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Cotton Production and Marketing Trend in Ethiopia: A Review

Article  in  Cogent Food And Agriculture · November 2019

DOI: 10.1080/23311932.2019.1691812

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FOOD SCIENCE & TECHNOLOGY | REVIEW ARTICLE

Cotton production and marketing trend in
Ethiopia: A review
Melesse Zeleke1, Mohammed Adem2, Mezgebu Aynalem3 and Habtamu Mossie4*

Received: 28 June 2018 Abstract: Ethiopia is one of the African countries that produce and export cotton. It
Accepted: 04 November 2019
has a long tradition of cotton cultivation with an estimated area of 2.6 million
First Published: 14 November 2019
hectares suitable for this product. Of these 65% is found in 38 high potential cotton-
*Corresponding author: Habtamu
Mossie, Agricultural Economics, producing areas and the remaining 0.9 million ha or 35% is in 75 medium potential
Wolkite University, Ethiopia. districts. Of the total land under cotton cultivation, 33% is cultivated by small
E-mail: [email protected]
holders, 45% by private farms and 22% are state-owned farms. But, Ethiopia shares
Reviewing editor:
Fatih Yildiz, Food Engineering and
only 5% of total cotton produced in Africa. This is because it recently cultivates only
Biotechnology, Middle East 3% of the total suitable land for cotton production. Ethiopia produces an average of
Technical University, Ankara, Turkey
33,842.11 metric tonnes in the year 2000–2018. The production trend shows some
Additional information is available at
the end of the article
declining stage since 2012. Natural and technological constraints were existed for
cotton production in this country. The country also participates on the export
market and earned an average of $14,336,667 especially in the last decade.
Currently the country exports with an average price of $1.45. Cotton market has
also some constraints like price disincentives and lack of market information.
Despite its inefficiency the cotton sector still has its own vital economic role on
textile industry and employment creation. It employs about 52,754 smallholder
farmers. Therefore, it is recommended that the government, the producers and
other relevant stakeholders should work in collaboration to solve the constraints.

ABOUT THE AUTHOR PUBLIC INTEREST STATEMENT

Habtamu Mossie was born Deber Elias Woreda, Ethiopia has a long tradition of cotton cultivation
East Gojjam Zone of Amhara Regional State in with an estimated area of 3 million hectares.
Semepetebr 1993. He also attended his ele- Though its role on textile industries, the current
mentary, secondary and preparatory school level of cotton production and marketing is not at
education at Deber Elias Secondary and its optimum level due to immense internal and
Preparatory High School in East Gojjam zone. external factors. Therefore, the author is Highly
After completion of his high school education, he interested to recommend a collaborated work
joined Jimma University College of Agriculture between the government and farm Households to
and Veterinary Medicine (JUCAVM) in encourage this product.
October 2013 and graduated with BSc Degree in
Agricultural Economics in June 25/2015. Soon
after his graduation, Assistance Lecturer
I employed him at Wolkite University. After
two year experience the author joined Bahir Dar
University College of Agriculture and
Environmental since in October 2018 to pursue
of his MSc degree in Agricultural Economics in
regular program. After the accumulation of my
master degree I joined Injibar University College
of agriculture, food and climate as Lecturer in
department of Agricultural Economics.

© 2019 The Author(s). This open access article is distributed under a Creative Commons
Attribution (CC-BY) 4.0 license.

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Subjects: Agriculture & Environmental Sciences; Agriculture; Economics

Keywords: cotton; production; marketing; trend and constraints

1. Introduction

1.1. Background and justification

Cotton is an important cash crop to a number of both developed and developing countries. It has
a strong poverty reduction impact, because it is cultivated in small family farms in areas where
opportunity for growing other crops are very limited and per capita income very low (Goreux, 2004).

In 2007, cotton was grown in 90 countries. Cotton cultivation cost is lower in Africa as compared
to other countries. But, the share of African countries in the world market is only 12% (USDA,
2010). In this continent, cotton is typically a smallholder crop, and the main cash crop grown in
rain-fed land where the use of purchased inputs such as chemicals and fertilizer is minimal
(Bosena, Bekabil, Berhanu, & Dirk, 2011).

According to Sneyd (2006), production of cotton in sub-Saharan Africa raised by a factor of 8.5
from 200,000 tonnes per year to over 1,700,000 in 2004/05 while during the same period the world
production volume only tripled. However, over the past decade yields have stagnated at roughly
half due to lack of irrigation and due to inconsistency in the provision of inputs and advice across
the region. Additionally, the author showed that the land covered by cotton is increasing while the
productivity of cotton is still only half of the world’s production in Africa (Ibid).

