Market entry constraints for African Cotton experiences from project implementation By: Matthias Knappe Date: 6 June 2019
Market entry constraints for African Cottonexperiences from project implementation
By: Matthias KnappeDate: 6 June 2019
4 Market developments requiring African reaction
• 1/3 of SSA cotton is certified sustainable (BCI, CmiA, Organic, Fairtrade)
• SSA has a better environmental footprint than that of conventional cotton from machine-harvesting origins (source CmiA) 1.92 Kg CO2 eqv vs 4.64 Kg CO2 eqv per Kg of lint cotton Almost no blue water resources are used as all water is rain-fed
• Thus large mechanized cotton-harvesting origins can use “better” as a marketing tool while 2/3 of Africa cannot
• All SSA cotton to follow an identity cotton • Promote the fact that SSA cotton has a better environmental
footprint than most other origins
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1) Identity cotton is here to stay but penalize 2/3 of SSA cotton
2) Wide scale instrument-testing of bales is required• Instrument testing has become the commercial standard• Non instrument-tested cotton is penalized by a de-facto
price discount• That needs an enhanced quality assurance system
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3) Bale marking is required for the market price function to work
• WCA cotton conservatively classed; knowing this intermediaries sometimes sell the cotton as higher grade cotton to spinners
• As a result, feedback from market on what is in demand is distorted• CMDT, SODECOTON, SODEFITEX changed their bale marking policy
4) Hand-picked cotton needs brandings efforts• Hand-picked cotton has higher intrinsic quality than machine-
picked cotton• Nevertheless, hand-picked cotton is traded as a discount • Marketing efforts of machine-picked cotton origins gained
strong reputation as a cotton of better quality (less contamination)
• Counterbalancing branding efforts required, and • Continued efforts to reduce contamination levels
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Reaching African Farmers• WB research: linking farmers directly to international
markets increases income and reduces poverty• But farmers produce seed-cotton i.e. a non-tradeable good• Projects often reach farmers through ginners under
contract farming for building farm-level capacity• But fundamentally opposing interests on prices• Thus, project to consider empowering of farmers to include
capacity to understand the value chain, market, price determination and negotiation
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THANK YOU
Matthias KnappeProgramme Manager, Fibres, Textiles & Clothing
International Trade Centre (ITC)www.intracen.org