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Ethiopian textile industry final

  1. 1. ETHIOPIAN TEXTILE INDUSTRY PRESENT STATUS ANDFURTURE GROWTH PROSPECTS Prof. R. B. CHAVANInstitute of Technology for Textile, Garment and Fashion Design Bahir Dar University, Bahir Dar, Ethiopia 2010
  2. 2. ETHIOPIAN TEXTILE INDUSTRY PRESENT STATUS ANDFURTURE GROWTH PROSPECTS By Prof. R B ChavanInstitute of Technology for Textile, Garment and Fashion Design Bahir Dar University, Bahir Dar, Ethiopia E-mail: 2010
  3. 3. PREFACEEthiopia has a long history of traditional cottage textile sub-sector. Traditionally yarn fromcotton fiber supplied by small hold cotton farmers is home spun using age old spinning dropwheel. The yarn is then converted into fabric using handlooms. This traditional cottage industrycontinues to grow even today making an important contribution to satisfying people’srequirement for textiles and providing large scale employment to rural and urban households.The introduction of modern integrated textile mills in Ethiopia is a recent phenomenon initiatedby Italians during the Second World War. Dire Dawa Textile Mill, was the first integrated textileMill established by foreign capital in 1939. This has marked the starting point of textile sub-sector in Ethiopia. During 196o’s, 5 large-scale integrated textile enterprises were establishedmainly by private capital. The socialist regime, which reigned from 1974 to 1991, nationalizedprivate textile and apparel firms and at the same time established 4 more integrated textile millsto expand the sector in order to satisfy the domestic demand for regular textiles and substitutingimported products.The dictator economy eventually took a toll on the sector. Because of neglect, lack ofcompetition, and outdated technology, the sector could not meet international market standards.As a result, the cotton farming and textile and apparel sectors were producing well belowcapacity. Since the overthrow of the Marxist dictatorship in 1991 the current Federal Democraticgovernment has been transforming the economy from one based on a centrally planned structureto an economy based on free market principles. In 2002, the Ethiopian government has drafted“The Sustainable Development and Poverty Reduction Program”, in which it identifieddevelopment and poverty reduction as the primary targets of the Government and “AgriculturalDevelopment-led Industrialization” as its principal strategy. Hence there is major focus on thedevelopment of the cotton/ textile/garment sub-sectors in Ethiopia. Thus, Ethiopia has a short history of production of cotton, textiles and garments on industrialscale. Therefore, task of writing the present book, probably the first of its kind in Ethiopia, wasboth easy and difficult. It was easy because the events of developments were meager, at the sametime it was difficult due to non-availability of information in a systematic way. It must berecorded here that following reports were found to be extremely useful and extensively used inproviding statistical data and strategic recommendations. 1. Benchmarking of the Ethiopian Textile Industry (UNIDO draft report) prepared for the Textile and Apparel Industry Development Institute, Ministry of Trade and Industry, Ethiopia, April, 2010 2. Market and Potential Analysis for the Textile, Garment and Home Textile Sector in Ethiopia (Final report 2007) prepared by Corporate solution, Bad Nauheim, Germany on behalf of Engineering Capacity Building Program, Germany. I  
  4. 4. 3. Fruits of the loom: Export potential of Ethiopian handmade, handloom and home furnishing textiles: Report prepared by Eyob Demessre etal. Submitted to Integrated Institution Export Development Program for Ethiopia, January 2005 4. Cotton – textile-Apparel value chain: Report for Ethiopia, Prepared by Agridev Consultant. Submitted to Regional Agricultural Trade expansion Support Program, Nairobi, Kenya, 2004 5. Study Report on The Development Strategy of Ethiopian Cotton/Textile/Garment Sub- sectors (Draft) prepared by China Textile Planning Institute of Construction, Beijing, China, 2003Much information was also collected through extensive internet search.The book provides the information both of academic interest regarding the development ofcotton, textile and garment sector and some valuable statistical data as well as the information ofcommercial interest for those who are interested in entering into cotton, textile and garmentbusiness in private or partnership mode. The book contains 10 chapters covering the cotton,textile, garment and handloom sectors. Special chapters on cotton grading, export market entry,quality standards and care labels, marketing, business opportunities and SWOT analysis. Thebook covers the up to date information till October 2010, highlighting Ethiopian Governmentsambitious plans to reach the textile/garment export earning of USD 1 billion in next five years. Aproposal has also been drafted by the Ethiopian Textile Industry Development Institute (ETIDI)to ban the export of Ethiopian cotton in order reap the benefits of producing value addedproducts. It is hoped that book will provide much of the scattered information on Ethiopiancotton, textile and garment sub-sectors in the form of a single compilation and enthuse some ofthe national as well as international enterprises to enter into these sub-sectors in a big way andcontribute in boosting the industrial development and economy of Ethiopia.Bahir Dar, Ethiopia Prof. R B Chavan November 2010 E-mail: II  
  5. 5. ABOUT THE AUTHORProf. R B Chavan was working as professor for 30 years at the Department of TextileTechnology, Indian Institute of Technology, Delhi, India. During this period he guided 11 Ph Dtheses and published more than 150 research papers in international, national journals andconference proceedings. He has also published 3 books on the subjects related to Chemicalprocessing of textiles, two books on quality assurance of Khadi a hand spun hand woven fabricand edited a special issue of the Indian Journal Textile and Fiber research on “Environmentalissues: Technology options for textile industry”. He has also contributed a chapter on“Environmentally friendly dyes and dyeing processes” to be published by Woodhead PublishingLimited, Cambridge, England in book “Handbook of textile and industrial dyeing: Principles,processes and types of dyes Vol I”. Editor: Dr Matthew ClarkHe is the recipient of Perkin Centenary Award from the University of Manchester for valuablecontribution in the field of color chemistry and Colourage Gold medal for best researchpublication on transfer printing of cotton and polyester/cotton blends. As a part of academiccareer he visited several foreign universities like University of Manchester, England from wherehe obtained his Ph D degree, university of Leeds, England, University of Natal, Brazil,University of Dhaka, Bangladesh. He also visited other countries like Germany, France, ItalySwitzerland and USA.After superannuation from the Indian Institute of Technology Delhi in 2006, he worked asConsultant for 3 years at Mahatma Gandhi Institute of Rural Industrialization, Wardha,Maharashtra, India. The assignment was a part of Rs. 120 million project sponsored by Khadiand Village Industries Commission, Ministry of Micro, Small and Medium Enterprises, Govt. ofIndia. He was one of the members of core group of four experts responsible for setting up theInstitute. During the period of 3 years he provided a valuable technical interventions for thedevelopment of Khadi (hand spun, hand woven fabric) by conducting more than 30 technologydissemination workshops on all India basis. He also developed the technology of Solar operatedCharkha (Mini-spinning machine) and standardized the technology by conducting many fieldtrials. The technology has provided much needed technical intervention to reduce the drudgery ofmanual operation of Charkha, improvement in quality and productivity of yarn and wage earningcapacity of spinners. Most importantly, the technology uses the renewable source of Solar energyavailable abundantly both in rural and urban India and thus solves the problem of non-availability of normal electricity in rural areas. As a result of extensive field trials the Khadi andVillage Industries Commission, India has accepted the technology for implementation in theKhadi sector (Times of India, October 3, 2010 press release). This is one of the majorcontributions of the author in the development of Khadi sector and application of science andtechnology for social benefits. III  
  6. 6. Since October 2009, the author is working as Professor at the Institute of Technology forTextile, Garment and Fashion Design (IoTex) at Bahir Dar University, Bahir Dar, Ethiopia. He ishelping in developing the post graduate and Ph D Programs at the Institute. The author isproviding technical guidance for quality testing and quality control at Bahir Dar Textile S C,Bahir Dar, and also prepared a detailed project proposal on “Quality standardization and gradingof Ethiopian cotton”. He also initiated two M sc research projects on “Utilization of studentcafeteria food waste for biogas generation” in collaboration with the Dept. of Applied Chemistry,Bahir Dar University and initiated a Ph D project on “Documentation and application of Naturaldye yielding plants of Ethiopia”. The present book is a result of author’s endeavor towardsmaintaining academic excellence at IoTex. IV  
  7. 7. CONTENTSPrefaceAbout the authorChapter 1 Ethiopia: general information 11.1 History1.2 People1.3 Capital city1.4 Main languages1.5 Local time1.6 Calendar1.7 Government and political system1.8 EconomyChapter 2 Cotton production: Present status and future growth plans 72.1 Introduction2.2 Planting period2.3 Cotton production2.4 Cotton species2.5 Cotton quality2.6 Grading and quality checking2.7 Scientific research and education system of cotton2.8 Marketing chain2.9 Cotton production statistics2.10 Potentials for the development of cotton sub-sector 2.11 Cotton production and marketing constrains2.12 Recommendations for the development of cotton sub-sector2.13 General development goals and strategy for implementation2.14 Present status and government plans for future growth of cotton sector V  
