FW
The shortfall in cotton production 2015-16 season in Pakistan has forced leading buyers in textile and commercial sector to make import contracts for 300,000 cotton bales with traders in South Africa, India and US for prime cotton grade (PIMA) during May-June 15, 2016.
According to senior member of Karachi Cotton Association (KCA), exporter, importer and ginner Ghulam Rabbani, they expect to import more than 1.5 million bales of various qualities amounting to $24.3 billion till end this year.
Rabbani said that country's demand for raw cotton has gone up to around 14.5 million bales (of 175 kg each), while the production this year due to short supply of water and pesticides besides use of un-certified seed was expected to be 12.1 million bales end season. In last crop season 2015, the country achieved only 13.8 million bales against a target of 14.90 million cotton bales. Textile and spinning sector has to bear load of the imports.
They are expecting a shortfall of more than three million bales, unlike Pakistan, India is expecting a better cotton crop led in part by an increase in cultivation of genetically modified cotton and a rise in the acreage. Among the leading producers of cotton, India is seen as an emerging force in the global market as production continues to outpace domestic demand.
Sri Lanka will benefit from the new trade deals to be signed with India, China and the European Union. The EU had banned Sri Lankan fishing exports from January 2015 due to irregular fishing practices. This ban is likely to be lifted. Sri Lanka is also trying to get back GSP Plus preferred tariff concessions for exports to the EU. The facility was suspended in 2010 due to issues involving labor rights, civil and political rights. If it is restored, exporters of apparel will get more access to the EU.
GSP Plus is a special incentive arrangement for sustainable development and good governance, which is one of three non-reciprocal, preferential import regimes for developing countries under the EU’s Generalised System of Preferences. The Economic and Technology Cooperative Agreement (ETCA) trade pact with India may be in effect by next year and a Free Trade Agreement (FTA) with China may also be inked soon.
Sri Lanka is a signatory for many bilateral and multilateral trade agreements, beneficial in enhancing commercial relationships and facilitation of trade and investment by reducing or eliminating tariffs, import quotas, export restrictions and other trade barriers. Trade agreements often include investment guarantees and can also help to minimise trade deficits.
Japanese international trading house Marubeni Corp has teamed up with the US based clothing and textile management consultants, Werner International to rehabilitate a textiles factory in Angola to produce denim and knitwear products. The move is part of a long-term plan by the Angolan government to restore its clothing and textile sector, which was severely damaged by the country's civil war, which lasted from 1975 to 2002.
The country wants to diversify its economy away from oil. Government figures for 2015 said oil accounted for more than 95 per cent of export earnings and 52 per cent of government revenues, making Angola vulnerable to the fall in global oil prices over the past 18 months.
The financial squeeze has also prompted the Angolan government to open talks with the International Monetary Fund (IMF), which it wants to help finance an economic growth programme. The IMF said it would be supporting a comprehensive policy package to accelerate the diversification of the economy, while safeguarding macroeconomic and financial stability.
Marubeni and Werner International's work dovetails with this strategy. The Japanese company is working on a contract worth around JPY25bn (US$229m) by Angola's ministry of geology, mining and industry to get the facility in Dondo, central Angola, back into operation. Werner International is presently training the management of the start-up.
Thailand is interested in trade engagements with India. The two countries are facilitating the private sector by liberalising policies. The major sectors of interest between India and Thailand are energy, automotives, electronics, food, rubber, software, chemicals, textiles, spa, real estate, gems and jewelry.
Thailand is waiving taxes and rules and processes to facilitate investments. Supply and production chain and linkages will be developed to enhance trade and investment opportunities between the two nations. Industry on both sides is being urged to explore more avenues for cooperation and capitalise on the strengths of each other to take the economic and strategic partnership forward. Both are important regional partners linking South and Southeast Asia. Business linkages have grown stronger over the years with connectivity improving. Today there are approximately 150 flights a week between India and Thailand. The actual inflow of FDI from Thailand into India from April 2000 to August 2014 was close to $179 million.
The total value of exports from Cambodian’s garment and footwear industry increased sharply this first quarter by 39.1 per cent to some $2 billion compared to about $1.5 billion in the same period last year, according to figures released by the Ministry of Commerce.
