Egyptian govt decides on no subsidies for cotton farmer or spindles during next season

The Egyptian Minister of Agriculture and Land Reclamation Adel El-Beltagy announced on Sunday that the state will not offer any form of subsidies for cotton farmers or spindles during the next season pointing out that long staple cotton cultivation is very expensive and there is no demand for it either domestically or internationally.

According to Sawsan Wahby, the Chairman of Eastern Cotton Company, one of the affiliates of the Cotton & Textile Industries Holding Company (CTIHC), the decision to remove cotton cultivation subsidies will harm the cotton and textile industry in Egypt. In fact all countries in the world subsidize their cotton industries.

Wahby stated that a day prior to the minister’s announcement, the Egyptian President had promised to protect and support farmers.
Around 25% of the Egyptian work force is involved in the textile industry, starting from farmers, to labour who work in factories, along with those who work in transportation. When the government decides to stop cultivating cotton, what will happen to all that work force?

The government used to offer subsidies for cotton spindles. Last year, however, the government introduced a new cotton subsidies system, providing EGP 1,400 for farmers per feddan of cotton.

The system had certain flaws because it was newly introduced without in-depth studies, Wahby said.

Wahby clarified that the old subsidies system provided support for farmers and producers. The new system gave financial support to all farmers, whether their production is used locally or exported. The government could go back to supporting cotton spindles to ensure that local production receives the deserved support.

However, Dalia Rady, the executive director for the export council for spinning and weaving, clarified that cotton yarn exports’ subsidies have not been removed as long staple cotton has a limited market because it is very expensive to produce.