WT/CFMC/W/86 19 February 2021 (21-1112) Page

WT/CFMC/W/86

19 February 2021

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Sub-Committee on Cotton Original: French

FEASIBILITY STUDY ON "TRANSFERRING TECHNOLOGIES AND KNOW-HOW

FOR THE DEVELOPMENT OF COTTON BY-PRODUCTS IN CHAD"

The following communication, dated 12 November 2020, is being circulated at the request of the

delegation of Chad.1

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1 The content of this communication corresponds to that of a study by the independent consultants Mr

Alexis Hougni and Mr Michel Naitormbaide, as presented in the Thematic Session on Cotton By-Products Development in LDCs on 12 November 2020.

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CONTENTS

CONTENTS ........................................................................................................................ 2

LIST OF TABLES ............................................................................................................... 3

LIST OF CHARTS ............................................................................................................... 4

ACRONYMS AND ABBREVIATIONS.................................................................................... 5

SUMMARY ........................................................................................................................ 6

1 GENERAL FRAMEWORK OF THE STUDY ......................................................................... 7

1.1 Background and rationale of the study ............................................................................ 7

1.2 Aims of the study ......................................................................................................... 7

1.3 Study methodology ....................................................................................................... 7

1.3.1 Overall approach ....................................................................................................... 7

1.3.2 Key stages of the study .............................................................................................. 7

1.3.2.1 Literature review .................................................................................................... 7

1.3.2.2 Data collection and processing .................................................................................. 7

2 BASELINE FOR THE STUDY ........................................................................................... 8

2.1 Size of the cotton sector and its role in Chad ................................................................... 8

2.2 Literature review and definition of the terms coproduits, sous-produits and produits dérivés in relation to cotton .................................................................................................. 8

2.2.1 Background and developments in the cotton sector in Chad ............................................ 8

2.2.2 Performance over 10 years (2009-10 to 2018-19) ....................................................... 11

2.2.2.1 Seed cotton, cotton lint and cottonseed production ................................................... 11

2.2.2.2 Estimation of availability of cottonseed oil ................................................................ 12

2.2.2.3 Estimation of availability of cottonseed meal ............................................................ 12

2.2.2.4 Estimation of availability of cottonseed hulls ............................................................. 13

2.2.2.5 Estimation of availability of cotton stalks .................................................................. 14

2.2.3 Impact of cotton growing .......................................................................................... 14

2.2.3.1 Food crops ........................................................................................................... 14

2.2.3.2 Farmer/household income ...................................................................................... 15

2.2.4 Definition of the terms coproduits, sous-produits and produits dérivés in relation to cotton.............................................................................................................................. 15

2.2.4.1 Cottonseed........................................................................................................... 16

2.2.4.2 Cottonseed kernels ............................................................................................... 16

2.2.4.3 Cottonseed meal ................................................................................................... 17

2.2.4.4 Linters ................................................................................................................. 17

2.2.4.5 Hulls ................................................................................................................... 17

2.2.4.6 Gossypol .............................................................................................................. 18

2.2.4.7 Use of cotton stalks ............................................................................................... 18

2.3 Current status of by-product manufacturers and production techniques ............................. 20

2.3.1 CotonTchad SN ........................................................................................................ 20

2.3.2 ABOUFATIMA, a private company .............................................................................. 20

2.4 Value chains of priority by-products .............................................................................. 20

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3 DIAGNOSIS OF THE COTTON SECTOR IN CHAD .......................................................... 21

3.1 Stakeholders and their roles in production ..................................................................... 21

3.1.1 The Chadian State ................................................................................................... 21

3.1.2 CotonTchad SN ........................................................................................................ 21

3.1.3 Seed cotton producers.............................................................................................. 23

3.1.4 Chadian Institute of Agricultural Research for Development (ITRAD) .............................. 23

3.1.5 National Rural Development Agency (ANADER)............................................................ 23

3.1.6 Banks ..................................................................................................................... 23

3.1.7 Private transport operators ....................................................................................... 23

3.1.8 Suppliers ................................................................................................................ 24

3.2 Policy environment analysis: legal and regulatory frameworks for the production of by-products ...................................................................................................................... 24

4 ANALYSIS OF COTTON BY-PRODUCTS AND DERIVATIVES IN CHAD ........................... 24

4.1 Strengths, weaknesses, opportunities and threats (SWOT) for expansion of each product ............................................................................................................................ 24

4.2 By-products in the seed-crushing subsector ................................................................... 25

4.2.1 Mapping of operators in the subsector ........................................................................ 25

4.2.2 By-products in the subsector ..................................................................................... 25

4.3 Markets for products and by-products ........................................................................... 27

4.3.1 Cotton lint .............................................................................................................. 27

4.3.2 Linters .................................................................................................................... 27

4.3.3 Seed ...................................................................................................................... 28

4.3.4 Meal ....................................................................................................................... 28

4.3.5 Oil ......................................................................................................................... 28

5 IDENTIFICATION AND ORDER OF PRIORITY OF BY-PRODUCTS TO BE EXPLOITED IN CHAD ...................................................................................................... 29

5.1 Meal ......................................................................................................................... 29

5.2 Hulls ......................................................................................................................... 29

5.3 Cotton stalks.............................................................................................................. 29

5.4 Order of priority for products ....................................................................................... 29

6 CONCLUSION AND RECOMMENDATIONS .................................................................... 30

BIBLIOGRAPHICAL REFERENCES ................................................................................... 32

LIST OF TABLES

Table 1: Revenue per hectare for cotton, groundnuts, sesame, maize and sorghum in cotton-growing areas in Chad. ............................................................................................ 15

Table 2: Volume of seed used to produce oil and meal ........................................................... 20

Table 3: SWOT analysis for expansion of the lint market ........................................................ 24

Table 4: SWOT analysis for expansion of cottonseed production.............................................. 25

Table 5: SWOT analysis for expansion of oil production .......................................................... 25

Table 6: SWOT analysis for expansion of cottonseed meal production ...................................... 26

Table 7: SWOT analysis for expansion of hull production ........................................................ 26

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Table 8: SWOT analysis for expansion of the utilization of cotton stalks ................................... 27

Table 9: Order of priority for ginning by-products and cotton stalks ........................................ 30

LIST OF CHARTS

Chart 1: Former administrative map of Chad showing the cotton production area ..................... 10

Chart 2: Seed cotton land area, production and yields ........................................................... 11

Chart 3: Cottonseed and lint output, 2009–19 ...................................................................... 11

Chart 4: Cottonseed oil output, 2009–19 ............................................................................. 12

Chart 5: Meal and seed production, 2009–19 ....................................................................... 13

Chart 6: Hull production, 2009–19 ...................................................................................... 13

Chart 7: Estimated quantity of stalks produced, 2009–19. ..................................................... 14

Chart 8: Proportions of by-products obtained from seed cotton ............................................... 16

Chart 9: Cotton linter production over 10 years .................................................................... 28

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ACRONYMS AND ABBREVIATIONS

ANADER : Agence Nationale de Développement Rural (National Rural Development Agency)

CEMAC Economic and Monetary Community of Central Africa

Cotonfran : Compagnie Cotonnière Equatoriale Française (French Equatorial Cotton Company)

CotonTchad SN : Société Cotonnière du Tchad Société Nouvelle

CRA-CF : Centre de Recherches Agricoles Coton et Fibres (Cotton and Fibre Agricultural Research Centre)

EU : European Union

FAO : Food and Agriculture Organization of the United Nations

GDP : Gross domestic product

ICAC : International Cotton Advisory Committee

INRAB : Institut National de Recherches Agricoles du Bénin (National Agricultural Research Institute of Benin)

ITRAD : Institut Tchadien de Recherche Agronomique pour le Développement (Chadian Institute of Agricultural Research for Development)

MAG : Charte de Marché Autogéré (self-managed market charter)

MGP : Minimum guaranteed price

SOSEA : Société de Services pour l'Europe et l'Asie (Europe and Asia Service Company)

SWOT : Strengths, weaknesses, opportunities and threats

UNPCT : Union Nationale des Producteurs de Coton du Tchad (National Union of Cotton Producers of Chad)

USAID : United States Agency for International Development

VAT : Value-added tax

VATICOPP : Valorisation des tiges de cotonnier pour la fabrication des panneaux à

particules (project to utilize cotton stalks to manufacture particle board)

WACIP : West African Cotton Improvement Programme

WTO : World Trade Organization

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SUMMARY

1.1. The feasibility study on "transferring technologies and know-how for the development of cotton by-products in Chad" is an initiative to identify examples of cotton by-products making positive contributions to poverty reduction, food security, job creation, income diversification, improved living standards for women, and the circular economy. The aim of this study is to establish priorities in interventions in order to facilitate investment and technology transfer.

