Cotton Sector in the OIC Countries

1
The Cotton Sector in the OIC Countries Problems
and Possibilities of Cooperation
Nabil DABOUR SESRTCIC
2
Cotton Sector in the OIC Countries

• Cotton plays a major role in the economies of a
  significant number of OIC member countries,
  particularly in some OIC least-developed members
  in Africa, such as Burkina Faso, Benin, Chad and
  Mali, where the exports of this primary commodity
  play a critical role in the prospects of growth
  and development in these countries.

3
Cotton Sector in the OIC Countries

• Production
• Trade (Exports)
• Processing (Imports)

4
Production of Cotton (2005/2006)

• Among the top 40 cotton-producing countries in
  the world, 22 were OIC members Pakistan (4),
  Uzbekistan (5), Turkey (7) and Syria (10).

• Yet, their share in world total production of
  cotton accounted for 26.2, which was
  significantly less than that of China and USA
  together (44).

5

Major OIC Cotton Producing Countries (2005/2006)
Production (000 MT) Share in World () Production (000 MT) Share in World ()
Pakistan 2145 8.6 Cameroon 90 0.4
Uzbekistan 1208 4.9 Nigeria 87 0.4
Turkey 773 3.1 Benin 82 0.3
Syria 327 1.3 Sudan 81 0.3
Burkina Faso 294 1.2 Azerbaijan 71 0.3
Mali 223 0.9 Chad 71 0.3
Turkmenistan 212 0.9 Kyrgyz Rep. 46 0.2
Egypt 201 0.8 Mozambique 36 0.1
Kazakhstan 147 0.6 Togo 30 0.1
Tajikistan 136 0.5 Senegal 20 0.1
Iran 115 0.5 Total 6504 26.2
Cote dIvoire 109 0.4
6
Top 10 OIC Cotton Producing Countries (2005/2006)
7
Exports of Cotton (2005/2006)

• Among the top 40 cotton-exporting countries in
  the world, 23 were OIC members Uzbekistan (2),
  Burkina Faso (7), Mali (8), Syria (9) and
  Kazakhstan (10).
• Yet, their share in world total exports of
  cotton accounted for 31.3, which was quite less
  than that of the USA alone (40.4).

8
Major OIC Cotton Exporting Countries (2005/2006)
Exports (000 MT) Share in World () Exports (000 MT) Share in World ()
Uzbekistan 1045 10.7 Chad 71 0.7
Burkina Faso 283 2.9 Pakistan 70 0.7
Mali 223 2.3 Azerbaijan 60 0.6
Syria 180 1.8 Kyrgyz Rep. 48 0.5
Kazakhstan 136 1.4 Togo 41 0.4
Turkmenistan 120 1.2 Mozambique 30 0.3
Cote dIvoire 114 1.2 Nigeria 27 0.3
Tajikistan 114 1.2 Turkey 27 0.3
Benin 103 1.1 Uganda 25 0.3
Egypt 103 1.1 Iran 20 0.2
Sudan 93 1 Senegal 15 0.2
Cameroon 91 0.9 Total 3039 31.3
9
Importance of Cotton Exports

• As a group, the OIC countries are considered as
  the second largest exporter of cotton in the
  world after the USA.
• The share of OIC members in Sub-saharan Africa
  in world cotton exports is 11.3.
• The share of cotton in total merchandise
  exports Burkina Faso (43.9), Benin (39.1),
  Chad (32.2), Mali (29.5).

10
Top 10 OIC Cotton Exporting Countries (2005/2006)
11
Imports of Cotton (2005/2006)

• Among the top 40 cotton-importing countries in
  the world, only 11 were OIC members Turkey (2),
  Bangladesh (3), Indonesia (4) and Pakistan (7).
• Their share in world total imports of cotton
  accounted for 24.3, which was significantly less
  than that of China alone (43.8).

12
Major OIC Cotton Importing Countries (2005/2006)
Imports (000 MT) Share in World () Imports (000 MT) Share in World ()
Turkey 737 7.7 Morocco 37 0.4
Bangladesh 482 5 Tunisia 22 0.2
Indonesia 479 5 Bahrain 16 0.2
Pakistan 361 3.8 Iraq 15 0.2
Egypt 114 1.2 Nigeria 15 0.2
Malaysia 42 0.4 Total 2320 24.3
13
Top 10 OIC Cotton Importing Countries (2005/2006)
14
Problems Facing OIC Cotton Producing Countries

• Low yield and subsidies levels compared to other
  countries.
• Volatility of cotton prices and the shift to
  synthetic fibers.
• Implementing testing/classification procedures
  and developing textile sector.

