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Govt leases land to private investors for cotton cultivation
01
Sep '11
Ethiopia's Ministry of Agriculture (MoA) has provided 54,000 hectares of land on lease to eight private sector investors during the last seven months, to meet the domestic demand for cotton.

The size of the leased land is little more than the area of Addis Abeba, the capital city of Ethiopia.

The land leased to private investors, including Tracon Trading and Access Capital, is mainly in the Benishangul Gumuz Regional State.

The eight private firms have already deposited one year lease price, with Access Capital acquiring an area of 5,000 hectares by paying a maximum price of 623 Br per hectare.

The price at which the land available for cotton cultivation may be leased out was derived on the basis of a research undertaken by the Ethiopian Development Research Institute (EDRI), which was set up in 1999. The institute evolved a standard price based on the suitability of the land and its distance from capital Addis Abeba.

Based on the findings of the research, of the available plots, those situated 700 km away from the capital were priced at 111Br per hectare while those situated 500 km away from the capital were tagged at 992 Br per hectare.

Cotton became a priority agricultural crop last year as the overall domestic production fell short of satisfying demands of local garment and textile producers. The small quantity of domestic produce was also exported due to its soaring prices in the world market.

In response, the Ethiopian Government imposed a ban on raw cotton exports since October 2010, while permitting the cotton farmers to sell their produce at a price equivalent to world prices, but after reducing the freight and transportation charges.

Drawing support from various Government bodies such as MoA, Ministry of Trade (MoT), the Ethiopian Textile Industry Institute (ETIDI) and Ministry of Industry (MoI), the cotton prices were fixed at 42.78 Br per kg for a quarter in November last year. It was subsequently increased to 57 Br per kg of cotton.

However, the ceiling of price of cotton was withdrawn by the Ethiopian Government a few days back. Still the demand for cotton in the country remains very high and has grown by almost 33 percent from 57,000 tons last year to 76,000 tons this year.

As per the MoA's five year strategic plan, the supply of cotton is likely to grow to 193,146 tons in 2014-15, and it is for this reason that cotton cultivation is being given priority.

Presently, around 93,985 hectares of land in the country is under cotton cultivation, with private investors holding 26,377 hectares, while the rest is under the ownership of domestic farmers.

Fibre2fashion News Desk - India

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