The British Economist Intelligence Unit, Egypt, has said that Egypt's production of cotton during the last season slumped by 50% compared to the previous season, as cotton-cultivated areas declined from 583,000 acres in the 2007/2008 season to 313,000 acres in 2008/2009. The report added that farmers refrained from planting cotton last season due in particular to the expected decline in its prices compared to other crops.
Due to the 50% decline in the annual production of Egyptian cotton, the farmers have increased prices to a level that has been never expected by cotton traders.
The report, which was released last Tuesday, added that export sales in the current season - August 2008/July 2009 – reached 10% of the total 2.24 million kantars sold last year. In addition, domestic sales dropped by some 50% compared to the previous year, as they amounted to 830 thousand kantars.
The Egyptian government is coming under pressure from Egyptian economic pressure groups. They are calling on the government to subsidy Egyptian cotton with LE150 per kantar within the framework of the government's announced plan to subsidize cotton and impose a temporary ban on imports.
The Economist Intelligence Unit has also expected the world demand for Egyptian cotton to decline by 6% in the 2008/2009 season compared to the previous one. This decline may be more than 6% in case there was a higher world demand for Chinese textiles, which compete with the Egyptian ones.
