Greece- Cotton and Products Annual 2013

An Expert's View about Textiles, Apparel and Accessories in Greece

Posted on: 8 Apr 2013

Greece’s MY 2012/13 cotton production is estimated at 265,000 MT or 8.6 percent down from the previous year due to lower than expected yields because of bad weather and lower fertilization usage.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 3/27/2013 GAIN Report Number: IT1310 Greece Cotton and Products Annual Cotton and Products Annual 2013 Approved By: Christine Sloop Prepared By: Ornella Bettini Report Highlights: Cotton is a major agricultural crop in Greece, accounting for more than 8 percent of total agricultural output. Greece’s MY 2012/13 cotton production is estimated at 265,000 MT or 8.6 percent down from the previous year due to lower than expected yields because of bad weather and lower fertilization usage. Greece is a major cotton exporter. During MY2011/12, Turkey has been the main destination for Greek cotton, accounting for approximately 35 percent of total exports. GREECE Cotton Lint Table 1: Production, Supply, and Demand (MT) 2011/2012 2012/2013 2013/2014 Market Year Begin: Market Year Begin: Market Year Begin: Cotton Aug 2011 Aug 2012 Aug 2013 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 285,000 285,000 285,000 285,000 220,000 Beginning 0 0 5,000 5,000 1,000 Stocks Production 290,000 290,000 300,000 265,000 200,000 Imports 2,000 2,000 2,000 1,000 3,000 MY Imports 0 0 0 0 0 from U.S. Total Supply 292,000 292,000 307,000 271,000 204,000 Exports 261,000 261,000 270,000 244,000 171,000 Use 20,000 20,000 20,000 20,000 27,000 Loss 6,000 6,000 6,000 6,000 6,000 Total Dom. 26,000 26,000 34,000 26,000 33,000 Cons. Ending Stocks 5,000 5,000 3,000 1,000 0 Total 292,000 292,000 307,000 271,000 204,000 Distribution 1000 HA, 1000 MT Source: FAS estimates based on Greek industry contacts Production Cotton is a major agricultural crop in Greece, accounting for more than 8 percent of total agricultural output. More than 75,000 farmers grow cotton, producing about 80 percent of the EU-27 crop. Thessaly, Macedonia, and Mainland Greece are the major cotton-producing areas. Cotton is planted from March 1 to April 15 and the harvest occurs from October 1 to November 30. Most cotton is irrigated and machine harvested. Greece’s cotton area, yields, and production have declined significantly following Common Agricultural Policy (CAP) reforms effective in 2006 that decoupled payments and reduced support and market barriers for a number of crops, including cotton. Greece’s MY 2011/12 cotton production has been good, up almost 42 percent from last season due to increased acreage and more effective pest control because of less investment in the sector. Initial delays during the planting period due to constant rainfalls and low temperatures have been offset by warm and sunny days in August and September. Greece’s MY 2012/13 cotton production is estimated at 265,000 MT, 8.6 percent down from the previous year due to lower than expected yields because of bad weather and lower fertilization usage. MY 2013/14 cotton area and production are forecast to decline by approximately 22.8 and 24.5 percent respectively, in favor of durum wheat and corn ―especially in Thessaly― because of cheaper production costs and the strong rebound in durum wheat and corn farm-gate prices from 0.22 €/Kg in June 2012 to 0.26 €/Kg in February 2013. There are roughly 30 ginning companies in Greece with a total of about 65 ginning units. About 80 percent of the companies are private and the remainder are cooperatives. The top 5 companies handle about 70 percent of ginning capacity. Greece’s financial crisis has negatively affected the cotton market, creating risks and uncertainty. Without bank assistance, many ginners and cooperatives cannot hold stocks to secure a premium price. There also is a lot of debate about the survival of cooperatives that used to receive a large percentage of the agricultural loans. Due to last season’s defaults and delivery issues, many international cotton merchants have decided to narrow their exposure by buying only from the top ginners/exporters based on their prior performance. Ginners generally do not contract with growers, but compete with each other to purchase the crop. Greek seed cotton prices have increased from 0.42-0.43 €/Kg in October 2012 to nearly 0.48 €/Kg for limited quantities in January 2013. Consumption Domestic spinners consume approximately 10 percent of lint production and the remainder is exported. About 58 percent of cottonseed production is exported (mainly to Italy) and the remainder is crushed for oil and oilseed cake or retained for seed. Trade Greece is a major cotton exporter. During MY2011/12, Turkey has been the main destination for Greek cotton, representing approximately 35 percent of total exports. Greek ginners are expanding their distribution channels rather than selling only to their traditional buyers. Thus, during MY 2011/12, Greece exported huge quantities of cotton to China (63,482 MT) and increased amounts to Indonesia (35,553 MT) and Pakistan (6,636 MT). MY 2011/12 has been characterized by reduced exports to Egypt even after March 18, 2012, when the