Ethiopia is also part of sub-Saharan African countries that produce and export cotton. It has
a long tradition of cotton cultivation with an estimated area of above 2.6 million hectares
suitable for the cultivation. The major markets for Ethiopian cotton are Africa, Asia and Europe,
with Asia alone accounting for 67% of the total exports (EIA, 2012). Currently, the price of
Ethiopian cotton is determined by textile industry development institute as Grade “A” ($1.47/
kg), Grade “B” ($1.43/kg) and Grade “C” ($1.40/kg). But Ethiopia shares only 5% of total
production in Africa (Ethiopian Investment Agency [EIA], 2012; ESTC, 2006). Going through
these reports, despite its available land to produce abundant cotton, Ethiopia performed
weakly in its production and marketing of cotton products. Therefore, these contradicting
issues on the production and its marketing of cotton product enhanced us to review different
literatures.

1.2. Objectives
The overall objective of this paper was to assess cotton production and marketing circumstances in
Ethiopia, and it specifically reviewed;

● Cotton production trend in Ethiopia especially in the millennium

● The cotton production constraints
● The cotton marketing trend and
● The economic role of cotton production in Ethiopia.

2. Methodology
The design of this review study is involved a quantitative analysis. Intensive review of both
published and unpublished documents from websites of governmental and nongovernmental
organizations was undertaken. Therefore, the data collected, organized, analysed, interpreted
and evaluated here are obtained from secondary sources. Different authors and researchers
have written on this issue; all the available sources have been used to assess the current produc-
tion and market situations and the major constraints of cotton produce in Ethiopia. Therefore,

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descriptive statistics followed by its interpretation of the raw data obtained from organizational
sources were employed for the justification of the results.

3. Result and discussion

3.1. Cotton production trend in Ethiopia

Ethiopia possesses 2,697,640 million hectares of land suitable for growing cotton; an area that
equals the cotton land in Pakistan, the world’s fourth largest producer (EIA, 2012). Sixty-five
percent (65%) is found in 38 high potential cotton-producing areas while the remaining 35% is
in 75 medium potential districts. Of the total land under cotton cultivation, 33% is cultivated by
small holders, 45% by private farms and 22% are state-owned farms (Admassie, Seid, May,
Megquier, & Moreland, 2015).

Ethiopia recently cultivates 3% of the total suitable area for cotton production (EIA, 2012). The
annual production of seed cotton was approximately 120,000 tons in the year 2011 to 2013 with
an overall yield of 1.42 ton/hectare (Alebel, Firew, Berihu, & Mezgebe, 2014). Currently, majority of
the cotton cultivation takes place in the Awash Valley, with some cultivation also taking place in
Gambella, Humera and Metema. Ethiopia can also produce irrigated cotton. Out of 84,000 hectares
of land that is under cotton cultivation, only 35,000 hectares is irrigated. The major potential
cotton-growing areas include Omo, Ghibe, Wabi-Shebelle, Awash, Baro-Akobo, Blue Nile and
Tekeze river basins (ICAC, 2014).

As shown in Figure 1, Ethiopia produces an average of 33,842.10 metric tons of cotton in

the year 2000–2018. With these year durations, Ethiopia produces a minimum of 14,000 in
the year 2001 and a maximum of 62,000 metric tonnes in the year 2012.

3.2. Cotton production constraints

For the last several decades, Ethiopian cotton farmers have primarily been using one major seed
variety which is becoming increasingly vulnerable to pests and diseases. According to Textile
Industry Development Institute (TIDI) report in 2015, the cottonseed that currently being used
varieties are (e.g. California and Delta); that were sourced from the United States more than 20
years ago (TIDI, 2015).

During the most recent crop season, farmers reported sizeable losses resulting from bacterial
blight, Flea Beetle, Pink Bollworm and Mealy bug. In some cases, these losses came after unfa-
vourable weather conditions occurred through several rounds of pesticide application. Meanwhile,

Figure 1. Lint Cotton production Cotton in MT

trend in Ethiopia (2000–2018). 70000

60000 62000
Source: FAOSTAT (2011) and
USDA (2018) 48000 55000
50000 47000 45000
45000
40000
40000
38000 38000
38000
30000 32000
28000
20000 20000
20000 15000 20000
20000 18000
14000 Cotton
10000 Prodn.
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Year

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the cotton bollworm is one of the pest challenges farmers struggle to manage. Commercial cotton
farms are said to be experiencing a serious shortage of labour to help with planting, weeding and
harvesting. Many labourers are reportedly choosing to work at the state-owned sugar plantations
where they receive better wages and benefit packages which include housing, transport and
medical care. In other instances, labour is scarce because of the seasonal demand for workers
to help with the coinciding cereal harvest. These labour shortages have occasionally led to delays
in some farms harvesting their cotton which has impacted the quality of the harvested cotton.

