05 April 2012
Assuming normal monsoon conditions, MY 2012/13 domestic cotton production is forecast at 120,000
Bangladeshi (400 lbs) bales (21,818 tons) from 40,000 hectares. MY 2011/12 cotton production is
estimated at 95,000 Bangladeshi bales (17,273 tons), harvested from 36,000 hectares. Of this amount,
87,000 bales were medium staple American variety and 8,000 bales of short staple up-land cotton
(locally called “Comilla” cotton).
A lack of short duration, high yielding, and pest tolerant cotton seed severely constrains the expansion of cotton acreage in Bangladesh. Cotton cultivation is very susceptible to excessive rainfall/floods and pest infestations. However, during the last several seasons, cotton crops in Bangladesh benefitted from favourable weather conditions during the critical growing period (July to December).
Bangladesh does not have a cotton research institute. The Bangladesh Cotton Development Board (CDB) is the sole organization responsible for providing extension services to Bangladeshi cotton farmers, and also for conducting trails of imported cotton varieties/hybrids for cultivation. In collaboration with private seed companies, the CDB has introduced a few short duration and high yielding Chinese hybrids in 2009/10. As a result, cotton production in Bangladesh has been expanding. The CDB has undertaken a program to gradually increase domestic cotton production to 670,000 Bangladeshi bales (from 100,000 hectares) within the next 5 years. The CDB strategy includes an expansion of the use of new high yielding varieties, the introduction of summer cotton, and gradually converting 20,000 hectares from tobacco to cotton cultivation. Notwithstanding this increase, under normal conditions, domestic production is unlikely to exceed 3 percent domestic raw cotton demand.
Value Added Cotton:
Yarn production in MY 2011/12 is estimated at 687,000 tons, down by 6.6 percent from MY 2010/11. Fabric production is estimated to increase to 3.7 billion meters, up from 3.6 billion last year. Approximately 700 million metres of fabric are produced by the small-scale handloom industry which meets 35 percent of domestic demand for fabrics. In MY 2012/13 yarn and fabric production are forecast to increase to 707,000 tons and 3.8 billion meters respectively.
The spinning sector has grown significantly over almost the last two decades in response to growing demand for yarns from both the domestic textile market and the export-oriented ready-made garment (RMG) sector (Table 8). However, the rate growth is slowing due to ongoing constraints in the energy sector. Most spinning mills are now operating at less than full capacity as they face tough competition from imported products, which are generally selling for 5 to 7 percent below the domestic price.
The textile industry, the largest manufacturing sector in Bangladesh, provides employment to approximately 5.5 million people, contributes around 12 percent of the country?s GDP, 40 percent of manufacturing value addition, and 77 percent of export earnings. During the last three decades, the Bangladesh textile sector has received investments amounting to over 3.75 billion Euros.
The Bangladesh primary textile sector (PTS) meets almost 100 percent of domestic yarn and fabric requirements, 85-90 percent of yarn requirements for export oriented knitwear, 35-40 percent yarn requirements for woven RMG and 40 percent of the demand for woven fabrics as part of the export oriented RMG sector. Domestic yarn production is supplied to home-textile, terry towel, and denim producers. The current structure of the Bangladesh textile industry is presented in Table-7. Despite significant growth in backward linkage industries, Bangladesh?s current demand-supply gap for fabric is about 50 percent for cotton-based use and around 25 percent for non-cotton based use in the RMG sector.
In MY 2011/12, raw cotton consumption is estimated at 3.5 million bales, down by about 5.5 percent
from MY 2010/11 due to a sharp decline in imports as well as weaker demand from the spinning subsector. Cotton consumption in MY 2012/13 is forecast to reach 3.6 million bales.
In MY 2011/12, consumption of yarn is estimated at 950,000 tons, up 1 percent from MY 2010/11, driven by sustained demand in the weaving and knitting sub-sectors. Yarn consumption in MY 2012/13 is forecast at 950,000 tons. Fabric consumption in MY2011/12 is estimated at 6.2 billion meters, marginally higher than in MY 2010/11. MY 2012/13 fabric consumption is forecast at 6.3 billion meters.
Recently constructed spinning and weaving mills are capable of supplying quality yarns and fabrics required for the export oriented RMG sector, however prices are typically at 7-10 percent higher than similar products sourced from India or China. There are also increasing concerns that illegally imported fabrics (used in the export oriented RMG sector under a duty drawback incentive) may be threatening the competitiveness of locally produced fabrics.
MY 2011/12 cotton imports are estimated at 3.25 million bales, a 12 percent decrease from the previous
year. A number of Bangladeshi cotton importers are still facing challenges in meeting contractual
obligations resulting from record high prices in the international market. Spinners that had committed
to purchasing cotton at relatively high prices are facing some difficulties with their suppliers. Industry
sources indicate that a few importers have already been blacklisted, while others are trying to
renegotiate with the suppliers to minimize loss. The Indian ban on cotton exports has also had a
detrimental impact on supply. As market conditions stabilize, industry observers expect that trading
volumes will resume. In MY 2012/13, raw cotton imports are forecast to reach 3.5 million bales.
Uzbekistan and India are the major suppliers of raw cotton to Bangladesh, mainly due to competitive pricing and short delivery periods. Last year the share of U.S. raw cotton grew to 12 percent, largely due to increasing demand from new generation spinning mills that value the consistency and ginning output of U.S. cotton.
Value Added Cotton:
In CY 2011, yarn imports are estimated to increase to 240,000 tons from 220,000 tons in the previous year. As buyers continue to seek cheaper yarns, imports for CY 2012 are forecast to increase to 250,000 tons. India will likely remain the principal supplier of yarn to Bangladesh, accounting for over 75 percent of the market share. The Indian Government ban on cotton exports has had a profound impact on the Bangladesh spinning industry, and many industry leaders view the Indian decision as a violation of international trade rules and a blatant move to capture a greater share of the Bangladeshi yarn market. The Bangladeshi industry is urging Indian counterparts to honour contracts signed prior to the ban, but this issue is still unresolved.
Fabric imports in CY 2011 are estimated to reach 2.3 billion meters, up by 2 percent from the CY 2010 import level. As prices for domestic fabric remain relatively high compared to imported products, fabric imports are forecast to increase to 2.4 billion meters in CY 2012. With the changes in the EU Generalised System of Preference (GSP), RMG manufacturers are sourcing cheaper fabrics from the international market. China continues to be the principal supplier of imported fabric, accounting for approximately 74 percent of the total imports. In FY 2010/11, RMG export earnings reached approximately $18 billion, a 43 percent increase from the previous year.
Bangladesh is almost entirely dependent on imports to meet its demand for raw cotton. More than 40 percent of raw cotton imports are destined for the export oriented RMG sector. Bangladesh spinning mills recognize the value of U.S. cotton, particularly Pima and Upland, for their quality, consistency and ginning output.March 2012
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