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 Tuesday, 14 January, 2003, 15:52 GMT
South Africans cut their cloth
Cleaning the cotton
South African cotton farmers cannot meet demand

In the Makhatini Flats in northern KwaZulu-Natal, the rains that should have fallen in October to moisten the ground for cotton planting did not come.

In this dry and underdeveloped region of South Africa, cotton is the only commodity that offers a lifeline out of poverty and subsistence farming.

The future of some 4,000 small-scale cotton farmers and their extended families now

  • hinges on the Land Bank.

    Without money to buy cotton seed, fertiliser and pesticides in the weeks ahead, the outlook for the season is bleak. However, a production loan could still see them through the months ahead.

    But only 400 production loans will be approved this season, a Land Bank loans officer tells a meeting of farmers. He reminds them that they still owe the bank $1.2m in outstanding debt.

    Cotton production
    Thousands of jobs have been lost due to the fall in cotton production

    This dates from the year 2000 when the floods that devastated neighbouring Mozambique also left the Makhatini Flats cotton farms waterlogged and wiped out that year's crop.

    The government's disaster plan did not cover crop losses and so most of the farmers defaulted on their loans.

    No price guarantee

    Apart from the difficulty of securing loans, usually at a high rate of interest, South Africa's cotton farmers are doubly discriminated against when it comes to competing on the world market, says Phineas Gumede, chairman of the KwaZulu-Natal Cotton Growers' Association.

    This is because cotton farmers from the United States and several European countries enjoy huge government subsidies, he says.

    "Our government is doing nothing about that. It's affecting us more than before, as small-scale farmers, because when it comes to inputs, the price is very high, and we aren't getting any subsidies. And at the end of the day, there's no price guarantee."

    We need about 400,000 lint bales and we are only producing about 150,000 bales every year

    Adriaan Hattingh, Makhatini Cotton Gin Mill

    Getting the cotton crop to a gin mill where the raw cotton, or lint, is cleaned, washed and prepared for spinning can add substantially to the farmers' costs.

    Unmet demand

    At the nearby Makhatini Cotton Pty Ltd gin mill, the general manager, Adriaan Hattingh, who has been in the cotton business since 1969, explains that the domestic demand for cotton in South Africa far outstrips the current supply.

    "We need about 400,000 lint bales and we are only producing about 150,000 bales every year. In the years when the prices are low and there isn't enough rain, the farmers don't plant cotton, and then we have to import what we need," says Mr Hattingh.

    Over the past year, South African cotton production dropped by 47%.

    US subsidy

    Hennie Bruwer, chief executive of Cotton South Africa, estimates the drop in South African production has meant the loss of some 24,000 jobs. And he lays the blame squarely on the United States Government.

    "The American cotton farmer does not react to any market signal, because he knows that whatever the price will be, he can maintain high production because he is ultimately guaranteed a price by the US Government."

    In 2001/2, the US Treasury paid out $4.4bn in subsidies to its cotton farmers, says Mr Bruwer, with a price guarantee of $0.70 per pound. The world market price was $0.42 per pound.

    Falling prices

    The United States is also the world's largest exporter of cotton. Because of the government subsidy system, US farmers can afford to sell their cotton on the international market at much lower prices.

    In 2002 the Americans produced a bumper crop, and are forecast to sell 2.2 million tons of cotton on the international market.

    Brazil, also a competing cotton producer, believes that this combination of US agricultural subsidies and over-production has resulted in the dumping of American cotton on the world markets, depressing world prices.

    Brazil registered a complaint with the World Trade Organisation stating that "no matter how efficient Brazilian cotton producers are, they cannot compete against the US Treasury".

    Bruwer says South Africa, and other cotton-producing nations who subscribe to free market principles, support the Brazilian position.

    "If you look at the West African cotton producers, like Mali, it's estimated that their GDP will be 3% lower than last year because of lower exports of cotton lint. So the low prices have already had a drastic effect on a poor country like Mali. And it's affecting all the developing countries that are cotton producers."

    A full version of this article appears in the January-March 2003 issue of

  • See also:

    28 Nov 02 | Country profiles
    12 Apr 02 | Business
    24 Sep 02 | Business
    12 Feb 02 | Business
    01 Jun 01 | Business
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