The ministry’s figures, also indicated that the European Union (EU) remained the largest market for the country’s garment and footwear exports. The total value of exports to the EU, in this first quarter, was about $717.8 million, followed by $419.2 million to the United States, $41.7 million to Canada and $34.6 million to Japan. Exports to other global markets amounted to $65.9 million.
Seung Sophari, Spokesperson for the Ministry of Commerce, said the increase in exports to the EU was due to the preferential treatment given to Cambodian garment and footwear products. Though there is no preferential trading agreement with the US, negotiations are ongoing between both countries. The ministry spokesperson, however, expressed concern of rising labor costs which she said did not match up with current productivity. According to Sophari this could threaten the industries, especially the garment sector. Cambodia’s garment industry is regularly plagued with strikes and protests. Advocacy groups are urging clothing brands to take action to ultimately end low wages.
The EU has banned some substances that are found in gloves, leather, paper-based food contact materials, liquid crystal display panels and textiles. By June 17, 2016, suppliers must submit notifications of five such substances of very high concern. Some of these substances are: propanesultone, benzotriazol, perfluorononan, and nitrobenzene.
Suppliers of any articles that contain one or more of such substances in concentrations greater than 0.1 per cent or in quantities totaling over one ton per year should inform their downstream suppliers of any available safety information on the substances concerned. The obligation applies to articles manufactured in or imported into the EU.
Businesses exporting articles to EU customers should check to see if their articles contain any of the substances mentioned above, and if so to ensure that a notification is submitted accordingly.
There are only two situations when a notification will not be required: one is that the producer or importer of an article can exclude the exposure of humans and the environment to the substance during normal or reasonably foreseeable conditions of use of the article, including its disposal. In this situation, appropriate instructions have to be provided to the recipient of the article. The second is that the substance has already been registered by a manufacturer or importer in the EU for that use.
Colombia and Cuba have expanded their trade relationship. Tariffs will be eliminated on more than 2,000 Colombian products, including agricultural goods, construction materials and textiles.
Bilateral commercial ties between the two countries already exist, valued at only $70 million last year, and represented mostly Colombian exports to Cuba. That figure would rise as Cuba moves to develop its agriculture and tourism sectors. Colombia wants more Cuban products such as medicines.
Cuba is a part of World Trade Organization for two decades and international trade in goods and services accounts for about 45 per cent of the island’s 77 billion dollar economy. Cuba hasn’t signed any full-scale free trade agreements. It has partial agreements with a number of countries and regional trade organizations. As a member of Aladi, a Latin American association designed to foster economic integration, Cuba receives discounts on tariffs for products it exports. And it has pacts with most Latin American countries, most notably Mexico, Venezuela, Chile, Bolivia, Peru and Ecuador.
Cuba is working to ease trade restrictions with the US and permit the free movement of people. Cuba has begun permitting its own people to expand private businesses and is wooing foreign investors. The country is interested in increasing commerce with other countries.
India’s cotton production for the 2016-17 seasons is expected to be about 350 lakh bales. Exports may be 60 lakh bales. But a lot depends on the monsoon. Though a good monsoon has been predicted, there has been damage to the crop in the previous season due to whitefly attacks and the pink bollworm and this could impact crop size.
The acreage was around 118 lakh hectares in the season of 2015-16 and there could be a minor correction this season. Domestic prices have risen on tighter supplies and higher prices for the staple in international markets. Price of lint (processed cotton) has touched Rs 42,000 per khandi as against Rs 33,000. Raw cotton is Rs 6,500 a quintal. Low output as compared with the previous year has pushed up prices, as a result of which those who had the funds purchased raw cotton from the markets and sat on the processed lint waiting for the price to rise. Finally, as a shortage was created, the rates began increasing to Rs 42,000 a khandi of lint.
The main buyers for Indian cotton include Bangladesh and Pakistan. The landed cost of Indian cotton for buyers in Pakistan and Bangladesh is at 75 cents per pound compared with around 73 cents for Brazilian cotton.
Invista held it 2016 Lycra fiber legwear seminar in China on May 31. Over 100 representatives of mills, brands and retailers with a stake in the leg wear segment of the Chinese marketplace attended. Invista is the owner of the Lycra fiber brand and one of the largest integrated producers of fibers and polymers.
