Mozambique: Cotton exports in H1 dip 71% YoY

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Mozambique: Cotton exports in H1 dip 71% YoY

11:42 CAT | 10 Dec 2024

File photo: Notícias

Cotton exports earned Mozambique US$7.6 million (€7.2 million) in the first half of 2024, a drop of 71% compared to the same period in 2023.

According to the central bank, cotton exports fell by the equivalent of US$18.5 million year-on-year, compared to US$26.1 million exported in the first six months of 2023.

“This behaviour is explained by the 4.5% drop in the average price of cotton fiber on the international market, in a context in which the volume exported increased by 36.2%,” the central bank report points out.

According to data provided to Lusa in May by the president of the Cotton Association of Mozambique (AAM), Francisco Ferreira dos Santos, cotton in Mozambique represented an annual average of US$30 to US$50 million in exports in the last ten years, making it an essential crop. “It has a huge value chain (…) it is an almost sacred culture, with catalytic effects on the economy and demography,” he said.

The Mozambican government allocated a subsidy for the purchase of cotton of five meticais (seven cents) per kilogram in the current campaign, stabilizing prices and benefiting 600,000 farmers, in addition to encouraging a “culture of trust”, Minister of Agriculture and Rural Development of Mozambique, Celso Correia, announced in May.

“This price stabilization and this subsidy that we are approving will affect around 100,000 families. We are talking about 600,000 people who will have their income stabilized,” Minister Correia said.

For the 2023/24 campaign, a minimum price of 30 meticais (€0.43) per kilogram for the sale of cotton was set, including the subsidy to be granted by the government, against 33 meticais (€0.49) per kilogram and seven meticais (€0.10 ) in the previous harvest.

The shortage of rain in some regions of the country due to the ‘El Niño’ meteorological phenomenon, the continued abandonment of production in the province of Cabo Delgado, one of the largest producers in the country, but above all the excess production on the market caused the price to fall and led, for the second year running, to the establishing of a subsidy to maintain income for producers.

“There is global pressure exerted by countries where there are subsidies, which is pushing the price of cotton down. A lot of cotton is being produced, and ‘stocks’ are rising,” Minister Correia explained.

Mozambique represents less than 0.5% of global cotton production, in a market led by countries such as the United States, China and India.

In the 2022/23 campaign, 37,400 tons were sold, with state subsidies of 261.6 million meticais (€3.8 million).

Source: Lusa