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Egypt's government raises Egyptian cotton subsidy

Ahram Online, Tuesday 22 Jul 2014
Farmer
A farmer picks cotton on a farm in Qaha about 25 km (16 miles) north of Cairo, Egypt. (Photo: Reuters)
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Egypt's economic ministers approve raising the subsidy for spinning companies (Private and state-run) to purchase abundant Egyptian cotton to become LE350 per quintal instead of LE200 ahead of harvest season in September, announced the ministry of, industry, trade and Small and Medium Enterprises (SMEs) in a statement on Tuesday.

The move is meant to encourage domestic industries to purchase Egyptian cotton as well as support local farmers.

Spinning companies can now buy cotton for LE920 per quintal rather than LE1,070 per quintal under the original subsidy.

Egyptian cotton traders and exporters buy cotton from farmers at LE1,670 per quintal on average, offering it to the spinning companies at LE1,270 per quintal.

Abundant cotton for the financial year 2013/2014 is estimated around one million quintals.

Contracting with domestic spinning companies will take place before August 10th. The remaining cotton which is not purchased by then will be sold to exporters at the original subsidy of LE200 per quintal.

The government, which historically considers Egyptian cotton a strategic commodity, plans to develop weaving, textile and clothes industry with the aim of raising its competitiveness in international markets, according to the statement.

Earlier this year, cotton exports were hit by domestic price hikes following a decline in local production brought about by reduced farm acreage and the lifting of an import ban.

Total exports in the 2012/13 season, which runs from September to August, were worth $215 million, accounting for 22.3 percent of local production, which stood at 300,000 tonnes.

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Yossef
23-07-2014 11:09am
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Wrong move
The gov should keep cutting on subsidies of all sort. If they want to protect local producers and encourage buying from Egyptian ones, they should just impose a new tax on importing cotton. Though in my opinion we should just convert all cotton fields into new productions like local vegetables. Indeed cotton production needs LOADS of water and Egypt doesn't have enough. It's nonsense. From ejfoundation: Cotton is one of the thirstiest crops in the world, taking about 2,720 litres of water to produce one cotton T-shirt, equivalent to what an average person might drink over three years. That is nonsense for a country like Egypt to produce either cotton or rice.
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Aladdin, Egypt
23-07-2014 12:16am
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Open Markets
European & African markets are wide open to Egyptian textiles. We nee advanced marketing strategy based on modern technology and banks' credits for buyers, delivery system, etc. Profit margin is wide if we do it smartly. Tahya Misr.
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Jasmin
22-07-2014 11:19pm
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Cotton
Karl Marx described cotton as a plant of colonialism..So, Government's last support means it wants Egyptians to be deployed in growing cheaper cotton for big powers industry.
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TH
22-07-2014 06:47pm
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I don't understand ?
So the government will spend 150 pounds per quintal to support cotton prices. The production is expected to be 1 million quintals. That means that the government will spend 150 million pounds to subsidize cotton. Why ? This at a time when we are cutting bread, fuel and other subsidies to fix the budget, all absolutely the right thing to do. Why this ?
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RS
22-07-2014 09:01pm
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Production
While I disagree with removal of gov subsidies in the current economic circumstances considering the impact it will have on driving the prices in a proverty manifisted country, you should note that the difference is as follows:
RS
22-07-2014 09:01pm
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Production
While I disagree with removal of gov subsidies in the current economic circumstances considering the impact it will have on driving the prices in a proverty manifisted country, you should note that the difference is as follows:
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