CAIRO: The market for Egyptian cotton, the legendary commodity that enriched Muhammad Ali-era pashas and fueled the growth of a sizeable textile industry last century, is not what it used to be.
A British Economist Intelligence Unit report said that domestic cotton production plummeted by half this season, as farmers reacting to lower prices switched to wheat, corn, vegetables and other crops.
Global cotton production fell this season due to high input costs around planting time, the global downturn and higher prices for competing crops.
The drop in local supply has been steep enough to prompt local textile producers and other groups to call on the government to create a subsidy of LE 150 per kantar and temporarily ban imports.
“There is a collapse in [the cotton] sector, said Ahmed El-Naggar, economist at the Al-Ahram Center for Political and Strategic Studies. “Our government should try to enable farmers to make profits by giving subsidies to them.
Farming subsidies in the United States, the world’s largest cotton exporter, have held cotton prices artificially low, said El-Naggar. “This put Egyptian farmers under real pressure, he said. “If they grow cotton they will lose.
Giving subsidies to Egyptian farmers is the best way to ensure they can compete, he said.
Egypt and other nations should also work through the World Trade Organization and similar groups to fight American subsidies, which hurt farmers in Egypt as well as other African countries growing competing crops, El-Naggar said.
Demand for Egyptian cotton has also been hurt by the growth of Chinese textile exports, which compete with Egypt’s.
Local textile producers make high profits compared with their Chinese counterparts, thus lowering their competitiveness, El-Naggar said.
“If our producers decrease their profit rate, I think they will be able to compete with Chinese producers, he said.
Trying to compete with China based on quality by taking advantage of Egypt’s long-staple cotton, which can be used to make finer products, could also help, El-Naggar said.
Demand for Egyptian cotton will decline by six percent this year, the Economist report predicted. So far, exports of Egyptian cotton have only reached 10 percent of last season’s total. Additionally, cotton-cultivating field space has dropped to 313,000 acres from 583,000 since last season, the report said.
The decline of the Egyptian cotton market has been mirrored throughout the world. In the United States, production is expected to decrease by nearly 30 percent from last year, according to the United States Department of Agriculture. Declines are also expected in Brazil, China, Pakistan, India and Uzbekistan.
World cotton production in this season will fall by 7.4 percent, the largest yearly fall in six years, according to US government forecasts. Additionally, consumption of cotton is expected to fall 5.5 percent, the most significant drop since the 1943-1944 season.