  8. 8. 2.15 Current and projected yarn production capacity of Ethiopian textile industry2.16 Yarn production and foreign exchange earning plan of textile industry, 2009/10-2014/152.17 Projected production from new investment in spinning factories2.18 Five year lint cotton demand of spinning industry2.19 Existing capacity and future production potential of ginnery2.20 Short and medium-term strategy to satisfy domestic and international demand of cotton (2010/11-2014/15)2.21 Financial requirement for the implementation of the strategyChapter 3 Need for development of grading system for Ethiopian cotton 633.1 Introduction3.2 International importance of cotton grading3.3 Need for development of cotton quality standard and grading system3.4 Brief history of iotex3.5 Objectives3.6 What is cotton grading?3.7 Essential quality parameters for cotton grading3.8 Expected outcome of the project phase I3.9 Benefits and beneficiaries3.10 Impact of cotton fiber properties on yarn quality and pricing3.11Effect of fiber quality on weaving performance3.12 Cotton grading and its need3.13 cotton grade standards3.14 Manual grading3.15 Development of instrument cotton grading3.16 Quality and pricing mechanism3.17nternational cotton marketing3.18 Global status of HVI instrument3.19 Advantages of HVI classification VI  
  9. 9. 3.20 Implementation of instrument cotton classification systems3.21 Sustenance of national HVI system3.22 Technical details of cotton grading system3.23 impact of cotton ginning on quality3.24 Cotton grading systems of some countriesChapter 4 Assessment of textile sub-sector 1034.1 Introduction4.2 Diversification of ownership4.3 Distribution and marketing system of textile products4.4 Education and training system4.5 Potentials for developing the textile sub-sector4.6 Challenges for the development of textile sub-sector4.7 Measures to be taken for the development of textile sub-sector4.8 Three phase development strategy4.9 Strategy to achieve the targets4.10 Present status of Ethiopian textile industry4.11 Structure of the Ethiopian Textile Industry4.12 Factors affecting the export competiveness of Ethiopian textile industry4.13 Other issues affecting the competitiveness of Ethiopian textile industry4.14 Foreign Direct investment in Textile and garment industry4.15 Incentives for foreign direct investment4.16 Preferential Market Access and other Incentive Programs4.17 Foreign investments4.18 Turkey Investment4.19 Indian Investment4.20 U.S. Firms Partner with Ethiopia’s Almeda Textiles4.21 The Italian Intervention on Textile and Garment Sector4.22 Ethiopian government may ban cotton exports4.23 Apparel export earnings likely to rise to $1 billion VII  
  10. 10. Chapter 5 Assessment of garment sub-sector 1665.1 Introduction5.2 Manufacturing scale and equipment level5.3 Development opportunities for the garment sub-sector5.4 Ethiopia’s garment export picking up speed 5.5 Potentials for the development of garment sub-sector5.6 Challenges for the development of the garment sub- sector5.7 Strategy and measures for the development of the garment sub-sector5.9 Present status of garment industry5.10 Value chain assessment of garment sector5.11 Trends in Garment sector and types of co-operation5.12 Productivity and quality (Benchmarks)5.13 Labor cost5.14 Status of product development5.15 Performance analysis (Case studies)5.16 Textile and garment Exports5.17 Institutional support5.18 Government Support Chapter 6 Handloom clusters and export potentials 210 of handloom sector6.1 Introduction6.2 Handloom establishments and handloom weavers in Ethiopia6.3 Handloom clusters at Addis Ababa6.4 Cluster institutions and their functioning6.5 Handloom value chains6.6 Generalized chain components for handloom marketing6.7 Production technology6.8 Problems during the production process6.9 Quality management system6.10 Handloom products VIII  
  11. 11. 6.11 Product marketing and pricing6.12 SWOT analysis of handloom sector6.13 Strategic issues6.14 ConclusionsChapter 7 Quality standards, care labels and packaging 2437.1 Introduction7.2 Trade-related, health safety, social and environmental issues7.3 Personal protective equipment7.4 Quality control7.5 Care labels7.6 Care label symbols7.7 Recommended labeling spots7.8 Packaging7.9 MarkingChapter 8 Strategy for entry into export market 2558.1 Pre-requisites for export marketing8.2 Target groups8.3 Target group segmentation8.4 Purchasing behavior of target groups8.5 Price segments8.6 Export pricing8.7 Cost calculations8.8 Delivery time8.9 Communication and product promotion8.10 Situation in Ethiopia8.11 Developing an export strategy8.12 Important points to be considered by exporters8.13 Tips for entering into export market8.14 Basic preparations for export market entry IX  
  12. 12. Chapter 9 SWOT analysis and recommendations for the 282 development of textile, garment industry9.1 Strengths9.2 Weaknesses9.3 Opportunities9.4 Threats9.5 Recommendations for development of textile, garment, home textile sectorChapter 10 Business in Ethiopia: opportunities, 295 incentives and regulations10.1 Investment opportunities10.2 Economic liberalization10.3 Why invest in Ethiopia10.4 Investment opportunities in different areas10.5 Regulations and incentives for starting a business in Ethiopia10.6 Investment incentivesReferences 320     X  
  13. 13. CHAPTER 1 ETHIOPIA: GENERAL INFORMATION1.1 HistoryThe history of Ethiopia, known to many as Abyssinia, is rich, ancient, and still in part unknown.Anthropologists believe that East Africas Great Rift Valley is the site of the origin ofhumankind. The first recorded account of the region dates back to almost 5,000 years ago duringthe time of the Egyptian pharaohs, when the ancient Egyptians sent expeditions down the RedSea in quest of gold, ivory, incense, and slaves.It is in the Afar region of Ethiopia where scientists discovered the remains of "Lucy" orDinkenesh, meaning "thou art wonderful," as she is known to the Ethiopians. "Lucy" lived morethan three million years ago, and her bones now rest in the Ethiopian National Museum at AddisAbaba.The countrys rich history is woven with legends of King Solomon and Queen of Sheba; the Arkof the Covenant that is said to rest in Axum. The story of King Lalibela, who is believed tohave had constructed eleven rock-hewn churches, still standing today and considered the eighthwonder of the world.Ethiopia is the only African country which was not colonized by European colonial forcesexcept, it was briefly occupied by the Italians between 1936 to1941.In recent history, between 1889 and 1913 Emperor Menelik II reigned fending off theencroachments of European powers. Italy posed the greatest threat, having begun to colonize partof what would become its future colony of Eritrea in the mid 1880s. In 1896, Ethiopia defeatedItaly at The Battle of Adwa, which was considered the first victory of any African nation over aEuropean colonial power.Meneliks successor, Haile Selassie I (reigned 1930-74) was left with the task of dealing Italysresurgent expansionism. In the early years of World War II, Ethiopia was liberated from theItalians by the joint forces of the Resistance Movement and British army.After being restored to power, Emperor Haile Selassie attempted to implement reforms andmodernize the state. However, increasing internal pressures, including conflict with Eritrea andsevere famine placed strains on Ethiopian society that contributed in a large part to the 1974military rebellion that ended the Haile Selassie regime. 1  
  14. 14. The biggest impact of the coup was the emergence of Lieutenant Colonel Mengistu HaileMariam as head of state, and the reorientation of the government and national economy fromcapitalism to Marxism. During the 17 years of the military control, the economy deeplyworsened, while civil unrest grew beyond the control of the military.Growing civil unrest and a unified force of the Ethiopian people, led by the Ethiopian PeoplesRevolutionary democratic Front (EPRDF) against communist dictators finally led to the demiseof the Mengistu regime in 1991. Between 1991 and 1995 the Transitional Government ofEthiopia, a coalition of 27 political and liberation organizations embarked on its path totransform Ethiopia from a centralized, military-controlled country to a free and democraticfederation Government.In 1994, a new constitution was written, setting up a legislative and a judicial system, andguaranteeing equal rights and freedom of expression to all citizens of Ethiopia. In May 1995peoples representatives to the Parliament were elected.1.2 PeopleWith a population of about 85 million (2009 Estimate), Ethiopia represents a melting pot ofancient Middle Eastern and African cultures evident in the religious, ethnic and languagecomposition of its Semitic, Cushitic, Omotic and Nilotic peoples. The Ethiopian populationcomprises about 80 linguistic groups of which the Amhara and the Oromo constitute themajority, with about 60 percent of the total population. Approximately 85 percent of thepopulation lives in the rural areas. The annual population growth rate is about 3.09 percent, andthe economically active segment, between ages 14 and 60, is about 50 percent of the totalpopulation.1.3 Capital cityAddis Ababa, the largest city, is the seat of the Federal Government of Ethiopia, and lies on thecentral plateau at an altitude of 2,400 meters, 9 degree north of the equator. Its averagetemperature is 16 degree Centigrade. Addis Ababa was founded in 1887, and has a population ofabove 3 million. It is host to the African Union (AU), and the United Nations EconomicCommission for Africa (ECA). Several other international organizations have their headquartersand branch offices in the capital, which is also the center of commerce and industry. 2  
