Cotton Production in Colombia

A Hot Tip about Textiles in Colombia

Last updated: 10 Mar 2011

Overview

Duty free access for textiles and garments to the United States under the Andean Trade Promotion and Drug Eradication Act (ATPDEA) boosted Colombia’s cotton demand. The increase in consumption has been accompanied by an increase in imports. Colombian production is expected to decline to approximately 32.000 tons in 2010. The lack of increased production is mainly due to smaller planted areas in those regions that are considered marginal for cotton production due to high production costs and low yields. Cotton planted area has been declining despite government guarantees of a high minimum price to growers and debt forgiveness up to 40 percent on credit granted to local producer associations. Imports are expected to increase at 52.000 metric tons in 2010 and the United States will likely continue to be the largest supplier. Colombia imports mainly short-length fiber cotton from the United States, which is not produced locally. The Government of Colombia is strongly encouraging cotton production by guaranteeing a minimum price paid to growers. The mandatory requirement for importers to purchase local production (absorption mechanism) was replaced by a new tariff-rate quota system that lowers the import duty if importers/mills purchase local production.

 

Best Prospects/Services

The expansion of Colombia’s textile industry triggered by duty free access to U.S. markets for garments and textiles under the ATPDEA resulted in larger cotton demand. The ATPDEA was extended and expires in late 2009 and should be extended through 2010.The high quality of Colombian products and the well-developed garment industry give Colombia a competitive advantage among other Central and South American countries. U.S. companies have also started direct investments in Colombia to take advantage of the expected market openings under the CTPA.

 

Opportunities

U.S. cotton exports should maintain their market share, although Colombia’s cotton imports are decreasing. This is because U.S. cotton quality and Colombia’s preference for short-length fiber cotton is not readily available from other sources. Colombia is an important producer of denim, which utilizes short-fiber cotton. U.S. cotton has the additional advantage of lower freight costs to Colombia.

 

 

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Posted: 04 May 2010, last updated 10 March 2011

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