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Mixed reaction to Egypt's temporary ban on raw cotton imports
Nov '11
There has been a mixed reaction to Egypt's decision to impose a temporary ban on import of raw cotton. The ban was imposed last week to stop the domestic prices from further declining.

Imposing the ban, Mahmoud Eissa, Minister of Industry and Foreign Trade, had said the ban would remain in place until all the local harvest this season was sold out. The decision was taken following requests by Egyptian cotton growers, who complained about difficulties in selling their cotton harvest, owing to a drop in cotton prices in international market.

Some experts, who have reacted negatively to the imposition of ban on raw cotton imports, said the ban would mean that domestic mills would be forced to procure locally produced cotton at higher prices. These mills will then supply yarn to fabric makers at similar higher prices.

Another group of experts said the ban is only on import of raw cotton, and hence garment factories can import yarn. So, there should not be any impact on prices of apparels either in the short or long run due to the ban.

They opine that the decision to ban import of raw cotton would be highly beneficial as it will spur farmers to grow more cotton next season, and it may gradually restore Egyptian cotton its former place in the global market.

The Ministry of Agriculture has, however, requested the Cabinet to sanction EGP 220 million for subsidizing the local spinning and ginning factories as they would have to pay more to get raw cotton after the imposition of ban.

Meanwhile, Salah Youssef, Minister of Agriculture, has recommended the Ministry of Industry and Foreign Trade to impose a fee on imported yarn to protect domestic yarn manufacturers from “unfair competition”.

Fibre2fashion News Desk - India

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