  15. 15. Manufacturing plants for steel fabrication, wood, tanneries, textiles, cement, leather goods andbreweries are among the industrial activities located in and around Addis Ababa.Ethiopias other important cities of trade and industry are: Awassa, Dire Dawa, Gondar, Dessie,Nazareth, Jimma, Harar, Bahir Dar, Mekele, Debere Markos and Nekemte. All these towns areconnected to Addis Ababa by asphalt and gravel roads, and most of them have goodinfrastructural facilities, such as first class hotels and airports.1.4 Main languagesEthiopia is a country where as many as 80 languages are spoken. Amharic is the officiallanguage of Ethiopia. The working languages of the national/regional government may differaccording to regions. English, French, Italian and Arabic are also widely spoken.1.5 Local timeEthiopia is three hours ahead of Greenwich Mean Time. The 12 hour clock is used locally andthis can be confusing to visitors. The first cycle starts with "one" at 7 A.M. and goes on to "12"at 6 P.M. The second cycle starts at 7 P.M. "one" and goes on to 6 A.M. "12".1.6 CalendarEthiopia follows the Julian calendar, which consists of twelve months of thirty days each and athirteenth month of five days (six days in a leap year). The calendar is about eight years behindthe Western (Gregorian) calendar. The New Year is Celebrated on September 11, which is 1Meskerem E.C. (Ethiopian Calendar).1.7 Government and political systemEthiopia adopted a new constitution that established the Federal Democratic Republic ofEthiopia (FDRE) in 1995.The federal government is responsible for national defense, foreignrelations and general policy of common interest and benefits. The federal states comprise of nineautonomous states vested with power for self-determination. The FDRE is structured along thelines of bicameral parliament, with the council of Peoples’ Representatives being the highestauthority of the federal government, while the federal council represents the common interests of 3  
  16. 16. the nations, nationalities and peoples of the states. Members of both councils are elected for afive-year term.The federal state is headed by a constitution president and the federal government by anexecutive prime minister who is accountable to the council of peoples’ Representative. Eachautonomous state is headed by a state president elected by the state council. The judiciary isconstitutionally independent.The Federal Democratic Republic is composed of states which are delimited (formed) on thebasis of settlement patterns, language, identity and consent of the peoples concerned.1.8 EconomyIn economic fields, agriculture is the mainstay of the countrys economy. Currently, itcontributes 47 percent to the GDP; 60 percent to the export and employs about 80 percent oflabor force. Industrial manufacturing and service sectors constitute about 13 percent; 40 percentof the GDP respectively.The country is endowed with huge natural resources. Out of the total 113 million hectors landareas, about 56 percent is suitable for cultivation. Nearly 15-16 percent of this is currently undercultivation. Water is the most abundant resource. A dozen of large rivers, including Blue Nile,lakes, underground water, seasonal rainfalls and comfortable weather conditions (average 10 -200 Celsius) provide suitable ground for the cultivation of various crops.Livestock is another major agricultural resource the country is known for. Ethiopia ranks first inAfrica in livestock population. All these resource bases made agriculture the mainstay of theeconomy.With the launching of the new economic policy and a series reform programs in 1992, theparticipation of private sectors in the economy has steadily increased, and the economy isliberalized and gradually turned to the trend of growth from its stagnant or negative trend underthe previous regime. The new economic policy and development strategy follows AgriculturalDevelopment-Led Industrialization in which agriculture in its current potential in terms of landand labor is seen as an ultimate resource basis to earn material and financial capacity for thedevelopment of the industrial sector.Other economic factors resources are 4  
  17. 17. • Minerals • Gold • Marble • Limestone • Tantalum (small amounts)Other resources with potential for commercial development are• Large potash deposits,• Natural gas,• Iron ore• Petroleum (possibly) and• Geothermal energyLandThe government owns all land and provides long-term leases to the tenants. This system keepson hampering growth in the industrial sector as entrepreneurs are unable to use land as collateralfor loans.GDP composition by sector: • Agriculture: 46.7% • Industry: 12.9% • Services: 40.4% (2006 estimate)Population • Population 85 million (2009 estimate) • Population below poverty line: 38.7% (2005-2006)Labor force • Labor force: 37.9 million (2007) • Agriculture and animal husbandry 85%, • Government and services 10%, • Industry and construction 5% (2005) • Unemployment: (% of labor force) 16.7% Age group 10 years and over. Urban areas (2006 estimate). 5  
  18. 18. Agriculture • Main products: cereals, pulses, coffee, oilseed, cotton, sugarcane, potatoes, qat, cut flowers, hides, cattle, sheep, goats, fishIndustries • Food processing • Beverages • Textiles • Chemicals, • Metals processing, • CementExports, imports • Exports: $1.085 billion f.o.b. (2006 est.) • Exports commodities: coffee, qat, gold, leather products, live animals, oilseeds, textiles • Exports partners: China 10.5%, Germany 8.7%, Japan 7.4%, US 6.8%, Saudi Arabia 5.8%, Djibouti 5.8%, Switzerland 5.1%, Italy 5% (2006 est.) • Imports: $4.105 billion f.o.b. (2006 est.) • Imports commodities: food and live animals, petroleum and petroleum products, chemicals, machinery, motor vehicles, cereals, textiles • Imports partners: Saudi Arabia 18.1%, China 11.4%, India 8.1%, Italy 5.1% (2006)Foreign exchange reserve and gold $1.108 billion (2006 est.)Debt - external: $6.038 billion (2006 est.)Economic aid - recipient: $1.6 billion (Financial year 2005-06)Currency: birr (ETB) 6  
  19. 19. CHAPTER 2 COTTON PRODUCTION: PRESENT STATUS AND FUTURE GROWTH PLANS2.1 IntroductionCotton is one of the oldest cultivated fiber crops in Ethiopia. Ethiopia has favorable weather andtopography for the cultivation of cotton. A study of the Ministry of Agriculture indicates thatthere is 3,000,810 ha (approximately 3 million ha) of land suitable for cotton production, whichis equivalent to that of Pakistan, the fourth largest producer of cotton in the world. Pakistanharvests about 2-2.5 million MT of cotton annually from a total cotton farm area of 2.9 millionha.The low to medium altitude areas of the country are generally known to have an immensepotential for the production of cotton subject to the availability of water. In terms of productivity,high yields are obtained in areas with an altitude ranging up to 1000 meters above sea level. Inthe absence of hail, frost, and other unfavorable weather conditions, cotton production can alsobe extended into areas with altitude of 1500 meters above sea level. Out of the total 3 million haof land suitable for cotton production, 1.9 million ha or 63.3% is found in 38 high potentialcotton producing areas and the remaining 1.1 million ha or 36.7% is in 79 medium potentialdistricts. Ethiopia currently (2008/09) produces only about 47,694.4 ton of lint cotton annuallyfrom a total cotton area of 75,375 ha land which is only 2.51% of the total area favorable forcotton cultivation. Selected regions and respective land area suitable for cotton cultivation is shown in Table 2.1 7  
  20. 20. Table 2.1 Selected regions and respective land area suitable for cotton cultivation No. Region Number of Area of land Suitable selected for cotton cultivation, Woredas ha 1 High Potential Areas 1.1 Tigray 3 208,825.20 1.2 Amhara 5 544,031.80 1.3 Sothern region 6 385,397.40 1.4 Oromia 6 205,491.20 1.5 Gambella 3 262,850.20 1.6 Benshangul Gumuz 3 79,931.8o 1.7 Afar 9 100000 1.8 Somali 3 100000 Sub-total 38 1,886,527.60 2 Medium Potential Areas 2.1 Tigray 6 60,303.60 2.2 Amhara 14 134,679.20 2.3 Sothern region 17 215,531.95 2.4 Oromia 12 201,930.05 2.5 Gambella 4 53,600.90 2.6 Benshangul Gumuz 16 223,235.45 2.7 Afar 5 100000 2.8 Somali 5 125000 Sub-total 79 1,114,281.15 Total 117 3,000,808.75Source: Cotton Cultivation and Marketing Plan, Ministry of Agriculture and Rural Development, 2010.As most of the lowlands are deficient in rainfall, the cultivation of cotton depends entirely onirrigation. Cotton growing on the irrigable lowlands is, therefore, a large scale commercialenterprise undertaken by government organizations, primarily by the Ministry of State FarmDevelopment, and to a certain extent by the Relief and Rehabilitation Commission. There arefive state owned enterprises producing cotton in the country. These are Tendaho, Middle Awash,Upper Awash, North Omo and Abobo. Large-scale cotton cultivation is carried out mainly in theAwash valley and in three minor areas, namely North Omo (southern Regions), Ababo(Gambella Region) and Gode (Ogaden Region). Cotton is produced with the help of irrigation inall regions except Ababo. 8  
  21. 21. Peasant cotton growing areas are rain fed and generally situated at altitudes ranging from about1,000 meters to 1,700 meters above sea level. Rain-fed cotton is also grown under peasantholdings in the Regions of Gonder (Humera), Sidamo (Bilate) and Gamo Gofa (Arba Minch)where the annual rainfall is more than 700 mm. Peasant production is characterized bytraditional technology with no access to improved seeds and chemicals. Almost all the cottonproduced by the peasant sector is used by the handloom industry. Spinning cotton into home-made yarn for making traditional fabrics by handloom weavers is an important historicaltradition.2.2 Planting periodThe planting period for cotton in Ethiopia considerably varies from area to area. In the lowerAwash valley, cotton planting starts in late June and ends in mid August. In the Middle Awashand rift valley areas, cotton planting commences sometime in early May and ends early June.Planting is carried out during late April-early May in Upper Awash. In Humera, Metema andGambella areas planting is done in June-August. Harvesting also shows similar variations. InLower Awash cotton harvesting begins early November and ends mid January. In Middle Awashthe harvesting period is November to late December. In Humera, Metema and Gambella,harvesting takes place starting Mid November to end January. The planting and harvestingperiods of cotton in the major cotton producing areas is shown in Table 2.2 Table 2.2 Planting and harvesting periods in different regions Area Planting period Harvesting period Lower Awash June to August November to January Middle Awash and Rift valley April to June November to December Upper Awash April to May September to November Hummera Mettema and Gambella June to August November to January Source: Cotton – textile-Apparel value chain Report for Ethiopia, Prepared by Agridev Consultant Regional Agricultural Trade expansion Support Program, Nairobi, Kenya, 2004 9  
