According to the latest USDA report, cotton prices, supply and demand were largely unchanged from last month. The world production figure declined only 298,000 bales, from 124.2 million to 123.9 million. Virtually all of this change was due to reductions in U.S. (-308,000 bales) and Argentinian (-150,000) harvest expectations that were partially offset by an increase to those for Turkey (+200,000).
The world consumption figure declined by 102,000 bales, from 114.4 million to 114.3 bales, with 50,000 bale reductions for both Mexico and Thailand accounting for most of the decline.
In Nigeria, the spokesperson for the National Cotton Association of Nigeria, NACOTA, Mr. Sam Oloruntoba, said that cotton price has dropped to N70, 000 from N120,000.
According to him, while local cotton production in 2011 went up by 50 percent, there was no market for Nigerian cotton because of crash in cotton prices at international market.
He stated that consequent upon this, their income was being affected as local textile companies only consume 20 percent of their production capacity; and there is no market for the remaining 80 percent.
“It was high time the Nigerian Export Promotion Council pay export expansion grant to cotton exporters so that they can stay in business. “Cotton farmers may stop production from next season and go for other crops,” he said.
Regarded as white gold, cotton leaf can serve as livestock feed, the stem back as pulp for paper making, the lint or fluffy fuzz, a foreign exchange earner is spurned in yarn by textile mills for assorted products while the seed is used for edible vegetable oil among others.
It will be recalled that in an effort to support cotton farmers to improve crop yield per unit area and their earnings among others, the Federal Government approved and authorised the Debt Management Office (DMO), to issue a long-term coupon rate N100 billion bond in tranches for the provision of funds to the Bank of Industry (BOI) for on-lending to businesses along the Cotton, Textiles and Garments (CTG) value-chain.
The coupon rate was fixed at 5 percent per annum while BOI lends at 6 percent .The first tranche of N10 billion was received by the bank in November 2009, and, subsequently, an additional N40 billion, making it N50billion.The beneficiaries are Kano, Kaduna, Kastina Abuja Lagos, Ogun , and Anambra State, with 26 revival projects., had through the Bank of Industry, launched a N50 billion cotton , textiles and garments development fund.
It is evident that with the recent reopening of the United Nigeria Textile Company (UNTL) for operation and the recall of its worker sacked over the years, life is returning to the textile sector in Kaduna State.
It will further be recalled that in the 1980s, there were over 185 textile mills in the country, employing almost 700,000 people.
Before the introduction of the CTG scheme, there were fewer than 20,000 people. The bank is working on the modalities of lending directly to cotton out-growers. Meanwhile, it is supporting them indirectly by giving loans to ginneries for working capital, part of which is made available to support the production of cotton. A total of N3.307 billion has been approved for the ginneries.
Most of the approvals were for re-tooling, reactivation/resuscitation, refinancing and acquisition of some modern plants and machinery. It was gathered that some of the beneficiaries had witnessed improvements in their operations.