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Source: www.africaecon.org

Africa Economic Institute

52% Increase in Egyptian Cotton Exports


Egyptian cotton exports reached a record level increase of 52%. Cottons in all forms and lengths witnessed an increase by 36% of their market price. Currently, the largest importer of Egyptian cotton in the global market is India.

Egyptian cotton exports reached a record level increase of 52%. Cottons in all forms and lengths witnessed an increase by 36% of their market price. Currently, the largest importer of Egyptian cotton in the global market is India.

According to the latest report issued by the Egyptian Central Unit For Statistics, $197 million worth of cotton were exported between January and August of 2008. Which is a 52% increase when compared to the L.E 144.8 million cotton exports for the same period of 2007. Moreover, the market value of cotton witnessed a 36% increase.

India, being the largest reactor for this rise in exports, imported 48.4% of total cotton exports in the mentioned. According to a report released by the Egyptian Ministry of Trade and Industry, total trade turnover between the two countries is expected to reach $4 billion by the end of 2009. Egyptian exports to India are expected to reach a total of $2.5.

In 2007, however, trade between the two countries increased by 64.4% reaching $3.5 billion, compared to $2.1 billion in 2006. The trade balance between the two countries showed a $285.7 million surplus in favor of Egypt.

Fouad Hassaan, the President of the Ghazl Al-Mahala Al-Kubra company, a subsidiary of the Ministry of Investment, stated that expectations for total production of cotton for the 2008/2009 season is around 2.3 million kintars rather than the previous 3.5 million kintars in the past season. Thus, total production fell by 1.2 million kintar.

Hassaan claims that the expected production rate for this season will not be sufficient to operate public and private textile factories, claiming that his company alone consumes 700,000 kintar per annum in order to operate, which is around 30% of the total cotton produced.  

Egypt produces medium-long staple (MLS), long staple (LS) and extra-long staple (ELS) cottons. These cottons produce a wide range of yarn counts needed for the production of fine textiles. However, international market demand is for the LS and ELS type Giza 70,88. The remaining varieties have, in the past, been consumed locally, because they were considered overpriced.

In the 1960s and 1970s, Egypt supplied 80 per cent of the world market, but later lost market share to its US competitor, Pima cotton. Today, Egypt alone supplies 55 per cent of the world’s needs of LS and ELS cottons, while the US Pima supplies 40 per cent. Egypt and the US have a monopoly over the production and trade of LS and ELS cotton varieties.

Over the past couple of years, the government has been working on reinstating the fame of Egyptian cotton by launching a cotton logo to reinforce consumer awareness. Egypt’s “white gold” has seen many ups and downs. For over 30 years (1963-1994), the planting and processing of the crop was monopolized by the government. The government bought the cotton, ginned it and sold it to local producers or exported it. Ginning is the process by which cotton lint is separated from the seed. The government set the price paid to the farmer, the export price and the price at which it was sold to local spinners. In 1994, the rules changed with the new cotton sector liberalization law. Farmers were free to decide the crops they wanted to plant and private traders were allowed to buy the crop, gin it and either sell it to local spinners or export it.

Source: www.AfricaEcon.org
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Source: www.africaecon.org