1.2. To achieve that aim, a survey questionnaire was drawn up and submitted to the main stakeholders in the cotton sector: producers (through the National Union of Cotton Producers of Chad (UNPCT)), CotonTchad SN and the Chadian Institute of Agricultural Research for Development (ITRAD). The review of the literature was also included. The collected data were analysed and are included in this document as text and in figures and tables with comments.

1.3. The results of the study show that Chad has huge potentialities for producing cotton, and hence

for producing large quantities of by-products. Over the last 10 years (2009–2019), annual seed cotton production has ranged from 17,000 to 185,000 tonnes, resulting in between 9,400 and 102,000 tonnes of seed. The oil mill in Moundou (a CotonTchad SN processing unit) can crush around 50% of that seed to obtain oil, which can then be used to make other by-products, including cottonseed meal and hulls. These by-products are delivered to traders entirely unprocessed. The traders then sell the by-products to farmers to be used as cattle feed, even though they contain gossypol, a harmful substance contained in cottonseed. Over the last 20 years, cotton has been

sown in some 230,000 hectares of land a year on average. Since one hectare can produce an average of 2.5 tonnes of stalks, around 575,000 tonnes of stalks are produced each year. The stalks may be used to produce briquettes, or they may be processed to make organic fertilizer.

1.4. All stakeholders recognize the socioeconomic and environmental benefits of using cottonseed meal and hulls to manufacture cattle feed and using stalks to produce biofuels and particle board,

so small businesses are likely to choose these by-products to process them. Developing and promoting these by-products will generate value addition and create jobs for the rural youth, who

are often attracted away from rural areas. Nevertheless, a pre-feasibility and cost-effectiveness study for each by-product to be processed appears essential.

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1 GENERAL FRAMEWORK OF THE STUDY

1.1 Background and rationale of the study

1.1. Cotton is grown for its lint (fibre), but it also provides a significant quantity of by-products, including seed, oil, meal and hulls. Utilizing those by-products would create a range of opportunities and thousands of jobs. Many value chains offer economic opportunities. To support the development of value chains through value addition in the cotton-growing sector, the World Trade Organization

(WTO) has commissioned this feasibility study on the project for "Transferring technologies and know-how for the development of cotton co-products, by-products and derivatives in the four Cotton-4 countries". The study is being carried out in the Cotton-4 (C-4) countries: Benin, Burkina Faso, Chad and Mali. This document presents the results of the work carried out in Chad.

1.2 Aims of the study

1.2. The initiative aims to collect evidence and success stories of cotton by-products contributing to

poverty reduction, food security, job creation, revenue diversification, improved living standards for women, and the circular economy. Its primary purpose is to establish priorities in interventions in order to facilitate investment and technology transfer.

1.3 Study methodology

1.3. As in the other three C-4 countries that were the subject of the study (Benin, Burkina Faso and Mali), the study in Chad was carried out in two stages.

1.3.1 Overall approach

1.4. To launch the study, a survey questionnaire was sent to the correspondents of the C-4 countries Burkina Faso, Chad and Mali. The study was carried out on the basis of the questionnaire as approved by the stakeholders.

1.5. To facilitate collection of the data, a letter from the WTO was sent to the bodies targeted by the study in each country. In support of that letter, the Directorate-General of the Chadian Institute of Agricultural Research for Development (ITRAD) sent an official letter to CotonTchad SN, the largest company in the cotton sector in Chad, to facilitate access to the company's data.

1.3.2 Key stages of the study

1.6. The key stages of the study are: (i) the literature review, and (ii) data collection and processing.

1.3.2.1 Literature review

1.7. A review of the literature was carried out to better understand the theme of the feasibility study on the project for "Transferring technologies and know-how for the development of cotton co-products, by-products and derivative products in the four Cotton-4 countries". The review used

technical reports prepared by stakeholders in the cotton sector and communications issued at international meetings, as well as several papers related to the study that were submitted by the coordinators of the study based in Cotonou.

1.3.2.2 Data collection and processing

1.8. CotonTchad SN made the basic data available and some of the officials at the company were interviewed. The collected data were analysed and are included in this document as text and in figures and tables with comments.

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2 BASELINE FOR THE STUDY

2.1 Size of the cotton sector and its role in Chad

2.1. Cotton was a leading sector in Chad from independence until the rise of petroleum production in 2003. Today, cotton still contributes a significant share of GDP. In 2000, it contributed 2.8%; from 2005 to 2015, the figure ranged from 0.4% to 1%. Cotton's share of export revenue was 30.4% in 2000 and 43% in 2002; since the oil boom, however, its share of exports has fluctuated between

0.8% and 2.5%.

2.2. Cotton still occupies pride of place in the cotton-producing areas, since it affects the daily lives of around 380,000 producers belonging to over 5,000 village associations. It is estimated that more than 3 million people obtain most of their income either directly or indirectly from cotton growing.

2.3. Cotton is Chad's main cash crop and the income it generates allows producers to fulfil their needs and aspirations regarding food, education for their children, clothing, family health care,

marriage, good-quality housing, transport, farming equipment, etc.

2.4. Seven ginneries are currently operational in five administrative provinces stretching from east to west. Thanks in part to the opening of those ginneries, other industrial plants followed, including:

• the oil and soap plant, which generates revenue from cottonseed by crushing it to make edible oil, meal to be used as animal feed and hulls to generate power; and

• the textiles company, which spins, weaves and dyes lint for local consumption.

2.5. Cotton is a major driver of socioeconomic growth in all cotton-growing provinces, creating jobs,

boosting local trade, funding government bodies through taxes on goods and persons, and leading

to the establishment of industrial processing plants that provide jobs related to ginning, crushing seed to make oil, and weaving and dyeing to produce fabrics.

2.6. Cotton production also helps open up isolated regions, since it results in the maintenance of unpaved roads in rural areas used to collect and transport cotton, food products and people.

2.7. CotonTchad SN is one of Chad's largest employers, with more than 800 employees. The cotton sector contributes to the construction of social facilities needed for rural development (schools,

village health centres, etc.) through the payments it makes to village associations. The sector also strengthens social cohesion through the cotton-producer organizations.

2.2 Literature review and definition of the terms coproduits, sous-produits and produits dérivés in relation to cotton

2.2.1 Background and developments in the cotton sector in Chad

2.8. Cotton is grown around the world, from the tropics to beyond the 40th parallel. The basic

conditions required to successfully grow cotton are a long frost-free season, a temperature range of 18°C to 32°C, and 600 mm to 1,200 mm of water during the plant life cycle, which generally lasts from 125 to 175 days (FAO, 2012). Cotton has a certain tolerance to salinity and drought and is therefore grown in arid and semi-arid regions.

2.9. The socioeconomic significance of cotton is very clear: in 2013-14, more than 75 countries produced 25.624 million tonnes of cotton lint in total (ICAC, 2014). Cotton is grown mainly for its lint, a raw material in the textile industry. Cotton was grown on 32.429 million hectares of land in

2013-14 (ICAC, 2014), or 2.3% of arable land worldwide (around 1.4 billion hectares on average for the period from 1992 to 2009, FAOSTAT). Around 80% of the cotton produced comes from six countries. China has the highest output (6.7 million tonnes), followed by India (6.371 million tonnes), the United States (2.811 million tonnes), Pakistan (2.076 million tonnes),

Brazil (1.644 million tonnes) and Uzbekistan (920,000 tonnes) (ICAC, 2014).

2.10. Thanks to new production techniques and good management practices, average global yields have almost doubled in 30 years, from 411 kg/ha of cotton lint in 1980-81 to 790 kg/ha in 2013-14

(ICAC, 2014).

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2.11. Cotton directly or indirectly impacts the lives of over 250 million people around the world (ICAC, 2009). It also plays an important role in industrial development, generating substantial revenue for stakeholders. The 25.6 million tonnes of cotton produced in 2013-14 and sold at an average price of USD 0.91 per pound of cotton lint (USD 2.01/kg) generated USD 51.4 billion for more than 100 million family farms.

