Egypt to increase cotton subsidies, support mills

The Cabinet decided on Monday to increase subsidies on local cotton. The government will now pay national factories LE350 for each quintal of cotton they purchase, up from LE200.

The move is meant to support both cotton farmers and local spinning and textile mills.

Although Egypt’s cotton is world-renowned for its high quality, the local textile industry does not share its fine reputation. The most distinct quality of Egyptian cotton is its long staple, which allows for the spinning of superfine thread that can be woven into dense, luxurious high thread-count textiles.

However, local cotton mills are not equipped to process long-staple cotton, meaning that they cannot properly use the vast majority of cotton produced in Egypt. This, combined with high prices for local cotton, has drawn producers to imported cotton, primarily from Greece, the United States, Burkina Faso and Benin.

According to US Department of Agriculture estimates, Egypt imported 400,000 bales of cotton in the 2013/14 market year, out of a total of 610,000 bales consumed. This year, the agency predicts that figure will drop to 225,000 bales of imports, primarily due to predicted increases in local production.

The government has also committed to supporting state-owned spinning and weaving factories. On July 19, Prime Minister Ibrahim Mehleb committed to disbursing employee benefits before Eid al-Fitr (the feast to break the fast at the end of Ramadan), as well as to completing a study on the needs of cotton mills and developing a restructuring plan for the holding company for spinning and weaving.

Textile companies in Egypt’s Nile Delta have been key sites of labor unrest, including a 2008 strike in Mahalla that is credited with sparking a wave of protests against the Mubarak regime, and a February 2014 strike over delayed bonuses and alleged mismanagement by senior executives in the holding company.