Cotton and Products Update

An Expert's View about Cotton in Senegal

Posted on: 22 Dec 2012

Harvest has nearly finished for the selected West African countries and they expect to produce around 1.5 million tons of seed cotton for the MY 2012/13 campaign.

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: 12/7/2012 GAIN Report Number: Senegal Cotton and Products Update 2012 West Africa Cotton and Products Update Approved By: Russell Knight, Deputy Regional Agricultural Attaché, West Africa Prepared By: Fana Sylla, Agricultural Specialist Report Highlights: This report is an update to the August 2012 West Africa Cotton and Products Update. Good rainfall and better management has maintained the positive outlook on MY 2012/13 seed cotton production at almost 1.5 million tons. Burkina Faso and Cote d’Ivoire began harvesting in October followed by Chad, Mali, and Senegal in November. However, Burkina Faso and Mali are the first countries to launch ginning activities, while the rest will likely begin in early December. These select West African countries have all officially fixed their minimum farm gate cotton price for MY 2012/13 at the previous year’s price. Burkina Faso announced that it will subsidize input prices, but the prices will tentatively remain at MY 2011/12 unsubsidized levels for the rest of the selected countries. Page 2 of 13 Page 3 of 13 Table of Contents MY 2012/2013 Cotton Update for Selected West African Countries.. . . . . . . . . . . . . . . 3 Burkina Faso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .. .. . . . . 3 Mali . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Cote d’Ivoire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Chad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... .5 Senegal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Technical Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Table 1: Seed Cotton Production: MY 2010/11 – MY 2012/13 . . . . . . . . . . . . . . . .. . 8 Table 2: Official Farm Gate Price for First Quality Seed Cotton MY 2010/11 – MY 2012/13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ..9 Production, Supply, and Demand Data Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Acronyms . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . .. . . . .12 Page 4 of 13 MY 2012/2013 Cot 1]ton Update for Selected West African Coun [tries Harvest has nearly finished for the selected West African countries and they expect to produce around 1.5 million tons of seed cotton for the MY 2012/13 campaign. This is a slight increase from our August forecast a 21 percent boost over MY 2011/12. MY 2012/13 production increased on improved policies boosting cotton planting and good rainfall, despite some flooding. Post has increased its MY 2012/13 estimate 40,000 tons for Cote d’Ivoire to 340,000 tons and maintained its August 2012 estimates tons for Burkina Faso (500,000), Mali (500,000), Chad (100,000), and Senegal (30,000). While the ginning is getting underway in Burkina Faso and Mali, some unexpected off season rains could have damage cotton quality, perhaps reducing the quantity. MY 2012/13 minimum farm gate cotton price for all selected countries remained the same than the MY 2011/12 minimum price. Burkina Faso has announced ahead of its neighbors to subsidize input prices below MY 2011/12 levels, while the input prices for the other selected countries remain at MY 2011/12 unsubsidized prices. USDA FAS supported 13 West Africans in the cotton sector to participate in FAS’s scientific exchange programs: Norman E. Borlaug International Agricultural Science and Technology Fellowship Program and Cochran Fellowship Program. Burkina Faso The MY 2012/2013 cotton campaign was launched without incident compared to the previous year. Burkina Faso has confirmed a good harvest season and estimates area harvested at 500,000 ha. The President of the National Union of Cotton Producers (UNPCB) estimates MY 2012/13 seed cotton production at about 500,000 tons as previously forecasted by Post in August 2012. This harvest would still be 20 percent greater than the MY 2011/12 harvest. Area harvested of Bt cotton is greater than initially estimated by Burkinabe