Mediterranean Report: Plantings and Production on the Rise in Egypt
January 5, 2012 Cotton is a cash crop to Egyptian farmers, as well as an important resource to the Egyptian economy. Cotton production occupies more than 500,000 rural householders and employs half a million people. Indirectly through the multiplier effect, it generates more than 1 million additional Jobs.
In 2010, cotton and textile exports generated about $2.25 billion. Cotton lint exports accounted for about $250 million, with the higher value-added manufactured products accounting for the balance.
Egypt is also one of the main states that helped to create the International Cotton Advisory Committee (ICAC) in 1939.
The Planted Area
It is worth mentioning that Egypt cultivated six commercial varieties of long and extra-long staples:
ELS Planted in Lower Egypt (Delta): Giza 88, 70, 92
LS Planted in Lower Egypt (Delta): Giza 86
LS Planted in Upper Egypt: Giza 90, Giza 80.
The planted area for 2010/2011 amounted about 158,000 hectares (ha), compared to 121,000 ha the prior year. The 2009/10 season was so low due to unfair prices paid to producers and better net profits from alternative crops especially grains. Costs are also a major factor. Not only were inputs expensive, but labor costs were very high, the result of hand-picking and the use of insufficiently trained workers.
Giza 86 was the predominant variety, totaling about 113,500 ha (72% of the overall plating area), which is up about 25,900 ha compared to previous season. Egyptian producers prefer to cultivate this variety due to its high quality and productivity and its high ginning outturn, in addition to its high locally and internationally.
Giza 88 takes the second rank, with a planted area of 28,800 ha (18% of the total), representing an increase of about 14,400 ha compared to 2009/10. There is high demand in the international market for this variety due to its high spinnability, not to mention its high productivity and ginning outturn. There is, however, limited demand from the local market.
Giza 90 comes in the third rank, as the planted area amounted about 10,300 ha (6.5 %), a decrease of 1,981 ha from the prior year. It is cultivated in Upper Egypt, due to its tolerance to temperature stress, high productivity and ginning outturn.
Giza 80 is next in line and is also cultivated in upper Egypt, with a planted area of about 4,040 ha (2.6%), down 1,980 ha from the previous season. It is also known for its tolerance to temperature stress, as well as high yield and ginning outturn.
Production and Productivity
The cotton crop has slightly increased in 2010/2011 to about 134,000 tonnes of lint, compared with 95,000 tonnes the year before. In 2010/11, the average yield was about 848 kg/ha compared with 785 kg/ha in 2009/2010.
Giza 86 is first in production, totaling about 93,785 tonnes (70%) of total production.
Giza 88 amounted to 28,000 tonnes of lint (21%).
Giza 90 came in at 7,817 tonnes (5%).
Giza 80 totaled 3,209 tonnes (25%).
The others (Giza 70, 92, new strains and mixed cotton) accounted for the remaining 2%.
Domestic Mill Demand
Local mills have always been the main consumer of Egyptian cotton, absorbing more than half of total crop, but in recent years, local demand for Egyptian cotton has decreased drastically due to very high prices. As a result, Egyptian cotton is often replaced by cheaper foreign cotton to fulfill local demand. The Egyptian mills also consume cheap foreign yarn to supply the domestic market.
It is notable that Egyptian mills usually consume about 200,000 tonnes of lint annually, yet through July 2011, consumption dropped to about 32,000 tonnes of Egyptian cotton and about 50,000 tonnes of imported cotton (as well as 18,000 tonnes of man-made fiber).
Generally, the decrease of Egyptian cotton consumption is the result of a lack of demand on fine count yarn, fine textiles and luxury ready-made garments. The global financial crises reduces the demand for high-quality products.
International Demand for Egyptian Cotton
International purchase commitments for 2010/2011 Egyptian cotton increased sharply to 110,950 tonnes, compared to about 80,000 tonnes during the previous season. This is due to the shortage of global supply due to lower overall production, reduced world stocks, and the improvement of yarn demand early in 2011, as well as improved economic growth in the first half of the year.
Egyptian Cotton Policy
The industry will maintain the same policy it has had for several years: complete freedom in both planting and trading, whether it be locally or internationally. Local marketing companies buy and sell seed cotton freely through collection centers, which are under the supervision of a general committee for arranging internal cotton trade. Similarly, internal prices are negated between buyers and sellers in the market, depending on supply and demand forces such as production, stocks, other cotton growths, internal and international economic growth, exchange rates, and other relevant factors. Export prices are also left to the effects of supply and demand and other market trends.
Outlook for 2011/2012
The cultivated cotton area is expected to increase to about 220,000 ha, producing an expected 186,000 tonnes of lint. That represents an increase of 62,000 ha in area and about 52,000 tonnes of lint production.
The anticipated increase in plantings is mainly due to the very high cotton prices – the highest producers have ever collected in the history of Egyptian cotton. This increase is also the result of the government’s limitation of rice area to rationalize water consumption; farmers will be forced to cultivate either cotton or maize rather than rice.
This article was extracted from the Arab Republic of Egypt’s Statement given at the 70th Plenary Meeting of the International Cotton Advisory Committee.
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