Tanzania : High Prices Expected To Benefit Cotton Producers

Cotton producer in Tanzania is expecting benefit from the high cotton prices in the international market. There was a high demand of cotton in 2003/04 in world market because of fall in overall production.

Cotton price was predicted to rise to $ 1.45 per kilogramme in 2003/04 season, up from $ 1.15 per kilogramme in December last year. The price of cotton fibre reached $ 1.35 per kilogramme in March this year.

According to the International Cotton Advisory Committee, represented during a cotton meeting held last March in Mwanza, world cotton production in 2002/03 was estimated to stand at 19 million tonnes, down by 2.5 million tonnes or 12 per cent from the record reached in the previous season. This is the lowest level of production in the past five seasons.

World consumption is expected to outpace production by 1.8 million tonnes in 2002/2003, causing world ending stock to shrink to 8.5 million tonnes, the lowest in eight seasons.

The COTLOOK A Index is projected to average $ 1.27 per kilogramme in 2002/03, $ 0.16 or 38 per cent above the 19-year low of the previous season. Higher prices will boost world production and stifle the growth rate of world consumption next season.

However, the demand for world cotton is challenged by production of polyster. While the expanding cotton supply is due to imported technology and government measures, the average level of cotton prices during this decade is likely to be lower than it was during the past three decades.

The estimates of season average of the COTLOOK A Index are below $ 1.54 per kilogramme over the next two seasons. However, the weather can change the price outlook from season to season.

Apart from the fact that cotton prices will tend towards the level of $ 1.54 per kilogramme or higher, it now seems more likely that the average level of prices will be well below the average since 1973/74 of $ 1.6 per kilogramme.

Low prices will ultimately benefit consumers, and the rate of growth in world cotton consumption may move back toward 2 per cent, as was common prior to the mid-1980s, says the ICAC.

However, continued low prices are obviously going to put addition pressures on producers, leading to less intensive input use, continued efforts to lower costs through technology and sharpening diplomatic conflict over government measure.

Meanwhile, in Tanzanian cotton producers paid only 60 per cent or Tsh 540 per kilogramme for cotton fibre against the world market prices averaged at Tsh 880 (US$ 88) per kilogramme for the same in 2002/03 season. However, three kilogrammes of seed cotton produce one kilogramme of cotton fibre.

Tanzania expects to produce about 750,000 bales in 2006/07 season from the current level of 354,000 bales as per Cotton Sector Development Strategy passed in 2001. Last year's production stood at 281,000 bales.

The increase in production was associated with the stable cotton development fund which started in 1999/2000 as it facilitated the buying of 100,000 litres of pesticide in 1999/2000 to 1million litres of pesticide in 2001/2002 and 2002/2003 season.

According to the Ministry of Agriculture and Food Security, the production of cotton in is expected to drop due to the unfavourable rains. The crop depends on rain by 100 per cent.

Cotton farming is done by small farmers with the capacity of cultivating between 0.5 to 5 hectares using hand hoe or animal plough. These kind of farmers use a small quantity of agricultural inputs.

The ministry further said that the quality of cotton produced in the country declined in quality from 77 per cent in 1999/2000 to 60 per cent this season. This was due poor supervision and lack of laws and regulations on quality and cleanness and low use of inputs by stakeholders.

Due to these factors the country has lost markets of Portugal, Italy, Belgium and Japan. The problem of quality has made Tanzanian cotton to be sold at low prices. Formerly, Tanzanian cotton was given the name of white gold and was sold at high prices in New York.

Cotton producer regions include Shinyanga, Mwanza, Singida, Morogoro, Msoma, Tabora and Tanga. There are only seven functioning ginneries, each with the capacity to produce 17,280 of seeds equivalent to 32,000 bales during the six-month cotton season.