Agri-Chain Analysis of Cotton Sub-Sector in Ethiopia

Abstract

Cotton is one of the rare agricultural products where production and consumption is more or less global in extent. Cotton is growing including Ethiopia, in more than 70 countries, where many developed and developing countries depend on import of lint for their spinning/textile industry. During the last four decades, the global production and consumption of cotton has increased significantly from 9.8 million tons in 1960/61 to 18.5 million in 1998/99 reaching 21.1 million tons in 2001/02 (CBI, 2006). The major cotton producers are located in the developed world, where USA is by far the largest producer, followed by China, India, Pakistan, Uzbekistan and West African countries. From the total world production, only 30% is exported annually as most producers are becoming major consumers o f their own production and even import cotton due to their expanding spinning and textile industries. This has resulted in a major shift of trade flows away from the main exporting regions towards the leading producers and importers of cotton such as those in Asia (Marianne, 2004). In Ethiopia too, there is an enormous potential for the production of cotton following its suitable agro-ecological zones and the availability of water. According to the Ministry of Agriculture, the suitable cotton •production area is estimated to be 2,575,810 ha, which is equivalent with the fourth largest producer, Pakistan. Despite this huge potential, however, Ethiopia currently produces only 77000-84,000 MT of raw cotton annually from a total area of 42,371 (Agridev, 2003). The disparity between the existing potential and the actual practice is more obvious when we look at the share of Ethiopia in terms of international production and marketing o f cotton with an average share of only 0.13% o f the total cultivated land and 0.1% of the produced cotton for the year 1998-2000 (MoARD, 2004). In terms o f international trade in lint cotton, the export share for Ethiopia is also a mere 0.1% with revenue of only 0.06% for the same year. Various reasons could be pointed out for the poor performance of the country in cotton production and marketing. Limited availability of research and extension services together with inadequate supply o f inputs and lack o f capacity to supply quality products, existence of inadequate infrastructure and finance are among the few (Agrediv, 2003). In spite o f its poor performance, the cotton sub-sector still offers a unique opportunity for Ethiopia in terms of serving as a bedrock upon which the country can shift to high value added technological transformation following its strong backward and forward linkages with various sectors, and its provision o f employment opportunities for the large number o f the rural poor. It is against this background that the Government o f Ethiopia wishes to take a deliberate effort and action to stimulate the growth and potential o f this sub-sector in terms of making cotton one of the major commercial crops in the country. In connection to this, it is high time to closely analyze the performance of the sector and identify at which point o f entry problems arise. Although previous studies have tried to pin point problems that are associated at the farm level, it is important to investigate further each point o f the commodity chain at the production, processing, and distribution level. Furthermore, due to the increasing international demand for cotton lint, it is vital to study the governance pattern for the global cotton market so that Ethiopia can easily identify the entry point that would enable her to convert the existing comparative advantages into a competitive one.