Cotton, the white gold which used to be a main source of income for Egypt's economy, has been losing its attraction, writes Mona El-Fiqi
It seems that international and local markets are no longer interested in purchasing Egyptian long staple cotton due to its high price compared to cheaper short and medium staple varieties.
Locally cultivated cotton is also plagued by low productivity, due to a lack of investment in research on improving the cotton crop. Farmers are encouraged to pursue more lucrative crops, and local textile producers depend on imported cotton.
Such reasons have led Egypt's cotton to lose much of its lustre, and in a bid to save the country's cotton industry former prime minister Ibrahim Mehleb issued a decree to form a higher committee on cotton headed by the prime minister and including the ministers of agriculture, industry, planning, finance, and investment, along with the chairman of the Federation of Egyptian Industries and representatives from the Syndicate of Spinning and Weaving.
The aim of the committee is to investigate how Egyptian cotton can regain its competitiveness in local as well as international markets. The committee should submit a report next month including concrete procedures to restructure cotton cultivation and the cotton trade in Egypt.
Former minister of agriculture Salah Hilal has also announced that a Cotton Research Institute will be set up to draw up a "cotton map" of the country. The map will include the amount, sort and area of cultivation of cotton in the different governorates.
The ministry will also announce an indicative minimum selling price to encourage farmers to cultivate cotton.
Since 1994, when the government liberalised the cotton trade, Egyptian cotton has suffered from a series of problems starting from a lack of high-quality seeds, spiralling cultivation costs, and the lack of a comprehensive marketing policy.
The result has been a decline in cultivated land from three million feddans in the 1980s to 300,000 feddans today.
"The current situation of cotton is bad because production costs are high while productivity is low, and the problem increases when the product is not in demand by local industries," said Adel Ezzi, head of the General Committee for Cotton Internal Trade.
Ezzi said that farmers refrained from cultivating cotton because they were not able to sell their harvest. Every year cotton farmers store their crop and wait for buyers, he said, adding that they had enormous problems marketing it.
The inventories of cotton from the previous season have now reached 1.2 million qantars, according to figures from the Egyptian Farmers Federation. As a result, farmers prefer to plant more lucrative crops like rice and corn, Ezzi said.
Experts blame the Ministry of Agriculture for not changing the cultivated strains of cotton to make them comply with locally demanded varieties and insisting instead on producing the long staple cotton that is no longer in demand.
Long staple cotton represents three per cent of the total cotton trade worldwide, while the remaining is medium and short staple cotton.
Mohamed Abdel-Meguid, head of the Egyptian Cotton Council, said there was a debate on the cotton staple Egypt should produce. Some experts recommend that the ministry of agriculture should focus on cultivating the short and medium staple needed by local industry, he said.
However, Ezzi said that producing short staple cotton was not a good idea as Egypt was known for its long staple cotton and maximising the benefit of this was still feasible. Restructuring the spinning and weaving industries to use the long staple variety was necessary, he said.
Egypt's total textiles exports reached $2.5 billion in 2014, a moderate figure compared to the $25 billion in exports made by Bangladesh that the country aims to increase to $50 billion within the coming five years.
A lack of coordination between ministries was another problem, according to Ibrahim Abdel-Motaleb, a former head of the Cotton Research Institute. "Six ministries are involved in cotton cultivation, namely, the ministries of agriculture, trade and industry, investment, finance, labour and the interior," Abdel-Motaleb said.
"Before the cultivation season begins, greater coordination is needed to define the quantities and kinds needed for the local and international markets," he added.
To encourage farmers to cultivate more cotton, the ministry of agriculture should apply a contract system, Abdel-Motaleb explained. "This should determine the price of each variety before the cultivation season begins. Any risks should be taken into consideration by the government when deciding the price," he added.
Mohamed Abdel-Meguid, the head of the Cotton Council, said that the liberalisation of cotton and the limits on the government's role in the trade had resulted in private traders and textiles producers making use of farmers for their own benefit.
"To help cotton to regain its position, the government should control the whole process, including cultivation, trade and industry, because cotton is a strategic crop for Egypt," Abdel-Meguid said.
The government should also focus on added value industries based on cotton, he explained, saying that "the total value of raw cotton exports is currently $500 million, and this could be increased to $2 billion if it is exported after spinning and $8 billion if it is sold in the international markets as fabric."
But Mohamed Qassem, chairman of the Ready-made Garments Exports Council, said that this could not be achieved unless new investments were introduced to the spinning and weaving sector since 80 per cent of factories are not able to deal with the Egyptian extra-long variety of cotton.
The manufacturers of textiles and ready-made garments prefer to import cotton for many reasons. Qassem said that US pima cotton was 30 per cent higher in price than Egyptian cotton, but manufacturers preferred to import Pima because it was better in terms of specifications.
"Every year Egyptian cotton specifications are worse than the year before," Qassem said.
Textiles producers attribute the deterioration in locally produced cotton to the ministry of agriculture, saying that Egyptian cotton has lost its position in international markets due to contamination.
Sayed Ahmed, chairman of the Home Textiles Exports Council, said that hand-picking Egyptian cotton resulted in contamination and farmers should be taught the correct methods.
Qassem said that the industry was obliged to follow the demand of the international markets and that the ministry of agriculture should handle the issue of cotton according to their needs.
Ahmed said that the problem was above all that local industry used short and medium staple cotton. In home textiles, only two to three per cent of production is based on long staple cotton, while the rest uses short and medium kinds.
The price of Egyptian cotton is another problem. The international price of short staple cotton is LE650 to 700 per qantar, while Egyptian cotton is sold for at least LE1,200 per qantar.
"If cotton productivity increases, the price will decline to international norms and the local industry will stop importing cotton," Ahmed said.
© Al Ahram Weekly 2015
