2 NOV 2020
South Africa’s cotton production has grown by almost 800% since 2013 following the establishment of the South African Sustainable Cotton Cluster (SCC) to build capacity in the Southern African cotton industry value chain. The SCC was funded by an initial grant of R200m from the Department of Trade and Industry.
According to Thomas Robbertse, chief executive of IQ Logistica (IQL) – the agtech company which developed the cloud-based SCC Operations Visibility Platform that integrates the cotton supply chains – the set-up of a cotton spinner is very capital intensive, costing anything from R1bn upwards to install.
“Despite the number of ginners declining from 24 in the heyday of local cotton production to the present seven ginners, it is still able to accommodate the cotton that is currently farmed. However, South Africa lacks spinning capacity meaning that most of the lint cotton is exported for processing and manufactured into clothing items, before being imported again.”
Employment opportunities lost
Robbertse says last year’s cotton lint left South Africa’s shores at about R24/kg, whilst the finished product was imported at around R500/kg. “Based on the export of about 42,840-tonne cotton lint and the concomitant value loss of R476/kg (R500/kg – R24/kg), the opportunity loss in local beneficiation to the economy comes to roughly R20,4bn. Not to mention the many potential employment opportunities that have gone wasted.
But according to Robbertse, it is not all bad news as the export of cotton lint does earn the country important foreign exchange and helps farmers to offset some of their input costs like fertiliser, fuel and equipment that are all dollar-based.