The government has eliminated cotton farming subsidies, Agriculture Minister Adel al-Beltagy announced on Sunday, warning farmers they would be responsible for securing their own contracts to sell the crop to textile companies.
The subsidy cut is effective immediately, and comes ahead of the spring planting season. Farmers and analysts fear the news could be the death blow to a once-fabled industry.
“Initially, the post-June 30 government spoke of subsidizing cotton farming by LE8,000 per feddan. Then they backtracked to LE1,400, and now nothing,” says former cotton farmer Osama al-Khouly, a founding member of the Independent Farmers Union.
Combined with rising costs and mounting debt to agricultural banks, the removal of subsidies will make it impossible farmers to survive by growing cotton, he says.
“They’ve moved to end electricity subsidies, they’re not supporting fertilizer subsides from the agricultural cooperatives, and now they are not subsidizing cotton either,” Khouly says. “The government is breaking the backs of cotton farmers and all farmers in general, especially small farmers.”
The 2014 Constitution commits the government to “providing the requirements for agricultural and animal production and buying basic agricultural crops at a suitable price, providing a profit margin to the farmers.” But farmers say without subsidies, they will be left to produce cotton at a loss.
According to Khouly, it now costs around LE800 to grow a kantar (a traditional measure equivalent to about 45.5 kg) of cotton. Without subsidies, farmers can only sell their cotton for around LE750 per kantar.
Even before this week’s cuts, some farmers in Tanta and Gharbiya chose to burn their crops rather than handing them over and facing losses, Khouly says.
“Why should we grow cotton? We can’t even grow it and eat it ourselves. There’s no reason to grow it. On the contrary, there’s reason not to grow it,” says Khouly, whose own family chose to stop growing cotton after changes to the market made the crop unprofitable.
“The economy is not just about the Suez Canal. There are many other parts of the economy that we need to take care of. Up to a third of the country is involved in agriculture in one way or another. The government should look after those people’s needs and interests,” he argues.
An industry in decline
Although Egyptian cotton has long enjoyed a sterling global reputation for its long, strong fibers, the country’s domestic textile industry increasingly relies on cheap imports from abroad.
The United States and Greece — both of which subsidize their domestic cotton industries — make up the bulk of imports to Egypt, with the African nations of Burkina Faso and Benin playing an increasing role.
Exports are declining as well. According to the state statistics agency CAPMAS, the country exported just 53,900 kantar of cotton from June to August of 2014, a decline of more than 40 percent from the same quarter last year.
Not only is Egyptian cotton more expensive than international imports, it is generally not suited for the local textile industry.
Egyptian cotton’s long fibers can be woven into the fine, strong thread that allows manufacturers to produce the high thread-count fabrics that give the local crop its luxurious reputation. Instead of taking advantage of these qualities, many domestic manufacturers — particularly the giant state owned milling firms — are fitted with machinery suitable for cheap imported short- and medium-staple cotton.
Lack of government oversight
Even those who do rely on long-staple cotton for their products say they are no longer finding locally grown cotton suitable for their needs, thanks to poor quality control in the local crop.
Over the last five years, seed quality has deteriorated, and farmers and traders mix different qualities of cotton together, says Mohamed Eshra of EshraTex cotton, which produces fine and superfine textiles for export. The result, he says, is weaker, shorter cotton.
“We cannot actually use it,” Eshra says of the Egyptian cotton he’s seen in the past few years. “We have to use American cotton, or old crops.”
At this point, no matter how low the price goes, Eshra says he will not be purchasing locally grown cotton.
Eshra puts much of the responsibility for declining quality at the feet of the Agriculture Ministry, which he says has done little to build up seed quality or prevent low-quality cotton from being mixed in with and sold as premium varieties.
“None of the previous ministers were doing anything about it for the past five years,” he claims.
“If they start today, we can get a good crop in three years,” Eshra says. “They have to proceed in that direction. Otherwise there may be no more Egyptian cotton.”
Khoury agrees that government neglect is dooming the cotton industry.
“Agricultural production will continue to deteriorate, not just in cotton but in many other crops. There is no mechanization, no subsidies and no central planning of the agricultural economy,” he says. “For decades, we had central agricultural planning. Now, the planning seems to be to wipe us out.”