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8/3/2019 African Cotton Industry_2007
http://slidepdf.com/reader/full/african-cotton-industry2007 1/6
1
Africa’s Cottonin the World
ICAC & Gérald Estur
Seminar on Cotton in Africa6-8 September 2007, Arusha
The Importance of Cotton in Africa
• A vital cash crop for millions of Africans
• Major source of export earnings: – 3rd place after cocoa and coffee
– 25 to 70% of total exports in several countries
• Engine of development
• 250 ginneries in rural areas
• Oil crushing mills & textile mills
0 3,000 Km
N
EW
S
2,000 to 40,000 tons
Producing countries
Production
< 2,000 tons
> 40,000 tons
Cotton in Africa Overview of the Cotton Sectorin Africa
• Produced in 37 countries out of 53
• 4.6 million hectares in 2006/07 (13.5% of world cotton area)
• 1.55 million tons (6% of world production)
• 25 exporters (18% of world exports)
• > 90% rainfed upland cotton
• Small-scale farms; labor intensive
• 100% hand-picked; mostly saw ginned
• Domestic consumption marginal (535,000 tons = 2% of world)
COTTON PRODUCTION
0
250
500
750
1,000
1,250
1,500
1,750
2,000
80/81 85/86 90/91 95/96 00/01 05/06
Franc Zone
Source: ICAC
Africa
Thousand tons
COTTON EXPORTS
0
2
4
6
8
10
80/81 85/86 90/91 95/96 00/01 05/06
Million tons
USAAfrica
Source: ICAC
World
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COTTON EXPORTS
India
12%
Australia
6%
Greece
3%
Brazil
3%
Other
12%
USA
34%
Uzbekistan
12%
Africa
18%
2006/07
Source: ICAC
World Exports
0
1
2
3
4
USA India Uzbek. CFA Zone Brazil Australia
05/06 06/07, est. 07/08, for.
Million tons
AFRICAN COTTON EXPORTS2006/2007
0 100 200 300 400 500
Burkina Faso
Mali
Benin
Zimbabwe
Cameroon
Egypt
Tanzania
Côte d'Ivoire
Chad
Zambia
Other
Source: ICAC
EXPORTS: CFA ZONE
0
400
800
1,200
80/81 85/86 90/91 95/96 00/01 05/06 10/11
EXPORTS:
EAST & SOUTH AFRICA
0
400
800
1,200
80/81 85/86 90/91 95/96 00/01 05/06 10/11
World Imports
0
2
4
6
8
10
91/92 95/96 99/00 03/04 07/08, proj.
China (M) R est of the World
Million tons
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COTTON IMPORTS
EU
6%
Thailand
5%
Russia
4%
Other
9%
Turkey
11%
Bangladesh
7%
China
29%
Mexico
4%
Other Asia
13%
Pakistan
6%
2006/07
Source: ICAC
Indonesia
6%
Is African Cotton Competitive?
• Constraints
• Productivity
• Costs of production
• Quality
Major Constraints
• Landlocked cotton areas• Cost of transportation• Uneducated farmers• Lack of equipment• Low inputs• Low productivity
• Particularly sensitive to market fluctuations: – Export dependent – Price takers – Local processing uncompetitive
– Impact of exchange rate• Lack of technical expertise & market knowledge• No subsidies except emergency
• Political instability
Cotlook A IndexSeason-average (US cents/lb)
25
40
55
70
85
100
73/74 81/82 89/90 97/98 05/06
average 73/74 – 97/98 =74 cents/lb average 98/99 – 06/07 =
56 cents/lb
77
59
68
Causes of Long Run PriceDecline:
• Technology Change (50%)
• Polyester (25%)
• Retail Prices of Apparel
• Government Measures
Biotech Cotton
47
1216 17
21 2225
29
3640
0
10
20
30
40
50
97/98 99/00 01/02 03/04 05/06 07/08,
proj.
% of World Cotton Area
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4
400
500
600
700
800
82/83 87/88 92/93 97/98 02/03 07/08,
for.
World Cotton Yield
Kg of lint/ha
756
647
751
Cotton Yields
World: Avg. Increase 13 kg/yr
Africa: Avg. Increase 1 kg/yr
200
400
600
800
80/81 85/86 90/91 95/96 00/01 05/06
Kilograms/Ha
Cotton picking in the U.S. today
Cotton picking in Africa todayCotton picking in the U.S
. in the early 20th century Productivity (2005/06)
USA
• < 25 000 cotton farms
• 80% irrigated
• Mechanized, capital intensive
• 230 hectares / farm
• Ginning ratio 37%
• 5.2 million tons lint
• 930 kg lint/ha
• 215 tons lint per farm
• 900 ginneries
African Franc Zone
• > 2 million
• 100% rainfed
• Manual, labor intensive
• 1 ha / farm
• 42%
• 0.9 million tons lint
• 390 kg lint/ha
• < 0.5 ton lint per farm
• 85 ginneries
Nominal Exchange Rates
50
100
150
A p r - 0
2
O c t - 0 2
A p r - 0
3
O c t - 0 3
A p r - 0
4
O c t - 0 4
A p r - 0 5
O c t - 0 5
A p r - 0
6
O c t - 0 6
MZM
TZS
UGX
XOF
ZMK
Domestic Currency vs USD (April 2002 = 100)
Source: IMF
Cotlook A IndexUS cents/lb
0
20
40
60
80
100
80/81 88/89 96/97 04/05
0
200
400
600
800
1,000
1,200
$
CFA
CFA/Kg
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CFA Cotton Prices
CFA/kg Lint
0
400
800
1,200
80/81 88/89 96/97 04/05
ProducerPrice
A Index
Cotlook A Index
US cents/lb
0
20
40
60
80
100
80/81 88/89 96/97 04/05
0
400
800
1,200
1,600
2,000
$
TanzaniaShillings
Shillings/Kg
Cotton Market Shift in India
• 2001/02:
2nd largest importer: 500,000 tons
•2007/08:2nd largest exporter: 1.1 million tons projected
Cotton in India
2
4
95/96 00/01 05/06
Million Tons
Mill Use
Production
Source: ICAC
Cotton Trade in India
0
200
400
600
800
1,000
1,200
80/81 85/86 90/91 95/96 00/01 05/06
Thousand tons of Lint
Source: ICAC
Exports
Imports
Cotton Yields
0
200
400
600
800
80/81 85/86 90/91 95/96 00/01 05/06
Kilograms of lint per hectare
World
SSA
Source: ICAC
India
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6
Implications of the Emergence of
India as a Major Exporter• Lowered Cotlook A Index:
- Cheapest growth among medium grades(contamination)
- Low shipping costs to China
• Closed important market for African exports (except ELS)
• Became No.1 competitor for SSA cottons in Asia:
- Hand-picked
- Roller ginned
- Shipping differential (1-2 cts/lb)
- Upward quality trend
International Cotton AdvisoryCommittee