Cottonseed market: units speculate on the raw material

2023-05-22 07:56:11

• Pressure on real grinders

• Barely 1/3 of the units actually crushed between 2018 and 2021

• Others buy and sell a good deal

CThis year, the management of the cottonseed stock for the crushers was going to be difficult, because of the cotton campaign which did not keep all its promises.

In fact, production experienced a drop of almost 7%, standing at around 480,000 tonnes. This production shelled in the factories of cotton companies is used as raw materials for the factories producing edible oil and oilseed cake for cattle feed.

In our columns, Mr. Warma, one of the managers of the first oil mill in Faso (SN Citec), was worried about the fact that this year, he will only have 40,000 tons of cottonseed available to grind. This volume represents a third of the plant’s capacity, estimated at 120,000 tonnes. Anything that raised fears of technical unemployment if an alternative is not found. According to the latest news, the Company will only have 33,000 tons available from Sofitex, ie a quarter of its needs.

“If you don’t have enough cottonseed, that will also affect the oil and the co-products that we have, such as meal. The soap factory is less affected, because it is a completely independent unit, but at the level of the boilers, for example, we take the shell of the seed that we burn to produce energy. As for the turnover of the oil mill, naturally, that will have an impact, we can expect almost 60% less revenue than in previous years”.

In fact, the management of cottonseed destined for oil mills is problematic. It will be even more so this year, with this shortage announced in view of the practices already denounced in a report by the ministry in charge of trade, which follows two workshops organized by the West Africa Competitiveness Support Program , Burkina Faso section.

These two workshops on the oil sector focused on the supply of oil mills with raw materials, in May and September 2021, in Bobo-Dioulasso, in order to address “the thorny concern linked to speculation around cottonseed, thus undermining the competitiveness of the sector”. The task force responsible for identifying oil mills crushing cottonseed, set up by the Department of Commerce, had the task, after investigation, of proposing remediation measures and taking stock of the oil mills that actually crush cottonseed. cottonseed, with a view to putting an end to speculation in this seed. And the results are edifying. Many of them buy and sell cottonseed under the cover of oil processing units, all of which hamper the activities of net crushers.

What does the report say. To grind the cottonseed, you have to be installed in an industrial zone, obtain a production permit and finally, obtain the last sesame, the authorization for consumption. This is renewable every year. In the ecosystem of oil mills, 85 processing units have been listed, 60 could be visited but data could only be collected from 53 units. The survey which returned its results in June 2021 establishes that of the 53 units, 44 were up to date from a regulatory point of view and could thus claim the distribution of cottonseed for the processing campaign. of 2022.

Once the lock on access to supplies is lifted, what do the recipients of the cottonseed actually do? The conclusions of the working group make it possible to index oil mills on which there are suspicions of speculation.

Here are the categories that were identified by the experts on the basis of data collected from cotton companies, groups of oil producers and by analyzing the electricity bills of production units:

– the seed “crushers”: these are the oil mills which crush all the seed made available to them by the groups or the cotton companies;

– the “crusher-buyers” of seed: these are the oil mills which, in addition to the seed allocation obtained from their groups, import or buy additional quantities of seed from other actors who may or may not be members of groups or from companies cotton mills for crushing purposes;

– the “buyers-sellers” of seed: these are the oil mills that import or buy additional quantities of cottonseed from other actors who may or may not be members of groups or from cotton companies and then resell a certain quantity and crush the remaining quantity;

-the seed “sellers”: these are the oil mills that resell part or all of the seed allocation received from their groups or from cotton companies”.

The working group used data on three campaigns, 2018/2019, 2019/2020 and 2020/2021. From its analyses, the working group revealed that only two companies actually crushed cottonseed over the 3 campaigns. These are Sn Citec and Yedan (see extract from the working group report.

It appears that only 25% of processing units actually crushed in 2019/2019, compared to 13% of units surveyed in 2019/2020 and 32% in 2020/2021. This means that two-thirds of the units are not operating normally, but have cottonseed which they resell to those who are actually operating and who are potential buyers in order to complete their stocks and be able to operate normally.

What solutions?

Ecosystem stakeholders recommend reviewing the cottonseed distribution key. Effectively serve those who are up to date from a regulatory and administrative point of view. The intensification of checks should make it possible to flush out those who have up-to-date papers but do not convert during the campaign. There are also kidnappings at the level of cotton companies supplying cottonseed, a strict application of the rules of sale could clean up the management of cottonseed. On the other hand, it would be necessary to monitor the number of units that are created, while the cottonseed market is not as elastic to serve all the applicants. This is also what accentuates speculation, anything that will threaten the viability and profitability of the units.

framed

Who does what with cottonseed?

«For the 2018-2019 campaign, fifteen (15) oil mills, or 25% of the oil mills surveyed, were identified as having effectively crushed cottonseed and the rest of the oil mills identified as having speculated on part or all of the seed. Those having crushed the cottonseed are the oil mills AOREMA, BA-MARIAMA, DELICE, DRAME & FRERES, EBIF, GROUPE LODOUN, HSF, KPS, MHF, NAKAM, NIDOR, SN-CITEC, SOTAMA, WATAN, YEDAN. Among the latter, ten (10) are considered to be potential seed buyers, namely DELICE, DRAME & FRERES, EBIF, GROUPE LODOUN, HSF, KPS, NAKAM, SN-CITEC, SOTAMA, WATAN, YEDAN.

For the 2019-2020 campaign, ten (10) oil mills, or 13% of oil mills, were identified as having effectively crushed cottonseed. These are the ANGO FASO, AUR SYD, GENOL, STAB, SN-CITEC, SOGEA, SOPRIOL, YEDAN, SOTISEF oil mills. They are identified as potential buyers of cottonseed, with the exception of SN-CITEC.

For the 2020-2021 campaign, nineteen (19) oil mills, i.e. 32% of the oil mills surveyed, were identified as having oil mills that actually crushed cottonseed. These are the ANGO FASO, BA MARIAMA, EBIF, GENOL, HKL, HABIBOU, HAFAAC, HODAF, HUZOGO, MHF, SN-CITEC, SOFAH, SOPRIOL, UTCPA, WATAN, YARO MAHAMADI, YEDAN, SOTRAPO, TEEGAWENDE oil mills. These oil mills were also identified as potential seed buyers, with the exception of HODAF, UTCPA and HUZOGO. » o