The event was a one-stop opportunity to get up-to-date on global leg wear trends and the increasingly wide range of consumer benefits delivered by Lycra fiber technologies. Attendees were briefed on growing demand for color creativity and how Invista’s Living Lights technology can help improve dyeing and finishing processes to help meet it. The natural appearance of existing styles can be heightened or readily enhanced with deeper, more saturated fashion effects.
Lycra fiber variants are also designed to deliver maximum freedom of movement and gentle shaping benefits. The high recovery-low hysteresis characteristics of Invista’s Shaping technology, in particular, aims to enable optimal combinations of comfort, perfect contours and stylish good looks.
The latest Invista leg wear innovation combines the better-than-bare aesthetics and silky touch of ultra-fine fibers, such as Lycra T777F, with the patented Lycra fusion anti-laddering technology. Super Summer Sheer hosiery can be produced on standard knitting machines using complementary Invista technologies.
"Other than the increasing labour costs in Asia, international textile firms are looking at Africa to take advantage of the growing African consumer market. This is an opportunity for African countries to find their place in these value chains, from the producers of raw materials on up."
Other than the increasing labour costs in Asia, international textile firms are looking at Africa to take advantage of the growing African consumer market. This is an opportunity for African countries to find their place in these value chains, from the producers of raw materials on up.
Africa-inspired designs are now regularly shown on catwalks in Paris, London and Milan. Michelle Obama, the First Lady of the US, wears African-influenced clothing from Nigerian designer Duro Olowu. According to Data from Euromonitor International, fashion is big business: the combined apparel and footwear market in Sub-Saharan Africa is estimated to be worth $31 billion.
Africa’s role in fashion industry
The textile industry value chain begins with the production of cotton, spinning and twisting of the fiber into yarn, the weaving and knitting of the yearn into fabric, and the bleaching, dying and printing of the fabric to obtain the fashionable garments that we all wear today.
Targeting the fashion industry means targeting the whole value chain, from the smallholder farmers to the fashion designers. The fashion industry in particular holds considerable potential to motivate and bring change to some of the most disadvantaged people, especially women and youth, while advancing structural transformation.
Recently, the African Development Bank looked at these global value chains to see how each country can join in at a particular stage based on its comparative advantage. Today, international textile firms are looking at Africa not only for the purpose of production in view of increasing labour costs in Asia. They are also looking at Africa to take advantage of the growing African consumer market. This presents an opportunity for African countries to find their place in these value chains, from the producers of raw materials on up.
The government of Rwanda is a good example for creating the right policy environment for businesses to thrive and attract investments. It is one of Africa’s most competitive economies and a top reformer in improving the business environment. It has created the foundation to attract foreign investors to work with local designers, establish garment factories and boost the textile and fashion industries. H&M is building a factory in Ethiopia and PVH is looking at Kenya for the production of its brands, including Calvin Klein and Tommy Hilfiger.
Challenges in Africa
But the cost of doing business is still too high. Energy shortages, high costs and poor access to energy, combined with high costs incurred by transport, logistics and custom facilities, can erode the advantages of lower labour costs and impede a country’s ambitions to industrialise. Sub-Saharan Africa consumes a mere 181 kWh in power. Compare this with 13,000 kWh in the US and 6,500 kWh in Europe and it is obvious how little this is – 1.4 per cent of what the US consumes and 2.8 per cent of what Europe consumes. About half of all firms across Africa have their own generator to complement or replace electricity supplies as needed. This represents a big disadvantage for firms trying to grow their business.
As governments become increasingly aware that apparel production offers large-scale employment opportunities, they need translate this awareness into investments in their people. Lesotho, Ethiopia and Kenya, for instance, have recognised this and are establishing training centres and tertiary institutions to promote the technical qualifications for people in the textile and apparel industries.
Africa currently accounts for just 1.9 per cent of global manufacturing. There is an urgent need for Africa to rapidly industrialise and add value to everything that it produces, instead of exporting raw materials that make it susceptible to global price volatilities. The fashion industry is a case in point. Instead of exporting raw cotton, Africa needs to move to the top of the global value chain and produce garments targeted at the growing African and global consumer class.