2.12. Industrial cotton growing was introduced in Chad in 1928. The crop was initially an imposition,

but was gradually accepted by the people living in the areas where it is produced (Chart 1). Since the 1980s, people in the south of Chad have emphasized the importance of cotton on account of the size of the sector, the socioeconomic benefits it brings at various levels and its strategic significance for Chad. Originally called Cotonfran (French Equatorial Cotton Company), the company has experienced several crises, as a result of which it has been restructured several times and changed its name. The largest restructuring was undertaken by the Chadian State in 2012, establishing

CotonTchad SN, which took over all the operations previously conducted by the former company,

CotonTchad. CotonTchad SN was previously 75% state-owned, with the remaining 25% stake shared between Dagris (19%) and local banks (6%). Its mission was to provide tools and fertilizers to cotton growers and to market seed cotton.

2.13. Poor management of the sector exacerbated the crisis. Given the socioeconomic importance of cotton to Chad, the State privatized the cotton company by selling a 60% share in the company to the Singapore-based Olam group in 2018.

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Chart 1: Former administrative map of Chad showing the cotton production area

Source: Cotonfran, 1980.

2.14. Cotton growing impacts the lives of more than 3 million Chadians. The cotton-growing area measures around 100,000 km², or about a tenth of the national territory (1.284 million km²). Grown mainly in the south of the country for its lint, cotton also generates by-products which, if utilized, provide economic opportunities and jobs.

2.15. Although the term "cotton" is often used to mean cotton lint, the harvested crop (seed cotton)

also contains a by-product called "cottonseed". Seed cotton comprises about one third lint and two thirds seed by weight.

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2.2.2 Performance over 10 years (2009-10 to 2018-19)

2.2.2.1 Seed cotton, cotton lint and cottonseed production

2.16. Over the last 10 years, the season with the highest production was 2016-17, with over

300,000 hectares harvested. It was also the season with the highest yield. Nevertheless, for the period as a whole, the increase in output was due to the increase in the land area in which cotton was sown.

Chart 2: Seed cotton land area, production and yields

Source: CotonTchad SN, 2019

2.17. The final two crop years were very poor, producing less than 50,000 tonnes of seed cotton

due to a shortage of synthetic fertilizers and insecticides, which are essential for cotton growing.

2.18. Cottonseed production experienced the same fluctuations as lint production. As shown in Chart 3, output of lint and seed (needed for crushing to make oil) was highest in 2016-17.

Chart 3: Cottonseed and lint output, 2009–19


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2.2.2.2 Estimation of availability of cottonseed oil

2.19. On average, only 50–60% of the cottonseed obtained from each annual crop is processed to make cottonseed oil.

2.20. The remaining cottonseed is probably used as animal feed.

2.21. Over the last 10 years, the volume of seed processed to make oil has been anywhere between 8,000 tonnes and 43,000 tonnes. On average, this represents 60% of the cottonseed obtained when

the seed cotton is ginned.

2.22. Also on average, the volume of oil obtained each crop year from crushing the cottonseed represents only 17% of the volume of seed used. Production of cottonseed oil peaked at

7,413 tonnes in 2014-15, thanks in part to a good crop that produced 142,000 tonnes of seed cotton. The positive trend in production of seed cotton and cottonseed oil continued in the following two seasons.

Chart 4: Cottonseed oil output, 2009–19


2.2.2.3 Estimation of availability of cottonseed meal

2.23. Meal is what remains of the cotton kernels that are crushed to make oil. On average, the meal

represents 43% of the volume of crushed seed. The amount produced varies in proportion to the amount of oil obtained. Meal production peaked in 2014-15 (Chart 5).

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Chart 5: Meal and seed production, 2009–19


2.24. Meal production over the last 10 years reached its lowest levels in 2017-18 and 2018-19. This was due to the difficulties experienced by the cotton sector in Chad in recent years.

2.2.2.4 Estimation of availability of cottonseed hulls

2.25. The volume of hulls produced each year is calculated on the basis of the volume of seed crushed to produce oil. This means that hull production follows the same upward and downward trends as oil and meal production.

Chart 6: Hull production, 2009–19


2.26. On average, the volume of hulls is equal to 41% of the volume of crushed seed.

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2.2.2.5 Estimation of availability of cotton stalks

2.27. The volume of stalks was estimated on the basis of seed cotton production using the formula devised by Kpadé et al (2019) for this purpose for VATICOPP (Valorisation des tiges de cotonnier pour la fabrication des panneaux à particules), a project to utilize cotton stalks to manufacture particle board. This formula assumes an average waste–product ratio of 2. Analysis of Chart 7 shows that seed cotton output fell in 2017-18 and 2018-19.

Chart 7: Estimated quantity of stalks produced, 2009–19.


2.28. Seed cotton output was poor (less than 30,000 tonnes) in the final two seasons of the period, because financial difficulties demotivated producers. For instance, if inputs are unavailable or they reach producers late, as sometimes occurs, the cotton crop is not harvested in full. And even if the crop is harvested, the producers might not get paid. Seed cotton output rebounded to 113,000 in 2019-20, which would equate to 226,000 tonnes of stalks. Although they could be used for compost,

unfortunately 80% of the stalks are used as fuel wood or are consumed by wildfires.

2.2.3 Impact of cotton growing

2.2.3.1 Food crops

2.29. The main food crops grown in terms of land area are sorghum, millet, groundnuts, dry-season sorghum, maize, rice, cowpeas and sesame. Since agriculture is often extensive, crop yields are generally low.

2.30. Over the last 10 years, the average land area in which food crops were grown was

4,401,900 hectares. The volume produced was 3,904,400 tonnes, resulting in an average yield of 890 kg per hectare.

2.31. Cowpeas, sesame and cotton are often planted at the start of a crop rotation. Cowpeas and sesame can be grown on a plot after rudimentary clearing, while cotton at the start of a rotation produces a good yield and benefits subsequent crop seasons too. Growing cotton benefits cereal

crops that are subsequently grown in the same soil, which have 20% to 30% higher yields thanks

to the after-effect of the fertilizer used on the cotton. Cotton also generates enough income for farmers to grow cereal crops, as they can then buy farming equipment such as oxen, ploughs and carts. This equipment gives them greater control over the crop calendar (tilling, sowing, hilling, etc.). Providing support to cotton producers also boosts the productivity of food crops.

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2.32. According to Hauswirth and Djinodji (2006), cotton-producing farms almost always have lower yields and lower food coverage levels for cereals, oilseeds and protein crops than non-cotton-producing farms. These findings explain why many farmers have begun growing groundnuts instead of cotton. Nevertheless, cotton growing continues for two reasons: it is an almost exclusive condition for gaining access to technical innovations (fertilizers, sprayers, insecticides), and it is a cash crop, the buying rate of which is known in advance.

2.2.3.2 Farmer/household income

2.33. The economic performance of cotton producers is slightly lower than that of groundnut producers, but slightly higher than that of sesame, maize and sorghum producers. In addition, growing cotton still requires more working capital than growing other crops (Table 1).

Table 1: Revenue per hectare for cotton, groundnuts, sesame, maize and sorghum in cotton-growing areas in Chad.

Description Cotton Groundnuts Sesame Maize Sorghum

Cost of production (CFAF) 112,450 92,250 102,500 83,700 42,500

Output (kg) 750 600 300 900 600

Buying price (CFAF/kg) 223 250 500 150 125

Output value (CFAF) 167,250 150,000 150,000 135,000 75,000

Producers' net revenue (CFAF) 54,800 57,750 47,500 51,300 32,500

Source: Naitormbaide, 2019.

2.34. This literature review found that, in addition to cottonseed oil, the cotton industry provides Chad with three other by-products: seed, which is separated from the lint during ginning, and the meal and

hulls, which result from the oil production (file: http://www.feedbase.com/papers/afz3044.pdf).

2.35. The by-products of ginning are cotton gin trash: a mixture of stalks, leaves, linters and seeds.

2.2.4 Definition of the terms coproduits, sous-produits and produits dérivés in relation to cotton

2.36. The term coproduit (by-product) refers to a substance created intentionally and unavoidably at the same time as the main product and as part of the same manufacturing process. The main finished product and the by-product must both meet certain specifications regarding their nature, allowing them to be used immediately for a specific purpose.

2.37. The product harvested from the cotton plant is called seed cotton. Seed cotton is ginned to produce two sous-produits (by-products): seed and lint. Cotton linters (low-quality fibres produced

during ginning) are used to manufacture products such as yarn, plastics and filling material. Lint, seed and linters are coproduits (by-products).

2.38. Cottonseed is sometimes used in its raw state as animal feed, especially in the dairy industry.

2.39. The term sous-produit (by-product) is a residual product that results from the manufacture

or distribution of a finished product. When cottonseed is crushed, the meal can be separated from the oil. Cake and oil are therefore produits dérivés (derivatives/by-products) of cottonseed, and meal is a sous-produit (by-product) of cotton.

