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Chad Table of Contents


Restructuring the System

By 1987, because world prices were still insufficient to recoup costs, Cotontchad was rapidly going broke. In the mid-1980s, annual net losses were estimated at CFA F18 billion. Net losses per kilogram of ginned cotton were estimated at CFA F453 in 1985 and CFA F298 in 1987. These figures stood in contrast to 1984, when there was a net profit of CFA F193 per kilogram. Cotontchad's position was not expected to improve unless the world price of cotton reached the CFA F600-per-kilogram range.

With World Bank backing and support from France, the Netherlands, and the EC, restructuring of Cotontchad began in 1986 with government implementation of the Emergency Cotton Program. At the producer level, the program called for freezing the price paid producers at the CFA F100-per-kilogram level through 1988 and studying new methods of fixing producer prices to reflect world market conditions. Subsidies on improved inputs, such as fertilizer and insecticides, were eliminated as of 1987, with producers assuming the costs. Cotton production was to be limited to about 100,000 tons by restricting the area under production to 75,000 hectares during the program period. At the company level, Cotontchad sold nonessential assets to the private sector (including 2 aircraft and about 150 vehicles), closed its branch office in Bangui, Central African Republic, and laid off administrative staff. It also closed six ginneries and reduced the number of cotton collection centers in accordance with the production target of 100,000 tons. For its part, the government exempted Cotontchad from taxes, particularly export duties, and suspended its contributions to the CSPC, the ONDR, and the Debt Amortization Fund (Caisse Autonome d'Amortissement--CAA). Staffs at the CSPC and the ONDR were reduced, and the roles of both organizations were reviewed.

Data as of December 1988