A dispute between
private sector spinning and weaving companies and cotton exporters is
continuing to overshadow the textile industry despite efforts to contain
it.
The Federation of
Cotton Exporters (FCE) has reached an amicable agreement with local
spinning and weaving producers to halt new export contracts until early
June, according to the independent Egyptian newspaper El-Masry El-Youm.
The agreement grants local companies the right to obtain cotton at the
export rate minus setup fees.
However, the crisis is not yet resolved
Mohsen El-Gilany,
head of the Holding Company for Spinning and Weaving, the largest
company in the sector, announced that a meeting will be held tomorrow
with factory owners to mediate a solution.
Local spinning and
weaving companies have vowed to shut down their factories if the
government does not comply with their demands to cease cotton exports
and lift duty charges on imports.
>A strike in front of
the cabinet was scheduled for Saturday but has been postponed until
Monday awaiting the government’s reaction“The private sector
cannot afford the new yarn prices; they are simply demanding that the
government subsidise their operations,” a source in the General
Committee for Cotton Trade (GCCT) tells Ahram Online
The unprecedented
growth in cotton prices has combined with a diminishing supply of yarn
to stretch all of Egypt’s spinning and weaving companies.
The private sector seems to be suffering the most.The FCE has strongly
opposed the demands of the distressed companies, warning that cessation
of exports before fulfilling all contracted commitments will lead to
major problems for traders that could result in the loss of world export
markets.
“Ceasing exports will
be a true catastrophe for the industry. Egypt’s reputation in the
cotton market will be severely tarnished…. if we lose a client we’ll
never get him back,” says the GCCT source
A shrinking export market would leave local farmers reluctant to cultivate cotton in favour of more profitable crops.The FCE submitted a
memorandum to the Prime Minister explaining the grave economic, legal
and agricultural consequences of complying with the spinners and weavers
demands
The memorandum
concluded that local company production needs are already secured
through 300,000 quintals (3,000 Kg) which have not yet been contracted,
in addition to a further 300,000 that were recently imported
The FCE said there are contractual commitments this season to export 860,000 quintals (86,000 Kg) which are yet to be fulfilled
Date:5/10/2011
Source:www.icac.org