Summary
The Economic crisis hasn't spared the cotton commodity in africa.
With the recent season of 2009-2010 most of the farmers were affected by the low prices offered by the cotton merchants and cotton trading companies
In Uganda for instance companies were not wiling to offer 0.5 USdollar for a kilogram of raw cotton.Most of the companies have pulled out of the business.In some countries there has been government intervention to top up the cotton price
Analysis
The Economic crisis hasn't spared the cotton commodity in africa.
With the recent season of 2009-2010 most of the farmers were affected by the low prices offered by the cotton merchants and cotton trading companies
In Uganda for instance companies were not wiling to offer 0.5 USdollar for a kilogram of raw cotton.The argument was that they the companies are not certain about the cotton market.Will the low spending from the consumer markets there was un clear picture regarding the cotton market.
It involved the Government of Uganda to intervene and top up the price.
With the continuous down turn there are alot of developments.In uganda anumber of companies have pulled out from the Business such as Copcot East africa -operating under paul reinhart closed,Western Uganda cotton company closed.
Major acqusitions have been felt by Rwenzori cotton company which bought the cotton ginnery of copcot east afica.
Olam uganda is buying from the small cotton companies as a way of generating volumes to meet customer targets.
The local farmers have teamed up to form UGACOT a company which adds value to their raw cotton by primary processing it and looking for market world wide.
There have been developments in the cotton sectors The entire agriculture extension services are now offered by the Government since most of the key players in the cotton sector bowed out.
In Tanzania the same story is felt.Currently its a cotton season and what used to be vibrant season is dominated by a few players like Alliance cotton company,Ndegesera cotton company,mwatex to mention a few.Copcot east africa closed its operations.
companies are not willing to offer a high price for the raw cotton just as in uganda.
Effects
Those developments will have effects on the cotton sector in Africa as the volumes are likely to decrease.where farmers are offered a good price,they produce more for the next season with the same anticipation.
With the current trend of low consumptions, there has been closure of some companies and acquisitions.loss of jobs since the cotton price on the market is low.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
