Cotton Import Ban Lifted

A Lastest News about Cotton in Egypt

Posted on: 24 Mar 2012

The Government of Egypt lifted the ban on cotton imports from all origins. The import ban was originally imposed in October 2011.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 3/20/2012 GAIN Report Number: Egypt Post: Cairo Cotton Import Ban Lifted Report Categories: Cotton and Products Approved By: Jonathan Gressel Prepared By: Mohamed Hamza Report Highlights: The Government of Egypt lifted the ban on cotton imports from all origins. The import ban was originally imposed in October 2011 due to threatened mass protests by farmers concerned with low cotton prices. Lifting the ban comes after most of the locally produced cotton has been marketed. While the import ban was relaxed in November 2011 to permit certain imports, U.S. upland cotton exports were still severely restricted as were most Greek cotton exports. US upland cotton exports to Egypt totaled over $45 million in MY 2010/2011, but virtually zero so far this MY. This import ban had a strong impact on the local textile industry which requires imported short/medium staple cotton for many of their products. General Information: After a five-month ban on most cotton imports, Egypt is once again permitting the importation of cotton. On March 18, the Minister of Agriculture and Land Reclamation (MALR) signed Decree 438 cancelling Decree number 1864 dated October 25, 2011 (GAIN Cotton Update) thereby permitting the importation of cotton from all origins. The GOE decided to end the import ban when most of the domestic cotton crop had been purchased from farmers, which was the original goal of the policy. The cotton import ban hindered the access of U.S. upland cotton to the Egyptian market. U.S. exports of upland cotton to Egypt totaled some 36,000 bales valued at over $45 million in MY 2010/2011 versus none so far this year. The increased U.S. exports to the Egyptian market met the needs of the local spinning mills for certain qualities of cotton for both the domestic and export markets. The ban was decided after Egypt faced a major crisis in the marketing of its locally produced cotton. The crisis started when the government announced before the planting season the indicative prices for cotton crop for the marketing year 2011/2012. This encouraged farmers to increase the area planted by 37% in order to gain the profits. The announced prices were higher than the international prices prevailing at harvest. Consequently, the total production increased from 2.637 million qintar (132 TMT or 544 TB) in CY 2010/2011 to 3, 611 million qintar (180 TMT or 745 thousands bales) in CY 2011/2012 in which 350,000 qintar (17 TMT or 72 TB) was short and medium staple cotton varieties. The increase in local cotton production was accompanied by improved world cotton production and reduced world demand due to the lingering effects of the world wide economic crisis and the absence of government?s policies to market the crop. Accordingly, the government decided to ban the importation of all cotton varieties from all origins and approved monetary subsidies for farmers and spinners to bridge the price gap between the international and local prices. Both the United States and the European Union repeatedly raised concerns with MALR and the Ministry of Industry and Foreign Trade concerning the import ban in light of Egypt?s WTO obligations, and, in the case of the EU, the EU-Egypt FTA.
Posted: 24 March 2012

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