Egypt has hiked the subsidy given to spinning companies. The move is meant to encourage domestic industries to purchase Egyptian cotton as well as support local farmers. Spinning companies can now buy cotton for LE920 per quintal rather than LE1,070 per quintal under the original subsidy.

Egyptian cotton traders and exporters buy cotton from farmers at LE1,670 per quintal on average, offering it to the spinning companies at LE1,270 per quintal. Contracting domestic spinning companies will take place before August 10. The remaining cotton which is not purchased by then will be sold to exporters at the original subsidy of LE200 per quintal. Cotton for the financial year 2013-14 is estimated at around one million quintals.

The government has historically considered Egyptian cotton a strategic commodity. It plans to develop the weaving, textile and clothing industries with the aim of raising their competitiveness in international markets. Earlier this year, cotton exports were hit by domestic price hikes following a decline in local production brought about by reduced farm acreage and the lifting of an import ban. Total exports in the 2012-13 season, which runs from September to August, accounted for 22.3 per cent of local production, which stood at 3,00,000 tons.