  22. 22. 2.3 Cotton productionThe industrialization of the Ethiopian textile sub-sector started in 1930s, when the country’scotton planting remained in a stage of traditional growing pattern by household farmers. Before1960, most cotton textile products made in Ethiopia depended on raw material imported, andcotton import alone occupied roughly 30% of the total import value. As a result of the increaseddemand on cotton from textile sub-sector, in 1960’s the Government initiated the large scaleplanting of cotton and made favorable land policies to meet the raw material needs of thedomestic textile sub-sector.Tendaho Agricultural Development Enterprise was the first foreign-invested commercial cottonfarm. Later, local investors, including local governments, started to invest in establishing farmsspecializing in cotton planting. With new cotton varieties, cotton growing area enlarged,irrigation projects constructed, machineries and chemical fertilizer employed in the planting,the Ethiopian cotton sub-sector was on the road to mass production. Since 1990s, along with thetransition to the market economy, a group of private farms have come into being, thus formingthe cotton production system in which small farm households, public farms and private farms co-exist.The technology employed in cotton production also varies from producer to producer. The stateowned and private farms use improved agricultural practices and technologies. The small holderfarmers although participate in large numbers in cotton production, practices traditional andbackward farming. Ethiopia grows relatively good raw cotton with fiber length of 26-28 mm.There is potential to produce long staple length cotton in the country with improved seed andtechnology utilization.2.4 Cotton speciesCotton is not indigenous to Ethiopia. Major cotton species are Gossypium hirsutum L includingCarolina Queen, Deltapint 90, Stonenlle 1324, Cu-okri, Acalasi (S.J-2), Cucuroval 51 S, Bulk2020 (crossbreed), Arha, Reba B-50 and Albar, (Coming from the USA, Israel, Turkey, formerSoviet Union and western African countries). All had high productivity when they were justintroduced.The output and quality index of the major cotton species when introduced are given in Table 2.3 10  
  23. 23. Table 2.3 The output and quality index of the major cotton species when introducedSpecies Seed Seed QualityName cotton cotton index Yield Yield only with Rainfed Irriga Kg/ha -tion Kg/ha Length Strength Fineness Evenness Maturity mm lb/in mv % %Acalasi SJ-2 3250 -- 28.6 39.4 3.2 47.1 77.5Deltapin t-90 3850 -- 27.7 38.3 3.7 47.7 78.7Stonell e-1234 3854 -- 27.9 36.1 3.6 47.8 78.0Carolina Queen 4960 -- 27.2 38.5 3.8 46.5 82.8Cu-Okra 4950 -- 26.1 39.4 4.0 46.6 83.8Cucurov A1518 5280 -- 27.0 37.0 3.8 46.6 82.1Bulk 2020 2242 28.1 38.7 3.5 47.0 75.1Arba 2030 30.3 40.0 3.5 47.1 77.0Reba B-50 1804 26.3 36.4 3.2 48.4 70.9Albar 1672 27.3 40.2 3.5 48.5 73.8 Source: Study Report on The Development Strategy of Ethiopian Cotton/Textile/Garment Sub-sectors: China Textile Planning Institute of Construction, Beijing, China, June 2003 2.5 Cotton qualityThere are no systematic records on quality of cotton produced in Ethiopia. In 2002/03, a Chineseteam from China Textile Planning Institute of Construction Beijing, Collected the cotton samplesfrom few state farms and textile mills and analyzed the cotton samples for different qualityparameters at the Cotton Quality Supervision and Test Centre of the Ministry of Agriculture ofChina. The test findings are given in the Table 2.4 11  
  24. 24. Table 2.4 Indexes of fibre quality of cotton samples Length Specific Elong- SpinningSampling place Length Evenness, Strength, ation, Micro- Refle- Yello- evenness mm % (cN/Tex) % naire ctance, wing %Tendaho Awash Ag.SC 28.6 84.5 27.9 7.2 3.5 76.4 9.5 144Upper Awash Ag.Ind. 28.3 82.9 27.2 7.3 3.9 72.9 7.3 127Middle Awash Ag.SC 26.5 85.3 31.9 7.0 4.6 75.0 8.1 144Bahir Dar Cotton mill 26.2 80.5 26.4 6.0 3.5 77.5 10.5 117Awasa Textile 27.7 80.9 28.5 6.8 4.4 73.9 9.2 117Akaki Textile S C 25.8 81.2 26.9 6.3 3.9 72.2 11.7 118Kambolcha Mill 28.8 84.3 30.9 7.7 3.9 70.3 10.3 145 Source: Study Report on The Development Strategy of Ethiopian Cotton/Textile/Garment Sub-sectors: China Textile Planning Institute of Construction, Beijing, China, June 2003 The comparison of cotton quality parameters between Ethiopian cotton and one of the Indian cotton varieties (J-34) is given in Table 2.5. Table 2.5 Comparison of Characteristics of Ethiopian Cotton Property Ethiopian cotton J-34 Indian cotton Staple length 25 - 31 mm 28.5 mm Micronaire 3.1 - 4.4 4.5 Strength 22 - 25 g/tex 28.5 g/tex Trash content (%) 3 - 6% 4.5% Uniformity ratio 48 - 50% 83 ( HVI) Source: Benchmarking of the Ethiopian Textile Industry, UNIDO Draft report 2010 According to the above test reports, Ethiopian cotton is characterized by the positive points of good fiber maturity, length and evenness, no or little contamination of “three threads” a term referring to foreign fibers (hair, synthetic fiber and other colored fiber thread). The negative points are rather low strength, high yellowing degree in color, sugary fiber (Stickiness), and the indexes of length, fineness and strength not matching one another. The trash content is on the 12   
  25. 25. higher side (6%) as compared to an equivalent variety of Indian origin cotton J-34 used inspinning coarse yarn counts. Ethiopian cotton is suitable for spinning coarse and mediumyarn counts (Ne 20-40’s). Cotton grown in Middle Awash region is medium staple (28-30mm) while that in Hawot region is short staple (25-27 mm).2.6 Grading and quality checkingThere is no well established system for grading and quality checking of cotton. In principle,Ethiopia adopts American grading standards for cotton produced in the country. Cotton qualitycheck includes field quality grading, storing the samples of seed cotton according to their patchfield number, species, and time of harvest. 10 samples of un-ginned cotton from each batch aretaken for testing.Fiber tests are conducted through the combination of apparatuses and visual observations andfeel. The test of length is made by hand pulling, while that of color, strength and fineness bySpinlab and Micronnair Instruments.Specie name, packing number, color, length, strength and grade are recorded on each bale of thecotton.The cotton ginning factories are not equipped with adequate quality test laboratories. Constanthumidity and temperature are not maintained, making many test errors and rare reproducibility oftest results.2.7 Scientific research and education system of cottonThe National Agricultural Research Institution (NARI) is located in Addis Ababa, with itsagricultural technology stations in middle and lower Awash. The responsibilities of NARI andtechnology stations include dissemination and training of research findings related to agriculture,forestry, fruit and pasturage. At the same time, the stations are responsible for collection andintroduction of new plant resources, cotton seed breeding, cultivation, fertilization, irrigation,drought fighting, preventing or solving the problems of disease, pest, or weed, and the researchwork on planting systems.The federal and regional governments have established higher institutions of agriculturaleducation. The three main agricultural universities are Alemaya Agricultural University, AmboAgricultural College and Jimma Agricultural College. Unfortunately, these agricultural 13  
  26. 26. institutions are not well equipped with scientific manpower and test equipment for quality andtechnical inputs in cotton post-harvesting technologies.2.8 Marketing chainCotton is grown as a cash crop and passes through different channels before it reaches the endusers as finished products. The marketing chain of cotton and its derivatives is shown in Figure2.1. Figure 2.1 Overview of cotton marketing chainSource: Abdella, Merima, and Gezahegn Ayele, Agri-chain analysis of Cotton Sub-sector in Ethiopia. Ethiopian Development Research Institute, Ethiopia 2008. 14  
  27. 27. ProducersState farms, private commercial farms and small holders produce cotton. Prior to 1992, largescale cotton farming had been the exclusive domain of state enterprises. After the reforms of1992, private commercial farms have also been engaged in cotton production. Currently there aresix major private commercial farms engaged in cotton production; namely, Lower Awash,Middle Awash, Birale, Humera, Metema and Wollega farms. As regards the smallholder sector,its annual production is not much known. The traditional cottage industries including handloomsand handicrafts were fully dependent on cotton supplied by smallholders.There are five state-owned farms, which account for 30-31% of the total cultivated area. Thesestate farms are Tendaho, Middle Awash, Upper Awash, North Omo, and Abobo. The privatecommercial farms accounted for the major share of 43% of the total area cultivated, while thesmallholder peasants represent 27% during 1996/97-2000/01. In terms of annual production,private commercial farms offer the dominant share of 56% of total production, followed by thestate farm enterprises (32%) and the smallholder peasant (12%).Cotton productivityIn spite of the low share that publicly owned farms have in total area cultivated and annualproduction level, they perform relatively better in terms of productivity by using better farmingsystem than the privately owned and the small peasant farms. The average annual productivityfor the state owned enterprises ranges from 20 to 30 q/ha on irrigated farms and 15 to 20 q/haunder rain fed agriculture. Privately owned farms that use irrigation systems also have a betterproductivity level than the small peasants, who predominantly rely on traditional and backwardfarming practices. The productivity data is given in Table 2.6 Table 2.6 Productivity of cotton by various producers Type of producer Productivity (q/ha) Rain fed Irrigated Small holders 5-10 - Private farms 15-20 20-30 State farms 15-20 20-30 Research institutes 35-45 Source: Werer Research Center (cited in Agri-chain analysis of Cotton Sub-sector in Ethiopia, 2008). 15  
