Egypt seeks to weave cotton renaissance

A picture taken on September 13, 2018 shows an Egyptian farmer working in a cotton field in the Egyptian Nile Delta town of Kafr el-Sheikh. (AFP)
Updated 14 October 2018
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Egypt seeks to weave cotton renaissance

  • Cotton was once Egypt’s main source of wealth in the 19th century
  • Egypt’s cotton union says buyers are even demanding lower prices, without triggering any intervention by the government

CAIRO: Treading carefully among his sprawling green plants in the Nile Delta, Egyptian farmer Fatuh Khalifa fills his arms with fluffy white cotton picked by his workers.
Durable, fine and luxuriously soft, cotton sourced from Egypt has long been seen as the best on the market.
But recent years have been far from smooth for the North African country’s farmers.
“I cultivate 42 hectares (104 acres) and it’s expensive ... while the price (of cotton) is very low,” said Khalifa, who has been growing the premium long-fiber variety for over 30 years.
Profits are “meagre,” he lamented, his head shaded by his cap from the unforgiving sun on his farm in Kafr El Sheikh.
Cotton was once Egypt’s main source of wealth in the 19th century, as the Nile Delta provided fertile grounds for the crop used to make the towels, sheets and robes coveted by Europe’s burgeoning bourgeoisie.
But decades of fierce international competition has diminished returns.
Well-marketed short-fiber cotton — while lower quality than the long-fiber variety — looks good and has increasingly been used by textile giants, dealing a heavy blow to Egyptian players.
The United States and Brazil are now the world’s top cotton exporters, according to this month’s report by the US Department of Agriculture, followed by India and Australia, leaving Egypt trailing far behind.
Back in 1975, Egypt exported $540 million of cotton. By 2016, the sector’s export receipts had fallen to $90.4 million, according to the Massachusetts Institute of Technology.
The popular uprising that toppled president Hosni Mubarak in 2011 dealt a fresh blow to the cotton sector, as political and economic chaos hit production and export chains.
Egypt’s output of cotton fibers fell as low as 94,000 tons in 2013, according to the UN’s Food and Agriculture Organization, down from 510,000 tons in 1971.
Last year brought producers some respite, thanks to rising prices and higher export volumes.
But a trade spat between the US and voracious importer China has seen benchmark global cotton prices fall afresh, as traders take fright over Beijing imposing tariffs.
The commodity was trading at a shade under $0.77 per pound (0.45 kilos) in early October, after reaching $0.95 — the highest level in more than six years — in early June.
In Egypt, the price has dropped back to the minimum guaranteed by the state of some 2,700 Egyptian pounds ($150, 130 euros) per 100 kilos.
Egypt’s cotton union says buyers are even demanding lower prices, without triggering any intervention by the government.
Others offer a different diagnosis of the sector’s ills.
“The drop in prices is not in itself a bad thing,” said Ahmed El-Bosaty, CEO of Modern Nile Cotton, one of the biggest companies in the sector.
Bosaty said the major challenge is boosting productivity.
“A rise in productivity rather than prices would ensure better incomes for workers,” he said.
A cotton expert at the agriculture ministry acknowledged that modernization is key.
“Productivity is rising,” said Hisham Mosaad. But cotton enterprises must invest in mechanization, as the industry is still entirely manual, he added.
Another challenge is that few Egyptian firms make finished products.
“We produce raw cotton for direct export,” said Mohammed Sheta, director of research at the Kafr El Sheikh cotton institute.
Egypt does not have “the factories or the means allowing us to transform it into fabric,” he lamented.
The state has tried to spur activity, boosting areas under cultivation over the last four years by around 50,000 hectares, to more than 140,000 hectares.
In an experimental move, the government in September even allowed the cultivation of short-fiber cotton, but only outside the Delta region.
Experts and farmers remain skeptical, believing Egypt will struggle against foreign heavyweights in the short-fiber market segment.
But many companies see the situation as urgent.
Even though official exports of Egyptian cotton rose 6.9 percent by volume in the three months to the end of May compared to the same quarter of 2017, there was a 57.9-percent fall in consumption of Egyptian cotton at home, due to the domestic market turning to imported products.
At the high end of the value chain, designer Marie Louis Bishara runs one of the few Egyptian firms that produces high quality finished products locally for the international market.
Young men and women work side by side in her modern factory in northern Cairo, in roles ranging from overseeing looms to packing finished shirts.
Promising Egyptian quality, she has dedicated one of her lines to local long-fiber cotton.
“We try to show the world that if you want to make luxury products, you have to use extra long cotton from the Delta,” she said.
Shirts, trousers and jackets stamped “Made in Egypt” have gone from the design stage on her factory floor to grace shop shelves in France, Italy and her home country.