15
Low Yield Levels

• The world average yield rose from 230 kg/hec in
  the 1950s to above 700 kg/hec in 2005.
• The average yield is higher than that of the
  world in only 4 OIC cotton producing countries.
  In contrast, it was lower in many members,
  particularly in Sub-saharan Africa.

16
Cotton Yields (Kg/Hec) (2005/2006)
17
Improving Cotton Yield

• Such countries with insufficient yield suffer
  the decrease of both international market share
  and prices.
• The large variation in cotton yield among the
  OIC members and the need for improving the
  productivity create a wide margin for cooperation
  in this sector.

18
Cotton Subsidies and Prices

• High levels of production and/or export
  subsidies provided by the USA and China to their
  domestic producers lead to serious distortions in
  international cotton markets.
• As a result, the increase in world cotton
  production (supply) reduces its price and this,
  in turn, reduces the revenues that could be
  obtained by the cotton exporting countries in the
  developing regions, including the OIC members.

19
Cotton Subsidies and Prices

• Annual government transfers to cotton farmers in
  the OECD countries constitute 60-80 of their
  revenues.
• 75 of the total cotton production in the USA
  benefits from government subsidies where the
  annula government subsidies to cotton farmers are
  more than the total GDP of Burkina Faso and three
  times more than the USAID budget for Africa.

20
Cotton Subsidies and Prices

• According to several simulation studies,
  elimination of cotton subsidies in the USA would
• increase the world cotton price by 3-11
• increase African cotton export revenue by
  35-100 million
• reduce USA exports by 43.

21
Shift to Synthetic Fibre

• The share of cotton in world textile fibre
  declined from 70 in the 1950s to below 40 in
  2002. This shift in demand reduces the world
  price of cotton.
• So, any benefits from improving cotton yield
  worldwide will be dispersed unequally among all
  the producers.
• The USA and China have more incentives, being
  both the world major exporters and users of
  cotton.

22
Cotton Testing and Classification

• Demand for cotton is highly affected by its
  quality and consistency. So, to maximize revenue,
  producers must properly classify their product.
• USA cotton is promoted by claims that it is less
  contaminated and better classified.
• Manual classification in most African countries
  reduces the value of their cotton.

23
Developing Textile Sector

• The lack of skilled labour and capital and high
  cost of energy and transportation are among the
  factors that still impeding the development of
  sustainable textile industry (processing the raw
  cotton) in most OIC West African cotton producing
  countries where these factors raise the cost of
  textile production.

24
Possibilities of Cooperation

• The OIC cotton producing countries, combined
  together, are net exporters of cotton, but many
  of them, particularly those in West Africa, are
  among the poorest in the world lacking the
  capacities for developing textile industries.
• Yet, sustainable and modern textile sectors have
  already been developed by some of the OIC
  countries who are also among the major importers
  of cotton in the world.

25
Possibilities of Cooperation

• Cotton producers, exporters and industrialists
  in the OIC countries should, therefore, lead the
  way of cooperation in the cotton sector. They can
  facilitate cooperation among themselves by
  initiating an OIC Cotton Alliance.

26
OIC Cotton Alliance

• The member countries of the OIC Cotton Alliance
  should benefit from their experience as members
  of some international and regional cotton
  association such as
• International Cotton Advisory Committee (ICAC)
• Committee for International Cooperation between
  Cotton Associations (CICCA)
• Association of African Cotton Producers (AProCA)
• African Cotton Association

27
OIC Cotton Alliance

• They should also benefit from their experience
  as members of cotton association in their own
  countries such as
• Pakistan Cotton Ginners Association
• Cotton Cooperatives and Unions in Turkey (Taris
  Cotton Union-Izmir, Çukobirlik-Adana, Izmir
  Mercantile Exchange, Antbirlik-Antalya)
• Alexandria Cotton Exporters Association in Egypt

28
OIC Cotton Alliance

• Establishing an OIC Cotton Alliance among cotton
  producers, exporters and industrialists should
  aim at coordinating cooperation in various areas
  related to the cotton sector such as
• Improving the productivity and yield levels.
• improving testing and classification of cotton.
• Promoting investment opportunities in cotton
  sector.
• Organic cotton production Turkey is the first
  OIC country with certification.
• Low pesticide use Syria produces 99 of its
  cotton without pesticides.
• Biotech varieties.
• Other issues that could be determined by the
  member countries.

29
Thank You