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Cotton-rich Africa:
A new Business Opportunity for Home Textiles in the Emerging Global Cotton Scenario
Matthias KnappeProgramme Manager Cotton, Textiles & Clothing
International Trade Centre
Conclusions
• Opportunities for Using African Cotton by Indian Home Textile Manufacturers
• Opportunities to Develop the Cotton you Need
• Opportunities for Investment in Africa
• Opportunities for Trade with and Exports to Africa
Structure
• ITC• Global World Cotton Scenario• Cotton in Africa• Cotton and Textile Opportunities with Africa
The International Trade Centre
• The trade development arm of both WTO and UNCTAD
• The development partner for small business export success
• The only international organisation that is 100% Aid for Trade
• Working in T&C since 40 years and in Cotton since 6 years
18
20
22
24
26
28
00/01 02/03 04/05 06/07 08/09 10/11
Million tons
2. Global Scenario: High Cotton Prices ($1.54)Can India expand? Africa Can!
Production
Consumption
Source: ICAC
Major Producers (2008/09 Season)
Source: ICAC
Production Trends by Country
Source: ICAC
Why African Cotton when India is a net Exporter?
Source: ICAC
Million tons lint
Mill Use
Production
Cotton Sourcing Potential in Africa
• East African Cotton has Similar Fibre Characteristics than Indian Cotton
• HAND-PICKED• ROLLER GINNED (often using Indian roller gin
technology)
Opportunity Using African Cotton
FIBRE QUALITY - LENGTHFIBRE QUALITY - LENGTH• INDIAN S-6 IS MOSTLY SOLD AS 1 1/8” • AFRICAN COTTON IS USUALLY AS PER
CONTRACT (1.1/8” +) Malawi: 1.1/8 – 1.5/32 Tanzania: 1.3/32 - 1.1/8 Uganda: 28-30 mm Mozambique:1.1/8 Zambia: 26-28 mm Zimbabwe: 1.3/32 – 1.1/8
Length
FIBRE QUALITY – AVG.MICRONAIREFIBRE QUALITY – AVG.MICRONAIREMICRONAIRE IS THE MOST IMPORTANT FACTOR
FOR SPINNERS
• US UPLAND 4.3 – 4.9• INDIA S-6 4.0 – 4.8• AFRICAN 3.8 – 4.5
Uganda 3.8 – 4.2Malawi 3.9 – 4.6Tanzania 3.5 – 4.9
AFRICAN COTTON MIC. IS VERY CONSISTENT.
AFRICAN - LOW UNEVENNESSBETTER FABRIC FEEL
MIC
FIBRE QUALITY – STRENGTHFIBRE QUALITY – STRENGTH
• US UPLAND 28+ GPT• INDIA S-6 30+ GPT• AFRICAN 29+ GPT
• Uganda 28-32 GPT• Malawi 29-31 GPT• Tanzania 28-29 GPT
INDIAN COTTON HAS A MARGINAL ADVANTAGE OVER AFRICANCOTTON
Strength
AFRICAN
FIBRE QUALITY – TRASH%FIBRE QUALITY – TRASH%
• US UPLAND 1.5 – 3.0 %• INDIA S-6 2.0 – 3.5 %• AFRICAN 1.5 – 2.0 %
TRASH% IN US UPLAND DEPENDS ON WEATHER CONDITIONS,METHOD OF PICKING AND GINNING CONDITIONS.
