Talking the future of local cotton production – Series 1

Hennie Bruwer, Cotton SA’s Chief Executive Officer, said the Cotton industry celebrated 800% growth in cotton production over a period of 5 years. In this exclusive interview with Mzansi Agriculture Talk CEO Tshepo Phaahla, Cotton SA provides clarity of its performance. 

The United Stated Foreign Services estimates low production cotton yield due to the effects of covid-19. Lockdowns has had a negative spin on cotton trade with “lowered global demand for cotton yarn, fabric, and products in 2019/20”. However, countries like India, Pakistan and Egypt have recorded larger exports volumes most driven by greater import demand in China and Bangladesh. 

RSA Cotton has remained silent in global trade which has raised concerns of whether indeed the little cotton farmers were abandoning the industry. According to Cotton SA 2021 March Market Report, the 2020/2021 plantings were considerably lower than the previous season which led to a much lower cotton crop. “Many farmers have turned to food crops while the lateness of the marketing of the previous season’s crops contributed to a contraction in planted area.” 

Phaahla: BFAP Report says cotton has been the highest of all agricultural products, what in your assessment has contributed to this? 

Bruwer: Major advancements in agricultural innovation and technology combined with better crop management have contributed towards the increase in local production. One of the other key contributing factors was the successes achieved through a 5-year government-funded initiative (2014-2019), the South Africa Cotton Cluster (SACC). The Cluster provided a coordinated platform to all the stakeholders in the cotton value chain to ensure growth and sustainability of the local cotton sector, creating a unique integrated supply chain program (ISCP) driven by retail demand.

Phaahla: Did the SACC produce its desired goals? 

Bruwer: The Cluster established a strong momentum for the growth and development of the Southern African cotton sub-national cluster. This grant unlocked various growth opportunities in the cotton industry, resulting in tangible returns on the investment. The significant growth in cotton production resulted in capacity constraint further in the value chain, requiring industry development. Private capital of more than R200 million was invested on the ginning side. Farmers also put their hands deep in their pockets to buy new harvesting machines, mainly the latest technology, which consolidates picking and baling. 

Phaahla: Manufacturing cotton in RSA requires for you to import various products tiers, why is this and what are you doing to address these gaps? 

Bruwer: Due to the capability and capacity limitations of local cotton spinning, weaving, and knitting, approximately 80% of the South African (SA) cotton lint is being exported for processing. Products in various tiers of the manufacturing process are then again imported. Simultaneously, approximately 75% of the cotton lint spun by the local spinners are imported from other African countries due to access to grade volumes and technology constraints to spin the local cotton. This situation seems counter-productive, especially when considering the possible opportunity cost to the economy of sacrificing local beneficiation. Based on research and historical crop statistics, there is sufficient land suitable for SA’s cotton production to meet the local demand.

Phaahla: How does the impact of this challenge augur for cotton production in South Africa? 

Bruwer: The result of the above was that South Africa became a net exporter of cotton lint in the 2018/19 and 2019/20 seasons. Due to the forced closure of spinning mills and allied industries during the lockdown period, exports of fibre may also exceed imports in 2020/21 as local consumption will be lower than previous years. Over the past 60 years, fibre exports had only once exceeded imports as the country is considered a net importer of cotton fibre.

Phaahla: What must be done to address this? 

Bruwer: Establishing a cotton spinning mill is very capital intensive, and further investment is needed to grow and sustain the local value chain. Over the past two years, the changes in the government structures brought a new strategic approach to the manufacturing industry, which led to the development of the Retail-Clothing, Textile, Footwear & Leather (R-CTFL) Master Plan. Amendments were to be made regarding funding guidelines, and a second funding application, submitted by the Cluster to the IDC in December 2018, was not successful. The economic impact of Covid-19 has reduced budgets, and new applications will only again be considered after the new guidelines are approved. This was scheduled to be finalised at the end of 2020; unfortunately, to date, no new guidelines have yet been communicated. With the decrease in the budget and the greater demand for increasing upstream competitiveness in the textile manufacturing industry, the possibility of government funding towards the local cotton programme is at risk, and the role-players have lost confidence in the programme. 

Phaahla: An Agriculture and Agro-Processing Master Plan (AAMP) has been developed and includes cotton, what is the cotton industry expecting? 

Bruwer: Cotton has been identified as one of the strategic crops in this Master Plan. Engagements are still in the early phases and how this will contribute towards aiding the cotton sector still needs to be finalised. It is, therefore, clear that government has an important role to play in supporting the industry. However, in saying that, I am not placing all the responsibility on government to ‘save’ the cotton industry. The success of any industry depends on the collaboration and trust relationship amongst industry role-players. In advocating for further funding towards the cotton industry, the critical need remains for investment from the seed level to the textile manufacturing level. Investments can only be sustainable and effective if the limitations to growth are addressed. These include access to seed and alternative plant genetics, finance for inputs and agri-assets, trading finance, reasonable interest rates and support of certain industry functions. The sustainable cotton production programme, or Better Cotton Initiative (BCI), also previously supported by the SACC, also runs the risk of being halted if growth continues to cease.

In the next series, we will discuss how Cotton SA is expanding its infrastructure in the irrigation schemes to boost local production.

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