Bangladesh needs to increase local cotton output

Bangladesh Cotton Association President Muhammad Ayub talks with The Business Standard's Reyad Hossain about the challenges and the possibilities of sourcing cotton as the fibre is an essential raw material for textile and garments productions. He also explains the factors behind the recent cotton price hike and its impacts on the clothing industry.

What is the current situation of the local cotton market?

In the last 15-20 years, a secondary market for cotton has developed locally. Imported and locally produced cotton have contributed to this development. Many importers are meeting the demand of a significant number of spinning mills by bringing in cotton from abroad. As far as I know, the local cotton market is making a significant contribution to the yarn production of many mills and is also playing a positive role in the expansion of textile industry. 

About 98% of Bangladesh's cotton consumption is dependent on import. What is the potential for increasing cotton production locally? 

It is true that cotton is the main raw material of textile industry. This industry has expanded on import-dependent raw materials which I think is a sensitive issue. We do not have the required amount of agricultural land for producing cotton. The lion's share of agricultural land in the country is being used for producing food grain. Bangladesh Cotton Association has been demanding for a long time that the government increases cotton production locally. 

In this case, we have been urging the authorities concerned to grow cotton on the land used for tobacco production. Locally produced cotton can save $3 per kg at the current market price. Besides, much of the government's revenue from tobacco production is spent on treating tobacco-related diseases. So we hope the government will take necessary steps in this regard.

Demand for man-made fibre is higher than that for cotton across the world, but the garment exports in Bangladesh is still dependent on cotton. Will the demands for man-made fibre increase and for cotton decrease in Bangladesh? 

The demand for man-made fibre in Bangladesh has already started increasing and it will definitely increase further. Unusual fluctuations in cotton prices in the international market are worrying garment owners. If such ups and downs continue, the nature of Bangladesh's garment industry is bound to change. 

What are the current challenges in cotton import? What kind of steps can be taken to overcome those? 

Sourcing cotton is a challenging job for spinning mills in Bangladesh. Reviewing the import figures of the last 20 years, we can see that each country's share in the cotton market was different in different times. Cotton imported from Central Asia had a profound effect earlier, but currently, it has changed and Indian cotton is being imported the most.

At the same time, cotton is being imported in large quantities from different West African countries to Bangladesh. It is also being imported from Australia, Brazil and the United States. We need cotton no matter where it comes from. All necessary steps, including trade diplomacy, must be taken to import cotton. 

What is the reason behind the hike in cotton prices in recent months? What is your prediction about cotton production and supply system? Will the price go down? 

According to the data provided by the International Cotton Advisory Committee, global cotton production increased by 9% in 2020-21, while its consumption increased by 20%. Moreover, freight rate increased 3-4 times when international trade reopened after almost coming to a halt due to the Covid-19 pandemic. All these factors contributed to the increase in cotton price in the international market. As far as we can guess, it is very unlikely that the price of cotton will return to the pre-pandemic level. 

We need to focus on global cotton production, use, etc. In this regard, Bangladesh Cotton Association, Bangladesh Textile Mills Association, Bangladesh Garment Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association and the ministries of textiles, commerce, agriculture and foreign affairs should form a high-powered committee together. Such a committee will be able to act as a coordinating body on all these issues.

Do you think there is a mechanism to stabilise the cotton market? 

Cotton is an agricultural product. Its production and quality depends on favourable weather. It has been observed many times that the crop is damaged by excessive rainfall and drought. So no mechanism will work in this regard. The price of cotton will be determined in the international market in the future – just like it was done in the past – in terms of production and demand. I think there is no way of saying anything in advance about this.

Supply chain disruptions and logistical constraints are widely discussed as reasons for increasing the cotton price. What can the Bangladesh government or the concerned parties in the international arena do in this regard? 

I think the current container backlog and ship congestion will not last long. It is bound to return to normal. All the stakeholders and the concerned ministries can take various steps in this regard, keeping in view the demand for cotton in our country. For example, roads and railways can be considered as means of import alongside the shipping routes.

Efforts can be made to ensure the supply of cotton through diplomatic contacts and trade cooperation agreements with various cotton producing countries. It is very important for us to do this.