Cotton for export. Kenya’s annual domestic consumption is 180,000 bales. Photo/ANTHONY KAMAU
Kenya’s cotton production has doubled this year, slightly reducing the country’s exposure to volatile international prices, new data shows.
Figures released by the US Department of Agriculture (USDA) indicate that the country harvested 49,000 bales of cotton this year, a 113 per cent rise over the 23,000 bales harvested last year.
This is the industry’s third best performance in the last 30 years — after the 62,000 bales recorded in 1979 and the 60,000 bales recorded in 1984 — but falls short of the 58,000 bales that the Cotton Development Authority had projected this year.
This level of production means reliance on imports dropped from 88.7 per cent last year to 72.8 per cent this year.
“A lot of campaigns have gone towards promoting cotton development this year and they are beginning to bear fruits,” said Mr David Masika, the chairman of Kenya Ginners Association.
Major distributors and retailers of cotton related items like school uniforms, bed sheets, and towels however said they have been forced to increase prices by between 10 per cent and 25 citing similar moves by manufacturers who have blamed the trend on rising international prices.
Parents of children returning to school have complained of higher uniform prices.
“The price at which I replaced my son’s shirt and one pair of shorts is 10 per cent higher compared to prices at which I bought the same items in August,” said Ms Mary Ambasa, who buys her items at KAWA uniform outlet in Buru Buru, Nairobi.
This year, international prices of cotton lint have risen to as high as Sh302.40 ($3.78) per kilogramme, about Sh54, 432 per bale.
This is much higher than the prevailing minimum price threshold of Sh32 per kilogramme of seed cotton (translating to Sh96 per kilogramme of lint cotton or Sh17,280 per bale) that the government fixed for the local market two months ago.
Local farmers have been threatening to look for alternative markets for their produce if the government (the main buyer) fails to raise minimum prices, while manufacturers’ high prices will make their products less competitive in the liberalised domestic market.
A meeting held last month between industry players on one side and the government represented by Agriculture and Industrialisation ministries on the other failed to resolve the pricing row in the sector.
Sunflag textile and Knitwear Mills general manager Harrison Kinuthia said improved harvests have been watered down by reduced supply in the international market, making it impossible to pass price advantage to the final consumer.
Plug shortfall
“Price for raw cotton constitutes 70 per cent of our ex-factory price for cotton fabrics, this means retail prices for our items will continue to rise as long as we also have to buy cotton at higher prices,” Mr Kinuthia told the Business Daily on Wednesday.
The Cotton Development Authority (CODA) estimates that the country’s annual domestic consumption of cotton at 180,000 bales.
This means that even at the current improved harvests, local textile firms still have to import at least 131,000 bales to feed their mills.
The local firms had expected to use the free trade regime in the East African Community to plug the shortfall with imports from Uganda and Tanzania.
Under its own projections for this year, CODA expected Tanzania to produce 700,000 bales with Uganda producing 250,000 bales.
According to the USDA report, Tanzania produced less than half the projection, harvesting only 300,000 bales this year while Uganda’s harvests dropped by 30 per cent to 140,000 bales.
When harvesting began in the country in October, CODA moved swiftly to ban exports of cotton saying some cross border middlemen were taking advantage of the harvesting season glut to buy cheaply from Kenya for hoarding purposes.
Not worked
“Unfortunately, all these calculations have not worked for us and like other producers worldwide, we are directly exposed to volatile international prices,” said Mr Kinuthia.
The recent floods that destroyed crops in Pakistan, the leading global exporter of cotton, have sparked global price rallies with countries such as China and India increasing their uptake of available stocks to boost domestic reserves.