cotton companies despite actions to limit availability to farmers of Bt seeds with a 98 percent level of purity. Bt cotton harvested acreage is estimated at 60 percent of total seed cotton production or about 300,000 ha. Last marketing campaign, Burkinabe farmers found Bt cotton fiber having shorter fiber than conventional cotton which decreased competitiveness of their cotton fiber on the international market. As part of its seed plan to increase the purity, only 5,000 seed multipliers were selected by cotton companies to produce good quality Bt cotton seed. Farmers planting Bt cotton were sensitized to increase the use of organic fertilizer in addition to chemical fertilizer because Bt cotton has more cotton bolls than conventional cotton (12 vs. 7) and therefore needs more nutrients. The General Director of Sofitex during an interview in October 2012 of CommodAfrica (www.commodafrica.com) said that both, use of more pure Bt seeds and increased amounts of organic fertilizer, will decrease the percentage of the fibers with a short length in MY 2012/13 and even more in MY 2013/14. Fiber length is primarily a genetic trait, but also depends on growing conditions, and harvesting, ginning, and processing methods. [1] [ ] Includes Burkina Faso, Chad, Cote d’Ivoire, Mali and Senegal. Benin is covered by FAS Lagos. (Note - For more information on the history and structure of the cotton sector in West Africa, refer to previous GAIN reports as well as August 2012 report. Page 5 of 13 Privatization There is no further development on the privatization process of the cotton sector. Pricing As mentioned previously, the MY 2012/13 farm gate price is fixed at 245 F CFA ($0.49) per kg, the same price as last year. Inputs GOBF subsidized MY 2012/13 inputs costs to farmers below that of MY 2011/12. Fertilizer prices were reduced from 16,748 FCFA ($33.50) in MY 2011/12 to 13,500 F CFA ($27), and urea from 18,445 F CFA ($36.89) to 15,500 F CFA ($31). In the August 2012 West Africa Cotton and Products Update, Post reported that GOBF organized a workshop in May 2012 to validate a study for the implementation of an input fund. The GOBF has decided to proceed with this input fund and has begun recruiting a bank for its management. This fund will permit cotton companies to buy inputs directly from a supplier at any given time when prices are more attractive instead of using bank loans and pay interest which will have an implication on input prices for farmers. In addition, the World Bank has promised to provide ten billion CFA ($ 20 million) by December 2013. These funds will be used to leverage more funds as a total of $80 million is sought to cover this mechanism. Mali CMDT is maintaining its crop outlook of 500,000 tons of seed cotton on 545,000 ha for MY 2012/13. Factors motivating farmers to plant more cotton have stemmed from the on-time delivery of agricultural inputs, as well as, the involvement of all cotton stakeholders (Permanent Assembly of Chambers of Agriculture of Mali (APCAM), National Union of Cooperative Societies Cotton Producers (UNSCPC), and CMDT), who are closely monitoring the success of cotton farmers. In addition, farmers received a bonus of 20 F CFA ($0.04) per kg on the MY 2011/12 farm gate price, encouraging farmers to stay in the sector. For MY 2012/13, input and the minimum farm gate prices were maintained at the same price levels as the previous year. MY 2012/13 farm gate cotton price was fixed at 255 F CFA ($0.51), fertilizers and urea at 12,500 F CFA ($25) per 50 kg bag. Privatization The privatization process of its four CMDT subsidiaries (East, South, Central and West) has not progressed. Page 6 of 13 Cote d’Ivoire The Interprofessionnal Association of the Cotton Sector (INTERCOTON) confirmed area harvested at 345,000 hectares and expects seed cotton production to be around 340,000 tons for MY 2012/13, just 8 percent above Post’s August forecast. The Government of Cote d’Ivoire (GOCI) continues to support the cotton sector with the highest farm gate price in the sub-region. If GOCI meets this expectation, production will have seen a 33 percent gain over MY 2011/12. As Post reported in August 2012, the MY 2012/13 