AFRICAN - CONSISITENTLY LOW TRASH LEVELLOWER WASTE IN PROCESSHIGHER YARN YIELD
Trash%
AFRICAN
FIBRE QUALITY – SHORT FIBER CONTENTFIBRE QUALITY – SHORT FIBER CONTENT
ORIGIN HVI - SFIAFIS - SFC(W)
%
US UPLAND 9 - 11 10 - 14
INDIA S-6 9 - 11 9 - 12
AFRICAN 8 - 9 8 - 10
SFC
AFRICAN
FIBRE QUALITY – NEPS/GRAMFIBRE QUALITY – NEPS/GRAM
• US UPLAND 250 - 400• INDIA S-6 100 - 130• AFRICAN similar to Indian
SIMILAR TO INDIAN COTTON BECAUSE IT IS HAND-PICKED AND ROLLER GINNED
NEPS ARE CRITICAL IN YARN DYED AND PIECE DYED FABRICS
Neps
FIBRE QUALITY – BARK LEVELFIBRE QUALITY – BARK LEVEL
Grams / 480 LB BaleUS UPLAND 60 – 150 INDIA S-6 0 – 10AFRICAN 0 – 10
Bark
AFRICAN
FIBRE QUALITY – CONTAMINATION LEVELFIBRE QUALITY – CONTAMINATION LEVEL PCS/480LB MG/480LB MG/PC.
US UPLAND 3 - 5 50 10
INDIAN S-6 80 - 100 5000 50
AFRICAN 15 - 20 500 25
US UPLAND - MACHINE PICK, SAW GIN, LOWEST CONTAMINATION
INDIAN S-6 - MANUAL PICK, ROLLER GIN, 100 TIMES US UPLAND
AFRICAN - MANUAL PICK, Roller GIN, 10 TIMES US UPLAND
Contamination
AFRICAN vsUS
Contamination
AFRICAN vsIndia
High contamination- low
RELATIVE CONTAMINATION STATUSVietnam PERCEPTION
Other Trade Advantages: Complementary Season
• Delivered from June to September/October (Tanzania; Malawi; Mozambique, Zambia, Zimbabwe)
• Logistic costs: Africa is closer to South India than Maharashtra or Gujarat
• Container cost Africa – India (via Colombo) lower than Maharashtra/Gujarat to Coimbatore
Potential for Niche Market Cotton:Organic, Fair Trade
• Organic cotton is grown in all countries• India is leader and can provide technical inputs to
overcome challenges• Low use of pesticides and chemicals in Africa• But: sustainable market linkages needed from the
beginning!• Potential to combine with other CSR
requirements: Fair Trade Cotton
Lint Production in Eastern and Southern Africa
Ethiopia: 30,000 t p.a. – potential: 150,000 tKenya: 32,000 t p.a. – potential: 70,000 t
Malawi: 5,000 t p.a. – potential: 100,000 t
Mozambique : 23,000 t p.a. – potential: 50,000 t
Uganda : 32,000 t p.a. – potential: 150,000 t
Zambia : 36,000 t p.a. – potential:75,000 t
Zimbabwe: 100,000 t p.a. – potential: 200,000 t
Tanzania 130,000 t p.a. – potential: 270,000 t
N. America = 0.37S. America = 0.35Asia = 0.46West Africa = 0.29Africa (Other) = 0.31Australia = 0.19World = 0.43
Low Cost of Cotton Production in AfricaDirect Cost of Seedcotton/Kg (US$)
Source: ICAC
0%
5%
10%
15%
20%
25%
90/91 95/96 00/01 05/06
Potential: Investment in Fibre Transformation – Spinning and Handloom Operations
Production
Consumption
Exports
Investment Opportunities in T&C in Africa:Africa is the Next & Last Destination for the Industry
• Countries like Ethiopia, Kenya and Tanzania have established facilities to attract foreign investment.
• India is culturally very close to Africa and therefore a logical No. 1 partner for Africa.
• Africa’s duty-free access to the US market (AGOA) as well as to the EU (Everything But Arms provision and relaxed rules of origin requirements under the Economic Partnership Agreements)
• Supply of yarn and fabric to Africa to be transformed into made-ups and clothing that can then be exported duty-free from Africa to the US and Europe.
Conclusions
• Opportunities for Using African Cotton by Indian Home Textile Manufacturers
• Opportunities to Develop the Cotton you Need
• Opportunities for Investment in Africa
• Opportunities for Trade with and Exports to Africa
Thank you for your kind attention
For more information please visit: www.cottonguide.org / www.icac.org