New plans to revitalize cotton sector: official
Cotton - REUTERS/Stringer
By THE CAIRO POST

CAIRO: Ahmed Mustafa, the head of the public-owned Textile Holding Company (THC), announced Sunday that a series of three plans (short-, medium- and long-term) will be applied to regrow the sector, Al-Masry Al-Youm reported.

THC co-owns and monitors 32 Egyptian cotton companies and has more than 63,000 workers, he said.

The short-term plan will provide 200 million EGP ($28 million) in subsidies to support public spinners and push them to purchase Egyptian cotton.

Public spinners are hesitant to purchase local cotton due to the high price of Egyptian cotton in comparison to international prices Mustafa said. He said the price of Egyptian cotton per kantar (99 pounds) may reach 1,300 EGP, while the price of imported cotton could be as low as 750 EGP, Al-Mal reported.

Public spinners’ aversion to purchasing Egyptian cotton has impacted consumption by more than three quarters of production, totaling 81,600 kantars, during the second quarter of the current agricultural year. This is in comparison to 504,400 kantars the year before, according to the Central Agency for Public Mobilization and Statistics (CAPMAS) in May.

The second, medium-term part of the plan will reactivate seven bankrupted factories including Misr Spinning and Weaving Company, Tanta Flax and Delta Ginning and Weaving Cotton, Mustafa said.

It will also include amendments to current laws to allow raising customs duties on cloth and textile industries to cover random importation, increase demand for national manufacturing and allow loans to restart the factories, he said.

Within the General Agreement on Tariffs and Trade (GATT), Egypt has the right to increase customs duties on textiles and cloth to 15 percent, but currently only enforces a 5 percent tax, Mustafa said. He added that such measures will protect national production from recession.

The medium-term plan is scheduled to be executed in two years and will cost about 90 million EGP monthly according to Mustafa.

The third, long-term plan is scheduled to be finished in ten years and will transfer urban factories to new industrial zones to benefit from lower land prices.

“The lower land costs will free up money to purchase new equipment and restore old equipment to boost production,” Mustafa said. He added the long-term plan will not need separate funding as the government can establish the new factories by selling the older facilities. Eight factories will be run under the long-term plan, and the government will restart one factory a year.

In related news, Minister of Agriculture Ayman Abu Hadid designated at the end of May a Cotton Research Institute to design a categorized plan of where to plant cotton in Egypt’s governorates. Cotton producing land is expected to hit 400,000 acres by the end of 2014, according to the Ministry of Agriculture.

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