The value chain round table is essential for the development of cotton industry

Cotton production in South Africa extends back over 300 years, with the first plantings beginning in the Western Cape, followed by KwaZulu-Natal approximately 156 years later, and was substantially driven by American demand until the 1870s.

Cotton production then spread to Limpopo, Mpumalanga, the North West, and Northern Cape provinces. Cotton was classified as an agricultural crop 249 years after its first planting, in 1939.

Cotton is thought to tolerate warmer temperatures better than other crops, despite its general vulnerability to other effects of climate change.

Cotton has the added benefit of providing a larger income stream in the form of numerous byproducts.

Cotton seed, for example, is processed into both seed and lint. The seed could be further processed in several phases to produce final products such as replanted seed, plastic, writing materials, filters, bank notes, sausage casings, flour, feed, fertilizer, salad and cooking oils, explosives, pharmaceuticals, and cosmetics, among others.

On the other hand, lint is processed into clothing, tyre linings, bags, ropes, sheets, towels, and other items. In many circumstances, waste material from each processing stage is converted into a byproduct that can be used in other stages. Consequently, this serves as a demand buffer for cotton. The cotton industry was adversely affected by the market liberalisation.

The liberalization of South African agriculture exposed the sector to global market forces, and the cotton industry was severely hit, with active spinning factories decreasing from twenty (20) to four (4), owing primarily to low-cost imports of manufactured goods from China.

Cotton plantings increased by 41% between the 1984/85 and 1999/00 marketing years, from 99,262 to 139,911 hectares.

This period is distinguished by a consistent increase, peaking at 208,360 hectares in the 1989/90 marketing year. However, the area planted has decreased by 87% between the 1999/00 and 2023/24 marketing years, never reaching six figures during this time and dropping as low as 9,011 hectares in the 2010/11 marketing year.

This change in discourse coincides with the inclusion of China into the World Trade Organization in 2001, which resulted in low-cost imports, putting pressure on local textile and clothing manufacturers.

Faced with challenging global trade, farmers continued to plant cotton.

In the 2023/24 marketing year, South Africa planted 17,994 hectares of cotton, which is lower than the long-term average of 64,948 hectares, accounting for 64% of dryland production and 36% of irrigated crop. Between 1984/85 and 2023/24 marketing years, the yield of irrigated cotton grew by 139% more than that of dryland cotton.

During this time, yields increased by 187% and 48% for irrigation and dryland production, respectively. The ten-year average yield of irrigation is 4,540 kilograms per hectare, compared to 1,036 kilograms per hectare for dryland production. 

Cotton seed and cotton lint prices averaged R8.89 and R24.40 per kilogram throughout the 2013/14 to 2023/24 marketing years. On average, smallholder farmers account for 7% of total cotton production throughout the same time.

This is approximately three times lower than Cotton South Africa's 2030 strategy target of increasing smallholder farmers' share of cotton production to 20%.

Cotton South Africa recommends that smallholder farmers have access to 50 hectares for dryland production or 10 hectares for irrigated production, as opposed to the current average range of 2-10 hectares. 

Furthermore, the National Agricultural Marketing Council (NAMC)’s Smallholder Market Access Tracker (SMAT) cotton baseline (available here) shows that a typical smallholder cotton producer is a female who produces 2,055 kilograms of cotton seed per annum and sells it to ginners.

This bodes well considering that women and youth participation in South African agriculture is limited due to disparities in the ownership of productive resources, such as land, among other things. In addition to limited access to resources, smallholder cotton farmers face a variety of challenges, including high transaction costs, a lack of harvesting, sorting, and packing machinery, a lack of infrastructure, and an inability to effectively implement the collective action approach in the form of cooperatives, among others.

Cotton South Africa is devoted to the cotton industry's growth and development by utilizing statutory measures (registration, records and returns, and levy).

The levy helps to fund industry-specific functions as well as transformation activities. The levy expenditure on transformation contributes to meeting the 2030 strategy goal of boosting smallholder farmers' contribution to overall South African cotton production. Access to the right cultivars (cultivars that produce longer fibre), forming partnerships for infrastructure development, access to machinery, skills development, acquiring the South African Sustainable Mark, and minimizing transaction costs are among the priorities.

Women already play an active part in smallholder cotton production, so increasing access to land, along with comprehensive farmer support, would help the industry scale up its growth and development initiatives. Previous efforts to mitigate structural and gender imbalances in South Africa, such as the land reform programme, comprehensive farmer development policy, integrated market strategy, and various industry initiatives aimed at driving transformation in the cotton industry, are greatly appreciated. However, the challenges faced by smallholder cotton producers, particularly women, persist. 

Recognizing that there is still a long way to go in ensuring a transformed, competitive, and inclusive cotton industry, the Agriculture and Agro-processing Master Plan (AAMP) emphasizes private-public partnerships (PPPs). The PPPs encourage various role players to align programs, projects and activities. The Value Chain Round Table (VCRT), an AAMP delivery mechanism, serves as a platform for reviewing and implementing commodity strategy and AAMP commitments that benefit the industry and general sector.

The VCRT should concentrate on what the affected individual value chain must do to ensure long-term success for every stakeholder involved. The VCRT promotes the effectiveness and consistency of government-industry-business-labour interactions.

The cotton industry has already made progress in establishing its VCRT, but it is essential to get it functional as soon as possible, given that there are less than five years before the 2030 strategy targets time frame are reached.

Bhekani Zondo (Agricultural Economist) & Kayalethu Sotsha (Senior Economist) – both seconded to the Agriculture and Agroprocessing Master Plan (AAMP) Project Management Unit (PMU) at the NAMC.

BUSINESS REPORT