Reclaiming the cotton throne

Mona El-Fiqi
Al AhramWeekly, 2-8 August

To rule as king once again, the Egyptian cotton industry is in dire need of an overhaul.

Egypt's "white gold" continues to face several challenges which have led to an obvious deterioration in its status on the international market. Experts believe that unless the government takes serious steps to recover the reputation of its cotton crop by increasing production, introducing new cotton varieties, reducing costs and implementing a clear pricing policy, this bullion will lose its allure.

The most pressing problem facing Egypt's cotton crop is dwindling land areas on which it is grown. According to Minister of Agriculture and Land Reclamation Amin Abaza, there are 450,000 feddans available for cultivating cotton -- a far cry from the two million feddans of cotton harvested in the 1950s. The reason behind the decrease in land area is that farmers are no longer interested in the crop because of inconsistent pricing policies.

Cotton prices fluctuate according to international value, and since the government does not provide cultivators with financial insurance of their crop they turn to more reliable crops such as rice, vegetables and fruits. Since 1994, when domestic cotton trade was liberalised, the government is no longer responsible for marketing cotton, leaving farmers without any financial insurance on their harvest. Moreover, farmers cannot face the challenges of international markets and the sudden changes in prices.

The solution, according to experts, is a more effective role by the government in marketing cotton. "The Ministry of Agriculture should set an average price for cotton and announce it at the beginning of each season," suggested Hussein Mohamed Hegazy, chairman of the Shura Council's Agricultural Production and Lands Reclamation Committee. "This will help farmers feel secure and encourage them to grow cotton."

Another challenge is delayed payments to cotton growers, sometimes for months at a time. "Farmers in Beheira did not get paid for last year's cotton crop until July 2007, while the new harvest will be collected in October," revealed Hussein. "Understandably, a large number of farmers stopped growing cotton."

What compounds the problem is that most local spinning and weaving companies do not use Egyptian extra-long cotton, but prefer to import cheaper short-staple cotton. Hegazy asserted that it would be better if local manufacturers upgraded to the extra-long varieties, rather than concentrating on producing cheap garments. "Growing long-staple cotton but not using it in local factories weakens our position on the international market," warned Hegazy.

To promote the cotton harvest, Hegazy suggested that the government double the land allocated for cotton, part of which will be earmarked for growing the short-staple cotton needed in local production. The yield of the longer staple variety will target foreign markets since it is in high demand there.

Hegazy stressed the need to use advanced technology and genetic engineering to develop more productive varieties. Six countries, namely the US, Russia, China, Pakistan, Brazil and India, were able to increase their cotton production to reach 78 per cent of total world production by using advanced technology.

Another setback cited by Hegazy is that fertilisers, seeds and harvesting costs are too high, which put final prices above the international market value causing Egyptian cotton to lose its competitiveness. He urged that the government provide farmers with production needs at reasonable prices, as is the case in many other countries. Also, that the results of research on agriculture should be applied rather than shelved. "Although government research centres do a good job on cotton crops, farmers have not been informed of any of the results in order to benefit from them," stated Hegazy.

While agreeing that there are many serious problems facing the Egyptian cotton industry, cotton dealers put in a few of their own suggestions. Amgad Hassan El-Atal, chairman of Egycot and head of the Exporters Committee at the Alexandria Businessmen's Association, believes that the most important problem is the government's sudden decision a few months ago to stop growing a long-strain variety of cotton, known as Giza 70, which is highly demanded by international markets.

El-Atal blamed the government for taking a sudden decision without informing cotton dealers beforehand, or providing other varieties before the moratorium on Giza 70. The Ministry of Agriculture had said the decision was a result of a poor harvest of Giza 70 due to mixing different cotton seeds. But El-Atal called on the government to introduce other longer varieties such as Giza 70, and find solutions to save other cotton staples such as Giza 88. "The ministry has to study well the reasons behind the decline of Giza 70 to save other cotton varieties," he urged.

One more problem, according to El-Atal, is the lack of set cotton pricing. He suggested that the government announces an estimated, non- obligatory price for all those in the industry, including farmers, traders, spinning companies and exporters. At the same time, this expert opposes subsidies or any other form of government support to public sector spinning and weaving companies. El-Atal explained that these companies will rely on subsidies and buy up large amounts of cotton in order to control prices.

In response to the cotton debate, officials promised that a number of procedures will be taken to help Egyptian cotton back on the right track. Abaza, for example, announced that his ministry is currently conducting a study to reduce the cost price of cotton by using high technology, particularly in collecting the cotton harvest. Abaza added that a number of new factories using long- staple varieties were recently established in the city of Borg Al-Arab. As a result, it is expected that there will be an increase in demand on Egyptian cotton and a rise in the area of land dedicated to growing the crop.

Also, the Ministry of Agriculture recently announced that it is considering to provide cotton farmers with production needs -- such as seeds and fertilisers -- at reasonable prices, depending on the number of feddans each farmer grows. This would encourage farmers to grow cotton, while at the same time lets market prices be decided according to supply and demand.