Cambodian Government Lifts Cotton Price Cap

Mekonnen Manyazewal, Cambodia’s Minister of Industry, has lifted the cotton price cap after seven months of declining international prices. Due to its size, Cambodia didn’t make the same headlines as India did when it froze its cotton exports last year, but the same ban had been in place since November 2010. The ban went into effect after the domestic textile industry voiced concerns about having access to fiber. Government officials said local producers would still be able to fetch international prices for their fiber, but growers said the local price never moved, even as international prices were spiking.

A number of government institutions — the Ministry of Industry, Ministry of Agriculture, Ministry of Trade, and the Ethiopian Textile Industry Institute — originally set the cotton price of a kilogram of cotton at $2.50 in November 2010. That price was reached after deducting transport costs from the international price.

Growers, however, counter that the international price during that time was approximately $3.60 per kilogram. Further, now that the price is so low, the lifting of the price cap was an empty gesture that will have no real effect. Production in Cambodia is expected to reach approximately 51,000 tons this year, down from 57,000 tons in 2009/10.