The cabinet and the ministries of finance and agriculture have issued three decisions regulating the new cotton season, which commenced on 1 March and concludes in May with the onset of harvesting.
The first decision, by the Ministry of Agriculture, delineates the approved long-staple cotton varieties permitted for cultivation in the governorates of Upper and Lower Egypt. It renews the ministry’s ban on cultivating imported cotton varieties, particularly American cotton. The ban was first issued five years ago to safeguard Egyptian long-staple cotton, expand the area on which it is cultivated, and bolster its global competitiveness.
The second decision, by the Ministry of Finance, allocates LE3 billion to compensate farmers for the price differential between sale prices at auction and the government-guaranteed price, set last year at LE10,000 per quintal in Lower Egypt and LE12,000 per quintal in Upper Egypt.
The government has already secured LE2 billion to expedite disbursement ahead of the new season.
The third decision, ratified during the weekly cabinet meeting, reaffirms the state’s commitment to supporting and enhancing the competitiveness of Egyptian cotton. The decision says that the government will support farmers by covering LE2,000 per quintal for any sale below the guaranteed price.
The state’s strategic plan, implemented over the past five years to preserve Egyptian cotton’s quality, productivity, and global competitiveness, is now yielding results. A key indicator of its success is the 32 per cent expansion in the area of cultivated cotton for the 2024 season compared to 2023.
Due to high demand for Egyptian cotton, prices surged from LE5,500 per quintal in 2023 to LE8,700 in 2024 and LE12,000 in early 2025. The increase has encouraged farmers to expand their cotton cultivation over the past two seasons, said Mustafa Emara, spokesperson for the Egyptian Cotton Institute, affiliated with the Ministry of Agriculture.
Emara said that Egyptian cotton had faced a crisis in the 2024 season following the end of the cotton harvest. Demand for Egyptian cotton declined due to the premature entry of American cotton into the global market, meeting a significant portion of global demand at a competitive price.
This led to a downturn in demand for Egyptian cotton, causing auction prices to plummet from LE12,000, based on farmers’ production costs and a modest profit margin, to LE8,000 to LE10,000. The government intervened to stabilise prices by covering the price difference.
Emara added that there are concerns regarding the potential repercussions of this crisis on the upcoming season, which began on 1 March in Upper Egypt and mid-March in Lower Egypt. Some farmers may refrain from cultivating cotton, or reduce the land cultivated with cotton due to last year’s crisis, he said.
Sayed Khalifa, head of the Agriculture Syndicate, commended Egypt’s cotton strategy, which has been under preparation since 2015 and implemented over recent years. He also lauded the Ministry of Public Business Sector’s revival of the Egyptian Cotton Exchange in Fayoum and Assiut.
However, he fears the impact of delays in disbursing price-difference payments for last year’s cotton. The harvest and supply period spanned from August to November, yet there remain outstanding payments to both farmers and traders. Any delay exceeding six months could discourage farmers from cultivating cotton from the beginning of March, he noted.
This necessitates the government’s issuing a new guaranteed and not indicative procurement price for the 2025 cotton season, Khalifa said. It should also make available financial allocations ahead of the supply period to ensure that farmers receive their dues within 48 hours of delivery, in line with its approach to sugarcane and beet procurement.
While the delay in disbursing cotton payments remains exceptional, it must be promptly addressed to restore regular timelines, Khalifa said.
A source close to the ministries of agriculture and the public business sector said that last year’s 32 per cent expansion in cultivated cotton was expected to yield nearly one million quintals, a target that was largely met. However, even before the 2024 planting season commenced, 400,000 quintals remained in storage, awaiting auction.
The surplus coincided with the onset of a global price volatility crisis, indicating that the current supply of Egyptian cotton is more than market demand. Moreover, the continued influx of American cotton has further depressed global prices, exacerbated this year by disruptions in supply chains and rising global inflation.
* A version of this article appears in print in the 27 March, 2025 edition of Al-Ahram Weekly
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