1. The Cotton Sector in the OIC Countries: Problems and Possibilities of Cooperation Nabil DABOUR SESRTCIC Nabil DABOUR SESRTCIC

2. Cotton plays a major role in the economies of a significant number of OIC member countries, particularly in some OIC least-developed members in Africa, such as Burkina Faso, Benin, Chad and Mali, where the exports of this primary commodity play a critical role in the prospects of growth and development in these countries. Cotton Sector in the OIC Countries

3.  Production  Trade (Exports)  Processing (Imports ) Cotton Sector in the OIC Countries

4. Production of Cotton (2005/2006)  Among the top 40 cotton-producing countries in the world, 22 were OIC members: Pakistan (4), Uzbekistan (5), Turkey (7) and Syria (10).  Yet, their share in world total production of cotton accounted for 26.2%, which was significantly less than that of China and USA together (44%).

5. Major OIC Cotton Producing Countries (2005/2006) Production (000 MT) Share in World (%) Production (000 MT) Share in World (%) Pakistan21458.6Cameroon900.4 Uzbekistan12084.9Nigeria870.4 Turkey7733.1Benin820.3 Syria3271.3Sudan810.3 Burkina Faso2941.2Azerbaijan710.3 Mali2230.9Chad710.3 Turkmenistan2120.9Kyrgyz Rep.460.2 Egypt2010.8Mozambique360.1 Kazakhstan1470.6Togo300.1 Tajikistan1360.5Senegal200.1 Iran1150.5Total650426.2 Cote d’Ivoire1090.4

6. Top 10 OIC Cotton Producing Countries (2005/2006)

7.  Among the top 40 cotton-exporting countries in the world, 23 were OIC members: Uzbekistan (2), Burkina Faso (7), Mali (8), Syria (9) and Kazakhstan (10).  Yet, their share in world total exports of cotton accounted for 31.3%, which was quite less than that of the USA alone (40.4%). Exports of Cotton (2005/2006)

8. Major OIC Cotton Exporting Countries (2005/2006) Exports (000 MT) Share in World (%) Exports (000 MT) Share in World (%) Uzbekistan104510.7Chad710.7 Burkina Faso2832.9Pakistan700.7 Mali2232.3 Azerbaijan 600.6 Syria1801.8Kyrgyz Rep.480.5 Kazakhstan1361.4Togo410.4 Turkmenistan1201.2Mozambique300.3 Cote d’Ivoire1141.2Nigeria270.3 Tajikistan1141.2Turkey270.3 Benin1031.1Uganda250.3 Egypt1031.1Iran200.2 Sudan931Senegal150.2 Cameroon910.9Total303931.3

9. Importance of Cotton Exports  As a group, the OIC countries are considered as the second largest exporter of cotton in the world after the USA.  The share of OIC members in Sub-saharan Africa in world cotton exports is 11.3%.  The share of cotton in total merchandise exports: Burkina Faso (43.9%), Benin (39.1%), Chad (32.2%), Mali (29.5%).

10. Top 10 OIC Cotton Exporting Countries (2005/2006)

11.  Among the top 40 cotton-importing countries in the world, only 11 were OIC members: Turkey (2), Bangladesh (3), Indonesia (4) and Pakistan (7).  Their share in world total imports of cotton accounted for 24.3%, which was significantly less than that of China alone (43.8%). Imports of Cotton (2005/2006)

12. Major OIC Cotton Importing Countries (2005/2006) Imports (000 MT) Share in World (%) Imports (000 MT) Share in World (%) Turkey7377.7Morocco370.4 Bangladesh4825Tunisia220.2 Indonesia4795Bahrain160.2 Pakistan3613.8Iraq150.2 Egypt1141.2Nigeria150.2 Malaysia420.4Total232024.3

13. Top 10 OIC Cotton Importing Countries (2005/2006)

14.  Low yield and subsidies levels compared to other countries.  Volatility of cotton prices and the shift to synthetic fibers.  Implementing testing/classification procedures and developing textile sector. Problems Facing OIC Cotton Producing Countries

