Double Standards on an Uneven Playing Field: Distribution along Senegals Charcoal Commodity Chain

Double Standards on an Uneven Playing Field: Distribution along Senegals Charcoal Commodity Chain

A Case Study of POLICY & PROFITJesse C. Ribot/ World Resources Institute (WRI) Institutions and Governance Program ribot@wri.org

WHAT IS COMMODITY-CHAIN ANALYSIS?

A method of analyzing factors shaping the distribution of benefits from a given product from its origin to end use

Method of analyzing accessWho reaps the flow of benefits from things [See Peluso and Ribot 2003]

METHOD OF COMMODITY-CHAIN ANALYSISIdentify actorsQuantify distribution of profitsPrice MarginsExpensesMarket SharesIdentify nodes of concentrationExplain patterns of profit & concentrationConduct, structure, performanceFarruk, Lele, Timmer, HarrissSocial identities, social relations, social historiesPolicys roleExplore functions of policy Develop Policy Recommendations

Senegal Case

1986 / 2006

Urban populationRetailersUrban wholesalersTransportersCo-operativesMerchants/PatronsMigrant WoodcuttersForest Villages

Rural Intermediaries KontrapalaasIdentify Market Actors

Urban populationRetailersWholesalersTransportersMigrant WoodcuttersForest Villages

Other Institutions

- Unions

- Religious BrotherhoodsMinistriesNational Forest Department

Rural IntermeidarieskontrapalaasRegional Forest ServiceLocal Forest ServiceElectedRegional CouncilLocal Rural Council/PCR

PRICE STRUCTURE AND PROFIT MARGINS FOR A SACK OF CHARCOAL (IN 2002 CONSTANT CFA)

19872002-2003ChangeAverage PricesUrban Woodcutter price to Merchant839778Merchant price to Wholesaler28063452Wholesaler price to Retailer30313769Retailer to Customer in Dakar3639[~4076]

Profit Margins (all costs deducted)Woodcutter734727-1%Rural Intermediary-30-Merchants598774+29%Urban Wholesalers225317+41%Retailer 519[~183]-

AVERAGE ANNUAL PROFIT OF ACTORS IN CHARCOAL MARKET

PROFIT DISTRIBUTION IN MARKET

7%

22% -

-

54%

16%

3%

Even

Skewed -

-

Skewed

Even

Skewed

Retailers10,000Urban Wholesalers200Merchants/Patrons5000-160 activeMigrant Woodcutters18,000

Forest Villages

FONT-SCALED PROFIT DISTRIBUTION

EXPLAINING DISTRIBUTION: MECHANISMS OF BENEFIT CONCENTRATIONVillagers Forest access control

Woodcutters Access to merchants

Merchants Control of labor opportunities Control of access to markets Leverage over prices

Wholesalers Control of distribution

Retailers Maintenance of access to wholesalers Leverage over prices

FUNCTIONS OF QUOTAS: CLAIMED FUNCTIONSEcologicalNo relation with forest potential

Supplying DakarNo relation with demand [60% of consumption in Dakar]Gap filled by quittances, overloading, under cover transport, clearing quotas, train, etc.

Equitable Distribution preventing monopolyEffect is the contrary

FUNCTIONS OF QUOTAS: ACTUAL FUNCTIONSRent systemhow patrons maintain their marginCapture of the market by patrons [with professional card and quotas] at expense of surga and CRMaintenance of price by restricted market entryCollusive price fixing by patrons (producer and transport prices) [opposed to Dcret 95-77 de 20 janvier 1995] Secondary market in quotasMarket in quittancesReduced competition by forbidding transport by trainPatronagePrincipal function of quotas et quittances allocation to clientsBarrier to decentralization and the transfer of powersUsurpation of powers of elected officials right of refusal

FUNCTIONS OF PROFESSIONAL CARDRestriction on charcoal market entryContrary to Dcret 95-132 fvrier 1995

Restriction on transport market entryVia link between card, quota and circulation permits

Patronage by Forest Service and Minister and the Union (UNCEFS)Via distribution of cards to new organizations

Functions of other laws and practicesfor an other day!Permis de coupePermis de circulationPermis de dfrichementQuittances Taxe domaniale de deux tires (1200 et 700)Plans damenagement the new quotaZPC, ZA, ZNCSuivi Fiscal (contentieux)Droit de signature pralable de PCR [Weexdunx]

Rural Council President Decision

Weexdunxs Signature

Mechanisms of Benefit ConcentrationVillagers Forest access controlTreats of violenceVillage access (wells & housing)Woodcutters Access to merchantsSocial ties Social identityTechnical skillsMerchants Control of labor opportunitiesPermitsCreditControl of market access Control of access to marketsQuotas, licensesCooperative membershipSocial ties with government Leverage over pricesCollusive price fixingInter-locking credit-labor arrangements MisinformationWholesalers Control of distribution Credit Arrangements/CapitalKnowledge of demandSocial ties with vendors & merchantsRetailers Maintenance of access to wholesalersRelations with wholesalers & clients Leverage over pricesManipulation of SymbolsManipulation of WeightManagement plansRC right to say noRC labor allocation

Market access control enhancedDominance over RCPressure by SPPressure by forestersPressure by Union and merchantsThreats and PayoffsAccusationShift of focus of blameLabor access control enhancedManagement PlansRequired training

CONCLUSIONS

Why Decentralization did not Increase Local BenefitsProgressive new laws 1996 & 1998Elimination of quotaTransfer of decisions to rural council signature prealable

Implementation blocked by foresters and merchants

National Policy Dialogue wrote and produced playMade it into film

Campaign to leverage decentralization.

