The South African market for cotton lint is contracting. Current
consumption of 47,000 tonnes is the lowest in a decade and with one
of the large spinners closing operations in 2008, consumption could
decline further. Local production of cotton lint falls below
current demand and imports supplement the local crop on an annual
basis. With the decline in local production of cotton, imports are
an increasingly important percentage of overall supply. The major barrier for foreign cotton producers in the South
African market is the current tariff structure. Imports of cotton
from SADC1 member states enter the South African market
at a zero rate of tariff whilst imports from non-SADC member states
pay a R1.60 per kilogram tariff. As a result, virtually 99% of
cotton imports are sourced from within the SADC region and non-SADC
producers are simply not price competitive at this level of
tariff. The outlook for the cotton sector in South Africa in the
long-term is not positive with some market commentators predicting
a worst case scenario of a complete disappearance of the local
spinning industry. In the medium-term, there does however exist a
viable market for imports, especially imports of organic cotton.
Demand for the latter is expected to grow exponentially over the
next few years as retailers, led by the Woolworths Group, move to
increase their ranges of organic cotton garments.
1 Southern African Development Community.
Members are Angola, Botswana, DRC, Lesotho, Madagascar, Malawi,
Mauritius, Mozambique, Namibia, Seychelles, South Africa,
Swaziland, Tanzania, Zambia and Zimbabwe. |