  28. 28. The different farming techniques together with various inputs utilized and the overallmanagement system in the production process would imply for the disparity in the productivityand quality of cotton produced by the various farms. The case studies undertaken for the threecategories of producers in Afar and Arbaminch reveal this fact very well.Major problems faced by the farmsState farmsLack of improved seedsThe two major seed types that have been used on the farm are Akala SJ2 and Delta Pine-90,which were released from Werer Research Center. Akala SJ2 was released in 1987 with anexpected yield of 32.5 q/ha. Delta pine-90 was released during 1990 with a better-expected yieldof 38.5 quintals per ha. The farms used to buy these seeds from the research center, but now ithas been long since it starts preparing its own seeds, and even sells to other farms. The yieldcapacity of these seed types is decreasing as the seeds lose their genetic potential from time totime.There was an attempt to introduce another seed called Gedera that was imported from Israel in2005. Because adaptation trial was not made prior to its cultivation, the seed variety resulted inhuge loss for the farm. Lack of improved seed variety has constrained the farm’s capacity fromreaching the desired yield and quality levels. Although there are many reasons for this problem,the fact that the farm does not get enough technical and/or advisory support from variousinstitutions, particularly from agricultural research centers is the major one.Irrigation water shortageWater shortage for irrigation arises from various reasons. Limited capacity of the cannel that wasbuilt some 30 years ago is the major one. The cannel was originally built to irrigate limited areasof land, but as the total area under cultivation both by the enterprise and by other farms in thenearby area increases, the capacity of the cannel to reach the entire land has been declining fromtime to time. The other reason is related with the prolonged cannel maintenance time taken bythe Awash Water Authority. Because the authority does not finish the maintenance according toschedule, water will not be released to the farms during the appropriate irrigation time. Duringtimes of heavy flooding from the Awash River, the cannel will also be closed completely as itwill be filled with soil sediment, creating water shortage for irrigation. 16  
  29. 29. To solve the water shortage problem, the authority once tried to open another way-out for thecannel, but it did not succeed, as there were major problems in its design.Labor shortageShortage of labor particularly during harvesting time is becoming a major problem to the farm.The vast majority of pickers are brought from the Southern part of the county, and labor sourcingwas not a problem for a long time until recently. The low wage paid to pickers (25cents per kg)compared to the surrounding private farms is one of the reason for shortage of labor whichresults in labor shifting away from the state farm towards other farms who offer a relativelybetter price. Apart from the disincentive created by low wage rate, alternative job opportunitiescreated in areas where the laborers came from is the major reason that created labor shortage notonly to the enterprise, but also to other cotton farms in the area.Shortage of labor has a lot of implication on the farming operation. Delayed cotton pickingresults in loss of cotton quality as the plant has to stay on the ground beyond the intended timelosing its moisture content and exposed to dust and other dirt materials. Delayed picking willalso expose the cotton plant to be fed by cattle, camels, and goats. Due to increased problemsfaced by shortage of labor, the farms are planning to move towards mechanized harvestingalthough it is costly and results in lower quality of cotton compared to hand picking.PestThe common pest types that affect the fiber yield and quality are the African Bollworm (ABW),aphids, jassids and white fly. Particularly the ABW has a significant effect on yield and qualityof lint, causing an average cotton yield loss of 48% or 720 kg/ha The most widely used methodfor controlling pest by the farm is the application of insecticides using aircraft spraying whichcost approximately 990 birr per ha. One problem associated with insecticide usage is theresistance development by the insects that subsequently fails to control the pest. The otherproblem arises due to the delayed availability of insecticides, as they are usually importedthrough various agents of chemicals in the country. Health hazards associated with the use ofchemicals that have high level of toxicity is also a major problem. The most frequently usedchemical on the farm is thiodon, which contains a dangerous chemical called endosulfan withhigh level of toxicity. Although there are no records of injuries or death caused by this chemicalin Ethiopia, there has been a record of dozens of death in cotton farms associated with the use ofthis chemical, such as in India, Malaysia, and Sudan. 17  
  30. 30. Problems faced by Private farmsAlmost all of the problems associated with the farming activities of the state farm like lack ofimproved seeds, shortage of irrigation water, shortage of labor and pest are also faced by theprivate commercial farm.Major problems faced by smallholdersApart from the common problems that arise due to the lack of improved seeds, shortage ofirrigation water, labor shortage and pest, smallholder farms also face the following problems.Lack of finance: There are no credit associations to provide peasants with the necessary finance for farmingactivities. This has limited the small holders’ chance of looking for alternative input price offersin other markets, forcing them to rely on prices provides by big private commercial farms. Thishas also forced the small holders to sell the raw cotton without it being processed/ginned, whichfetches much lower price.Lack of market informationInformation regarding the existing domestic and/or international market is almost non-existentwith the small holders. This has made them to become price takers, with no-negotiation powerfor the selling price of cotton.Problems related with land ownership In case small hold farming, most of the peasants come from other parts of the region and pay acertain amount of their net profit to tribe members who own the land. The tribes have full powerto discontinue the farmer upon failure of paying the specified amount, or if they obtain a betteroffer from another farmer who wish to expand his land. This uncertainty over land has been amajor disincentive to smallholder farmers to invest their time, power, and money fully.In and around Arbaminch, the situation is a bit worse. In spite of the long existing tradition ofcotton farming, in this area that was once called the Cotton Belt in Ethiopia, the area is losing itsoriginality due to obstacles faced by the farms starting from the very small land holdings theygot. The average land holding of a household in that area is estimated to be one fourth of ahectare which they use it for not only the production of cotton but also other cash crops likeBanana and food crops like cassava, tef, sweet potato, and others. Because cotton harvestingrequires a lot of investment and intensive care throughout its cultivation period, there is a trendto shift from cotton to other less time and money consuming cash crops. 18  
  31. 31. The small holders are aware of the fact that successful cultivation of cotton would result inhigher yield and return at the end of the day than other cash crops cultivated in that area, butbecause of lack of finance and technical assistance provided to them, they prefer to cultivateother crops with lower but less riskier returns like banana. One other factor for the small holdersto abandon cotton farming has to do with lack of market access for their produce. They lackinformation regarding where to sell and at what price. Often the local collectors would go aroundthe house of every farmer and collect cotton at a very low price. The capacity of the localcollectors to absorb the total cotton produced in the area is also limited resulting in large amountof cotton to be wasted without even reaching the local market. This shows that markets arehighly disintegrated leaving little room for incentive to farmers.Smallholder farms in Humbo Wereda, which is found around Arbaminch, have started to formtrade unions that would collect the final cotton harvest and take it to the market. It is a goodmove to establish such unions to alleviate the market problem of farmers. Nevertheless, apartfrom that, huge technical assistance in terms of improving the productivity and yield of cottontogether with forming a strong linkage with the domestic and international market is yet to befocused and developed.Local AssemblersAs can be seen from the Figure 2.1, rural assemblers play an important role in collecting seedcotton from smallholders. These assemblers are mostly independent operators at primary marketswho assemble and transport the raw cotton using pack animals and small trucks for sale toprivate ginners. They handle about 20% of the cotton production by smallholders.GinneriesIn 2003 there were 11 ginneries, 4 state owned and 7 private with an estimated annual ginningcapacity of 200,000 MT of raw cotton. 19  
