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  • 6.6.9-MARKET PROFILES-RECOMMENDATIONS FOR LDC COTTON EXPORTERS

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  • Recommendations for LDC cotton exporters

    Chapter 6 - Market profiles - South Africa 

     
     
    South Africa is a nett importer of medium to high quality cotton lint. Imports of 40,000 tonnes are expected in the current marketing season. Although imports have been declining, there remains a sizeable market for foreign exporters.

    The key barrier to entering the South African market is the current tariff structure whereby producers within the SADC region pay a zero rate of tariff and producers from outside the SADC region pay R1.60 per kilogram tariff. This tariff adds roughly 20% to the cost of the cotton lint and simply renders producers from outside the SADC region uncompetitive. All the spinners interviewed for this report have stated that they would be very happy to import cotton from other areas as this would provide a greater variety of cottons but they are simply not able to do this because of the R1.60 per kilogram tariff.

    Cotton South Africa is currently in discussions with government to obtain a rebate on the cotton tariff from sources outside of SADC. If the government agrees to this, it will go someway to levelling the playing field and giving producers from outside the SADC region a chance to compete in the South African market. Without the rebate scheme, non-SADC producers will find it very difficult to enter the market.

    An opportunity does exist for producers of organic cotton. As highlighted in this report, there is a growing demand for organic cotton and there are currently no producers in South Africa and very limited supply in the rest of SADC. This means that imports have to come from outside of SADC regardless of the R1.60 tariff.

    Exporters interested in accessing the South African market should contact the three large brokers that service the South African market as this is the most direct access point into the supply chain. It would also be advisable to contact the spinners and discuss specific requirements.