2.40. During the industrial production of oil, the kernels are separated from the hulls before the oil is extracted. Hulls are also a derivative of the seed.

2.41. The oil is usually used for human consumption, but is sometimes used to manufacture soap

or for other industrial uses, such as to manufacture plastics and pharmaceutical products. Soap is

therefore an oil derivative. This paper discusses the two main cotton by-products: oil and meal.

http://www.feedbase.com/papers/afz3044.pdf

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2.2.4.1 Cottonseed

2.42. Cottonseed is currently the cheapest oil and protein raw material in the world, costing around USD 150 per tonne. Its economic potential is not fully exploited, since it is traditionally used exclusively for producing oil and meal for animal feed. The seed given to animals may be whole, delinted (linters are a fuzz covering the hulls), or partially or fully dehulled. Whole cottonseed contains about 22% protein, 20% fat and 28% crude fibre (dry-matter content).

2.43. Cottonseed is less valuable than cotton lint and is normally crushed to separate the oil from the meal. Dehulling cottonseed produces kernels, and hulls with linters. Crushing cottonseed, on the other hand, produces three main types of products: refined oil (for human consumption), meal (feed for ruminants) and soap products.

2.44. Given the wide range of origins and varieties, cottonseed is a highly variable product. Rich in oils and fats, it has a far higher fibre content than rapeseed and soybeans. As such, cottonseed can

be used to make high-energy, high-fibre rations for highly productive dairy cows.

2.2.4.2 Cottonseed kernels

2.45. Cottonseed kernels have a high oil and protein content, but they also contain a toxic pigment called gossypol, which is removed by artisanal or industrial means. Crushing the kernels produces an excellent-quality edible oil, which is also used to manufacture soaps. Cottonseed oil is the sixth most widely consumed vegetable oil in the world. It is a good-quality oil that is high in polyunsaturated fatty acids (including vitamin E) and contains no cholesterol, but it does not react

as well to heat as other common oils. In some cotton-growing countries (including Mali, Chad, Burkina Faso and Togo), most of the edible oil consumed is cottonseed oil.

2.46. In Chad, cottonseed oil is used for human consumption and to manufacture soap. The oil may

also have other industrial uses, such as for manufacturing plastics or pharmaceutical products.

2.47. Cottonseed is sometimes used in its raw state as animal feed. The composition of cottonseed depends on several factors, but on average a tonne of seed cotton produces 35–40% lint, about 10% oil and around 30% meal.

Chart 8: Proportions of by-products obtained from seed cotton


2.48. Blasi and Drouillard (2002) showed that the relative share of the different components partly depends on both the ginning outturn ratio, which ranges from 30 to 40% of the weight of the seed cotton, and the cottonseed oil extraction ratio, which varies between 10% and 16% of the seed

weight, depending on the crushing method used.

2.49. In the United States, a metric tonne of seed cotton produces, on average, around 350 kg of

lint and 104 kg of oil. Of the remaining 546 kg, meal (293 kg) accounts for more than half, hulls for 176 kg and linters for 52 kg. Around 26 kg becomes waste. In West and Central Africa, however,

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one tonne of seed cotton produces around 420 kg of lint (thanks to a better ginning outturn ratio) and 70 kg of oil (where oil extraction methods are less technically advanced).

2.2.4.3 Cottonseed meal

2.50. Cottonseed meal is a source of protein, with the average protein content as a percentage of dry matter ranging from 22.2% (Sharma et al., 1978a) to 30.3% (Balogun et al., 1990) for unhulled cottonseed meal and from 29.7% (Shekar-Reddy et al., 1998) to 56.0% (Ryan et al., 1986) for

hulled cottonseed meal. Cottonseed meal competes with other types of oil meal and is generally used as animal feed.

2.51. The pulp that remains after the oil has been extracted from the cottonseed is processed to make meal, which is used as feed for ruminants (only animals that can detoxify the gossypol during

digestion, such as cows and sheep). The meal provides 3 to 6 times more protein (which represents up to 49% of the meal's dry matter) than cereals and up to 20 times more than certain types of

fodder. It is also the plant food with the highest phosphorus content. Cottonseed meal can be used as fertilizer or as a growth substrate for mushrooms, among other agricultural uses. It is traded internationally and is exported by most cotton-producing countries.

2.52. The use of cottonseed meal in livestock production is limited by anti-nutritional factors such as the presence of gossypol, which only ruminants can detoxify. The main impediment to using cottonseed meal as chicken feed is the presence of free gossypol, which can damage many internal tissues and reduce the growth performance and feed efficiency of the ration (Diaw et al., 2010).

Processes to bind the free gossypol are used to increase the amount of meal incorporated into the feed, but there are drawbacks to those processes.

2.53. Cottonseed meal is a highly variable product: the average protein content is 42% but can be anywhere between 28% and 58%, the raw cellulose content ranges from 8% to 23%, and the oil

and fat content ranges from 0.5% to 15% (dry-matter content). In addition to the initial seed, another factor that leads to variability is technological treatments.

2.54. The volume of meal produced in Chad depends on the volume of seed cotton produced.

Consequently, because of the difficulties the cotton sector has faced and the way the country's livestock population has developed over the last 10 years, production levels fall well short of demand. Chapter 3 of the present paper presents statistics on trends in production levels.

2.2.4.4 Linters

2.55. Linters around the seeds are a highly cellulosic material formed of short cellulose fibres and are used to manufacture felts (rugs, carpets, etc.); trims for bedding, furnishings and motor

vehicles; compresses, gauze pads, cotton wool and dressings; and yarn for carpets and rugs. Derivative food products are also extracted from linters (dietary fibre, thickeners, excipients, etc.).

Because of their many uses, linters are present on the international market.

2.56. In Chad, linters are often mixed with waste fibres recovered from the cotton gins. Referred to as mode bord, it is of poor quality and is sold relatively cheaply to traders to be used as low-quality padding (for mattresses) at an affordable price for persons with low incomes.

2.2.4.5 Hulls

2.57. Hulls constitute a relatively appetizing animal feed. They can also be used by the chemical industry to manufacture synthetic derivatives, such as fertilizers.

2.58. In Chad, hulls are used exclusively by the oil plant to generate power. If the oil plant does not use all the hulls, the remaining ones are sold to traders, who sell them on to livestock farmers to be used as animal feed.

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2.2.4.6 Gossypol

2.59. Although gossypol is toxic, it has certain beneficial properties.

• Contraceptive properties

2.60. Gossypol has been used in China for a long time as a natural remedy for bronchitis and as an abortive remedy (Vander Jagt DL et al., 2000). The Chinese first noted a significantly lower birth rate in the cotton-producing regions, and the observation was linked to the fact that the indigenous

population included cottonseed oil in its diet.

• Antiviral properties

− Anti-herpes properties

2.61. The antiviral properties of gossypol have been noted mainly with the herpes virus. With regard to HIV, Lin et al. (1989) observed selective inhibition of HIV-1 replication by (-)-gossypol, while the anti-HIV activity by (+)-gossypol in peripheral blood mononuclear (PBM) cells was in line with its

cytotoxicity.

− Anti-fungal properties

2.62. Aspergillus flavus is responsible for the biosynthesis of aflatoxins that form on kernels and seed. Gossypol inhibits these food poisons from forming (Mellon JE, 1992).

− Anti-parasite properties

2.63. Gossypol inhibits numerous parasites that sometimes cause severe and widespread diseases, including Entamoaba histolytica, which invades the intestines and the liver; Trypanosoma brucei,

which infects cattle in Africa; and Taenia taeniaeformis, a parasite that infects humans and animals. The development of Taenia taeniaeformis larvae in rats further to the ingestion of eggs can be inhibited by gossypol (Rikihisa Y & Lin YC, 1986). Gossypol can also inhibit Plasmodium falciparum, one of the four species of parasites that cause malaria.

− Anti-tumour activity

2.64. Studies on prostate and breast cancer have shown that gossypol arrests cell growth in the G0/G1 phase and inhibits cells from entering the S phase (Ligueros M et al., 1997; Shidaifat F et al.,

1996).

2.2.4.7 Use of cotton stalks

2.65. In order to reduce phytosanitary risks or limit infestation by caterpillars that have entered into diapause, cotton growers used to systematically burn cotton stalks or use them as fodder for penned livestock. Although organic material takes a long time to break down, in recent years the awareness of producers has been raised and they have been encouraged to recycle this material by

incorporating it into the soil.

