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 [email_address]

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]

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

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

Urban population Retailers Wholesalers Transporters 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 Wood & Charcoal Loans Market regulations Unofficial relations Co-operatives Merchants/ Patrons

PRICE STRUCTURE AND PROFIT MARGINS FOR A SACK OF CHARCOAL (IN 2002 CONSTANT CFA) - [~183] 519 Retailer +41% 317 225 Urban Wholesalers +29% 774 598 Merchants - 30 - Rural Intermediary -1% 727 734 Woodcutter Profit Margins (all costs deducted) [~4076] 3639 Retailer to Customer in Dakar 3769 3031 Wholesaler price to Retailer 3452 2806 Merchant price to Wholesaler 778 839 Urban Woodcutter price to Merchant Average Prices Change 2002-2003 1987

AVERAGE ANNUAL PROFIT OF ACTORS IN CHARCOAL MARKET ??> 180,000 $360 Retailer 1,600,000 $3200 Urban Wholesaler 2.000.000 $4000 Merchant 236.000 $562 Rural Intermediary 72.000 $144 Woodcutter Annual Average Profit (CFA) Actor

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

Retailers 10,000 Urban Wholesalers 200 Merchants/Patrons 5000-160 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

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

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 95-77 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

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 95-77 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 95-132 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

Restriction on charcoal market entry

Contrary to Décret 95-132 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]

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

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 Management plans RC right to say no RC labor allocation Market access control enhanced Dominance over RC Pressure by SP Pressure by foresters Pressure by Union and merchants Threats and Payoffs Accusation Shift of focus of blame Labor access control enhanced Management Plans Required training

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

Management plans

RC right to say no

RC labor allocation

Market access control enhanced

Dominance over RC

Pressure by SP

Pressure by foresters

Pressure by Union and merchants

Threats and Payoffs

Accusation

Shift of focus of blame

Labor access control enhanced

Management Plans

Required training

CONCLUSIONS

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.

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 corv é e 1998 Decentralized code necessitated coercion

Shift of focus of blame from line ministries to elected local authorities

[Cameroon; China]

1993 participatory code created participatory corv é e

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

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

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

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

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

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

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 95-132] 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 500-1000 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

1. Deregulate the market following laws already legislated :

Eliminate Quota : [see Code Forestière 1998, art R66]

Eliminate Professional Card : [Décret 95-132]

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 500-1000 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

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

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

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