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An opportunity in disguise

  • Published at 01:42 am April 20th, 2018
An opportunity in disguise
Bangladesh is the second largest exporter of apparel to the world. It is also one of the world’s largest importers of the raw-materials needed to make apparel. The data of Bangladesh Textile Mills Association (BTMA) says that Bangladesh’s raw cotton requirement stands at 11.50 million bales, if 100% capacity is utilized. Bangladesh can barely meet 1-3% of this demand. Bangladesh’s textile and apparel sector’s condition is very closely linked to the global demand and supply situation of its chief raw material: Cotton. It faces various risks, in the form of price volatility, currency fluctuations, and political relations.angladesh is the second largest exporter of apparel to the world. It is also one of the world’s largest importers of the raw-materials needed to make apparel. The data of Bangladesh Textile Mills Association (BTMA) says that Bangladesh’s raw cotton requirement stands at 11.50 million bales, if 100% capacity is utilized. Bangladesh can barely meet 1-3% of this demand. A recent example is the sudden cancellation of a shipment of 400,000 bales of cotton by Indian traders in January 2018, which would negatively affect Bangladeshi yarn production and negatively impact apparel exports. Prices surged more than 15% in weeks prior to this event, after pest infestations put pressure on its supply and the world’s largest producers of the fibre. Such an impact is massive for a nation like Bangladesh, which has emerged as a big buyer of Indian cotton (thanks to competitive prices and lower freight costs), sourcing nearly half of its annual import requirement of 7 million bales from India. What can Bangladesh do to hedge against such risks? The logical answer lies in building up our capabilities to reduce dependence on imports. Primary textile sector in Bangladesh has 425 spinning mills, 790 weaving mills, and 250 dyeing mills. Why, despite the obvious demand for raw cotton, does the sector remain underdeveloped in Bangladesh? Why is Bangladesh yet to realize its true potential of this crop which is often termed as “white gold” because of its lucrative potential? The answer could be excessive emphasis on growing “food crop” to ensure food security by the government. But it is time to take a broader view of food security. Organically grown cotton can serve several important needs and in fact aid in solving the problem of food security. During the early and mid-90s, farmers in Bangladesh moved away from cotton as it takes six months to harvest cotton crop and only two yields were possible in a year, so farmers shifted to short duration, high value crops like vegetables. But in recent years, as the demand for raw cotton has increased exponentially and prices have gone up, some Chinese hybrid and BT cotton varieties (which have higher yield) were introduced. Cotton is a saline and drought resistant plant and can be grown in char areas, coastal areas, and hilly areas of the country. Bangladesh has huge char areas in Jamalpur, Pabna, Hemayetpur; and new char areas are being formed in Padma, Teesta, Jamuna, and Garai rivers. By-products of cotton like edible oil, which is low in cholesterol and is good for diabetic and heart patients, can be an additional source of income for rural economy. Oil cakes which are by products of cotton oil seeds can be used by farmers as cattle feed, which can increase their milk production capacity by up to 20%. Cotton tree wood can be used as fuel by farmers as well. The case for converting Bangladesh’s over-dependence on raw cotton import into an opportunity is very clear; some of my suggestions are as follows.

Looking forward

1. Build strategic partnerships for raw-cotton supply with select suppliers across different geographical markets. This maintains a healthy competition between raw-material suppliers as well as hedges risk of over-dependence on one supply base. 2.Utilize our waste cultivable land in hilly tracts and other regions to grow cotton which is not being utilized for main food crops, such as hilly, saline, char, agro-forestry, and tobacco replacement areas. 3.Adopt organic cotton farming methodologies, which do not depend on using any chemical fertilizers and cater to global organic cotton market and charge a premium for it. 4.Incentives by the government to use higher domestic content in terms of raw materials for export value added products. 5.Diversify and develop our capabilities in other fibres such as jute, bamboo -- which are gaining prominence in world apparel market. 6.Develop strategic partnerships with other important fibre producing nations and companies to create mutually beneficial deals that enable technology and skill transfer into Bangladesh in return for yield or profit-sharing. 7.Vertical integration of our spinning mills with their own cotton farms. 8.Foreign direct investment (FDI) in agriculture could be encouraged. So, while the raw cotton can be termed as an opportunity disguised in vulnerability and with “sustainability,” “transparency” becoming buzzwords in the global apparel industry, a huge opportunity also lies for Bangladesh to set an example in showing the world what it takes to invest, innovate, and prosper.  
Mostafiz Uddin is the Founder & CEO of Bangladesh Apparel Exchange (BAE) and Bangladesh Denim Expo. He is the Managing Director of Denim Expert Limited.  
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