Egyptian Government lifted the import ban imposed in October 2011 (Ministerial Decree No. 1864/2011) in an effort to increase the demand for locally produced cotton. Small amounts of cotton are imported for blending in the domestic spinning industry. Table 2: Cotton Lint Exports (MT) Aug-Jul 10/11 Aug-Jul 11/12 EU-27 20,335 21,117 Italy 5,659 10,229 Germany 8,122 4,377 France 1,927 2,712 Bulgaria 1,887 1,863 Extra EU-27 137,048 226,348 Turkey 86,877 87,268 China 589 63,482 Indonesia 9,274 35,553 Egypt 27,789 9,826 Pakistan 2,039 6,636 World 157,383 247,465 Source: GTA Table 3: Cotton Lint Imports (MT) Aug-Jul 10/11 Aug-Jul 11/12 EU-27 1,355 935 Bulgaria 404 486 Belgium 428 219 Germany 377 174 Extra EU-27 5,153 4,373 Turkey 2,994 3,192 Brazil 0 390 Pakistan 1,027 261 Argentina 0 199 India 219 159 World 6,508 5,308 Source: GTA Policy The future of the cotton sector in Greece is strictly related to the subsidy scheme and how the CAP reform will be implemented. Cotton policy is detailed in EU Regulation 637/2008, amending Regulation 1782/2003, and the national restructuring programs for the cotton sector. Because of the risk of production disruptions in the cotton producing regions, the payment has two components: 65 percent of the aid is "decoupled" and 35 percent is "coupled.” "Decoupling" means that priority is given to supporting the income of producers, rather than the product they produce. Producers receive the aid in return for respecting strict standards of environmental protection, animal welfare, and food safety ('cross compliance’), and are free to produce whatever they wish. In "coupling,” the aid is linked to cotton production and granted per hectare of eligible area of cotton. In order to be eligible, the area must be located on agricultural land authorized by the Member State for cotton production, sown under authorized varieties, and actually harvested under normal growing conditions. The aid is paid for cotton of fair and marketable quality. Greece’s base area is established at 250,000 Ha. The amount of the aid per eligible hectare in Greece is established by multiplying fixed yields (3,2 tons/ha) with a reference amount of Euro 251, 75. If the eligible area exceeds the maximum base area, the aid per hectare is reduced proportionally. It is estimated that in MY 2011/12, the amount of direct subsidies paid for production in Greece was $266 million ($280 million in MY 2010/11) or approximately 43 US cents per pound of lint production – considerably lower than the 70 U.S. cents in 2010/11. Textile products According to the Association of Hellenic Textile Industries (SEVK), the Greek textile industry is facing tough times as not only the sector’s production has dropped by 18 percent, but domestic orders have also slumped 20 percent. A negative trend has dominated the export market, which has shrunk by approximately 23.8 percent during MY 2011/12 compared to the previous year. The problems for the Greek textile industry are compounded by the absence of liquidity in the market, meaning that banks have pulled the plug on all sources of funding, forcing a number of businesses to seriously consider closing down entirely. The SEVK has also complained about the amount of interest charged on loans, which can exceed 10 percent. A number of Greek businesses are exploring alternative avenues of funding by approaching potential investors as far afield as the United States and China. Given these circumstances, the industry is looking for an intervention of the State to revitalize the sector, starting with a settlement of millions of euro in VAT restitution to the leading exporters. Table 4: Cotton Yarn Imports (MT) Aug-Jul 10/11 Aug-Jul 11/12 EU-27 1,949 1,089 France 482 372 Italy 1,020 304 Bulgaria 115 203 Germany 202 133 Extra EU-27 6,256 4,387 Turkey 4,405 3,468 India 1,179 667 Egypt 199 166 Pakistan 48 45 World 8,205 5,476 Source: GTA Table 5: Cotton Yarn Exports (MT) Aug-Jul 10/11 Aug-Jul 11/12 EU-27 13,495 8,260 Germany 4,898 2,273 Spain 974 1,446 Italy 1,619 891 Bulgaria 1,282 750 Extra EU-27 1,080 801 Switzerland 227 297 Tunisia 160 104 Serbia 54 32 Turkey 113 17 World 14,575 9,061 Source: GTA Table 6: Cotton Fabric Imports (MT) Aug-Jul 10/11 Aug-Jul 11/12 EU-27 1,674 1,178 Italy 901 573 Spain 270 173 Germany 134 120 Bulgaria 113 111 Extra EU-27 3,709 3,025 Pakistan 1,217 1,127 Turkey 1,203 965 China 924 734 India 85 85 World 5,383 4,203 Source: GTA Table 7: Cotton Fabric Exports (MT) Aug-Jul 10/11 Aug-Jul 11/12 EU-27 3,190 2,337 Bulgaria 1,571 1,195 Italy 1,420 463 Romania 64 246 Germany 26 198 Extra EU-27 3,082 2,440 Turkey 1,186 1,044 Tunisia 411 326 Morocco 521 284 Serbia 204 206 World 6,272 4,777 Source: GTA Abbreviations and Definitions Used in this Report The PSD tables are prepared based on an August 1 to July 31 marketing year. HS codes considered for Lint Cotton trade data: 5201, 5202, 5203. HS codes considered for Yarn Cotton trade data: 5204, 5205, 5206, 5207. HS codes considered for Fabric Cotton trade data: 5208, 5209, 5210, 5211, 5212 EU European Union CAP Common Agricultural Policy Ha hectare; 1 ha = 2.471 acres MT Metric ton = 1,000 kg
Posted: 08 April 2013

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