The total cotton production of Ethiopia was 45 thousand tonnes in marketing year (MY) 2016/17, which increased by 17.78 per cent to 53 thousand tonnes in MY 2018/19. The total production of the country moved up by 39.47 per cent in MY 2018/19 over the previous year and is expected to reach 69.81 thousand tonnes in MY 2020/21 with a CAGR of 14.76 per cent from MY 2018/19.
The cotton production has increased due to increase in harvested cotton area. The cotton harvested area was 82 thousand hectares in MY 2016/17, which dropped by 6.10 per cent to 77 thousand hectares in MY 2018/19. Total cotton harvested area moved up by 28.33 per cent in MY 2018/19 over the previous year and is expected to reach 92.38 thousand hectares in MY 2020/21 with a CAGR of 9.53 per cent from MY 2018/19. Lower local prices of the cotton and growing textile and apparel industry along with recent approval of BT cotton seed varieties for commercial cultivation, have also boosted the local cotton production.
In May 2018, the Ethiopian Ministry of Environment, Forest & Climate Change (MEFCC) approved two BT cotton hybrids (JKCH1050 and JKCH1947) for cultivation as it was confirmed that these type of cotton are safe for the environment, ecosystem, and human health.
In Southern and Amhara regions of Ethiopia, cotton plantation in MY 2018/19 had got delayed due to late onset of rain. Some incidents of pests were found between August and mid-September. The farmers of the northern and northwest regions preferred the production of cotton over other commercial crops due to better price returns.
Ginnery locations
The harvests of MY 2018/19 faced the challenge of the unavailability of labour. Some of the large cotton farms in Amhara, Benshagul Gumuz, Gambela and Afar regions were affected by severe labour problem and were not able to manage the harvests on time. Approximately, 40 per cent of the cotton harvest was not picked on time. Also, the turmoil caused by ethnic and tribal conflicts across regions have increased the labour issues such as erratic security problems, road blockages, and delayed harvests. Along with labour issues, the cotton farming got affected by land right issues, access to finance, improved seeds, agrochemicals, farm machinery, spare parts, and outdated ginneries among others.
Trade
Ethiopian cotton export was 1,088.60 tonnes in MY 2016/17, which increased by 60 per cent to 1,741.80 tonnes in MY 2018/19. Total cotton export of the country moved down by 46.67 per cent in MY 2018/19 over the previous year and is expected to reach at 2,721.60 tonnes in MY 2020/21 with a CAGR of 25 per cent from MY 2018/19. The future exports will remain low due to attractive local market prices and small export margins.
Ethiopian cotton import was 13,716.60 tonnes in MY 2016/17, which decreased by 52.38 per cent to 6,531.70 tonnes in MY 2018/19. Total cotton import of the country moved down by 57.75 per cent in MY 2018/19 over the previous year and is expected to reach at 10,479.80 tonnes in MY 2020/21 with a CAGR of 26.67 per cent from MY 2018/19.
Prices
Mainly two price setting mechanisms are carried out in the country at present. In the first case, Ethiopian Industrial Inputs Development Enterprise (EIIDE) buys cotton from local producers at fixed price. EIIDE then sets fixed prices based on lint quality specifications for Grade A, B, and C. At present, the domestic market prices for lint cotton at EIIDE range between $1.65 and 1.72 per kilogramme.
In second case, the price is taken from cotton transactions between local producers and textile factories. The seasonal average price of cotton in the local market is ranged between $1.72 and 1.89 per kilogramme, which is higher than EIIDE price.
Growth and Transformation Plan (GTP II)
Under Ethiopia’s Five-Year Economic Plan (2015-2020), the government has planned a considerable investment to develop the textile and apparel sector. The GTP II has targeted export revenues up to $1 billion by the end of 2020. Beyond GTP II, the government has been trying to make Ethiopia the textile and apparel manufacturing hub of Africa with annual exports of $30 billion by 2025.
New Cotton Development Strategy (NCDS)
The Ethiopian government has launched the NCDS. Under NCDS, government has planned to make Ethiopia one of the world’s top cotton producers with annual cotton lint production of 1.1 million metric tonnes for the coming 15 years (2017-2032). The NCDS has proposed to Ethiopian Cotton Development Authority to oversee and implement plans to make the cotton sector more competitive.
Industrial Parks Development
The government of Ethiopia (GOE) is investing considerable resources to build textile and industrial parks around the country, while at the same time working to attract potential international investors. Foreign investors from US, China, Korea, India, Sri Lanka, Bangladesh, and others are setting up shop in these parks to take advantage of inexpensive labour and electricity costs, as well as other tax incentives.
Around 21 textile and apparel manufacturers are operating in the industrial park. Government has planned to import the BT cotton seeds from India for upcoming planting season. About 800 hectares of land has been planned for BT cotton plantings as a trial production.
