Double Standards on an Uneven Playing Field: Distribution along Senegal’s Charcoal Commodity Chain

Double Standards on an Uneven Playing Field: Distribution along Senegal’s Charcoal Commodity Chain A Case Study of POLICY & PROFIT Jesse C. Ribot/ World Resources Institute (WRI) Institutions and Governance Program

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 “access” Who reaps the flow of benefits from things [See Peluso and Ribot 2003]

METHOD OF COMMODITY-CHAIN ANALYSIS Identify actors Quantify distribution of profits –Price Margins –Expenses –Market Shares –Identify nodes of concentration Explain patterns of profit & concentration –Conduct, structure, performance—Farruk, Lele, Timmer, Harriss –Social identities, social relations, social histories –Policy’s role –Explore functions of policy Develop Policy Recommendations

Senegal Case 1986 / 2006

Urban population Retailers Urban wholesalers Transporters Co-operatives Merchants/ Patrons Migrant Woodcutters Forest Villages Rural Intermediaries Kontrapalaas Identify Market Actors

Wood & Charcoal Loans Market regulations Unofficial relations Urban population Retailers Wholesalers Transporters Co-operatives Merchants/ Patrons Migrant Woodcutters Forest Villages Other Institutions - Unions - Religious Brotherhoods Ministries National Forest Department Rural Intermeidaries kontrapalaas Regional Forest Service Local Forest Service Elected Regional Council Local Rural Council/PCR

PRICE STRUCTURE AND PROFIT MARGINS FOR A SACK OF CHARCOAL (IN 2002 CONSTANT CFA) Change Average Prices Urban Woodcutter price to Merchant Merchant price to Wholesaler Wholesaler price to Retailer Retailer to Customer in Dakar3639[~4076] Profit Margins (all costs deducted) Woodcutter % Rural Intermediary-30 - Merchants % Urban Wholesalers % Retailer519[~183] -

AVERAGE ANNUAL PROFIT OF ACTORS IN CHARCOAL MARKET Actor Annual Average Profit (CFA) Woodcutter $144 Rural Intermediary $562 Merchant $4000 Urban Wholesaler1,600,000 $3200 Retailer ??> 180,000 $360

Urban population Retailers Urban wholesalers Transporters Co-operatives Merchants/ Patrons Migrant Woodcutters Forest Villages Rural Intermediaries PROFIT DISTRIBUTION IN MARKET 7% 22% - 54% 16% 3% Even Skewed - Skewed Even Skewed

Retailers 10,000 Urban Wholesalers 200 Merchants/Patrons active Migrant Woodcutters 18,000 Forest Villages FONT-SCALED PROFIT DISTRIBUTION

EXPLAINING DISTRIBUTION: MECHANISMS OF BENEFIT CONCENTRATION Villagers  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 FUNCTIONS Ecological No relation with forest potential Supplying Dakar No relation with demand [60% of consumption in Dakar] Gap filled by quittances, overloading, under cover transport, clearing quotas, train, etc. Equitable Distribution – preventing monopoly Effect is the contrary

FUNCTIONS OF QUOTAS: ACTUAL FUNCTIONS Rent system—how patrons maintain their margin Capture of the market by patrons [with professional card and quotas] at expense of surga and CR Maintenance of price by restricted market entry Collusive price fixing by patrons (producer and transport prices) [opposed to Décret de 20 janvier 1995] Secondary market in quotas Market in ‘quittances’ Reduced competition by forbidding transport by train Patronage Principal function of quotas et quittances – allocation to clients Barrier to decentralization and the transfer of powers Usurpation of powers of elected officials right of refusal

FUNCTIONS OF PROFESSIONAL CARD Restriction on charcoal market entry Contrary to Décret février 1995 Restriction on transport market entry Via 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 practices—for an other day! Permis de coupe Permis de circulation Permis de défrichement Quittances Taxe domaniale de deux tires (1200 et 700) Plans d’amenagement –the new quota ZPC, ZA, ZNC Suivi Fiscal (contentieux) Droit de signature préalable de PCR [Weexdunx]