15.  The world average yield rose from 230 kg/hec in the 1950s to above 700 kg/hec in 2005.  The average yield is higher than that of the world in only 4 OIC cotton producing countries. In contrast, it was lower in many members, particularly in Sub-saharan Africa. Low Yield Levels

16. Cotton Yields (Kg/Hec) (2005/2006) Cotton Yields (Kg/Hec) (2005/2006)

17.  Such countries with insufficient yield suffer the decrease of both international market share and prices.  The large variation in cotton yield among the OIC members and the need for improving the productivity create a wide margin for cooperation in this sector. Improving Cotton Yield

18.  High levels of production and/or export subsidies provided by the USA and China to their domestic producers lead to serious distortions in international cotton markets.  As a result, the increase in world cotton production (supply) reduces its price and this, in turn, reduces the revenues that could be obtained by the cotton exporting countries in the developing regions, including the OIC members. Cotton Subsidies and Prices

19.  Annual government transfers to cotton farmers in the OECD countries constitute 60-80% of their revenues.  75% of the total cotton production in the USA benefits from government subsidies where the annula government subsidies to cotton farmers are more than the total GDP of Burkina Faso and three times more than the USAID budget for Africa. Cotton Subsidies and Prices

20.  According to several simulation studies, elimination of cotton subsidies in the USA would:  increase the world cotton price by 3-11%  increase African cotton export revenue by $35- $100 million  reduce USA exports by 43%. Cotton Subsidies and Prices

21.  The share of cotton in world textile fibre declined from 70% in the 1950s to below 40% in 2002. This shift in demand reduces the world price of cotton.  So, any benefits from improving cotton yield worldwide will be dispersed unequally among all the producers.  The USA and China have more incentives, being both the world major exporters and users of cotton. Shift to Synthetic Fibre

22.  Demand for cotton is highly affected by its quality and consistency. So, to maximize revenue, producers must properly classify their product.  USA cotton is promoted by claims that it is less contaminated and better classified.  Manual classification in most African countries reduces the value of their cotton. Cotton Testing and Classification

23. The lack of skilled labour and capital and high cost of energy and transportation are among the factors that still impeding the development of sustainable textile industry (processing the raw cotton) in most OIC West African cotton producing countries where these factors raise the cost of textile production. Developing Textile Sector

24.  The OIC cotton producing countries, combined together, are net exporters of cotton, but many of them, particularly those in West Africa, are among the poorest in the world lacking the capacities for developing textile industries.  Yet, sustainable and modern textile sectors have already been developed by some of the OIC countries who are also among the major importers of cotton in the world. Possibilities of Cooperation

25. Cotton producers, exporters and industrialists in the OIC countries should, therefore, lead the way of cooperation in the cotton sector. They can facilitate cooperation among themselves by initiating an OIC Cotton Alliance. Possibilities of Cooperation

26.  The member countries of the OIC Cotton Alliance should benefit from their experience as members of some international and regional cotton association such as:  International Cotton Advisory Committee (ICAC)  Committee for International Cooperation between Cotton Associations (CICCA)  Association of African Cotton Producers (AProCA)  African Cotton Association OIC Cotton Alliance

27.  They should also benefit from their experience as members of cotton association in their own countries such as:  Pakistan Cotton Ginners’ Association  Cotton Cooperatives and Unions in Turkey (Tariş Cotton Union-İzmir, Çukobirlik-Adana, İzmir Mercantile Exchange, Antbirlik-Antalya)  Alexandria Cotton Exporters Association in Egypt OIC Cotton Alliance

28.  Establishing an OIC Cotton Alliance among cotton producers, exporters and industrialists should aim at coordinating cooperation in various areas related to the cotton sector such as: Improving the productivity and yield levels. improving testing and classification of cotton. Promoting investment opportunities in cotton sector. Organic cotton production: Turkey is the first OIC country with certification. Low pesticide use: Syria produces 99% of its cotton without pesticides. Biotech varieties. Other issues that could be determined by the member countries. OIC Cotton Alliance

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