  32. 32. Table 2.7 Distribution, number, and operation of private and state-owned ginneries Private Location No. of Operation GinneriesAddis Ababa 04 Offer ginnery service to private commercial farms and lint cotton exporters in Awash valley and other cotton producing regionsGonder 02 Provide service to private commercial farms and cotton traders operating at Metema and its surroundings.Humera 01 Owned by a cotton producing share company.State ownedMiddle Awash 01 Provide service to state owned farms and small holders aroundstate enterprise the areaTendaho State 01 Provide service to state owned farmsEnterpriseSouth Omo State 01 Provide service to state owned farms South Omo StateEnterpriseSouth Omo State 01 Provide service to state owned farms South Omo StateEnterprisesAbobo State 01 Provide service to state owned farms South Omo StateEnterprisesSource: Abdella, Merima, and Gezahegn Ayele. 2008. Agri-chain analysis of Cotton Sub-sectorin Ethiopia. Ethiopian Development Research Institute, Ethiopia.All the ginneries are operating under capacity due to the low production of cotton in the country.While all the cotton produced by state farms and private commercial farms go to the ginneries,only 20% of the smallholder production is ginned. This is mainly because handlooms are themain buyers of raw cotton directly from smallholder peasant farms.Most of the lint cotton processed by public and private ginneries is sold to domestic textile millsfor further processing and production of textile fibers. Textile mills receive 80% of the cotton lintprovided by ginneries, where only 20% goes to the export market that is very low compared toeastern and southern Africa average.Delayed ginning operation due to prolonged time taken to source spare parts from abroad tomaintain the ginning machines is one of the problems that the factory faces. Electricityinterruption is also a major problem, which results in almost 20% of the idle time. Shortage ofqualified laborers and laboratory equipments that are essential for the grading procedure are alsocreating difficulty in the ginning process. 20  
  33. 33. Limited information regarding the international market is a major marketing problem.Textile sectorDomestically produced raw and lint cotton are the major raw materials consumed by textilefactories, although other synthetic fibers and acrylic yarn are used to a limited extent. Almost80% of lint cotton produced locally is absorbed by the textile mills for further processing toproduce fabrics both for the domestic and for the export market. The domestically producedcotton is sufficient in fully satisfying the demands of the textile mills, making import of eitherraw and/or lint cotton negligible.The large cotton mills that consume local lint cotton as primary inputs for manufacturing textilefibers are mostly state-owned or those leased by the private sector from the government on fixedcontractual agreements. The major textile factories are:integrated mills (Akaki, Hawassa, Kombolcha, Bahir Dar, Dire Dawa, Almeda and Ethio-JapanNylon Textile factory;Spinning mills (Adie Ababa and Edget Yarn Factory);Spinning and weaving (Arbaminch Textile Factory);Integrated Blanket Factory (Debre Berhan Blanket Factory).Most of the textile factories in the country are largely underperforming unable to maximize thebenefits of procuring raw material from their close vicinity. The annual lint cotton consumptionof the existing textile mills is estimated to be 42,860 mt, which can be fully met from domesticsupply, but their actual consumption does not exceed 30,000 mt Table 2.8 shows the actualproduction in percent of the installed capacity of different textile mills. Table 2.8 Actual value of production of textile mills as % of yearly capacity Industrial group 1998/1999 1999/2000 2000/2001 Manufacture of textiles 32.8 43.5 53.49 Spinning, weaving, finishing 31.23 42.93 54.31 Cordage, rope, twine, netting 60.22 53-41 45.66 Knitting 32.29 16.37 31.48 Source: CSA (2003) 21  
  34. 34. The old and obsolete machineries that exist in most of the textile mills together with lack ofindustrial capacity and base, lack of relatively skilled and trained labor and proper productionmanagement are the major factors contributing to this inefficiency. Because of the mills’ limitedprocessing capacity, the domestic supply of lint cotton is by far in excess of its actual utilizationcreating a lot of wastage.Garment factories that are predominantly owned by private companies perform relatively betterthan the textile mills. In 2005, there were 25 garment factories oriented to the export market ofUSA and EU following the preferential treatments granted by these countries. The flow of exportto these countries has increased enormously for the past three years, especially to the EU wherethe value obtained from export of garment and clothing textiles increased by 28% in 2004 and144% in 2005.In spite of the growing export trend for garment and clothing textiles to the international market,there is a week linkage between the cotton textile sector and the clothing sector where exports ofcotton related garments are out-weighted by garments made from imported fabrics. Some of theobvious reasons are the poor quality of textile fabrics made in the country and high cost ofproduction due to inefficiencies experienced by the various textile mills resulting in high pricefor fabrics. In addition, lack of flexibility on the part of the textile mills to meet the demands ofsmall and medium garment factories in terms of the right size, width, and color has made theworking relationship between the two sectors very loose.RetailersRetailers play an important role in the market chain of seed and lint cotton, cotton oil seed andfabrics. Most of the textile finished products and the edible oil produced by the actors in thecotton chain pass through a network of wholesalers and retailers before they reach the finalconsumers.2.9 Cotton production statisticsA systematic statistical data is available from following two sources.1. Cotton textile value chain report for Ethiopia prepared by Agridev Consult, on behalf ofRegional agricultural trade expansion support program (RATES), Nairobi, Kenya 2004 22  
  35. 35. 2. Study Report on The Development Strategy of Ethiopian Cotton/Textile/Garment Sub- sectors, prepared by China Textile Planning Institute of Construction Beijing, China June 2003Though these reports are out dated, a summary is given in order to keep the record of theinformation. A more recent statistical data from the Ministry of Agriculture is given at the end ofthe chapter.Statistical data from Regional agricultural trade expansion support program RATES(1996/97 to 2000/01)The statistics for state farms, private farms and small holder farmers in terms of area planted,total cotton production and yield per hectare for the period 1996/97 to 2000/01 is given inTables 2.9 to 2.11 Table 2.9 Area planted under cotton during 1996/97 to 2000/01 HaProducer 1996/97 1997/98 1998/99 1999/2000 2000/01 Average % shareTendaho 5450 5652 5955 5645 4117 5363 13Middle 5153 5368 4789 1667 5407 4456 11AwashUpper Awash 1000 1000 1000 1000 1000 1000 02North Omo 1500 1500 1500 1500 1500 1500 04Abebo 250 250 250 250 250 250 01Total state 13,353 13,670 13,494 10,062 12,274 12570 30farmsPrivate 18,150 18,150 18,150 18150 18,150 18,150 43commercialfarmsSmallholders 11,650 11,650 11,650 11,650 11,650 11,650 27Total 43,153 43,470 43,294 39,862 42,370 42,370 100 Source: Cotton – textile-Apparel value chain Report for Ethiopia, Prepared by Agridev Consultant. Submitted to Regional Agricultural Trade expansion Support Program, Nairobi, Kenya, 2004 23  
  36. 36. Table 2.10 Production of seed cotton during 1996/97 to 2000/01 (MT) Producer 1996/97 1997/98 1998/99 1999/00 2000/01 Average %Share Tendaho 7943.7 7716.5 9512.5 11503.4 8370.4 9009.3 11 Middle Awash 15024.1 11627.5 9746.3 5763.8 15566.2 11545.6 14 Upper Awash 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 3 North Omo 3000.0 3000.0 3000.0 3000.0 3000.0 3000.0 4 Abebo 325.0 325.0 325.0 325.0 325.0 325.0 0 State farms (total) 28392.8 24769.0 24683.8 22692.2 29361.6 25979.9 32 Private farms 45375.0 45375.0 45375.0 45375.0 45375.0 45375.0 56 Smallholders 9320.0 9320.0 9320.0 9320.0 9320.0 9320.0 12 Total 83087.8 79464.0 79387.7 77387.2 84056.6 80674.9 100 Source: Cotton – textile-Apparel value chain Report for Ethiopia, Prepared by Agridev Consultant. Submitted to Regional Agricultural Trade expansion Support Program, Nairobi, Kenya, 2004 Table 2.11 Yield of seed cotton during 1996/97 – 2000/01 (MT/Ha) Producer 1996/97 1997/98 1998/99 1999/00 2000/01 Average Tendaho 1.5 1.4 1.6 2.0 2.0 1.7 Middle Awash 2.9 2.2 2.0 3.5 2.9 2.6 Upper Awash 2.1 2.1 2.1 2.1 2.1 2.1 North Omo 2.0 2.0 2.0 2.0 2.0 2.0 Abebo 1.3 1.3 1.3 1.3 1.3 1.3 State farms (total) 2.1 1.8 1.8 2.3 2.4 2.1 Private farms 2.5 2.5 2.5 2.5 2.5 2.5 Smallholders 0.8 0.8 0.8 0.8 0.8 0.8 Total 1.9 1.8 1.8 1.9 2.0 1.9 Source: Cotton – textile-Apparel value chain Report for Ethiopia, Prepared by Agridev Consultant. Submitted to Regional Agricultural Trade expansion Support Program, Nairobi, Kenya, 2004At an extraction rate of 37% the average yearly domestic production of lint cotton during theperiod 1996/97 – 2000/01 was about 29.950 MT, of which 24,861 MT or nearly 83% wasdestined for the domestic market. The share of textile mills and handlooms and handicrafts was86% and 14% respectively of the annual domestic sales of lint cotton. 24  
  37. 37. Import/Export of cotton lintAs can be seen from the Table 2.12 below, Ethiopia has exported about 4,989 metric tons of lintcotton per annum during the period 1996/97 – 2000/01. Import of lint cotton, however, wasnegligible. The amount exported represents 17% of total annual domestic production of lintcotton. The major cotton export markets are Africa, Asia, and Europe. The largest portion (67%)of cotton export was destined to the Asian countries, namely, India, Pakistan, Bangladesh, whileabout 23% of the volume of cotton export went to Africa essentially Djibouti. The remaining10% was destined to European markets. Table 2.12 Cotton supply, import, export and consumption figuresS.No 1996/97 1997/98 1998/99 1999/00 2000/01 Average1 Total domestic lint 30,742 29,402 29.370 28,633 31,101 29,850 production (MT)2 Supply to domestic market 24,746 28,219 24,335 20.959 25,046 24,861 (MT)3 Supply to export market 4997 1182 5035 7674 6055 4989 (MT)4 Import lint cotton (MT)5 Import of textiles and 30,662 34,265 73,983 40,514 42,656 44,423 textile articles (MT)6 Export of textiles and 1324 1750 5630 9680 8674 5412 textile articles (MT)7 Net import of textiles and 29,338 32,512 68,353 30,834 34,012 39,011 textile articles (MT) 5-68 Net import of textiles and 24,937 27,640 58,100 26,209 28,910 33,159 textile articles in lint equ. (MT) 0.85x79 Total lint cotton supply to 50,683 55,864 82,435 47,168 53,956 58,020 domestic market (MT) 1-3+4+810 Population x000 58,144 59,822 61,672 63,495 65,34411 Per capita consumption of 5.6 5.6 5.6 5.6 5.6 5.6 woven cloth (m2)12 Per capita consumption of 1.12 1.12 1.12 1.12 1.12 1.12 lint cotton (kg)13 National consumption of 65,121 67,001 69,073 71,114 73,185 69,099 lint (MT) 10x1214 Surplus/deficit (MT) 9-13 -14,438 -11,141 13,363 -23,947 -19,229 -11,079 Source: Cotton – textile-Apparel value chain Report for Ethiopia, Prepared by Agridev Consultant. Submitted to Regional Agricultural Trade expansion Support Program, Nairobi, Kenya, 2004 25  
