In spite of being the 2nd largest RMG exporter country in the world and the upcoming denim king in the field of export, our primary textile sector i.e. spinning industries are totally depended on cotton import to manufacture the required amount of yarn in spinning industries. Bangladesh imports cotton from almost 42 countries around the world.
Figure 1: Diversification of cotton sourcing is a crying need for the spinning industry.
Statistics show that Bangladesh imports cotton from India approximately 26% but the real scenario is not exactly known. According to a business report of Maasranga Television, approximately 60 percent of cotton is imported from India. This means that we are going to push this emerging sector towards single-source dependency. This type of dependency especially towards India on the context of cotton business between India and Bangladesh is not good for sustainable cotton business. It is high time for us to diversify our cotton sourcing to overcome this situation.
Why single dependency can ruin our emerging sector gradually
Figure 2: Country-wise cotton import shares. Courtesy: USDA, Bangladesh Bank
In 2010, the Indian Government imposed restrictions on cotton export to Bangladesh that affected our textile value chain badly at that time. In recent years, the anti-dumping policy is imposed on Jute and jute products of Bangladesh. As a result, one of the main concerns of cotton-related industries is the unexpected implications from India to Bangladesh. This type of circumstances can create a catastrophic situation in our emerging Textile Industry.
No alternative except Indian cotton for local yarn
The spinning industry is producing yarn for two different market segments, one is the local yarn for the production of home textiles, and another is for export-oriented RMG and supportive industries. Actually, export-oriented yarn quality has a far difference with local yarn. Local spinners consume Indian cotton for producing local yarns for several reasons.
Unavailability of several types of cotton like 29mm, 30mm, 31mm except for India. Sometimes they collect from other sources but cannot meet the quality yarn.
The price difference between Indian cotton and another sources cotton on the context of same quality.
Spinners are not so much concern about yarn quality.
Shohel Rahman, CEO of Bridge Asia Ltd opined that at present there is no alternative without Indian cotton for the production of local yarn due to the affordable price and lower lead time as well as availability.
It is a good news that some local entrepreneurs of Bangladesh are trying to replace Indian cotton with West African cotton. But, this is not on a large-scale production stage.
According to Director of Infinia spinning Ltd, Mominul Motin Tushar, “For proper coordination and proper quality management, we can replace Indian cotton with West African cotton.’’
Local yarn market is in a critical situation due to wastage export to Abroad
In many cases, the yarn which is produced from cotton wastages in the spinning industry known as Rotor yarn that is used in home textiles and denim production. Continual improvement of the denim industry, which is totally export-oriented, the demand for the local yarn is increasing. The whole denim market consumes local yarn that is generally used in home textile in huge amount and collected from the market at a higher price than the home textile consumer. As a result, local spinners are showing an unwillingness to sell their yarn to home textile manufacturers. This causes the crisis of local yarn in home textile and affects their production at a serious rate as well as they feel concerned about losing the competitive market of USA with India and Pakistan.
According to a Daily star Report, Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA) proposed that the government should give permission for the duty-free import of 10 single, 16 single and 20 single open-end yarn (for towel production) through land or sea port from India or Pakistan, which would be 15-20 percent cheaper in price.
It was also proposed that a five-year cash incentive scheme for exports to the US market that would increase the export basket of these products from USD 1.2 billion to USD 2 billion over the period. Putting in place measures to open up the market for importing raw material at most competitive rates and the implementation of policy measures that would not only protect the industry but also allow Bangladesh to effectively take advantage of the China-USA trade rift, where China's textile exports to the US may soon face further duties. It is a prime time to cash in on the China-US trade war and put Bangladeshi home textile/terry towel export in an advantageous position over India/Pakistan.
The possibility of source diversification of cotton in export-oriented yarn market
Owing to lower lead time, comparatively better quality, availability and competitive price, Export oriented yarn market consume the huge amount of Indian cotton every year that pushes the spinning industry towards single-source dependency. The rate of consumption of Indian cotton is increasing at an alarming rate. Previous year cotton import statistics from India is given below:
Figure 3: Cotton Import trend from India.
But, there are several possibilities in hand to go out from single dependency to diversification of cotton import source in Export-oriented yarn market to ensure sustainable cotton supply in our existing spinning industry. Various possibilities are given below:
Bangladesh can enter the supply chain of the different cotton initiative
Due to the worldwide environmental issue, sustainability and sustainable goal as well health and safety, different cotton initiatives are becoming popular day by day. They are keeping their great impact in global cotton supply chain continuously. Different global brands and retailers have acknowledged the works worldwide. They offer various privilege towards manufactures whether manufactures use the different initiative cotton for their product manufacturing. It is a good time for Bangladesh to join this new revolution and consume cotton from these sources and giving the privilege to attain higher price in their product as well as promoting the possibility of promoting sustainability that helps to diversify our RMG market. Different cotton initiatives are such as Better Cotton Initiative (BCI), Cotton Made in Africa (CIMA), Organic Cotton.
According to a cotton specialist, Abdul Wadud, CEO & Management Consultant at TRANSFORM opined that “There is no concern about the cotton quality of different cotton initiatives. Many manufacturers are using their cotton simultaneously.''
Mohammad Mahamud Alam, Deputy General Manager, Noman spinning Mills Ltd opined that “In our Noman Group, we use different types of cotton initiatives cotton according to buyer requirement because RMG exporters generally get extra privilege for using different cotton initiatives cotton for manufacturing products from foreign buyers.’’
