Egypt forecast to reduce cotton area harvested, increase imports, exports

Egypt forecast to reduce cotton area harvested, increase imports, exports

The Foreign Agriculture Service explained that the reduced prices discouraged MY 2019/20 cultivation, expecting that this may continue into the coming season

In market year (MY) 2020/21, Egypt's cotton area harvested is forecast to drop by almost 35 percent to 65,000 hectares (ha), from 100,000 ha in MY 2019/20, according to the “Cotton and Products” report, issued by the Foreign Agriculture Service at the US Department of Agriculture (FAS).

The report added that FAS revised down production of MY 2019/20 to 305,000 bales compared to expected production of 337,000 bales, attributing that revision to the reduction of yields due to the lower quality of seeds and losses due to whitefly infestation.

“Reportedly, farmers mixed the cultivation of cotton with tomato and this encouraged the infestation of whitefly in both crops. If uncontrolled, whiteflies can reduce cotton yields and affect cotton quality. Immature whiteflies infest the underside of the leaves and secrete honeydew, which is a sticky, sugary solution. This can be a serious issue in terms of fiber quality or the spinnability of fibers when grinned," the report said.

The report explained that reduced prices discouraged MY 2019/20 cultivation, expecting that this may continue into the coming season.

Previously, the government provided cash payments to the textile industry, which allowed them to pay a government-announced price for Egyptian cotton.

Following the reform of that system, the government announced an indicative price before the planting season commenced. The indicative price is a subtle attempt to urge the textile industry to buy cotton from farmers at the indicative price. However, it is not a price support or commitment from the government to buy the crop, according to the report.

It added that In MY 2019/20, for the first time, the government did not announce indicative prices, which will have adverse effects on MY 2020/21 cultivation. In addition, in MY 2019/20, the prices are still low even with the drop in production.

Price averages are EGP 2,100 ($133) up to EGP 2,300 ($146) for extra-long varieties and EGP 1,900 ($120) up to EGP 2,100 ($133) for long-medium staple cotton.

“In MY 2018/19, the government announced the indicative price for Giza 86 and 94 was EGP 2,800 ($160) /quintar or $776/bale. The announced price for Giza 90 and 95 was EGP 2,700 ($154)/quintar, or $747/bale. As the crop was harvested and farmers began to market their product, prices dropped intensely. Prices for Giza 86 and 94 fell to EGP 2,300 ($131)/quintar, while the price of Giza 90 and 95 dropped to EGP 2,200 ($125)/quintar. The decrease was approximately 18 percent below the government-announced price. Prices were even less at the end of last season, which had dropped to EGP 2,150 ($122) for Giza 86 and 94 and EGP 2,050 ($117)/quintar for Giza 90 and 95”, the report stated.

Referring to the deficient supply, the report noted that in MY 2019/20, unexpectedly, the yields dropped not only because of the decreased area cultivated, but also due to the use of lesser quality seeds compared to last season.

In MY 2018/19, yields were two quintar more than normal or about nine quintar/feddan. This season, yields are five quintar less than last season, or fourgfive quintar/feddan. The yield also was affected by the infestation of whitefly, which caused losses.

The report highlighted Egypt’s efforts to put an end to its cotton industry’s decline through announcing a new policy in 2017 based on a 19-step plan.

It illustrated that such efforts have provided high quality seeds to increase yields and quality: The length, strength, firmness, colour, trash count and maturity all improved in cotton produced in MY 2018/19. The better-quality seeds were also reflected in the increased yield per area cultivated.

It also has developed the local spinning and weaving industries and helped to stimulate the use of good agricultural practices, in addition, it has prepared annual economic studies that determine the production area needed based on demand and developed new varieties to increase the yields. The new variety developed most recently is Giza 97, which will be distributed for commercial use.

“Egypt’s agriculture ministry decision to decrease the planted area for the first time in MY 2019/20 is a response to such efforts, given the decrease in prices in MY 2018/19”, the report added. 

Meanwhile, the report said that Egypt’s cotton imports are expected to increase by 23 percent، or 630,000 bales, in My 2020/21, up by 118,000 bales from MY 2019/20 imports.

It unveiled that in MY 2019/20, Greece, Benin, Sudan, the US and Burkina Faso were Egypt’s main cotton suppliers and are expected to remain so in MY 2020/21.

The report forecast exports will increase by 14 percent, or 30,000 bales in MY 2020/21, to reach 250,000 bales due to the low prices, expecting international demand for Egyptian cotton to increase as prices are low and demand in domestic consumption declined.

In MY 2019/20, India remains the main importer of Egyptian cotton. Pakistan, Bangladesh, Greece, Germany and Italy are also Egypt’s top export destinations. India and Pakistan are expected to maintain the same demand in MY 2020/21, according to the report.


Source: ahram.org.eg
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