2.66. Many studies carried out on cotton stalks have shown that they have a chemical composition comparable to that of most hardwood species. They also contain holocellulose (69%), lignin (27%) and ash (7%). As such, they may be used as an alternative raw material for manufacturing several value-added products.

2.67. With climate change reducing soil fertility, resulting in lower yields, this way of recycling cotton stalks is a new opportunity for small-scale farmers, who can now achieve a significant increase in

income by comparison with the substantial gains derived from cotton growing.

2.68. Promoting the recycling of cotton stalks creates an economic opportunity that, if seized upon, will revive a sector plagued by declining soil fertility, fluctuations in world cotton prices, reductions in subsidies by major powers, etc.

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• Manure and potash production from cotton stalks

2.69. Manure production is underdeveloped because cotton stalks take a long time to decompose owing to the presence of lignin. Thanks to studies carried out under the West African Cotton Improvement Programme (WACIP), funded by the United States Agency for International Development (USAID), technical processes have been drawn up to use cotton stalks to produce manure.

2.70. Like waste from other crops, cotton stalks are often burned or used for grazing, and therefore not returned to the soil (Soumaré et al., 2000; Lompo, 2005). Only a small fraction of cotton stalks are composted, and they do not always meet the nutritional needs of the crops. Because such a small proportion of organic matter is returned to the soil, mineral fertilizers – which are often prohibitively expensive – lose some of their efficacy (Vall et al., 2006). Furthermore, given the very

difficult economic situation caused by the drop in world cotton prices, which has also dragged down

the prices paid to seed cotton producers, improving the size of harvests is a major challenge for cotton companies in different countries. In West Africa, manure production from cotton stems is most developed in Burkina Faso and Mali. Dakuo et al. (2011) showed that compost from cotton stalks had higher levels of nitrogen (N) and potassium (K), but relatively low levels of phosphorus (P). Kpadé et al. (2018) conducted a survey indicating that 52% of respondents in Benin, 49% in Mali and 23% in Togo recycle cotton stalks to use them as organic fertilizers.

• Briquette and fuel wood production from cotton stalks

2.71. The manufacturing of briquettes from cotton stalks is increasingly encouraged in most cotton-producing countries, and the practice is growing fast in Mali, Burkina Faso and Benin. In Benin, such an initiative was tested by the Cotton and Fibre Agricultural Research Centre (CRA-CF) of the National Agricultural Research Institute of Benin (INRAB) through the VATICOPP project.

2.72. This briquette-manufacturing process is important because it reduces deforestation (especially for charcoal and fuel wood production) and bushfires, as well as creating new economic activity in rural areas and therefore new sources of income. Several techniques are used to make

briquettes, but two main ones are used in the market: one in which the stalks are incinerated before the briquettes are made, and one in which the briquettes are made immediately after grinding.

• Mushroom growing

2.73. Cotton is a fibrous plant with a high concentration of lignin (27%), making it a high-quality food resource (substrate) for mushrooms, which provide excellent nutritional intake for humans. Production of edible mushrooms in Benin and the subregion is booming. In Benin, where they are

often considered a second-tier food supplement, mushrooms are often harvested early in the rainy season, when there are food shortages (the "hungry gap"). Cotton stalks are a good substrate for mushrooms.

• Paper pulp

2.74. Because cotton stalks are rich in cellulose fibres, they are a choice raw material for the paper-making industry. Pulp is prepared by isolating cellulose fibres contained in wood, other woody plants or other sources of fibres while retaining their mechanical, optical and morphological

properties as best as possible and seeking to eliminate lignin, the other main component of wood.

2.75. Cotton stalks make good ingredients for paper pulp, thus offering new opportunities to the paper-making industry in Benin. Environmentalists also welcome the use of cotton stalks for pulp, since it reduces deforestation. This value-addition option is available and simply needs to be used.

• Particle board

2.76. Particle board is becoming increasingly popular in the furniture industry and has become an integral part of 21st century furnishing. Particle board made from cotton stalks is used to make

furniture, wall panels, window panels, table tops, floor and ceiling tiles, partitions and roof panels. It is also used for insulation.

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2.3 Current status of by-product manufacturers and production techniques

2.77. Two companies process cotton by-products in Chad.

2.3.1 CotonTchad SN

2.78. CotonTchad SN (Société Cotonnière du Tchad Société Nouvelle) was originally formed in 1972 and was privatized in April 2018. It is 60% owned by the Singapore-based Olam group. CotonTchad SN was previously 75% state-owned, with the remaining 25% stake shared between Dagris (19%)

and local banks (6%). Its mission is to provide tools and fertilizers to cotton growers and to market seed cotton.

2.79. Although the term "cotton" is often used to refer specifically to the lint, the crop that is

harvested (called "seed cotton") not only contains lint but also a by-product called cottonseed. The company owns seven ginneries throughout the cotton-production area with output capacities ranging from 80 to 300 tonnes per day.

2.80. The lint is exported, while the seed is either crushed to separate the oil from the meal or used as cattle feed. The seed used to produce oil is transported from all parts of the country to be crushed at a single plant in Moundou. The oil is currently used only for human consumption, with soap production having ended in 2006 for technical and economic reasons. The meal and hulls obtained when the seed is crushed are systematically used as animal feed.

2.3.2 ABOUFATIMA, a private company

2.81. This semi-industrial private company was created in 2019 in Léré, a town in south-west Chad

near the Cameroon border. The company has 19 permanent employees, as well as a number of

casual staff based on the company's needs.

2.82. To produce cottonseed oil, ABOUFATIMA buys seed from CotonTchad SN through its Léré plant. It uses five machines to crush and press the seed to extract the oil.

2.83. In 2019 and 2020, ABOUFATIMA purchased 8,500 tonnes of seed, from which it produced 857 tonnes of oil and nearly 97 tonnes of meal (Table 2).

Table 2: Volume of seed used to produce oil and meal

Year Volume of seed (t) Volume of oil (t) Volume of meal (t)

2019 6000 605 68.6

2020 2500 252 28.6

Total 8500 857 97.2

Source: ABOUFATIMA (2020).

2.84. 70% of the oil that the company produces is consumed in Chad, with the remaining 30% exported to Cameroon.

2.85. The main difficulty that the company faces is its power supply. Since Léré's electricity network

is not functional, the company uses its own generators, which significantly increases the cost of producing cottonseed oil.

2.86. Of the two cotton-processing companies in Chad, CotonTchad SN is the larger, since it supplies the semi-artisanal company ABOUFATIMA with its raw material. Since ABOUFATIMA's purchasing power is probably limited, it buys only small volumes of seed (500 to 1,000 tonnes) from CotonTchad SN, thus severely limiting its production capacity.

2.4 Value chains of priority by-products

2.87. Producing 100 kg of seed cotton generates an average of 40.3 kg of lint and 54.7 kg of seed. Over the last 10 years, production of seed cotton has averaged 85,144 tonnes, with 34,310 tonnes

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of lint and 46,604 tonnes of seed. Each year, between 28% and 90% of seed is used to produce oil. As mentioned previously, one tonne of seed produces 60-100 kg of oil, around 400 kg of hulls and 400 kg of meal. These values are lower than those obtained in the United States, where one tonne of seed produces around 200 kg of oil, 300 kg of hulls and 500 kg of meal.

2.88. Apart from the lint, the by-products are consumed almost entirely in Chad. Since there is so much livestock in Chad, the amount of meal produced each year is not enough to meet local needs.

Chadian oil is of such good quality that it dominates local markets, with the stock held by shops often being depleted before the following year's oil has been produced.

2.89. This analysis shows that the best-utilized products are oil and meal. Unfortunately, the availability of meal is limited, so it is difficult for traders to buy it. This shortage often fuels price speculation, making meal unaffordable for low-income farmers.

2.90. Hulls are poorly utilized. In addition to their use as a source of energy, making organic fertilizer

from hulls would significantly improve environmental management and could boost agricultural output.

3 DIAGNOSIS OF THE COTTON SECTOR IN CHAD

3.1 Stakeholders and their roles in production

3.1. The main stakeholders in Chad's cotton sector are cotton producers and their representative bodies (village associations, local cotton coordination committees (CCLs) and the National Union of Cotton Producers of Chad (UNPCT)), CotonTchad SN, the State and state agencies

(the National Rural Development Office (ONDR) and the Chadian Institute of Agricultural Research for Development (ITRAD)). Banks, private transport operators and suppliers are also stakeholders.

