The Cotton Sector in the OIC Countries: Problems

and Possibilities of Cooperation

The Cotton Sector in the OIC Countries: Problems

and Possibilities of Cooperation

Nabil DABOURSESRTCIC

Nabil DABOURSESRTCIC

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.

Cotton Sector in the OIC Countries

Cotton Sector in the OIC Countries

Production

Trade (Exports)

Processing (Imports)

Cotton Sector in the OIC Countries

Cotton Sector in the OIC Countries

Production of Cotton (2005/2006)

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%).

Major OIC Cotton Producing Countries (2005/2006)

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 d’Ivoire 109 0.4

Top 10 OIC Cotton Producing Countries (2005/2006)

Top 10 OIC Cotton Producing Countries (2005/2006)

0.5

0.6

0.8

0.9

0.9

1.2

1.3

3.1

4.9

8.6

0 2 4 6 8 10

Tajikistan

Kazakhstan

Egypt

Mali

Turkmenistan

Burkina

Syria

Turkey

Uzbekistan

Pakistan

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%).

Exports of Cotton (2005/2006)Exports of Cotton (2005/2006)

Major OIC Cotton Exporting Countries (2005/2006)

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 d’Ivoire 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

Importance of Cotton ExportsImportance 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%).

Top 10 OIC Cotton Exporting Countries (2005/2006)

Top 10 OIC Cotton Exporting Countries (2005/2006)

1.1

1.1

1.2

1.2

1.2

1.4

1.8

2.3

2.9

10.7

0 2 4 6 8 10 12

Benin

Egypt

Turkmenistan

Cote d'Ivoire

Tajikistan

Kazakhstan

Syria

Mali

Burkina

Uzbekistan

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%).

Imports of Cotton (2005/2006)Imports of Cotton (2005/2006)

Major OIC Cotton Importing Countries (2005/2006)

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

Top 10 OIC Cotton Importing Countries (2005/2006)

Top 10 OIC Cotton Importing Countries (2005/2006)

0.2

0.2

0.2

0.4

0.4

1.2

3.8

5

5

7.7

0 2 4 6 8 10

Tunisia

Bahrain

Iraq

Malaysia

Morocco

Egypt

Pakistan

Bangladesh

Indonesia

Turkey

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.

Problems Facing OIC Cotton Producing Countries

Problems Facing OIC Cotton Producing Countries

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.

Low Yield LevelsLow Yield Levels

Cotton Yields (Kg/Hec)(2005/2006)

Cotton Yields (Kg/Hec)(2005/2006)

722

738

844

1288

1452

0 200 400 600 800 1000 1200 1400 1600

World

Egypt

Uzbekistan

Turkey

Syria

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.

Improving Cotton YieldImproving Cotton Yield

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.

Cotton Subsidies and PricesCotton 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.

Cotton Subsidies and PricesCotton 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%.

Cotton Subsidies and PricesCotton Subsidies and Prices

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.

Shift to Synthetic FibreShift to Synthetic Fibre

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.

Cotton Testing and Classification

Cotton Testing and Classification

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.

Developing Textile SectorDeveloping Textile Sector

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.

Possibilities of CooperationPossibilities 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.

Possibilities of CooperationPossibilities of Cooperation

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

OIC Cotton AllianceOIC 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 (Tariş Cotton Union-İzmir, Çukobirlik-Adana, İzmir Mercantile Exchange, Antbirlik-Antalya)

Alexandria Cotton Exporters Association in Egypt

OIC Cotton AllianceOIC 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.

OIC Cotton AllianceOIC Cotton Alliance

Thank YouThank You