CAIRO // Cotton has done nearly as much as the pyramids at Giza to make Egypt a household name in far-flung places. But nearly two centuries since the cash crop first brought a tide of commerce and industry, the dominance of Egyptian cotton has ebbed, say farmers and industry observers.
The fields of the Nile River Valley were once covered with some two million feddans (800,000 hectares) of "white gold" during the 1950s and 1960s. Egyptian farmers decreased their crops to about 500,000 feddans during the 1990s and to approximately 330,000 feddans today, according to officials from Egypt's Ministry of Agriculture. While the year-old global economic crisis has accelerated the crop's free-falling prices, the true story of cotton's downward spiral dates back several decades and presents a cautionary tale about the perils of economic mismanagement and the pitfalls of liberalised global trade.
In the final analysis, say some agriculture experts, Egyptian cotton was just too good for its own good. "The textile industry wants lower-quality cotton at a cheaper price," said Adil Ezzi, president of Al Watani Cotton and Agricultural Development Company. "Now, there is a debate between the idea of improving the productivity of Egyptian cotton and keeping these varieties that have no competition anywhere else in the world, or producing lower-quality cotton at a lower price."
Egypt's soil and climate are uniquely suited to the production of long and extra-long staple cotton - a luxury fibre treasured for its soft feel, firmness and dense thread count. Only three to five per cent of all the cotton sold on the international market is long or extra-long staple. Manufacturers use Egyptian cotton, or Gossypium barbadense, in towels, bed sheets, haute couture clothing or any other textile that demands a particularly soft touch.
Only Pima cotton, a slightly shorter staple that is commonly grown in America's south-west, can compete with the unparalleled comfort of Egypt's crop. On the strength of that softness, Mohammed Ali, one of the founders of the modern Egyptian state, built a cotton export industry in the 19th century by shipping raw cotton to manufacturing plants in Europe. But it was not until the 1960s that another of modern Egypt's founding visionaries, Gamal Abdel Nasser, a former president, decided to extend cotton's ambitions.
"By that time, the Egyptian government thought they would increase and extend yarn production instead of exporting it as raw cotton," said Mr Ezzi. "Unfortunately, they established these industries but there was no development of the technology used in these factories to cope with international competition. That's why most of these factories are now dedicated to producing poor fibres." Such was the root cause of Egypt's current cotton conundrum: there is no business sense in using top-flight cotton plants to produce poorly-spun fabrics. And as the global textiles industry gradually moved its operations to low-income Asian countries, the market for Egyptian raw cotton exports moved with it.
For years, Egypt's government subsidised an industry that had long been a point of national pride. But in 1994, the rules changed. Centralised economic planning had gone out of style, and a new cotton trade liberalisation law removed government assistance in the sale of domestic cotton. Finally, a presidential decree in 2004 lifted protectionist tariffs on imported short and medium-staple cotton products just before the international Multi-Fibre Agreement expired, lifting a patchwork of quotas from the global textiles trade.
The floodgates were then open to the low-quality cotton from Asia that was more suitable for Egypt's low-quality textiles industry. Today, the results of these decisions speak for themselves. As Egypt's home-grown cotton business atrophies, manufacturers are buying more and more short and medium-staple cotton from Asia. Asian manufacturers, in turn, rely on their domestic cotton growers, said Saad Nassar, a policy adviser for the ministry of agriculture.
Egyptian cotton fields grew 765,000 qantars of cotton (37.5 kilograms) this year, compared with 3.5 million qantars in 2008, according to Egypt's Central Authority for Statistics. Meanwhile, Egyptian cotton processing factories purchased 447,000 qantars of imported raw product mostly from Asia compared with only 53,000 qantars last year. "The government propped up an industry that made poor-quality cotton from a high-quality product," said Mohammed Abdel Maguid, director of Cairo's Cotton Research Institute. "If you have good materials and a bad system, then you lose your chance."
But the decline of Egyptian cotton cannot be blamed solely on domestic agricultural policy. Changes to consumer tastes have shifted in the past two or three years, as the quality of cheaper synthetic products has improved. That, combined with the global financial crisis, sapped what little appetite remained for high-quality cotton. Where long and extra-long staple cotton has thriven, it has been largely with government help. To the chagrin of developing nations, the US government provides substantial subsidies for its cotton farmers, including those who grow high-quality Pima, through direct handouts and loan covers for foreign importers.
A 2002 study by Oxfam America, a global anti-poverty organisation, revealed that America's 25,000 cotton farmers receive about US$2 billion (Dh7.3bn) to $4bn each year for their crops, about 80 per cent of which is sold abroad. If the crutch for US cotton were removed, it would raise the price of cotton on the global market by six to 14 per cent, Oxfam estimated. In recent years, the Egyptian government, which global financial institutions such as the International Monetary Fund have long encouraged to embrace market reforms, has brought back their cotton subsidies, said Mr Nassar.
After about 1.3 million qantars of raw cotton went unsold following the 2007 harvest, the agriculture ministry decided to offer 100 Egyptian pounds (Dh67) for each qantar of cotton that Egyptian farmers were able to sell domestically. The following year, less than half of Egypt's cotton crop was sold, despite the government assistance. This year, Mr Nassar said, the government offered a subsidy of 150 pounds per qantar at a cost of 225 million pounds to Egyptian taxpayers.
But the economic band-aid that subsidies provide cannot be sustained in the long term, so the Egyptian government is exploring other means of helping farmers. Mr Meguid's Cotton Research Institute is in the midst of engineering new cotton varieties that are better suited to withstand drought and disease - a long-term gambit the Cotton Research Centre hopes will increase cotton yields to 11 qantars per feddan from the usual seven qantars.
The ministry of agriculture is also planning to assist farmers with cultivation. Cotton is an unusually labour intensive crop with 30 to 35 per cent of the cost of the cotton coming from the labour needed to pick the crop. Unlike in cotton competitor nations such as India and China, Egyptian labour is not cheap. Mechanising the human component of production would cut costs considerably, said Mr Nassar, who added that the ministry is in talks with agriculture companies Monsanto and Deltapine to consult on mechanisation projects.
Until a solution is found, industry analysts expect more and more farmers to switch to other, more lucrative crops. Among the alternatives, rice is a particularly attractive option. While it is less expensive to cultivate than cotton, rice demands far more of Egypt's precious water resources. The government has taken to fining farmers who grow rice outside of designated agricultural zones. Since water comes at no cost to farmers - it would be politically impossible to start charging farmers for water, said Mr Nassar - urging rice farmers to switch back to cotton is a tough sell.
But sell they must, said Mr Ezzi. If farmers continue to turn their backs on what was once their national crop, Egypt risks losing an industry that helped built this nation. "The government should put down some sort of base price or guaranteed price for cotton so that the farmers who would not sell their cotton can sell it to the government," said Mr Ezzi. "This continuing decline will make the trend difficult to reverse."