Figure 4: Partners of ‘Better Cotton initiative’. Courtesy: BCI
But, some uncertainties are existing in our country about the cotton quality of different cotton initiatives especially cotton made Africa and other initiatives. Many manufacturers seem that European and other western investors are trying to establish their business agenda in the name of sustainability and other issues.
According to Md. Majibur Rahman, General Manager, spinning Division of Envoy Textile Limited “We have several unpleasant experiences about the cotton quality of cotton made in Africa. At this moment, For the sake of buyer requirement, we use cotton made in Africa with cotton to attain our desired quality yarn as well as customer satisfaction.’’
Actually, the possibility of consumption of different cotton initiative cotton creates the opportunity of diversification of cotton sourcing in disguise for Bangladesh. If Bangladesh capitalizes this opportunity, our spinning industry will be more stable and hassle-free.
There is no concern about the cotton quality of different cotton initiatives. Many manufacturers are using their cotton simultaneously.
Selection of cotton in an innovative way and better policy research optimization
Selection of raw materials in coordination with price and desired quality from different sources is an important factor in the cotton industry. Mill owners should be concerned about the cotton quality of different sources and go out from using cotton from the same source in the whole Year. The Technical persons in the industry should think out of the box and use different sources cotton of the same quality in different time, and make them understand the owners about its importance for getting desired quality yarn as well as increasing profitability and resource optimization.
According to Shohel Rahman, “At the time of any cotton harvesting and initial storage, cotton quality is optimum and cotton quality is deteriorating with the time period. I give a suggestion towards spinners that you will collect any type of cotton from any source at the time of cotton harvesting.''
He also added, ‘' Generally Indian cotton is harvested at the month of October. On the other hand, Australian cotton is harvested in the month of April. Everyone should use cotton at the time it's harvesting. Generally, Mill owners are usually using the same type of cotton around the year and arise different quality issue. Mill owners should use same type of cotton from different sources in the different time by proper cotton management and better policy as well as establish strong research and development wings where they test different sources of cotton in sample size''
Potential sources for cotton sourcing around the world
Besides India, Bangladesh is importing cotton from West Africa, East Africa, Brazil, CIS countries, The United States of America, Latin American countries and Australia. A proper balance should be considered for future cotton sourcing to reduce supply chain risk. Though it is not easy to collect cotton from diversified sources in the perspective of Bangladesh, an investment for this in cotton import and corresponding financial and technical management will be worthy enough to remain safe in a volatile world.
Figure 5: Worldwide cotton production (Country wise). Source: STATISTICA.
Mohammad Mahbub Alam said, "Africa could be next big destination for cotton sourcing. In spite of the contamination problem, African cotton quality is increasing day by day. At present, we import approximately 20% of our total cotton import from Africa. If they can reduce lead time and ensure reliable financial technical structure in importing from African region that will provide a sustainable spinning sector in Bangladesh."
Shohel Rahman, CEO of Bridge Asia Ltd, said that most of the mill owners are feeling the interest to buy afloat cotton from West Africa and East Africa because it takes 10-15 days to rush our Chittagong port. This procedure is very cost effective and hassle-free buying procedure rather than direct shipment from the African region, actually, shipment of cotton from Africa takes above 2 months or more to rush Chittagong port due to some unavoidable system loss. As a result, afloat cotton takes a great impact to consume a higher amount of African cotton Every year.''
The possibility of increasing US cotton consumption due to the battle of the commercial war
One of the biggest cotton producer's countries of the world, USA is trying hard and soul to find out any alternative market due to the embargo on China. Recently, Cotton Council of USA and big merchants of Cotton USA reveal that they see Bangladesh as potential alternative market and trying to increase their export in Bangladesh at 10 percent rate in every year to sustain their cotton business around the world.
Figure 6: Major Export destinations of USA Cotton (USDA).
Cotton Council of USA addressed our government for the amendment of cotton fumigation rule, the capacity utilization and increasing the capacity of Chittagong port that causes for higher lead time for importing USA cotton. Actually, these constraints and higher price create an unwillingness to import cotton from the USA.
If Bangladesh resolves this issue, US cotton is going to get a level playing field in Cotton Business. Moreover, US cotton is in a critical condition to find out their potential alternative market. At this moment, If Bangladesh is successful to consume a higher amount of US cotton by proper price fixation, will create the huge possibility of product diversification in RMG industry and minimize the risk in the field of cotton business as well as to go out from single source dependency.
Shahriar Ahmed is a dynamic manufacturer whose company, Apex Spinning and Knitting Mills Limited, does weaving, all over printing, cut and sew, placement prints and make stitching. He had problems with needle breakage and shade runs…until he was introduced to COTTON USA. Now, this valued partnership allows him to forge a long-term partnership deals with premium brands and retailers.
According to Shohel Rahman opined that Pricing of US cotton is a major concern for Bangladeshi Importers. Manufacturers of Bangladesh use US cotton in most cases for the production of white yarn where higher quality cotton is required. They can’t increase their customer at a satisfactory level in Bangladesh. Without price reduction, they cannot grab the Bangladeshi market in this competitive stage.
Conclusion
Proper coordination of all measures taken by the top to bottom stakeholders of cotton business in Bangladesh, strong and contemporary legislation Act as well as strong policy research and capacity improvement in Research and development and creation of required technical persons can gift us a sustainable spinning industry by diversification of cotton import at the supreme level.
