Sudan was traditionally one of the world's largest producers of long-stable cotton and medium producer of medium-stable cotton. In the Sudan cotton has been the most important cash crop and foreign-currency earner for the past 50 years. During the seventies and up to late eighties cotton alone contributed between 45 and 65 percent of the total foreign-currency earnings however, it contribution dropped below 3% in 2001. In addition, cotton is considered as a main source of income for about 13 percent of the total labor-force. In spite of the economic importance of cotton for the Sudan economy big fluctuations in cotton area, production and yield occurred. Gezira Scheme (GS) contributes about 60 % of the total cotton produced in Sudan. The study answers the following research questions (1) What are the main driving factors and the reasons for the decrease of cotton production in the GS; (2) Is the cotton yield variability among the tenants in the GS due to random variability or due to the tenants' technical inefficiency or scheme management factors? What are the main factors behind technical inefficiency?; (3) What are the economic losses as a result of cotton production variability in the GS? and (4) If the tenants are free to choose what to produce, what are the crop combinations they will select and how close are they to the current crop combination?

Gezira is the Arabic word meaning ‘island* or ‘peninsula*. It crops up in place names throughout the Arab world, notably in the name Algeria which is an anglicized form of the Arabic al-guzayir, ‘the islands*. In the Sudan, Gezira means only one thing. It refers to that vast area of land which lies between the Blue and the White Nile. In particular, though, it refers to the part of that area which is irrigated and used for growing cotton, the staple export crop of the country.

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