  38. 38. As regards import of lint, although Ethiopia does not import lint cotton as a raw material, itnevertheless imports substantial quantities of finished textile products. During the period1996/97 – 2000/01, the country has imported 44,423 MT of various textile articles per annumworth Birr 684.4 million. Volume and value of export of textile articles during the same periodwere 5412 MT and Birr 53.7 million. Thus the net import of finished textile goods during theperiod mentioned was 39,159 MT or Birr 630.7 million. In terms of cotton lint equivalent, theaverage annual net import was about 39,159 MT. The origin of textile import to Ethiopia is verydiversified.Cotton lint utilizationVarious studies conducted in the past show that Ethiopia’s per capita demand for textile productsis about 5.6 m2 or 1.12 kg in cotton lint equivalent. Thus annual demand for lint cotton duringthe period 1996/97 – 2000/01 is estimated to be about 65,121.3 to 69,098.8 MT. On the otherhand total annual supply including domestic supply and net import (in lint equivalent) was58,144.0 to 82,435.2 MT. This indicates that the country faced a substantial deficit in most of thepast five years. The demand for and supply of lint cotton during the period 1996/97 – 2000/01 isshown in the table above which indicates that the country had surplus amounting to 13,362.5MT of lint only in 1998/99 when import was substantially high compared to other years.The deficit shown in the table may have been partially met through informal cross border trade.Various studies show that the volume of informal cross border trade involving textile products isconsiderable. For example, according to the Ethiopian Customs Authority, textile productsnormally constitutes about 50% of the contraband seizer. It has been estimated that out of 42million Birr worth of goods apprehended by the Ethiopian Customs Authority, about 22.5million Birr worth of goods were textile products. UN statistics on used clothes trading alsoshows that Ethiopia has imported about USD 25.7 million worth of used clothes over a period of10 years. According to the UN data, Ethiopia ranks 13th among the 90 major countries in theworld importing used clothes. The same source also indicates that Djibouti has imported aboutUSD 29.1 million worth of used clothes during the same period. This clearly shows that informalcross border trade of used clothes through Djibouti and other border areas is significant. 26  
  39. 39. Statistical data from the Report prepared by China Textile Planning Institute ofConstruction, Beijing (2003).With the development of cotton farms the cotton sub-sector has made a historical contribution toEthiopian national economy in creating employment opportunities for rural labor-force, andearning foreign exchanges through exports.The Output, Consumption, Import and Export of Cotton for the period 1970/71-2002/03 is givenin the Table 2.13 Table 2.13 output, consumption, import and export of cotton (1970/71-2002/03) Year Acreage Output Yield Consumption Import Export X1000 ha X1000MT Lint kg/ha X1000 MT X1000 MT X1000 MT 1970 61 14 233 1975 61 18 298 1980 53 27 518 24 5 1985 53 22 392 23 3 1986 53 20 454 22 1987 53 20 468 20 1988 37 21 401 21 3 1989 35 18 332 22 2 1990 36 19 528 20 2 1991 40 12 300 16 4 1992 40 10 200 33 16 1993 41 14 366 22 11 1994 42 15 333 17 13 1995 42 15 357 18 3 1996 42 15 357 18 3 1997 42 15 357 18 3 1998 43 15 354 18 3 1999 43 15 352 18 3 2000 50 34 578 7.7 2001 59 31 569 6 2002 63 33 512 7 Average 49.8 19.6 401.0Source: Cotton World statistics bulletin of International cotton advisory committee 1998(Through China report 2003)From the statistics of cotton production given by two agencies it is clear that the cotton sub-sector has provided over 90% of its raw materials needed by the textile sub-sector. Otherwise,foreign currency reserve would have to be spent in importing raw cotton. This could have been 27  
  40. 40. an unwise choice. The cotton sub-sector has been vital support for the textile sub-sector.Therefore, it is obvious that the cotton sub-sector development will directly promote Ethiopianindustrialization.According to statistics from the Customs of Ethiopia, 6.014 tons of cotton was exported for US$6.55 million and 3,062 tons of cotton seeds for $50.29 million in 2001/ 02. The Ethiopiancotton export destinations are India. Pakistan, Indonesia. Denmark. Thailand and Djibouti etc asshown in Table 2.14 Table 2.14 Cotton export from Ethiopia (x1000 MT) Importing 1998 1999 2000 2001 country India 834 1139.5 3574.3 Pakistan 932.8 3119.7 5534.0 1182.9 Indonesia 498.2 543.4 Denmark 452.0 Thailand 250 454.4 102.1 Djibouti 0.3 99.0 0.4 63.1 Yemen 40.4 Greece 501.0 Vietnam 301.4 Sri Lanka 104.0 Switzerland 103.6 Italy 19.1 Total 1183.1 5034.9 7673.1 6055 Source: Study Report on The Development Strategy of Ethiopian Cotton/Textile/Garment Sub-sectors: China Textile Planning Institute of Construction, Beijing, China, June 2003 To encourage cotton export, the government has formulated policies, one of which is to charge15% sale tax for selling cotton in domestic market, but charge none for exporting cotton, inaddition to a 10% return to cotton farms as a reward. 28  
  41. 41. 2.10 Potentials for the development of cotton sub-sectorThe potentials of growing cotton are high because of following favorable factors 1. Natural environment advantages.      2. Large labor force and Low production cost  3. The potentiality for expanding the cotton growing acreage  4. Increasing the yield potentiality   5. Domestic and international market potentials  Natural environment advantagesEthiopia is bestowed with natural environment advantages such as availability of vast land atsuitable sea level heights, sufficient sunshine and temperature, soil conditions, abundant waterresources etc. for the development of cotton sub-sector.64% of Ethiopian land is at or below 1500m, which provides a vast territory for cotton growing.The main areas for cotton growing are in low or mid regions from 360 m to 1300 m high. Thecountry endowed with 13 Ethiopian months of sunshine, the annual sunshine in Ethiopiaamounts to over 3,000 hours, which can fully satisfy the need of cotton growing. The averagetemperature in cotton growing area is 26-310 C. Under such conditions, theoretically, cotton canbe planted all the year around. Ethiopian cotton field soils are brown and composed ofdenaturation soil and alluvial soil. The content of cohesive particles is 60% while that of sandparticle 40%. The soil is rich in organic matters. Most importantly, with its rich rainfall, ninerivers, many lakes and as the source of the Blue Nile, Ethiopia is rich in water resource and isrecognized as the Water Tower of Africa, though the water utilization ratio is only 5%.Large labor force and low production cost Out of 67 million, 57 million i.e. 85% of population live in rural area. 13 million i.e. 23%population is between 15-49 years old. (2002). This constitutes ample labor force for agriculture.Ethiopia has a comparative advantage over other countries in terms of production cost perhectare. According to a survey by International Cotton Advisory Committee (1998), theproduction cost of Ethiopian cotton is 66.3% of that of China, 57.3% America. 33.5% Australia.23.2% Israel, and 90.8% India. By contrast, because of low production efficiency, theproduction cost per kilogram, has a comparative disadvantage and is higher than that of any of 29  
  42. 42. the above mentioned countries. Ethiopia also enjoys low cost of cotton ginning, packing andprocessing.The potentiality for expanding the cotton growing acreage56% of Ethiopian territory is arable land, of which 15%. about 16.85 million ha up to now havebeen cultivated. 3.7million ha can be irrigated, though only 197,000 ha, 5% of it has beenirrigated until now. Judged from its arable land and irrigated land, Ethiopia has a greatpotentiality for expanding cotton- growing acreage.Potentials for increasing the yield per hectareAt present the cotton species are primarily American species--- Deltapint 90 and Acalasi (SJ-2).However, these species have been used for more than20 years, thus giving rise to the seriousproblem of species ageing and degeneration. Generally, species will be limited to a 3-5 years usein the major cotton production countries, because by species renewal, yield can be increased byl0%-15%, in some cases, even by 30%. Also the use of fertilizers is low and cultivation methodsare not totally scientific. With the use of improved seeds such as crossbred or geneticallymodified, increasing the use of fertilizers and scientific inputs for cultivation the yield perhectare can be considerably increased with the positive effect on total production.Vast domestic and international marketAssuming 1.5 kg per person per year consumption of cotton and 75 million population (2006)the domestic consumption of cotton will be 103,000 ton. With the progress of cotton sub-sectorthere will be emphasis on the export of cotton. The government has identified textile andgarment sub-sector as one of the priority sectors for rapid industrial developments. All thesefactors will lead to increase production of cotton. At the international level, cotton is a kind ofcash crop and it is a leading raw material for the textile and garment sub-sector, and definitelyoccupies the dominant position among natural fibers. With the rise of world population andpeople’s living standard, cotton will continue its dominant place in global fiber consumption. Asa small cotton-planting country, in terms of its present export scale, Ethiopia has a rather largeexport market.2.11 Cotton production and marketing constrainsAccording to a study conducted by the Ministry of Agriculture, cotton production and marketingfaces various constraints. The nature and type of the constraints are different. On the production 30  