farm gate price was pegged at 255 F CFA ($0.11) per kg, continuing to be the highest in West Africa. During MY 2008/09 – MY 2011/12, GOCI has subsidized inputs up to 17 billion CFA ($34 million), however MY 2012/13 inputs prices remain unsubsidized at 17,000 F CFA ($34.00) per bag of 50 kg of fertilizer and 16,000 F CFA ($32.00) per bag of 50 kg of urea. Chad Since the creation of the new state-owned cotton company, Cotontchad SN, farmers have planted more cotton with the increase of the farm gate price which had been fixed for many years since MY 2009/10. As an indication of the efforts to plant more cotton, MY 2012/13 area planted increased 57 percent from MY 2011/12 (170,000 ha to 267,000 ha). Government of Chad (GOC) is anticipating a harvest of 118,000 tons of seed cotton, however, Post maintains its forecast of 100,000 tons due to some unexpected late rains and some flooding that may have damaged cotton quality and reduced the quantity. It was recently announced that Cotontchad SN would maintain the farm gate cotton price at MY2011/12 levels, 215 F CFA ($0.43)/kg. In addition, MY 2012/13 inputs prices have been announced and they are considerably above MY 2011/12 prices. GOC has not decided yet to subsidize these prices and until it does, farmers will have to pay the full price and get reimbursed later. The MY 2012/13 unsubsidized fertilizer price is set at 22,181 F CFA ($44.36) per bag of 50 kg, and the urea price is set at 26,920 F CFA ($53.84) per bag of 50 kg, a 48 and 92 percent increase from MY 2011/12. Senegal Sodefitex, Senegal’s national cotton company increased its August production estimates by 2,500 tons of seed cotton 32,500 tons based on 33,700 ha harvested for MY 2012/13. If this production estimate holds, it would be a 28 percent increase compared to the previous year. However, Post will maintain its forecast at 30,000 tons. For MY 2012/13, input and farm gate prices were maintained at the same price as MY 2011/12. MY 2012/13 farm gate cotton price was fixed at 255 F CFA ($0.51), fertilizers at 9,500 F CFA ($19) per 50 kg bag, and urea at 9,000 F CFA ($18) per 50 kg bag. Page 7 of 13 Privatization There is no further development on the privatization process. For more information, please refer to August 2012 GAIN report. Technical Cooperation This year, USDA FAS sponsored 13 fellows from West Africa to participate in its scientific exchange programs: Norman E. Borlaug International Agricultural Science and Technology Fellowship Program and Cochran Fellowship Program. Two researchers from the National Institute for Environment and Agricultural Research (INERA) in Burkina Faso participated in the Norman E. Borlaug International Agricultural Science and Technology Fellowship Program. One Fellow studied “gene flow and cross pollination in cotton species” at Texas A&M University from June to August 2012 and concluded that gene flow can occur between Genetically Engineering (GE) crops and non-GE crops population throughout: out crossing, voluntarily, and seed handling. She noted that contamination cannot be solved only by applying a certain distance between fields. She plans to share her findings with Burkina Faso’s National Biosafety Agency (NBA) and other Burkinabe scientists and expects to draft another proposal to continue her research. The second Fellow, currently at Purdue University from October to November 2012, is studying “the effects and impacts of GE cotton and edible crops on non-target organisms”. USDA is helping reinforce the technical capacity of West African cotton companies and provides them with new ideas that can be adapted to their country, when possible. During October 13-26, 2012, USDA FAS sent the remaining eleven Cochran Fellows from Senegal (4), Burkina Faso (4), Cote d’Ivoire (2), and Chad (1) on a two-week program to learn about cotton production and processing at Texas A&M University in College Station and Lubbock. Participants were those in charge of the ginning facilities and cotton seed production from four cotton textiles companies in Senegal (SODEFITEX), Burkina Faso (SOFITEX, SOCOMA, FASO COTON), and Cote d’Ivoire (CIDT), the Senegalese Federation of Cotton Producers (FNPC), and the Chadian Agricultural Research Station (ITRAD), and the Ivorian Inter-professional Fund for Agricultural Research and Counsel (FIRCA). The Cochran fellows had the opportunity to visit all facets of the cotton sector, including: Cotton seed germplasm bank Seed breeding programs on biotechnology for improved yield, fiber quality, earliness, resistance to biotic and abiotic stress, and disease resistance Cotton marketing Irrigation and harvest systems and management Cotton ginning, cotton lint, cotton seed factories Cotton byproducts research products Cotton ginning technologies and equipment maintenance Page 8 of 13 Cotton fiber moisture devices production factory Association and cooperatives of cotton growers Storage and shipping facilities Yarn mill and textile factories Cotton classification All cotton harvested in West Africa is handpicked while in the US is mechanized using either stripper or picker equipment Participants learning about the harvesting Partcipants listening to the International Trade system in a module Negotiations course related to Cotton marketing Participants learning about the cotton A group photo at the United Cotton Growers irrigation system Source: FAS Dakar Page 9 of 13 To highlight some visits of interest to the group, Fellows were able to meet with the Lummus Corporation, a manufacturer of ginning equipment commonly found in West Africa. The group discussed some problems they are facing in their respective countries, including the lack of available replacement parts that are not produced anymore by the company with the Lummus Corporation. The Lummus Corporation was very open to working with these fellows and helping them to improve their ginning capacity. On the topic of research and development of cotton fiber moisture devices, the group visited Samuel Jackson, Inc., who manufactures humidification products used to safely and effectively restore moisture to cotton seed and lint and avoid mechanical fires. This brand is also commonly found in West Africa. All cotton harvested in West Africa is handpicked while in the US, harvesting is mechanized using either stripper or picker equipment. When the group visited a cotton storage facility, it noticed that plastic propylene bags were being used to hold cotton. A large problem facing cotton ginning companies in West Africa is the contamination of cotton by plastic fibers made of polypropylene. Old used fertilizer bags are saved by farmers to collect seed cotton when handpicked. Those bags are often damaged and the polypropylene fibers are mixed with the seed cotton and cannot be completely removed during the ginning process. However, it is important to note that the bags used in the US are new bags without frays. West African cotton is recognized for its good quality and length of the fiber, but polypropylene contamination reduces its value. Today, cotton companies and the unions of cotton producers are working together to find a solution to this problem, including using bags made of cotton to collect the bolls. Table 1: Seed Cotton Production: MY 2010/11 – MY 2012/13 Selected 2010/11 2011/12 2012/13 2010/11 2011/12 2012/13 Countries U.S.DA Post and Post U.S.DA Post and Post and Official Government Forecast Official Government Government Production data Production Production data November Production Production updated data Production (000 Bales) (000 Bales) (000 Bales) (000 Tons) (000 Tons) (000 Tons) Burkina 652 801 965 338 415 500 Faso Mali 469 859 965 243 445 500 Cote 338 494 656 175 256 340 d’Ivoire Chad 100 151 193 52 78 100 Senegal 50 48 58 26 25 30 Total 1,610 2,353 2,837 834 1,219 1,470 *1 Bale = 480 lbs. (Source: FAS Dakar estimates and official country data) Page 10 of 13 Table 2: Official Farm Gate Price for First Quality Seed Cotton MY 2010/11 – MY 2012/13 Official 2010/11 Farm Official 2011/12 Farm Official 2012/13 Farm Gate Price for First Gate Price for First Gate Price for First Selected Quality Quality Quality Countries (F CFA) (F CFA) (F CFA) Burkina Faso 182 ($0.36) 274 ($0.55)* 245 ($0.49) Mali 185 ($0.37) 275 ($0.55)* 255 ($0.51) Cote d’Ivoire 210 ($0.42) 265 ($0.53) 265 ($0.53) Chad 180 ($0.36) 215 ($0.43) 215 ($0.43) Senegal 255 (0.51) 255 (0.51) 255 (0.51) *Minimum announced farm gate price plus additional bonus (29 F CFA for Burkina Faso and 20 F CFA for Mali) (Source: Official sources; $1= 500 F CFA; F CFA per kg) Production, Supply and Demand Data Statistics Cotton Mali 2010/2011 2011/2012 2012/2013 Market Year Begin: Aug Market Year Begin: Aug Market Year Begin: Aug 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 260 286 480 477 500 545 Beginning Stocks 92 92 92 77 292 50 Production 475 470 850 858 900 965 Imports 0 0 0 0 0 0 MY Imports from 0 0 0 0 0 0 U.S. Total Supply 567 562 942 935 1,192 1,015 Exports 450 460 625 860 800 915 Use 25 25 25 25 25 25 Loss 0 0 0 0 0 Total Dom. Cons. 25 25 25 25 25 25 Ending Stocks 92 77 292 50 367 75 Total Distribution 567 562 942 935 1,192 1,015 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA Page 11 of 13 Cotton Burkina 2010/2011 2011/2012 2012/2013 Market Year Begin: Aug Market Year Begin: Aug Market Year Begin: Aug 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 400 400 400 395 475 500 Beginning Stocks 169 169 140 141 236 150 Production 650 652 700 800 925 965 Imports 0 0 0 0 0 0 MY Imports from 0 0 0 0 0 0 U.S. Total Supply 819 821 840 941 1,161 1,115 Exports 675 675 600 786 800 960 Use 4 5 4 5 4 5 Loss 0 0 0 0 0 0 Total Dom. Cons. 4 5 4 5 4 5 Ending Stocks 140 141 236 150 357 150 Total Distribution 819 821 840 941 1,161 1,115 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA Cotton Cote 2010/2011 2011/2012 2012/2013 d'Ivoire Market Year Begin: Aug Market Year Begin: Aug Market Year Begin: Aug 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 200 217 250 278 325 345 Beginning Stocks 160 160 148 42 198 76 Production 340 337 450 494 600 656 Imports 0 0 0 0 MY Imports from 0 0 0 0 U.S. Total Supply 500 497 598 536 798 732 Exports 302 405 350 410 425 600 Use 50 50 50 50 50 50 Loss 0 0 0 0 Total Dom. Cons. 50 50 50 50 50 50 Ending Stocks 148 42 198 76 323 82 Total Distribution 500 497 598 536 798 732 Page 12 of 13 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA Cotton Chad 2010/2011 2011/2012 2012/2013 Market Year Begin: Aug Market Year Begin: Aug Market Year Begin: Aug 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 100 100 175 198 185 200 Beginning Stocks 23 23 18 0 38 11 Production 100 100 145 151 140 193 Imports 0 0 0 0 0 0 MY Imports from 0 0 0 0 0 0 U.S. Total Supply 123 123 163 151 178 204 Exports 90 90 110 130 120 180 Use 15 15 15 10 15 15 Loss 0 0 0 0 0 0 Total Dom. Cons. 15 15 15 10 15 15 Ending Stocks 18 18 38 11 43 9 Total Distribution 123 123 163 151 178 204 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA Cotton Senegal 2010/2011 2011/2012 2012/2013 Market Year Begin: Aug Market Year Begin: Aug Market Year Begin: Aug 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 27 27 27 27 30 32 Beginning Stocks 9 9 14 9 15 2 Production 50 50 46 48 50 58 Imports 0 0 0 0 0 0 MY Imports from 0 0 0 0 0 0 U.S. Total Supply 59 59 60 57 65 60 Exports 25 42 25 53 30 55 Use 20 8 20 2 20 4 Loss 0 0 0 0 0 0 Total Dom. Cons. 20 8 20 2 20 4 Ending Stocks 14 9 15 2 15 1 Page 13 of 13 Total Distribution 59 59 60 57 65 60 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA Acronyms APCAM Permanent Assembly of Chambers of Agriculture of Mali CMDT Compagnie Malienne pour le Développement des Textiles CIDT Compagnie Ivoirienne pour le Développement des Textiles FIRCA Fond Interprofessionnel pour la Recherche et le Conseil Agricole FNPC National Federation of Cotton Producers GE Genetically Engineering GOBF Government of Burkina Faso GOC Government of Chad GOCI Government of Cote d’Ivoire GOM Government of Mali INERA Institut de l'Environnement et de Recherches Agricoles INTERCOTON Association Interprofessionnelle de la filière Coton ITRAD Institut Tchadien de Recherche Agronomique pour le Développement NBA Agence Nationale de la Biosécurité SOCOMA Société Cotonnière du Gourma SOFITEX Société des Fibres Textiles SODEFITEX Société de Développement et des Fibres Textiles UNPCB Union Nationale des Producteurs de Coton UNSCPC National Union of Cooperative Societies Cotton Producers
Posted: 22 December 2012

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