3.1.1 The Chadian State

3.2. The State approves bank credits on behalf of CotonTchad SN, subsidizes factors of production for cotton producers, also subsidizes CotonTchad SN's operations, and exempts the cotton company from certain taxes such as value-added tax (VAT). Since the partial privatization of CotonTchad SN, the State owns only 35% of the company. The multinational Olam owns 60% and the producers 5%.

3.1.2 CotonTchad SN

3.3. CotonTchad SN is partly responsible for managing the producers in terms of organizing the markets where seed cotton is sold. It also funds agreements signed between it and the other stakeholders. Its roles include:

− providing agricultural inputs (fertilizers, phytosanitary products and seed) to cotton

producers, mainly on credit;

− purchasing seed cotton, with an obligation to buy the entire crop;

− transporting seed cotton, with part of the transport service outsourced to private operators;

− ginning seed cotton and removing and marketing the lint;

− transporting the seed, processing it to make oil and meal, and marketing the oil and meal.

3.4. Cotton is grown mainly in the south of the country on family farms run by five or six farmers. The size of the farms ranges typically from 1 to 2 hectares. Viewed as "white gold", cotton is a pillar

of the Chadian economy, providing a livelihood to around 3 million people and occupying around a tenth of the total cultivated land. The main export destination for Chadian cotton is the European Union, especially France, Germany, Belgium, Portugal and Spain.

3.5. CotonTchad SN currently has seven ginneries in operation and one oil plant. All of these are located in the south of the country (Sarh, Koumra, Moundou, Kelo, Léré and Pala). The Gounou-Gaya and Kyabe factories have not been operational for more than 15 years.

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3.6. CotonTchad SN employs around 2,000 workers spread across the various cotton-producing areas. A technical unit working on the ground is responsible for producing and marketing the cotton. The unit comprises plant coordinators, supervisors, seed-production coordinators and training coordinators.

3.7. Only the Moundou plant is at the same location as where the seed is crushed. The others are between 100 and 400 km away. Since some national roads are unpaved, the transport of seed is

sometimes interrupted, in which case the plant's supply of raw material is also interrupted if the rains come early.

• Seed-cotton pricing: the process and the parties involved

3.8. Through Order No. 1862/PR/PM/MDIC/2017 of 19 April 2017, the Government of Chad

established a tripartite committee (cotton producers, CotonTchad SN and the State) to design a mechanism for setting the purchase price for seed cotton and for the transfer of agricultural inputs.

In the tripartite committee, the State is represented by three ministries: the Ministry of Production, Irrigation and Agricultural Equipment; the Ministry of Mines, Industrial and Commercial Development and Private Sector Promotion; and the Ministry of Finance and Budget.

3.9. In exercising its mandate, the tripartite committee put forward a pricing mechanism which was approved by the Government.

3.10. The aforementioned government-approved mechanism for pricing seed cotton is based on the mechanism used in Burkina Faso and contains the following elements:

− a guaranteed minimum price (floor price) announced before the sowing season;

− a final price to be calculated at the end of the crop season; and

− a price smoothing fund to ensure that the minimum guaranteed price is respected.

3.11. The minimum guaranteed price (MGP) is calculated as follows:

MGP = Share_Prod × PF × Cotlook A _FOB × LiYLD

Where:

− MGP = minimum guaranteed price, announced before sowing season;

− Share_Prod = producers' share of lint value; − PF = prudence factor corresponding to floor price of smoothing tunnel; − Cotlook A_FOB = trend line for cost of lint as measured by three-year average of

Cotlook A Index on a free on board (FOB) basis, centred on current year and expressed in CFAF;

− LiYLD = ginning lint yield standard.

3.12. The final producer price is calculated at the end of the crop season based on actual Cotlook A Index values for the n/n +1 crop season. The price is expressed on an FOB basis by deducting the cost, insurance and freight (CIF). The 12-month period used for the calculation goes from April of the year n to March of the year n +1.

3.13. The values of the various parameters for Chad are as follows:

− Share_Prod = 54%;

− PF = 95% (revised to 92% if the price smoothing fund has a net liability with the cotton

company);

− LiYLD = 41%;

− Cotlook A_FOB is obtained by deducting 3 cents/pound from the trend line for lint prices.

3.14. Since the pricing formula was considered obsolete, it was updated by a consultant in December 2019 but has not yet been published.

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3.1.3 Seed cotton producers

3.15. The primary role of producers is to grow their own seed cotton and deliver it to CotonTchad SN through their village association under the terms of an agreement called the Charte de Marché Autogéré (MAG - self-managed market charter). The village associations are the direct respondents of CotonTchad SN when factors of production such as loans to farmers, seed cotton marketing and recovery of productivity loans are implemented. The associations form local cotton coordination

committees (CCLs) at the canton level, and these delegations form the National Union of Cotton Producers of Chad (UNPCT), which is the national umbrella organization. Alongside the Government, the UNPCT and CotonTchad SN carefully examine all the bids for inputs and set prices for seed cotton and inputs. The UNPCT also takes part in the marketing of seed cotton, the revision of the MAG and all other activities involving the producers. Overall, relations between the two partners are good.

3.1.4 Chadian Institute of Agricultural Research for Development (ITRAD)

3.16. ITRAD is a public scientific and technical institution that conducts research on crop production, including cotton (varietal research, production of basic seed, conservation of phylogenetic resources, development of crop technology packages).

3.17. The partnership between ITRAD and CotonTchad SN takes place through an agreement setting out a framework for the delivery of services and the provision of expertise to CotonTchad SN. The services include support for drawing up the seed policy plan, producing pre-basic and basic seeds to maintain varietal purity, and providing CotonTchad SN field workers, staff at seed multiplication

farms and seed producers with training related to seed cotton production. The services also include drawing up technical recommendations and taking part in meetings relating to tenders for agricultural inputs, as well as providing any other expertise relating to agricultural inputs, ginning and lint quality.

3.18. Given the shortage of human resources for cotton research, there has been almost no varietal improvement for over 10 years. Although several cotton varieties have been introduced through partnerships (C4 + Togo, C4CP, etc.), work to improve the quality of cotton is at the embryonic

stage. Substantial support for research is therefore essential to develop new varieties and new production techniques to boost cotton production and thereby improve the availability of cotton by-products that can then be processed.

3.1.5 National Rural Development Agency (ANADER)

3.19. ANADER provides support to rural communities as a whole for all crops, including cotton. It sits on the dispute settlement commission responsible for determining the quality of seed cotton at

ginneries. The partnership between ANADER and CotonTchad SN takes place under a collaboration agreement and a memorandum of understanding, the most recent of which were signed by the two parties on 3 May and 13 May 2015, respectively.

3.1.6 Banks

3.20. Banks issue state-guaranteed seasonal loans to CotonTchad SN for harvesting, purchasing and ginning seed cotton and marketing the lint, as well as productivity loans for purchasing inputs and delivering them to producers. The State executes the guarantee if the cotton company is unable

to repay the loan.

3.1.7 Private transport operators

3.21. Private transport operators are a very important pillar in CotonTchad SN's development. For each marketing year, CotonTchad SN requests the services of private transport operators in Chad and Cameroon to move seed cotton from purchase centres to factories and to move lint for export from factories to Cameroon. These operators also transport agricultural inputs. The Bolloré group is

the main private company that transports cotton bales for the export and import of agricultural

inputs.

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3.1.8 Suppliers

3.22. Chadian and foreign companies supply goods and services. They deliver inputs, machinery and parts, vehicles and miscellaneous supplies to CotonTchad SN.

3.23. The largest suppliers of agricultural inputs over the past five years have been Arysta LifeScience and the Société de Services pour l'Europe et l'Asie (SOSEA – Europe and Asia Service Company) for pesticides and the Louis-Dreyfus Commodities group for mineral fertilizers.

Given Chad's location on the continent, these companies deliver the inputs via the port of Douala, situated more than 1,000 km away from the delivery destinations. The cost of transport and administrative and customs procedures therefore increases the prices of inputs delivered to producers. To encourage producers to grow cotton, the State subsidizes inputs almost every crop year.

3.2 Policy environment analysis: legal and regulatory frameworks for the production of

by-products

3.24. There is no cross-industry agreement governing the cotton sector in Chad. The MAG is responsible only for marketing seed cotton, purchasing it and recovering productivity loans. Although the joint committee of cotton producers, the Chadian State and CotonTchad SN is somewhat akin to a cross-industry body, its sole mission is to set prices for seed cotton and agricultural inputs.

