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