Ethiopia fixed the price of cotton at 29 birr to 32 birr a kilogram to allow cotton growers to dispose of accumulated stock estimated at 106,000 tons.
The price was fixed by a committee of cotton and textile industry players with government oversight. The committee met with Tadesse Haile, State Minister for Industry and included representatives of textile manufacturers, the Ethiopian Textile Development Institute and cotton growers.The main reason behind the stock excess was said to be a bumper cotton harvest in 2011-12. The total amount of cotton harvested during this time was about 79471 tons which was 60,000 tons more than the previous harvest due to the 80000 hectare increase in the total land being used for cotton.
At the same time textile factories had purchased several months of cotton in advance anticipating shortages following forecasts for increased demand and hence had excess leftover from the previous harvest according to a source from the Cotton Producers, Exporters and Ginners Association.
It is to be remembered that the government had fixed the price of cotton at 57 birr per kilo last year in conjunction with the ban on cotton exports put in place at the time.
Source: Addis Fortune