  43. 43. side, the constraints are related to the absence or limited availability of research and extensionservices and inadequate supply of inputs, while on the marketing side, the constraints are relatedto lack of capacity to supply quality products, inadequacy of the existing infrastructure and lackof finance. Some of the constraints are as follows.Strengthening the development of human resourcesQualified and trained human resource is the most important factor in production, marketing andgeneral management. The development of human resources is of practical importance andurgency for the developing countries, which possess the advantages of raw materials, labor forceand market potentialities. Labor-force with low cost and high quality is a vital element ofshowing the comparative advantages of the industry, and is also to create the most competitiveenvironment for foreign investments.Education and training to enhance the comprehensive qualities of the staff on the public farmscan be a concrete and effective method of reinforcing the development of human resources. Thetraining of personnel can be performed at two levels:Train personnel of medium and advanced level for cotton management and administration andtechnological research. Identify training plans and regulate the management methods oftraining; reform the management measures; select devoted and excellent experts in the cottonproduction, management, administration, and technology for training personnel in batches indefinite time schedule. Train managers, workers and farmer at the basic level. Improve trainingmethods to rapidly enhance the trainees’ basic quality and skill.Production constraintsAccording to the reports of RATES, Kenya and China Textile Planning Institute of ConstructionChina, some of the constraints in the development of cotton sub-sector and measures aresummarized belowShortage of improved seed VarietiesThe seed varieties available in the country are either inadequate or do not meet the requiredinternational standards or both. Not much research efforts are made to develop cotton seedvarieties which can allow the production of cotton of acceptable quality and quantity. The seedvariety needed to produce the type of cotton in great demand in the international market is longfiber seed, and it is not available in the country. More seriously, minimal research efforts aremade to the multiplication of those seed varieties which are already known and used in other 31  
  44. 44. countries. These constraints have seriously undermined the effort to improve cotton productivityand quality.Surveys demonstrate that in Ethiopia, cotton plants are primarily American species--- Deltapint90 and Acalasi (SJ-2). However, these species have been used for more than 20 years, thusgiving rise to the serious problem of species ageing and degeneration. Generally, species will belimited to a 3-5 years use in the major cotton production countries, because by renewal ofspecies, yield can be increased by l0%-15%., in some cases, even by 30%. Since 1990s, the cotton species have come into a new utilization era from normal cotton tocrossbreed cotton and pest-resistant cotton. There are two ways to produce crossbreed cotton.One is breeding among species, or subspecies. This has obvious advantages and is an effectiveway to increase the yield, quality and pest- resistance.Another approach is the development of genetically modified Pest-resistant cotton usually refersto Bt gene-transformed cotton. Its successful breeding opens a new technological path for anti-pest cotton species.The world has come into the era of supplying seeds commercially instead of breedingindependently. It is advocated that seeds for production be replaced every year and that farmsand farmers not to keep their seeds. Seed breeding, crossbreeding, processing, testing, packingare all done in industrial way. For example, China’s cotton planting acreage has been 4.5-5million ha. planting acreage of pest-resistant cotton (Bt cotton) has reached 30%, crossbredcotton is 15% , demonstrating a strong developing trend. Indian cotton acreage is 7-7.5 millionha, 50% being crossbred cotton. At the same time, America has cotton acreage of 5-5.5 millionha, 60% of which is anti-pest Bt cotton. These giant countries in cotton production often usetheir breeds for 3-5 years. It is generally held that new breeds will increase yield by 10%-15%,the highest being 30%. In this way, quality as well as its resistance to pests, will also beimproved.Shortage of technical inputsNeedless to say, if one is to meet required quality standards, availability of adequate amounts oftechnical inputs- fertilizers, pesticides, herbicides and better equipment is crucial. The reality inEthiopia is, however the reverse. In spite of its visibility by its absence, the attention given toprovide such inputs to the farmers has been minimal, and this has had an obvious negativeimpact on improving quality and productivity. As cotton is prone to attacks by different types of 32  
  45. 45. pests, absence or inadequacy of pesticides has forced textile factories to receive inferior rawcotton damaged or infested with honey dew caused by the excretion of sucking insects likeaphides. Following measures are suggested to improve the situation.In Ethiopia, large-scale farms are highly mechanized. The cleaning of the remaining old Plants,tilling, raking, leveling, sowing, and preventing pests, diseases and weeds, are mostly dependableon machineries. Large tractors, sowing machines, leveling machine, large cotton-ginningmachines, Oil extractors and diesel generators are mainly from the former Soviet Union andGermany. All these machines, suffering from ageing to all degrees and shortage of spare parts,need renovation. The problem of ageing and shortage of parts also restrict the cotton yield andquality. The enterprises should reinforce their maintenance work of equipments. Make full use ofthe existing machinery potentialities, put into use new parts, and bring down the malfunctionrate. Thus, they can raise the production capability and efficiency and bring into play the scaleeffects of large farms.Fiber quality testFiber quality test is the foundation on which cotton quality and price are assessed. Public farms,on the basis of the existing fiber tests, should reform and introduce new state of art testequipment, improve cotton fiber test laboratory, enhance the testing measures so that, they canmake a series of scientific test criteria and procedures for the assessment and regulation of cottonquality.The government cotton administration should set up agencies to supervise cotton quality. QualityTesting Station should be established in different cotton producing regions. It should becompulsory that cotton producer, when applying for government’s financial aid and exportsshould testify cotton in terms of quality by the testing certified agencies. The technical staff inthe testing laboratories should be qualified from the recognized institutions.Large-scale farms should set the role modelLarge-scale state farms are the leading force to increase Ethiopian gross output of cotton.Therefore, the large scale farms should take the initiatives in utilizing new agriculturaltechnologies, new varieties and planting techniques. And thus act as an example for privatefarms and traditional farmers to follow suit. This will drive Ethiopian cotton subsector toadvance. 33  
  46. 46. Equalizing fertilizationFertilizer, being the “food” of cotton, is an important factor of improving cotton yield, theincrease percentage being 30-50%. Now the advanced cotton-planting countries have undergonethe transition from single nutrition to multiple nutrition and the transition from nitrogen fertilizerto the combination of nitrogen with phosphate, potash and trace elements.Ethiopia uses a rather small amount of fertilizer. Since there have been no fertilizer factories inthe country, all fertilizers depend on imports. The amount of fertilizer is as low as 17kg/ha, incomparison to 83kg/ha for the average global level, 97kg/ha for the North Africa, and1,125kg/ha for China. The recommended amount for Upper Awash is N 64kg/ha and P 46kg/haand for Tendaho Farm Carbamide 100kg/ha. The fertilizer method is manual spraying along withdiammonium before sowing, followed by disc harrowing, and addition of Carbamide during theperiods of flower and boll. Control of disease and pestsMajor cotton pests in Ethiopia include bollworm, pink bollworm, leafhopper, aphid. Cotton-leafacarid, trips and leaf miner. Chemical pesticides are Polyethrine, Thiodon, Carbamate,Endosulfan, Pyrethroids and Deltonet. All imported from the U.S.A, U.K, France, andGermany.Diseases and pests cause 30% loss of cotton production and also affect the cotton quality.Therefore, forecast teams of cotton diseases and pests should be established and integratedmeasures should be adopted to control diseases and pests to ensure high yield and quality ofcotton.Absence of extension servicesExtension service to small-scale cotton producers is virtually non-existing. What ever isproduced at this level is entirely using traditional practices which can ensure neither adequate norquality production. The quality constraints on its part have diminished the potential earnings ofsmall scale farmers. In general absence of extension services have impeded the expansion ofmodern cotton production practices in the country.Limited Research workOverall limited attention is given to cotton production in the country. Research on improvingproductivity is minimal. There is only in one center-Melka Werer that some research is 34