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Bangladesh cotton imports to double in six years – conference told

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News Published: Tuesday, Mar 31, 2015

Bangladesh cotton imports to double in six years – conference told

By AZM Anas 30 March 2015 Last updated at 15:31

Ayub (2)

Muhammad Ayub, president of Bangladesh Cotton Association, speaks at the opening session of the two-day Global Cotton Summit (March 20-21) in Dhaka. Credit: Md. Arif Uddin Mia

 Mark (1)

 

Mark Messura, senior vice president of Cotton Incorporated’s global supply chain marketing division, addresses participants of the two-day Global Cotton Summit (March 20-21) in Dhaka. Credit: Md. Arif Uddin Mia

 Sattar

 

Dr Zaidi Sattar, chairman of the Dhaka-based Policy Research Institute, presents the  ‘Bangladesh Economy in Next 10 Years’ report at a two-day Global Cotton Summit (March 20-21) in Dhaka. Credit: Md. Arif Uddin Mia

 Tapan

 

Tapan Chowdhury, president of the Bangladesh Textile Mills Association, addresses the closing session of a two-day Global Cotton Summit (March 20-21) in Dhaka. Credit: Md. Arif Uddin Mia

 

With Bangladesh’s economy set to continue growing and local cotton production expected to remain insignificant, cotton imports are set to double by 2021, said industry players and experts attending the country’s first Global Cotton Summit. The two-day event (March 20-21) in Dhaka, was jointly organised by the Bangladesh Cotton Association (BCA) and Bangladesh Textile Mills Association (BTMA).

In his keynote speech at the summit, Jahangir Alamin, managing director of Bangladesh-based Fuad Spinning Mills Ltd, said: “Bangladesh will remain a major and high priority destination for raw cotton exporters.” Meanwhile, the country’s earnings from garment exports are projected to reach US$50 billion in six years, double the present size, he said.

Last year, Bangladesh purchased 4.5 million bales of cotton, making it the world’s second-largest cotton importer after China, which imported 7.3 million bales.

With cotton remaining a dominant fibre in the domestic market, Mr Alamin forecast that imports would reach 9 million bales by 2021, propelled by a growing population, higher fabrics consumption per head and growing hand loom and power loom industry serving a burgeoning export trade.

Dr Zaidi Sattar, chairman of Dhaka think tank the Policy Research Institute said the south Asian country is likely to join the ranks of lower middle-income nations in two to three years, with annual economic growth topping 7%. Dr Sattar - a trade economist and former World Bank senior economist - presented a report, ‘Bangladesh Textiles in the New World Order,’ during a conference session focused on Bangladesh’s economy in the next 10 years. Dr Sattar predicted that the 7% rate would be hit soon: “We haven’t been able to get past. We’re on the door,” he said.

Noting that Bangladesh’s economy as a dynamic one that creates job, is reducing poverty quickly and shares economic prosperity widely, he said: “All is good for the future of readymade garment and textiles.” In the next 10 years, he predicted: “Bangladesh will continue to have the comparative advantage in labour-intensive production,” such as the clothing industry, which is driving demand for cotton. “The future of textiles will be determined by future of Bangladesh economy,” he added.

Tapan Chowdhury, president of the BTMA, told wtin.com that the summit improved importers’ understanding of cotton price hedging, which can help them skirt volatility in the international market. “In the past, many of us got harmed due to lack of knowledge about dynamics of cotton trade,” he said.

Mr Chowdhury, who is also managing director of Square Textiles Ltd in Bangladesh, identified price volatility as a key reason why contractual obligations are broken by both buyers and sellers in cotton trade.

He said Bangladesh is now trying to increase its clout in the UK-based International Cotton Association (ICA). Bangladesh’s cotton industry is represented there by Salman Ispahani.

Meanwhile, Mark Messura, senior vice president of global supply chain marketing at the Cotton Incorporated, said while Bangladeshi millers cannot control prices, they can make informed and educated decisions by analysing the market. “You need to understand economics of cotton. [There are] lots of sellers are here. This summit will help importers get information,” he told WTiN.com.

Muhammad Ayub, president of the BCA, added that holding the summit in Dhaka for the first time, amidst political strikes and economic disruption organised by opposition parties, is the “greatest achievement.” He added the event boosted foreign businesses’ confidence in Bangladesh, reassuring them that “visiting Bangladesh is safe; doing business in Bangladesh is safe.”

He said many pending issues, including payment default, between suppliers and buyers of cotton were resolved at the meeting: “Now, we’ve no gap between sellers and buyers,” he told WTiN.com. Each supplier cut deal with local buyers, “none left empty-handed,” he said referring the achievements of the summit.

Almost 40% of Bangladesh’s cotton imports come from India; Mr Ayub noted Bangladesh would likely remain a steady consumer of Indian cotton and did not see a need to diversify markets, “as long as supply remains smooth.” Other suppliers are the former-Soviet Commonwealth of Independent States (CIS) countries that together account for 20% to 22% of imports; African countries represent 13%; and the USA supplying 7%, he added.

Mr Chowdhury also noted that India is now the world’s second-largest grower of cotton and “we source according to our needs.” For example, importers bring in denim cotton from India and African countries, while long staple cotton comes from central Asia, he added.

According to the BTMA, Bangladesh cotton imports have risen from 3 million bales to around 5 million bales in the last decade, driven by an increase in capacity among the country’s 400-plus spinning mills.

In his paper on ‘Cotton Production in Bangladesh & its Challenges,’ Dr Md Farid Uddin, executive director at the government’s Bangladesh Cotton Development Board, estimated that the country can raise output from the present 0.15 million bales to 1 million bales by 2021 by expanding farming to 0.1 million hectares of non-conventional areas such as hill and char areas (new land caused by soil erosion and deposition).

Another way to boost cotton output in the country, he said, would be to introduce a hybrid variety. “By introducing hybrid and [genetically modified] Bt hybrid, production per unit area can be raised 1.5 times or even be doubled from the present level,” he said.

He also suggested that spinning mills use local contract farming to reduce uncertainty in the shipping times of imported cotton, whose delivery usually takes two-to-three months.

In a panel discussion on the ‘Cotton Industry in Bangladesh: Buyer & Seller Perspective,’ Showkat Aziz Russell, managing director of Bangladesh-based Amber Cotton Mills Ltd, chided suppliers for breaching contracts when prices rise. He said: “In the recent past, we’ve observed when prices go up, your shipment goes down. We see surplus when prices are not up.”

He suggested the creation of a common arbitration platform, arguing the ICA is becoming ‘obsolete.’ His proposal was supported at the summit by Indian and Pakistani cotton traders and millers.

However, Abdullah Al-Mahmud – participant and managing director of the diversified textile producer Mahin Group – told WTiN.com: “It’s better to stay with international forums such as ICA. We can learn many things from this.”

He added he was impressed with the summit’s discussion on forward booking and cotton price hedging, saying many are now considering using such tools as a safeguard.

The apparel and textile sector also remains a key industry in Bangladesh for the government; during his opening speech at the summit, minister of textiles and jute Md Emaz Uddin Pramanik said his government would continue to extend financial support to the textile sector.

The forum was attended by more than 250 suppliers, agents, merchants, shippers, traders, experts and economists from India, China, the USA, the UK, Hong Kong, Poland, Germany, France, Uzbekistan, and Pakistan. Other participating representative bodies included the Cotton Association of India, the African Cotton Association, and the Karachi Cotton Association, Pakistan.

http://www.wtin.com/article/2015/march/3032015/bangladesh-cotton-imports-to-double-in-six-years-%E2%80%93-conference-told/?channelId=1120

 

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