By Loucoumane Coulibaly

ABIDJAN, Dec 17 (Reuters) - Ivory Coast's cotton sector hopes investments by a consortium including Singapore's Olam International Ltd can help it to revive output that has fallen in recent years, a producers group said on Wednesday.

Olam is part of the consortium that this year bought the assets of cotton producer La Compagnie Cotonniere Ivoirienne (LCCI) for just over 8 billions CFA francs ($16.39 million). The Ivorian state seized LCCI assets in 2003 after it went bankrupt.

Ivory Coast had an annual production of 400,000 tonnes before a brief 2002/2003 civil war disrupted an economy that was once West Africa's most prosperous. The country, which is also the world's top cocoa grower, produced 150,000 tonnes last year.

"This is the first time that the Olam Group has got involved in the cotton sector in Ivory Coast. We think that this bodes well for a better future for an industry that we have been trying to rebuild since the crisis began," said Nicolas N'Guetta, Executive Secretary of producer group Intercoton.

Olam already has a subsidiary in Ivory Coast, Outspan Ivoire, which trades cocoa, coffee and cashew nuts.

N'Guetta said the cotton investment deal sees Olam taking over a ginning plant at Ouangolo, near the northern border with Burkina Faso. It has a 35,000-tonne per year capacity.

Other investors in the consortium were Ivoire Coton, which has taken over the 100,000-tonne capacity M'Bengue factory, and the Yebe Wognon cooperative, which has bought two factories in Korhogo with a joint capacity of 75,000 tonnes.

This season's harvesting started in late November and is due to end by March. Ivory Coast has had to cut its forecast for the 2008/09 season to 165,000 tonnes from 250,000 tonnes due to poor weather and the lack of chemicals for farmers.

RE-LAUNCH

But N'Guetta said he believed 2009 would be a key year in re-launching the industry, not least because the European Union was investing roughly 2 billion CFA francs ($4.10 million) to provide farmers with equipment to improve productivity.

"This project will boost production next year," he added.

Farmers agreed, saying higher farmgate prices this season would lure growers back to the cotton fields. The cotton sector provides a direct or indirect income for 3.5 million Ivorians.

"Everything is going well. Harvesting is under way. The ginners are buying cotton at 185 CFA francs ($0.379) per kilo," said Ali Soro, a farmer with seven hectares near Korhogo.

Soro said that last year's price had been around 150 CFA francs per kilo.

"Next year, all the farmers will come back to the fields because they will see how the cotton is being bought at a good price," added Soro.

($1=488.0 Cfa Franc) (For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com/) (Writing by David Lewis; Editing by Pascal Fletcher)