Uncertainty In The CIS Region
January 29, 2009 The economic activity in the textile sector of the Commonwealth of Independent States (CIS) was expanding strongly in the past seasons and cotton planting was up, but this year both sectors are experiencing slight decline. While some investments are being made, the anticipated growth has yet to be seen.
“There are some spinning and weaving operations in Kazakhstan with relatively recent investments,” Damir Makhmunov, of Balt Cotton Group, explains, “but how successful they are, I am not quite sure.”
His company began trading in 2000 with the cotton produced in the company’s own factories in Kazakhstan. But BaltCotton Group rapidly widened its business relations with suppliers from all over the world.
He says the textile industries in countries with their own cotton supplies have a brighter outlook this year. “Stories from Russian textile operations, in general, are also more negative than positive. Textile mills in Uzbekistan, Turkmenistan and Tajikistan are likely in a more favorable position, enjoying local supplies. How successful they are in marketing, and how financially strong they are in this year’s global environment, I am not sure.”
“As an observation for our particular region — the Baltic States of Latvia, Lithuania, Estonia — spinning levels are almost at zero, as the last largest mill in Estonia stopped its spinning operation this spring,” said Makhmunov.
The CIS region is marked with lots of question marks this year, which seems to be a trend throughout the supply chain worldwide. Continued growth of the middle class in Russia is expected to increase the textile demand as it has in past years.
But cotton production in Kazakhstan and Tajikistan could be heading towards further decline. The Tajik economy, based heavily in agriculture, is on shaky ground with the heavy migration of workers to Russia. Government corruption is a growing problem in these countries, resulting in the farmers only receiving portions of the money raised from their crop. In addition, the global food crisis is a major factor for the area. A U.N. report, released the week of June 2, stated that more than 1.5 million people in Tajikistan, about one-fifth of the population, are threatened by a chronic lack of food. Cotton planting in Uzbekistan and Kazakhstan fell slightly this year, and with these food shortages, the possibility of further decline in the next season seems high.
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