In addition to the challenge of finding enough labour, some farmers are holding back growing
more cotton, switching to other crops, or quitting the business altogether due to the increasingly
erratic weather conditions, difficulty accessing inputs, lack of credit, rising production costs and an
inefficient marketing system. GOE has placed considerable emphasis on ramping up sugar produc-
tion with the intent of making the country one of the world’s top 10 sugar producers. The Tendaho
cotton farm, which previously was one of the country’s largest cotton-producing farms, was
converted to sugar several years ago. In addition to Tendaho, several other smaller cotton
operations have switched to sugar production.

Second, the limited availability of quality inputs, including seed and fertilizer, and pest challenges
have restricted the potential expansion in cotton production. Land tenure rights as well as natural
disasters, such as floods, especially along the Awash River have also negatively impacted growth in
cotton production. The third oft-cited reason for stagnation in the country’s cotton production is the
previous restriction from 2010–12 on exporting surplus cotton along with the fact that other crops, like
sesame, were more profitable to grow. As a consequence of the export restrictions, farmers planted
less cotton, opting for the more profitable sesame or other cash crops. In general factors that
constrain the production of cotton is shortage of improved seed varieties, shortage of technical inputs
including labour, absence of extension service and limited irrigation practices.

3.3. Cotton marketing trend in Ethiopia

Cotton is a major cash crop. From the 1940s to 1970s, Ethiopia was importing raw cotton to satisfy
the domestic demand of its textile factories. Following the establishment of state farms and large-
scale private farms in 1970s, the country started exporting cotton. However, due to the drought in
the 1980s, the country discontinued the export of cotton. Then, in 1994/95, the country resumed
exporting lint cotton (MoARD, 2005).

At an extraction rate of 37%, the average yearly domestic production of lint cotton during the
period 1996/97-2000/01 was about 29,849.7; of which about 24,861.0 metric tons or nearly 83%
was domestically consumed. The respective share of textile mills and handlooms and handcrafts
was 86% and 14% of the annual domestic sales of lint cotton, respectively (Mulat, Tewodros,
Solomon, Asefa, & Temesgen, 2004).

According to data obtained from the Ethiopian Revenue and Customs Authority (ERCA, 2016),
Ethiopia earned an average of 10.08 million USD in the year 2006/07-2010/11. There were dramatically
decline of cotton export from 10.6 million USD in 2009/2010 and 0.5 million USD in 2010/2011. It had
faced continuous difficulty in exporting cotton since USA exports cotton with high subsidy. The export
declined because Ethiopia banned exports of cotton in 2010 to protect domestic textile firms from high
international cotton prices. The ban did not yield its intended result of encouraging textile and apparel
manufacturers to use locally produced cotton for at least two reasons. First, some factories faced
financial difficulties in purchasing the desired amounts of local cotton.

Second, some factories needed higher grade cotton, which was not available in the local
marketplace, and therefore, had to import. After considerable discussion with commercial cotton
growers, the government decided to lift its cotton export ban which had been in place since 2013
(Global Agricultural Information Network [GAIN], Annual, 2015).

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However, after the ban was left at the end of 2012, despite rising local demand for cotton,
Ethiopia recently started exporting small volumes of cotton to Indonesia and few EU-member
countries. Tight local supplies, small export margins and price/quality competitiveness suggest
future exports will remain small. In early 2015, the GOE announced that it was going to resume
price controls on cotton in order to minimize the markups charged by middlemen. The price is set
by a government committee made up of the MOA, TIDI and MOT. This committee made the price
concerning the quality of the product and inflation rate of Ethiopian currency. In 2015, the farm
gate price for cotton was 30–38 birr per quintal, while the textile and apparel firms were purchas-
ing it for 50–60 birr per quintal and the average export price of Ethiopian cotton was $1.62/kg
(GAIN, 2015). Therefore, the prices of cotton were mostly steady with the cotton grade level. As
described in the background section in 2018 the average price of export cotton (Figure 2) was
$1.45 following October 2017/18 devaluation of Ethiopian currency (USDA, 2018).