3.25. Chad's cotton sector has experienced a series of successive crises caused by exogenous and endogenous factors. The exogenous causes have been (i) the decline in world cotton prices due to

huge subsidies in the Global North, (ii) parity in the dollar–euro exchange rate, which has been unfavourable to the CFA franc, and (iii) Chad's location in the African continent. The endogenous factors are: (iv) the high cost of agricultural inputs and material, (v) limited support for producers, (vi) ageing industry due to a lack of investment in maintenance and upgrades, and (vii) poor internal

management by the cotton company, with high production costs for lint.

3.26. Despite the various reforms undertaken by the Chadian State, the sector's performance did not recover until the State transferred a 60% stake to the Olam group and 5% to cotton producers.

The group's entry into the sector finally gave a long-awaited boost to the cotton industry and generated optimism among cotton producers.

4 ANALYSIS OF COTTON BY-PRODUCTS AND DERIVATIVES IN CHAD

4.1 Strengths, weaknesses, opportunities and threats (SWOT) for expansion of each product

4.1. Tables 3 to 7 show the results of the SWOT analysis performed on the various cotton

by-products and derivatives.

Table 3: SWOT analysis for expansion of the lint market

Strengths Weaknesses

− Existence of ginneries; − Domestic and external markets (CEMAC zone)

available; − Highly structured sector.

− Monopoly held by single private operator; − Almost non-existent domestic markets; − Very low domestic consumption; − Almost no endogenous technology for

processing by-products.

Opportunities Threats

− Large and growing population; − Rehabilitation of a textile and spinning

company under way; − Presence of a private operator.

− Ageing ginneries; − Unavailability of by-products in the market in

the event of a breakdown at the sole processing plant (oil plant);

− Very limited knowledge of consumer needs in terms of quality and quantity.

Source: Survey results, 2019.

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Table 4: SWOT analysis for expansion of cottonseed production


− Excellent natural environment for seed cotton production;

− Existence of ginneries; − Domestic markets for livestock feed; − Creation of an oil production plant.

− Ageing ginneries; − Unaffordable for consumers; − Single processing plant (oil plant).


− Very large domestic market; − Sustained growth in cattle and sheep

numbers.

− Unavailability of seed in the event of processing plant breakdowns.


4.2 By-products in the seed-crushing subsector

4.2.1 Mapping of operators in the subsector

4.2. The Moundou oil plant is the sole producer of cottonseed oil. It is therefore starting up oil and meal production. This year, ginneries will produce around 63,000 tonnes of seed to be crushed.

4.3. The Moundou oil plant receives its supplies from the ginneries. It had been shut down since cotton production dropped, but action was taken to reopen the plant in 2019, with cottonseed production expected to exceed 100,000 tonnes.

4.2.2 By-products in the subsector

4.4. Cottonseed is the only raw material used by the Moundou oil plant. The seed is processed at the plant to produce the following by-products:

• Oil; • Meal with a floury texture • Hulls; • Ash; • Free fatty acids;

• Waste.

4.5. The SWOT analysis for the expansion of oil production is presented in Table 5, below.

Table 5: SWOT analysis for expansion of oil production


− Raw material available; − Two processing industries; − Domestic and external markets (CEMAC zone)

available; − Skilled human resources; − Job creation.

− Limited availability in the domestic market; − Relatively expensive; − Almost no endogenous technology for processing

oil.


− Collaboration with external companies, with the private sector involved in cotton production and processing.

− Oil not always available in the market; − Single processing plant (oil plant).


4.6. Tables 6 and 7 show the SWOT analyses for the expansion of meal and hull production in Chad.

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Table 6: SWOT analysis for expansion of cottonseed meal production


− Raw material available; − Existence of a processing plant (oil plant).

− Inaccessible for consumers; − Relatively expensive.


− Large domestic and external markets; − Increase in production due to revival of the

sector.

− High cost of meal; − Breakdown of the sole processing plant (oil plant).


Table 7: SWOT analysis for expansion of hull production


− Existence of a processing plant; − Domestic market available; − Skilled human resources; − Raw material available;

− Very limited use; − Lack of processing technology.


− Potential use as a soil improver in organic

farming; − Potential use as fuel in boilers; − Potential use for growing mushrooms.

− Pollution of the environment, because they are

discarded almost everywhere; − Very limited consumption.


4.7. Like the meal, the hulls are used as livestock feed. Despite their many advantages – as a soil

improver, as a fuel to generate power and as a substrate for growing mushrooms – hulls are not well utilized in Chad, which does not have adequate technology to process them. It is therefore necessary to develop a hull management programme.

4.8. The stakeholders involved in the hull value chain are:

- CotonTchad; - The cotton producers' union; - The livestock producers' union;

- The traders' union; - The agropastoralists' union; - The business owners' union; - The oil plant.

4.9. A consequence of the additional cotton production is an increase in the number of stalks, which

are utilized as fodder for penned livestock or as fertilizer. Some stalks, however, are still incinerated.

4.10. Stalks can be used to manufacture briquettes, compost and particle board.

4.11. This study identified strengths, weaknesses, opportunities and threats related to stalk management (Table 8).

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Table 8: SWOT analysis for expansion of the utilization of cotton stalks


− Excellent natural environment for seed cotton production;

− Land available; − Skilled labour available; − Stalks available;

− Fodder for penned livestock; − Revitalization of the sector; − Use of stalks as fertilizer.

− Unfamiliarity with technology for manufacturing particle board;

− Absence of small and medium-sized enterprises using stalks to produce briquettes, compost, artisanal soap, etc.


− Potential to utilize cotton stalks; − Creation of small and medium-sized enterprises for

women for the production of local soap; − Government financial support; − Sustained growth in cattle and sheep numbers; − Opening of the oil plant, from which hulls and other

waste can be used as fertilizer; − Possibility to sell cotton stalks.

− Poorly processed stalks may create pest nests.


4.3 Markets for products and by-products

4.12. Market sizes depend on demand for the by-product among economic operators or industrialists in a given geographical area.

4.3.1 Cotton lint

4.13. Annual lint production ranges from 6,680 tonnes to 75,980 tonnes, depending on the weather and the socioeconomic situation. More than 98% of that production is exported through the port of Douala in Cameroon. According to industrialists, Chadian cotton lint is among the best quality cotton lint in the world. Despite that, the new textile company (Nouvelle société textile du Tchad), which is expected to process some of the lint locally, is struggling to get up and running.

4.3.2 Linters

4.14. Based on the volumes of seed cotton produced by CotonTchad SN from 2009 to 2018, and given that linters account for 3% of the volume of seed cotton, 2017 was the year in which Chad produced the highest volume of linters, at around 5,700 tonnes (Chart 9).

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Chart 9: Cotton linter production over 10 years


4.15. Since the volume of linters depends on annual production of seed cotton, Chad has large quantities of linters, which can be used as padding or as raw material for making paper and cardboard.

4.3.3 Seed

4.16. The amount of seed produced ranges from 9,043 tonnes to 105,068 tonnes, depending on how abundant the year's crop is. Good-quality seed may be resown (12%). Other seed is either sent to the oil plant (80%) to be crushed into oil or sold to other processing companies (2%) or to

livestock farmers to be used as feed (6%). All of the seed is consumed locally in Chad.

4.3.4 Meal

4.17. Meal is highly sought after and is used to feed livestock. Chad has more than 100 million head of cattle, so demand for meal is never fully met. In fact, the data obtained shows that current production levels, which vary based on seed cotton production, provide meal for less than 10% of the livestock. Seed cotton production has fallen since 2017, making it difficult to find enough livestock feed. Many efforts have been made to revive production of seed cotton, and therefore of

meal. Those efforts have clearly borne fruit, as 113,494 tonnes of seed cotton were produced during the 2019-20 crop season, up from around 17,000 tonnes the previous season.

4.18. The meal produced as a result will provide a cheaper source of protein for ruminants, as well as for poultry and fish, but only if suitable technologies are used to remove the gossypol (a yellow toxic pigment that protects cotton from insects) or to reduce the gossypol content to safe levels.

4.3.5 Oil

4.19. Almost all of the oil produced at the plant is consumed locally. The amount of oil produced ranges from 3,438 tonnes to 19,125 tonnes, depending on the year. When seed cotton production is down, cottonseed oil production also falls, so large-scale imports of oil from other countries are sometimes justified. Indeed, the Chadian market is sometimes flooded with oil from Asia and neighbouring Sudan.

4.20. In 2019, cottonseed oil production was expected to reach 10,000 tonnes. A 20-litre canister of oil refined at the plant costs CFAF 17,000.

