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FINANCIAL NEWS
Egypt suspends subsidies on cotton
07 Jan 2015
(MENAFN) Egypt’s government announced that it has decided to stop the subsidies it used to give to the cotton farmers, as well as saying that it has advised the farmers not to plant the crop unless they have contracts to sell it, Gulf Times reported.
The market for Egypt’s high quality extra-long staple cotton, once known as the country’s ‘white gold’, has been shrinking for years, due farmers beginning to plant more profitable crops and local textile firms changing their focus to creating low-quality products with cheap raw cotton imports.
‘The government will no longer pay the subsidy of 350 Egyptian pounds per qintar of cotton (160kg), as much as 40 percent of the domestic market price in the current season.
The Egyptian Agriculture Ministry said that the decision was made due to the cotton being too expensive to grow and to Egyptian factories no longer buying the local cotton because of the availability of far cheaper short cotton. The removing subsidies would benefit farmers because instead of the government giving direct support to producers amid price volatility in the global market, it will help coordinate favorable contracts between companies purchasing the crop and the farmers,’ The Egyptian Agriculture Minister said.
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