TRALAC - Trade Law Centre

Cotton sub-sector in dire straits as production declines

Monday, 15 February 2010

Source: Business Daily

Cotton growing has now been left to small holder farms thereby reducing the production capacity of the country, analysts say amid concerns that the declining production is jeopardising Kenya’s ability to utilise the platform offered by Africa Growths Opportunities Act (Agoa) to export locally manufactured apparel to American markets duty and quota free.

Attempts to grow cotton in more than 30,000 hectares have flopped after a 2005 attempt by the Cotton Development Authority to encourage cotton farming and return Kenya to the export field.

More farmers are quitting the cultivation of the crop in the face of poor marketing by authorities, poor seed varieties and a lack of affordable credit and market for the farmers.

Exports have been dwindling and now analysts say the reducing supply from cotton farmers is partly to blame for the reduced visibility of Kenya’s apparel on the international stage. Agoa rules require that apparel exports to the US must constitute input from Kenya’s cotton fields. This requirement aims at improving Kenya’s agriculture earnings.

The Cotton Development Authority — a state agency which oversees the cultivation and marketing of cotton in Kenya — says production of cotton is quickly declining due to lack of affordable credit to farmers, poor quality seeds and unpredictable cotton prices in the global markets.

Unreliable rainfall and high pest incidence has also been blamed on the dwindling production.

According to statistics by the Cotton Development Authority, production declined from 28,380 in 2006 to 22,200 tonnes in 2009.

“There was a decline in the seed cotton harvested in 2007 and 2008 due to severe drought” says the Cotton Development Authority.

The declining production has already started straining the capacity of local apparel and textile manufacturers to meet orders from abroad.

Sub-Saharan Africa

Agoa was enacted in 2000 as a unilateral offer for manufacturers of textile and 6,000 other products in sub-Saharan African countries to access the US market duty and quota free.

Under the Agoa arrangement, Kenyan apparel exports to the US increased from six million pieces worth $30 million in 2000 to 63.3 million pieces in 2005 earning manufacturers and exporters more than $240 million.

Agoa was initially intended to end in 2008 but Kenya was given a new lifeline when it was extended to 2015.

But despite the free access of Kenya’s apparel into the US market, numbers traded have started dwindling due partly to competition from China and the government alongside exporters has expressed concerns over the competitiveness of Kenya’s textile in the international scene.

The Kenyan Apparel Manufacturers and Exporters Association has attributed the dip in sales to low prices at the US markets but analysts say the low production or even poor quality of cotton yield from the fields is making it impossible for Kenya to sustain exports to the US.

“Kenya’s Government announced that it intends to increase cotton output five-fold within the next year. This increase would serve the local industry and export markets. It is seen as an important component of food security” says Matthias Knappe, the programme manager cotton, textile and clothing at the International Centre for Trade.

The plans to increase output entailed the distribution of free seeds to farmers across the country which started in 2005 to increase yield to over 65,000 tonnes a year but a prolonged drought led to poor yields of 8,500 tonnes, the lowest production in as many years.

Players in the cotton sub-sector say the distribution of seeds to farmers alone cannot resuscitate the frail sector which is nearing its death.

Cotton growing — a big agricultural venture in various parts of the country in the 1980s — has been squeezed into smaller portions of land after farmers reduced acreage due to losses as a result of lack of market, and the liberalisation of the economy in the 1990s which gave way for the importation of second hand clothes which quickly replaced locally manufactured garments.

Liberalisation

The liberalisation of the sector resulted in the collapse of big names in the textile industry such as the Kisumu Cotton Mills (KICOMI) and the Rift Valley Textiles (RIVATEX). Moi University recently bought and resurrected the Eldoret based RIVATEX and now the university is using it for educational purposes.

The continuing decline in the production of cotton is bad news to local textile firms which have declined in numbers.

Four years ago, Kenya had 36 textile exporting firms that directly and indirectly employed more than 32,000 people.

Today, 21 of those firms have folded and the employment numbers whittled down to under 12,000 people.

Players in the sector project that the country will have only 10 textile firms at the end of this year as the production of cotton continues to dwindle.



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Kenya's bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.