World leaders prepare for Davos amid gloomy forecasts

Klaus Schwab, founder and executive chairman of the World Economic Forum. (AFP)
Updated 16 January 2019
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World leaders prepare for Davos amid gloomy forecasts

  • Delegates to annual forum to include presidents of Iraq and Afghanistan

DUBAI: World leaders are preparing to head to the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, amid the riskiest global backdrop in years, according to a report from the event organizer itself.

As the WEF announced the names of some of the 3,000 participants set to attend the meeting and details of the four-day agenda, it also published a gloomy outlook on international politics, economics, the environment and technology. 

Rising geopolitical and geo-economic tensions are the most urgent risks in 2019, with 90 percent of experts surveyed expecting further economic confrontation between major powers, according to the WEF’s annual Global Risks Report.

“The world’s ability to foster collective action in the face of urgent major crises has reached crisis levels, with worsening international relations hindering action across a growing array of serious challenges. Meanwhile, a darkening economic outlook, in part caused by geopolitical tensions, looks set to further reduce the potential for international cooperation in 2019,” it added.

Although political and economic worries were top of the immediate agenda for the 1,000 experts polled by the WEF, the environment and climate change are also a cause for concern, as are “rapidly evolving” cyber and technological threats, the WEF said.

Børge Brende, the WEF president, said: “With global trade and economic growth at risk in 2019, there is a more urgent need than ever to renew the architecture of international cooperation. We simply do not have the gunpowder to deal with the kind of slowdown that current dynamics might lead us toward. What we need now is coordinated, concerted action to sustain growth and to tackle the grave threats facing our world today.”

The leaders who will begin to arrive in Switzerland in the next week include Shinzo Abe, prime minister of Japan; Jair Bolsonaro, president of Brazil; Angela Merkel, chancellor of Germany; and Wang Qishan, vice president of China.

With US President Donald Trump pulling out of the meeting to deal with the partial government shutdown, the American delegation is expected to be led by Steven Mnuchin, Treasury secretary, and Mike Pompeo, secretary of state.

The Middle East is well represented at the meeting, with at least nine heads of state or government from the region, including Palestine, Iraq, Egypt, Jordan and Lebanon. Saudi Arabia will be represented by a team of senior policymakers and business leaders.

The risk report will give them all food for thought in the Alpine resort.

Asking whether the world is “sleepwalking into a crisis,” the report responded: “Global risks are intensifying but the collective will to tackle them appears to be lacking. Instead, divisions are hardening. The world’s move into a new phase of strongly state-centered politics continued throughout 2018.

“The idea of ‘taking back control’ — whether domestically from political rivals or externally from multilateral or supranational organizations — resonates across many countries and many issues.”

Macro-economic risks have moved into sharper focus, it said. 

“Financial market volatility increased and the headwinds facing the global economy intensified. The rate of global growth appears to have peaked,” the report said, pointing to a slowdown in growth forecasts for China as well as high levels of global debt — at 225 percent of global gross domestic product (GDP), significantly higher than before the financial crisis 10 years ago.

Raising the prospect of a “climate catastrophe,” the report said extreme weather, which many experts attribute to rapid climate change, was a risk of great concern. “The results of climate inaction are becoming increasingly clear,’ the WEF said.

Of the 3,000 participants at Davos, which runs from Jan. 22 to 25, around 78 percent are men, with an average age of 54. 

The oldest will be the 92-year-old British broadcaster David Attenborough, the youngest 16-year-old South African wildlife photographer Skye Meaker.