The primary reason behind the increase in cotton prices in international markets is China’s recovery attempts in businesses. In order to recover the losses in apparel sector, incurred by C-19 pandemic, China has increased cotton imports from international markets. Since the country is the largest consumer and producer of cotton in the world, any move of this country inevitably impacts the international cotton markets.
However, the price of this essential element for apparel manufacturing has now exceeded pre-pandemic levels for several reasons. C-19 pandemic has reduced cotton fibre production worldwide. Driven by weather and pest concerns the United States Department of Agriculture (USDA) forecasts of decreased production of cotton fibre in Pakistan, the US, Greece, Mali, and Turkey in 2020-21.
Unfortunately, the local spinners are taking more time in supplying the yarn as demand is growing from knitwear manufacturers and exporters. Our local spinners, traders, millers and consumers import cotton from international markets, since locally produced cotton can merely supply 2.50 per cent of the annual requirement of 75 lakh bales.
Knitwear exports fetched $8.53 billion of the total $15.54 billion generated by garment items. Meanwhile, woven items fetched $7.01 billion, which is a decline of 10.22 per cent. For woven items, the raw materials need to be imported as local weavers can meet around 40 per cent of the demand. The rest is imported mainly from countries such as China and India.
Nearly 60 per cent of the yarn production cost is connected to cotton while the rest to other related raw materials. Since Bangladesh produces little amount of cotton against its gigantic demand for the apparel industry, there is no alternative to import cotton immediately. In order to sustain and survive the largest source of foreign currency of the country, diplomatic efforts should be taken to ensure smooth raw material supply for the apparel sector. If need be, private and public sectors must team up searching for a way-out to control the excess price of imported cotton – explore newer countries from where quality cotton can be imported for a cheaper price.
After absorbing the primary shock of C-19, now it is time for Bangladesh to recover the RMG sector in full swing.