Rural Council President Decision Weexdunx’s Signature

Mechanisms of Benefit Concentration Villagers  Forest access control  Treats of violence  Village access (wells & housing) Woodcutters  Access to merchants  Social ties  Social identity  Technical skills Merchants  Control of labor opportunities  Permits  Credit  Control of market access  Control of access to markets  Quotas, licenses  Cooperative membership  Social ties with government  Leverage over prices  Collusive price fixing  Inter-locking credit-labor arrangements  Misinformation Wholesalers  Control of distribution  Credit Arrangements/Capital  Knowledge of demand  Social ties with vendors & merchants Retailers  Maintenance of access to wholesalers  Relations with wholesalers & clients  Leverage over prices  Manipulation of Symbols  Manipulation of Weight àManagement plans àRC right to say no àRC labor allocation Market access control enhanced àDominance over RC àPressure by SP àPressure by foresters àPressure by Union and merchants àThreats and Payoffs àAccusation àShift of focus of blame Labor access control enhanced àManagement Plans àRequired training

CONCLUSIONS

Why Decentralization did not Increase Local Benefits Progressive new laws 1996 & 1998 –Elimination of quota –Transfer of decisions to rural council  ’signature prealable’ Implementation blocked by foresters and merchants National Policy Dialogue –  wrote and produced play –Made 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 corvée 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 IMPLICATIONS Move away from property land-tenure security as entry point for policy: –Toward broader access focus on benefits –Forest ownership or control does not produce benefits Move toward benefit security –Via taxes, stumpage fees, market access, accountable representation –Organizing—E.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 resources –Bates  policy and institutional choice

THE END

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

OBJECTIVES OF RECOMMENDATIONS Maintain ecosystem services and functions for local, national and global objectives Establish democratic decentralization in natural resource management Establish a space of local discretion Produced citizenship  Increase local benefit retention for local development Fund 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 DECENTRALIZATION Transfer 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 population Secure powers Accountability mechanisms

3 : ELEMENTS FOR INCREASING LOCAL BENEFITS Transfer of lucrative opportunities to Local Government Exploitation opportunities Transport and trade opportunities/market access  Establish a tax for the Rural Community In a free market benefits will be zero without a tax This tax must be significant –  close to magnigude of current oligopsony rents This tax must be set nationally—not council by council

5 LINKED RECOMMENDATIONS 1. Deregulate the market following laws already legislated: Eliminate Quota: [see Code Forestière 1998, art R66] Eliminate Professional Card: [Décret ] Stop Price Fixing: [Décret 95-77] 2. Shift to minimum standards approach: Identify uses that can occur without management plans or approval by forest service Identify exploitation rules/standards Reserve plans for production enhancement or problem zones 3. Tax on forest products for the CR: Fixed at national level At least CFA the sack 4. Civic education: Population needs to know their rights and the powers of their reps. Representatives need to know their powers and recourse 5. Transparent fiscal management system: Public access to revenues and expenditures information Experiment with participatory budgeting

STEPS OF TRANSITION 2 Models : Slow [and painful] elimination 1:  ================== NON ==================  Slow establishment Eliminate old system all at once 2:  OUI ===================  Establish new system progressively

RISKS TO MANAGE Ecological destruction The fragile Sahel—this discourse is not viable Anarchic cutting—nothing worse than present system Shortages in Dakar Patrons strikes—as their policy leverage Political pressure of patrons Re-conversion requests UNCEFS Votes Recentralization With forest classification With management plans With control of former permission

STRATEGY FOR MANAGING RISKS Mettez les risque en perspective Risque écologique pas si grave—régénération forte; populations contre Risque de pénurie gérable—gaz; appelle de production Pénuries a Dakar Lancez la reforme quand le charbon est abondant au fin de saison Stockage publique de charbon de bois au dépôt a Dakar Stockage de gaz butane en surplus [les ruptures en CdB peut promouvoir conversion vers la gaz] Éduquer les journalistes pour expliquer que c’est les Exploitants et pas les Eaux et Forets derrière des pénurie Libéralisation de marchée de transport vas assurer approvisionnement Libéralisation vas diminuer la prix (même avec une taxe pour le CR) Endommagements Écologique Réponse poste hoc  Trouvez les solutions quand les problèmes émerge Faire la production (a traverse la mise en défense) dans les zones dégradé en lieu de reforestation Nouveau système de gestion vas s’établir a partir des imprévisible dynamiques et problèmes crée par l’élimination de vieux système.  On droit avancer sans avoir tout les éléments en place.  Réagir a chaque problème qui émerge Contrôler la flux a l’entrée des grandes centres de consommation Enregistrement des permis de circulation donnée par les CR