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  • 6.6-MARKET PROFILES-SOUTH AFRICA

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  • Executive summary

    Chapter 6 - Market profiles - South Africa 

     
     

    The South African market for cotton lint is contracting. Current consumption of 47,000 tonnes is the lowest in a decade and with one of the large spinners closing operations in 2008, consumption could decline further. Local production of cotton lint falls below current demand and imports supplement the local crop on an annual basis. With the decline in local production of cotton, imports are an increasingly important percentage of overall supply.

    The major barrier for foreign cotton producers in the South African market is the current tariff structure. Imports of cotton from SADC* member states enter the South African market at a zero rate of tariff whilst imports from non-SADC member states pay a R1.60 per kilogram tariff. As a result, virtually 99% of cotton imports are sourced from within the SADC region and non-SADC producers are simply not price competitive at this level of tariff.

    The outlook for the cotton sector in South Africa in the long-term is not positive with some market commentators predicting a worst case scenario of a complete disappearance of the local spinning industry. In the medium-term, there does however exist a viable market for imports, especially imports of organic cotton. Demand for the latter is expected to grow exponentially over the next few years as retailers, led by the Woolworths Group, move to increase their ranges of organic cotton garments.

     

    *Southern African Development Community. Members are Angola, Botswana, DRC, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.