Stronger ties needed between African cotton and Asia – ITC
21/08/2013
In a recently published report, it states that African cotton companies and farmers face a number of obstacles that limit their export revenues, particularly in terms of improvements along the value chain, and while much has already been achieved through supply-side assistance to improve the quality of African cotton, efforts are still needed to rebuild the sector’s poor image in key markets.
A major problem facing African cotton producers and ginners in exports is falling prices. During the early stages of the global financial crisis, demand for cotton dropped significantly and subsequently hit production. More recently, production has rebounded and reached a record of 27 million tons in 2011-2012 but world cotton consumption is lagging behind production. As a result, the international price for cotton has decreased, leading some countries to raise their subsidies in line with price declines.
Many cotton producing countries continue to grant subsidies to their cotton growers that substantially distort the market for cotton. Because African countries are relatively small players in the world cotton market, they have a limited impact on international cotton prices.
In addition, spinning mills in Asia often perceive African cotton to be of inferior quality (mainly related to contamination issues), according to the ITC, which prevents producers from applying any premium on their cotton. Building direct ties between African cotton producers and Asian buyers will create opportunities for technical cooperation and knowledge transfer and will also improve the reputation of African cotton. In the end, this will allow African producers to obtain a premium on the price of their cotton, it said.
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