Today almost 80% of world cotton fibre is processed into yarn in Asia. In contrast, fibre transformation rates in Africa are at a historic low. Thus, on average, 83% of sub-Saharan African cotton is exported as lint, almost exclusively through international merchants to Asia.
In 2000, the 27 countries currently members of the European Union imported 1,077 million tons of cotton while China imported 52,000 tons and Bangladesh 192,000 tons. In 2009/10 Europe imported 276,000 tons while China imported 1,893 million tons and Bangladesh 652,000 tons.
Towards Market-Oriented Culture
The high rate of cotton exports, the shift in demand from industrialized countries to Asian emerging economies and an increasingly integrated value chain require closer links with the market, especially with the emergence of competitors such as Brazil and India. Closer interaction with clients and cotton consumers is vital to maintain competitiveness. African countries have traditionally focused on production rather than the market. Market linkages towards Europe were secured by Western (often French) mother companies and, increasingly since 2005, towards Asia by international cotton merchants. A market-oriented culture did not develop as market-related aspects were handled outside Africa. Moreover, in the past, cotton sold readily as world cotton demand was higher than production. As a result, direct market linkages with clients did not develop and no direct feedback loop from spinning mills to ginning companies and producers emerged. This is a strategic disadvantage in a declining market, as was the case in the 2008/09 season, and in slow-growing markets as is forecast. World cotton mill use is estimated to recover by 2% in 2010/11, growing to 24.9 million tons, based on the assumption of a continued global economic recovery.
Competitiveness starts from the market. A clear understanding of the entire value chain and the market, as well as the client and the client's client, is necessary to become competitive. This is obvious with consumer goods such as garments. Without a clear understanding of fashion trends and market and buyer requirements, a clothing manufacturer will not be successful. This, in principle, is no different for a commodity such as cotton. For example, farmers and cooperatives in the United States of America, and more recently their counterparts in Brazil and India, have organized marketfamiliarization missions to cotton-consuming countries in Asia to learn what their clients expect from them, but also to promote their cotton. However, African cotton companies, independent ginners and producers have lacked this opportunity. As a result, they have no clear understanding of the entire value chain or the markets where their cotton is sold. Direct contacts with the consumers of their cotton, i.e. spinning mills, have been rare, and direct feedback on quality and buyer requirements sporadic and often 'filtered' by intermediaries.
Understanding Value Chains
Before cotton stakeholders can actually engage in proactive marketing, the necessary condition - a full understanding of external issues, i.e. the value chain and world markets - needs to be met. In addition, cotton stakeholders need to find ways to translate information and knowledge into know-how that is applied at the national and regional levels (the sufficient condition). Thus, gathering knowledge about the value chain, the market and clients, and subsequently applying this knowledge at home - i.e. developing the know-how to engage all cotton stakeholders in Africa - is a step-by-step approach.
Guest Editorial