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  • 6.6.5-MARKET PROFILES-THE DOMESTIC MARKET: A MICRO VIEW

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  • The domestic market: a micro view

    Chapter 6 - Market profiles - South Africa 

     
     

    There are currently eight ginneries in South Africa. Seed cotton is either sold by the grower to a ginner, who gins the cotton and then sells the cotton lint directly to spinners, or the growers contract the ginner to gin the cotton on their behalf and then the growers sell the lint to the spinners either via the ginner or directly. The local ginners gin the local crop. The spinners use the cotton lint to spin yarn which is then sold directly to knitters and weavers. The cotton seed is sold directly by the ginners to processors who use it for the production of cotton seed oil and cake and thereafter animal feeds.

    In South Africa, spinning capacity is currently greater than the amount of cotton produced locally and therefore imports make up for the shortfall in supply on an annual basis. Given the current tariff preferences on cotton imports from fellow SADC member states, almost all cotton requirement are sourced within SADC, primarily Zimbabwe, Zambia and Malawi and to a lesser extent Mozambique and Tanzania.

    The spinners generally use the services of recognised cotton merchants that are members of the International Cotton Association to source their cotton imports. The major brokers active in South Africa are Cargill, Plexus and Dunavant Enterprises.

    The following diagram illustrates the structure of the local market

    Figure 21: The cotton industry
    Click to enlarge
    6.6.5-en 

     

    Source: Cotton, National Department of Agriculture, Diagram courtesy of Cotton SA with additions by the consultant.

    The purchase of seed cotton by the ginners takes place in terms of the grading standards applicable to hand-picked and machine-picked cotton and these are linked to the South African Grading Standards for lint. In the case of a dispute on delivery, either the Quality Control Department of Cotton SA or an international organisation such as the Liverpool Cotton Association will be called in to arbitrate.

    Generally the South African spinners require a staple fibre length of 11/ 8 inch and a micronaire of between 3.8 and 4.5. This is considered a medium to high quality market.