Without dismantling the Environmental policies that concentrate market access control with urban merchants, there is no economic decentralization

More Implications Shift of focus of blame from line ministries to elected local authorities[Cameroon; China]

1993 participatory code created participatory corve

1998 Decentralized code necessitated coercion

There is plenty of profit in this market.

Forestry policies exclude local people from the benefits while enabling urban merchants to profit.

Without dismantling the policies that concentrate forestry market access control with urban merchants, there is no economic decentralization THE POVERTY OF ENVIRONMENTAL POLICY

BROAD POLICY IMPLICATIONSMove away from property land-tenure security as entry point for policy:Toward broader access focus on benefitsForest ownership or control does not produce benefits

Move toward benefit securityVia taxes, stumpage fees, market access, accountable representationOrganizingE.G. Coalition of Rural Council Environment officers

Extend concept of public resource to profit from public resources

Study policy processes as linked to patronage and commercial resourcesBates policy and institutional choice

THE END

POLICY RECOMMENDATIONSNote: The following section of the power point was not presented at the talk.

OBJECTIVES OF RECOMMENDATIONSMaintain ecosystem services and functions for local, national and global objectives

Establish democratic decentralization in natural resource managementEstablish a space of local discretion Produced citizenship

Increase local benefit retention for local developmentFund the CR

1: ELEMENTS FOR PROTECTING THE ENVIRONMENT

Identify activities to transfer that do not threaten ecosystem functions

Identify simple rules (shift to minimum standards approach) to assure ecosystem functions This shift eliminates rent-seeking opportunities

2 : ELEMENTS FOR EFFECTIVE DEMOCRATIC DECENTRALIZATIONTransfer of powers (not just obligations) concerning natural resources Meaningful (relevant to population, lucrative)Discretionary (giving real alternatives to rural councilors)Lucrative opportunities

Accountability of rural councilors to the populationSecure powersAccountability mechanisms

3 : ELEMENTS FOR INCREASING LOCAL BENEFITS

Transfer of lucrative opportunities to Local Government Exploitation opportunitiesTransport and trade opportunities/market access

Establish a tax for the Rural CommunityIn a free market benefits will be zero without a taxThis tax must be significantclose to magnigude of current oligopsony rentsThis tax must be set nationallynot council by council

5 LINKED RECOMMENDATIONS1. Deregulate the market following laws already legislated:Eliminate Quota: [see Code Forestire 1998, art R66]Eliminate Professional Card: [Dcret 95-132]Stop Price Fixing: [Dcret 95-77]2. Shift to minimum standards approach:Identify uses that can occur without management plans or approval by forest serviceIdentify exploitation rules/standardsReserve plans for production enhancement or problem zones3. Tax on forest products for the CR:Fixed at national levelAt least 500-1000 CFA the sack4. Civic education:Population needs to know their rights and the powers of their reps. Representatives need to know their powers and recourse5. Transparent fiscal management system:Public access to revenues and expenditures informationExperiment with participatory budgeting

STEPS OF TRANSITION2 Models : Slow [and painful] elimination1:================== NON================== Slow establishment Eliminate old system all at once2: OUI===================Establish new system progressively

RISKS TO MANAGEEcological destructionThe fragile Sahelthis discourse is not viableAnarchic cuttingnothing worse than present system

Shortages in DakarPatrons strikesas their policy leverage

Political pressure of patronsRe-conversion requestsUNCEFSVotes

Recentralization With forest classificationWith management plansWith control of former permission

STRATEGY FOR MANAGING RISKSMettez les risque en perspective Risque cologique pas si gravergnration forte; populations contreRisque de pnurie grablegaz; appelle de production

Pnuries a DakarLancez la reforme quand le charbon est abondant au fin de saisonStockage publique de charbon de bois au dpt a Dakar Stockage de gaz butane en surplus [les ruptures en CdB peut promouvoir conversion vers la gaz]duquer les journalistes pour expliquer que cest les Exploitants et pas les Eaux et Forets derrire des pnurieLibralisation de marche de transport vas assurer approvisionnement Libralisation vas diminuer la prix (mme avec une taxe pour le CR)

Endommagements cologiqueRponse poste hoc Trouvez les solutions quand les problmes mergeFaire la production (a traverse la mise en dfense) dans les zones dgrad en lieu de reforestation

Nouveau systme de gestion vas stablir a partir des imprvisible dynamiques et problmes cre par llimination de vieux systme. On droit avancer sans avoir tout les lments en place. Ragir a chaque problme qui merge

Contrler la flux a lentre des grandes centres de consommationEnregistrement des permis de circulation donne par les CR