Egyptian cotton marketing companies have returned to demand that the government provide financial support to cotton farmers amounting to 4 billion pounds to market two million quintals of the crop in light of the high security prices and low export prices.
The Cotton Exporters Union sent an official memorandum to the Ministers of Investment and Finance complaining of its inability to market the cotton crop for the current season. A group of major cotton export companies also sent another memorandum to the Council of Ministers containing the same complaint and proposals, according to what Al Arabiya Business viewed.
The memorandum stated that about 325 companies from the private sector have stopped working during the current cotton marketing season due to the rise in insurance prices and the decline in international cotton prices, causing losses of more than two thousand pounds per quintal.
The Council of Ministers set the cotton guarantee prices for this season at 10,000 pounds per quintal for Upper Egypt cotton and 12,000 pounds for Upper Egypt cotton.
A source from the Cotton Exporters Union said, “Guarantee prices are higher this year by more than 100% compared to last year’s prices. At the same time, the average price of cotton globally decreased to 130 cents per libra (approximately 453 grams) compared to about 190 cents last season. We need the global price to rise to 170 cents to be able to buy cotton at guarantee prices without adding any profits yet.”
The memorandum explained that the season faces other obstacles, most notably the presence of more than 650,000 quintals of cotton remaining from last season, divided into 400,000 felt cotton and 250,000 floral cotton.
The remaining hair cotton was driven by the government directive issued last season to reduce export quotas with the aim of providing larger quantities for manufacturing locally, which caused the public and private sector factories to have a stock of more than 400 thousand quintals, according to the memorandum.
Also, about 250,000 blossom cotton remain from last season as a result of the decline in selling prices in cotton system auctions at the end of last season to about 10.6 thousand pounds per quintal, compared to 16-17 thousand pounds at the peak of the season, which prompted farmers to reject the prices and keep the cotton without ginning it.
Cotton companies proposed allowing private companies to open special rings under the supervision of the General Authority for Cotton Arbitration and Testing and the General Committee for Cotton Regulation and Trade, in addition to the rings of the government system, and leaving farmers the freedom to choose whether to supply to any ring.
The memorandum explained that private companies in Upper Egypt began buying cotton at a price ranging between 8 and 8.5 thousand pounds per quintal, and these cottons will either go to civil factories or be supplied to the cotton system.
Sources in the sector explained that the government system’s delay in disbursing farmers’ dues in full for weeks forces them to sell to the private sector at lower prices to meet their obligations.
So far, the holding company has purchased about 300,000 quintals of the current season’s production, according to a government source who spoke with Al Arabiya Business.
The memorandum also suggested that the government provide support to cotton farmers worth two thousand pounds per quintal, which would enable traders and exporters to continue their work to maintain marketing shares in global markets.
According to sources' estimates, the cotton supply for the current season exceeds two million quintals of new production in addition to the remaining stock from last season, which requires support ranging between 3-4 billion pounds.
The sources explained that the 2015-2016 season was the last year in which the government supported farmers worth approximately 300 million pounds, after which it stopped providing any support for the crop.
Related news