3.4. Economic role of cotton in Ethiopia

Cotton as Industrial input: Cotton crop has direct connections with various agro-processing industries
like textile, oil mills and the livestock sub sector. In other words, the crop has a direct linkage with the
industrial sector. It is a major industrial input for textile firms. Currently, Ethiopia has about 14 textile
factories and 50 medium-to-large garment manufacturers. There is a relatively better FDI flow in the
textile and garment sector; especially many Turkish textile firms are relocating to Ethiopia. Hence, the
demand for raw cotton and fabric continues to expand as existing textile firms expand and new
domestic and FDI firms join the sector. While cotton produced by the state farms and private
commercial farms is mainly used in the modern textile manufacturing sector and to some extent
exported to foreign countries, cotton produced by peasant farms is for the large part used by the
handloom sector (Berihu, Mezgebe, & Alebel, 2015). The high-quality cotton yarn produced would be
packaged and supplied primarily into Ethiopia’s growing textile industry (80%), with surplus production
exported to the global textile and garment manufacturing market (20%) (EIA, 2014).

Employment creation: In 2016, about 30 textile companies and brands including the Bonprix or
OTTO, Rewe group, Tchibo, Ernsting’s family, Engelbert Strauss, Asos, Besteller, Dibella or AldiSüd put
about 50 million cotton made in Africa (CmiA) textiles on the market. More than 695,000 smallholder
farmers and their family members included more than 5,7 million people from Cameroon, Ethiopia,
Ghana, Ivory Coast, Mozambique as well as Zambia, Zimbabwe, Tanzania and Uganda are currently
part of the Cotton made in Africa program (Cotton made in Africa [CmiA], 2017).

Figure 2. Value of export cotton Value, 000 USD

in 2006–2017. 35000
Source: Alebel et al. (2014) and
USDA (2018) 30000
28922
25000

20000 19200 19684

17235
14313 16539
15000 14300 14509
10600 Cotton
10000 10438
Export
5000 5800

500
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year

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Similarly, Ethiopian textile and garment sectors are relatively labour-intensive. According to Ethiopian
development research institute (EDRI), the cotton sector employs about 52,754 smallholder farmers, 408
mechanized rain-fed farms and 107 mechanized irrigated farms in 2015 (Berihu et al., 2015).
Additionally, huge temporary employment opportunities are also generated from both private commer-
cial and state farms that are engaged in cotton production.

4. Conclusion and recommendations

4.1. Conclusion
Cotton is an important cash crop to a number of both developed and developing countries. Ethiopia is
also one of the African countries that produce and export cotton. It has a long tradition of cotton
cultivation. Therefore, the review concluded that though Ethiopia has a huge potential capacity to
produce both rain-fed and irrigated cotton it performed weakly. This is due to different production and
marketing constraints. These constraints can be derived from physical constraints, lack of technology
and agricultural inputs and lack of government support and development services. Hence, erratic
weather conditions, difficulty in accessing inputs like fertilizer and improved quality seeds, pest
challenges, absence of extension services on irrigation practices, shortage of seasonal labour, lack
of credit or financial constraints and rising production costs are identified as production constraints.
Similarly, an inefficient marketing system like inadequate knowledge about market standard, lack of
market information, absence of a system for contractual production and marketing arrangements,
inefficient communication and pricing inefficiencies are identified as marketing constraints.

4.2. Recommendations

● Extension service should be improved for the seed sector including the fertilizer provision, pest
management and irrigation services.
● Additionally, Ethiopian seed sector have to consider the cottonseed quality improvement.
● The government should give great emphasis on standardized grading in line with price
incentives. In addition, the government must work with business development services and
financial institutions to solve financial problems and bureaucratic requirements and to deliver
better producing and marketing information.
● Ethiopian commodity marketing institutions should work in collaboration to all actors to
disseminate market information to all producers and traders throughout the year.
● Also, producers must aware themselves that the cotton is a highly demanded product both in
the domestic as well as international market and should motivate themselves to solve
production and marketing constraints.
2
Funding Department of Economics, Samara University College of
The authors received no direct funding for this research. Business and Economics, Samara, Ethiopia.
3
Department of Agri Business and Value Chain
Competing Interests Management, Debre Markos University Burie campus,
The authors declare no competing interests. Debre Markos, Ethiopia.
4
Department of Agricultural Economics, Wolkite
Author details University College of Agriculture and Natural Resources,
Melesse Zeleke1 Wolkite, Ethiopia.
E-mail: [email protected]
ORCID ID: http://orcid.org/0000-0003-3733-8534 Citation information
Mohammed Adem2 Cite this article as: Cotton production and marketing trend
E-mail: [email protected] in Ethiopia: A review, Melesse Zeleke, Mohammed Adem,
ORCID ID: http://orcid.org/0000-0003-3733-8534 Mezgebu Aynalem & Habtamu Mossie, Cogent Food &
Mezgebu Aynalem3 Agriculture (2019), 5: 1691812.
E-mail: [email protected]
Habtamu Mossie4 References
E-mail: [email protected] Admassie, A., Seid, N., May, J. F., Megquier, S., & Moreland, S.
1
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