattle trade flows and coastal beef markets in central West Africa, and the implications for cattle production and rangelands utilization in the Sahel. Section 2 reviews the scattered evidence available on trade flows and on the coastal beef markets. The focus will be on Côte d'Ivoire and Ghana, the main destiny of EU beef exports to West Africa during the period 1980–95. The effects on t he beef market are likely to differ considerably between Côte d'Ivoire, which belongs to the franc zone, and Ghana, which nowadays has a floating exchange rate. The effects on cattle production and rangelands utilization in the Sahel are examined in Section 3. Because of limited data, the analysis is confined to a theoretical exposition.