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Govt interference makes negative impact on Egyptian cotton

Egypt’s Giza-86, long-staple luxury cotton is renowned the world over. However, the government’s decision to divide large acres of land among small farmers and interference at every stage of the production process limited its growth and potential.

Egypt is known for producing eight cotton varieties. Each is grown in separate regions, with a carefully controlled system to make sure they remain uncontaminated by other varieties. Giza-86 has long formed the bulk of the crop, but other even finer varieties, including Giza 45, 87 and 92, have catered to more expensive niche markets. However, later to make quick money, people started packing low quality cotton in between the layers of high quality one, which led to the mixing of superior and inferior seeds. An inventory made a year ago indicated that the impact was such that the country only had enough pure Giza-86 to plant 21,000 hectares.

Adding to the woes, in January 2015, the government announced it would no longer subsidise the cotton crop. However, it changed the decision a few months later. It has now guaranteed a purchase price of 1,400 pounds per qintar (157kg) for the newly rescued Giza-86 seed cotton, which on the open market would have fetched about 800 pounds (Dh373). But it then offered to pay almost as much for common cotton, which was fetching 600 to 700 pounds on the open market.

Now the state-owned cotton holding company that buys the cotton plans to sell the Giza-86 to private traders at 1,520 pounds per qintar, a premium of 120 pounds over the inflated price it has promised farmers. Experts say that because of the government monopoly over cotton purchases, some of the countryʼs 240 licensed traders are likely to go bankrupt. On the other hand, it has put a curb on imports by making it difficult to get licences from the Egyptian quarantine office.