0

1000

2000

3000

4000

5000

6000

Vo

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e o

f lin

ters

(t)

Crop seasons

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4.21. The oil plant has created many jobs since it was reopened, and it employs both men and women. The main organizations that participate in the value chain are CotonTchad SN, the UNPCT, and the respective unions representing livestock producers, traders, agropastoralists and business owners.

5 IDENTIFICATION AND ORDER OF PRIORITY OF BY-PRODUCTS TO BE EXPLOITED IN CHAD

5.1. The by-products to be developed were identified following discussions with stakeholders in the cotton sector, taking into account the economic, social and environmental context. The stakeholders consulted were cotton producers, industrialists (ginners and processors of cotton products and by-products), livestock farmers, traders and consumers. The main by-products are cotton meal, hulls and stalks.

5.1 Meal

5.2. Exploiting the meal is a priority. Processing cottonseed meal adds value and greatly enhances the quantity and quality of protein for the more than 100 million head of cattle in Chad.

5.3. The 2019-20 seed cotton crop totalled 113,494 tonnes, from which around 62,989 tonnes of seed was obtained. Around 60% of that seed, or 37,793 tonnes, was sent to the oil plant for crushing, so the total meal produced was 13,228 tonnes – well short of the amount needed to feed Chad's vast livestock population.

5.4. Since there is no processing unit to improve the quality of meal, it is recommended that Chad

open a small processing unit, which would add value to this by-product. Cottonseed meal is a good protein supplement for animal feed of low nutritional quality and for fibrous by-products, since its proteins are easy to digest.

5.2 Hulls

5.5. CotonTchad SN currently uses the hulls to generate green energy. Cotton hulls are highly cellulosic (53% cellulose), a fairly appetizing fodder and can aid digestion in fibre-poor animal rations. To a lesser extent, they are also used as organic soil improvers by vegetable growers. Since

a tonne of seed can produce around 300 kg of hulls, the seed from the 2019-20 crop can potentially produce 11,338 kg of hulls. Because bovines that are fed hulls have better fat and a high milk yield, it is evident that hulls would benefit the economy of a country like Chad, in which livestock farming plays such a central role. Processing units for this by-product are therefore vital.

5.3 Cotton stalks

5.6. Cotton stalks are another major cotton by-product. Often viewed as agricultural waste, cotton

stalks account for around 80% of the total mass of the cotton plant. The International Cotton Advisory Committee (ICAC) estimates that around 2–3 tonnes of stalks per hectare of cotton field can be recovered. This part of the plant can be used as substrates for edible mushrooms or to manufacture particle board. Stalks can also be processed to make biofuels such as briquettes and pellets, thus responding to current priorities in environmental protection policies. In other words, stalks can be used in Chad to manufacture briquettes, which could potentially replace wood charcoal. The sale of stalks not only generates extra income for cotton producers, but it also helps protect the

environment. During the 2019-20 crop season, 288,508 hectares of land produced 721,250 tonnes of stalks, providing a very important source of raw material for the stalk processing units planned to be opened in Chad.

5.4 Order of priority for products

5.7. Three main by-products were identified:

− meal and hulls, which can be used to manufacture cattle feed, and

− stalks, which can be processed to make biofuels such as briquettes and pellets.

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5.8. The order of priority for these by-products was established according to their economic, social and environmental importance and impact.

5.9. A pair-wise ranking, a tool that serves to determine priorities, was used for this purpose. In the pair-wise ranking table, the same by-products were placed on both the horizontal and the vertical axis. At the intersection of the two axes are the cells where interviewees entered their choices from among the pairs of by-products harvested from the field (cotton stalks) or obtained through

processing, with the reasons for those choices listed. The frequencies obtained were used to determine the order of priority of the by-products.

Table 9: Order of priority for ginning by-products and cotton stalks

By-products Meal Hulls Stalks

Meal Meal Meal

Hulls Meal Hulls

Stalks Meal Hulls


5.10. Analysis of Table 9 shows that, of the three by-products identified for potential new uses, the first priority is meal for the manufacture of cattle feed, followed by stalks and hulls in equal

proportions.

5.11. Since meal will be utilized as cattle feed and to ensure product diversification, it is preferable that cotton stalks be processed and made into biofuels (briquettes, particle board) and compost so that they can be returned to the soil where they were produced and ensure that cotton farming is sustainable. These measures can be an opportunity to create jobs for the rural youth.

6 CONCLUSION AND RECOMMENDATIONS

6.1. The initiative aims to collect evidence and success stories of cotton by-products contributing to

poverty reduction, food security, job creation, revenue diversification, improved living standards for women, and the circular economy.

6.2. Although the primary sector in Chad has been dominated by the petroleum industry since 2003, which contribute 64.6% of added value, agriculture is still dominated by cotton farming, with more than 300,000 Chadian farms growing cotton. Around 2 million people depend on cotton for their livelihoods.

6.3. Cotton is a cash crop currently managed by CotonTchad SN, which has a monopoly on seed

cotton purchases, ginning and the marketing of cotton lint, by-products and derivatives. In view of its limited vehicle fleet, the transport of seed cotton, seed and lint is outsourced to private operators.

CotonTchad SN supplies agricultural inputs (fertilizers, pesticides and phytosanitary products) to producers on credit. Seed cotton is the raw material used in the processing of numerous by-products and derivatives, including seed, meal, oil, hulls and stalks. Apart from cotton stalks, which are often discarded in fields or used to generate power, the by-products of cotton farming, such as meal, hulls

and linters, probably generate additional value for the company that has a near monopoly in all segments of the cotton sector (production, marketing and processing of seed cotton). In such a scenario, it is almost impossible to ascertain the profit margins of each segment, which reflects the limits of this study.

6.4. The processing of seed cotton is limited to the main by-products that CotonTchad SN sells in the market, namely, cottonseed, oil, meal and hulls. This is probably because there are no small and medium-sized enterprises and because knowledge of processing techniques is lacking. An improved

business climate could attract investors to Chad, making a range of derivatives available through the processing of by-products such as cotton meal and hulls that are not currently processed but are in high demand. In addition to the above are cotton stalks. The study has shown that the main

priority in order to add value and create jobs for young people and women will be the processing of meal to make cattle feed. Likewise, processing cotton stalks to make compost would make it possible to preserve soils to ensure the sustainability of cotton-growing in Chad. Cotton stalks can also be used to manufacture particle board and can be processed to make biofuels such as briquettes and

pellets. Given their economic and environmental importance, meal and stalks are the cotton

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by-products whose processing is the highest priority in Chad, but a feasibility and cost-effectiveness study is necessary.

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BIBLIOGRAPHICAL REFERENCES

• Baffes, John (2010) "Markets for Cotton By-Products: Global Trends and Implications for African Cotton Producers". Washington, DC: World Bank, Development Prospects Group & Africa Region.

• FAO (Food and Agriculture Organization of the United Nations) (2015) "Measuring Sustainability in Cotton Farming Systems: Towards a Guidance Framework". Rome: FAO.

• FAO (2012) "Crop yield response to water", FAO Irrigation and Drainage Paper, No. 66.

• FAOSTAT, (available at http://faostat.fao.org).

• Gergely, Nicolas and Poulton, Colin (2009) "Valorization of Cotton By-Products". In: D. Tschirley, C. Poulton and P. Labaste (eds.), Organization and Performance of Cotton Sectors in Africa: Learning from Reform Experience. Washington, DC: World Bank.

• Hauswirth, Damien and Djinodji, Reoungal (2006) "Dynamique des systèmes de production

cotonniers en zone soudanienne du Tchad: cadre de suivi thématique". N'Djamena.

• Hougni, Alexis (2019) "Transfert de technologie pour les sous-produits et produits dérivés du coton dans les pays du 'Cotton 4'". Presentation during the Sectoral Initiative in Favour of Cotton workshop held on 4 June 2019 in Geneva.

• ICAC (2014) Cotton: World Statistics. Washington, DC.

• ICAC (2009).

• Tran, Gilles (1994) "Le coton et ses co-produits en alimentation animale", La Revue de

l'Alimentation Animale, No. 482. Viewed at: http://www.feedbase.com/papers/afz3044.pdf.

• Tschirley, David, Poulton, Colin and Labaste, Patrick (2009) Organization and Performance of Cotton Sectors in Africa: Learning from Reform Experience. Washington, DC: World Bank.

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http://faostat.fao.org/

http://www.feedbase.com/papers/afz3044.pdf

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