After dozens of farmers threatened to burn their cotton crop this year due to low selling prices, the government decided last week to increase the subsidy the farmers receive by LE200, pushing the price of each quintal of cotton up to LE1,800. The decision strengthens the farmers' situation against the traders who set buying prices that fail to cover the whole cost of production, Osama Al-Kohl, a farmer in the Delta region, said. Now farmers could sell their harvest to the state-owned Holding Company for Spinning and Weaving (HCSW) at the new price, he said. Ahmed Mustafa, manager of the HCWS, said that many stakeholders, including his company, had asked the government to subsidise the cotton farmers rather than the spinning and weaving companies. “This would both help the HCWS's subsidiaries to get cotton at good prices and protect the farmers,” he said. In July the government increased the subsidies it provides to both public and private spinning companies to buy the cotton crop from LE200 to LE350 per quintal. Adel Ozzi, head of the cotton internal trade committee at the ministry of agriculture, said that cotton prices in Egypt had decreased this year due to a decline in international prices, a fact that was adding to the farmers' woes. “The cost of cotton cultivation is on the rise, as it is a manual activity that needs a lot of workers and more than in other countries,” Ozzi said. The liberalisation of cotton cultivation and trade has also exacerbated the sector's problems. Until the early 1990s, the government decided the acreage of cotton grown and the national spinning and weaving companies purchased the overall harvest. However, recent years have seen private spinning and weaving companies importing cheaper short- and medium-staples of cotton. Egyptian cotton boasts the image of a soft, luxurious fabric that is made of raw material that has traditionally been recognised as the best in the world. The long- and extra-long staples or fibres of Egyptian cotton give it the strength and durability that allows it to be spun into very fine yarns used to make premium fabrics, according to Ozzi. Countries like India and China import Egyptian cotton and mix it with their own cotton to produce high-quality clothes for export. Egyptian production of cotton has decreased since 1997 from about six million quintals to around two million quintals. Mohamed Abdel-Hakim, the former head of the country's Cotton Research Institute, said that the drop in cotton acreage and productivity was due to the farmers' reluctance to grow cotton while shifting to more profitable crops like rice and corn. He added that 70 per cent of Egypt's farmers used to delay cotton cultivation until May and June instead of March in order to grow other winter plants like wheat. As a result, the yield per acre had decreased from around 11 quintals to less than nine quintals, he said, this accompanied by a doubling in the cost of cotton collection to LE50 per worker mainly because the crops matured after the school year started in September. The Ministry of Agriculture is now seeking to oblige farmers to plant certain areas with cotton according to previous contracts with traders. Ozzi praised this idea, but said he believed it would be hard to implement because Egypt's farmland was fragmented. Some experts have called for a ban on cotton import until the local harvest has been sold, but by doing so Egypt would violate the GATT Agreements (General Agreement on Tariffs and Trade) and many exporting countries might react by refusing to import other Egyptian goods, Ozzi said. “Greece refused to import Egyptian potatoes last year for this reason,” Ozzi noted. Egypt's crop represents 30 per cent of world long-staple cotton exports, and its spinning and weaving industry needs 4.5 million quintals of cotton annually. Abdel-Hakim said that the state should protect its “good fortune” by paying good prices to encourage farmers to cultivate cotton and to expand areas under cultivation to increase yields.
