Currently working as Consultant, AK Khan & Co. Ltd.
Export Oriented Readymade Garments Industry – The main driver of demand for yarn:
Bangladesh is world’s second-biggest apparel exporter after China. Readymade garments export earns more than 81% export earnings of Bangladesh and therefore is a vital part of Bangladesh export and economy. Unfortunately, almost all raw material (Cotton, Manmade fiber, filament, re-generated cellulosic fiber, etc.) and chemicals, machinery, spares and consumables are imported therefore retention of foreign currency through export of readymade garments is not more than 20%. Having a portion of domestic raw material is also strategically important as it can increase value addition without increasing export, saves cost, minimize lead time of raw material, increases foreign currency retention and creates by products (i.e. edible oil, cottonseed oil cake, firewood, fertilizer, etc.), local business and employment opportunity.
The fashion industry is fast changing and in order to execute the sample development and orders on time, backward linkage plays a vital role by facilitating garments deliver goods within minimum lead time, maintaining the right quality. The benefit of investment in backward linkage industries is already reflected in cotton based knit and woven sectors that are growing, and becoming internationally competitive gradually.
A snap shot of Primary Textile Sector (PTS) of Bangladesh – The main driver of demand for Raw Cotton:
Primary textile sector consists of spinning, knitting, weaving fabric manufacturing and dyeing and has supported well to supply the quality yarn and fabric on a timely manner to cater the need of export oriented readymade garments industry.
Total investment in PTS in Bangladesh is USD 12 billion. The dyeing/printing/finishing capacity is 4,000 million yards while fabric manufacturing capacity of knit and woven is 3,690 million yards and 4,100 million yards, respectively.
|Yarn manufacturing mills:
|Installed spindles 14 million & rotor 0.24 million (Annual production capacity):
3,270 Million kg
|Fabric Manufacturing (Annual capacity ):
Woven: 4,100 Million Meters & Knit: 3,690 Million Meters
|Dyeing/Printing/Finishing (Annual capacity ):
4,000 Million Meters
|Total investment in PTS:
Around $12 Billion USD
Figure: A snap shot of PTS of Bangladesh, Source: BTMA, November, 2021
Demand for 80% and 40% of knit and woven fabrics required by export oriented garments industry is supplied by primary textile sector (PTS) while 90% and 60% of yarn is supplied by export oriented local spinning mills.
Primary textile sector is vertically integrated in cotton but not in synthetic yarn and fabric. Value addition in knit fabrics is more while woven is import dependent. Due to graduation to middle-income country form LDC, ‘Two stage transformation’ would be required after 2026 (With three year grace period 2029). This would induce development in backward linkage in synthetic fabric other fabrics that are currently based on imported fabrics which would also create scope for new investment in dyeing & finishing, fabric, yarn and fiber.
(In Mil kg)
(In Mil kg)
|Gap (Consumption – Production)
(In Mil kg)
Figure: A snap shot of demand-supply situation of yarn in Bangladesh (Source: BTMA).
Graph: A snap shot of demand-supply situation of yarn in Bangladesh (Source: BTMA).
The demand gap of yarn is mostly for synthetic, specialty and woven yarn. Woven garments is mostly based on imported fabric so is active and sportswear fabric of knit garments export.
It is interesting that although share of cotton with respect to global production of fiber is only 24.2% (As per Textile Exchange Preferred Fiber & Materials Market Report 2020), global demand for cotton for spinning and weaving is 55% (As per ITMF 2016 Report), in Bangladesh the share cotton is 89% (As per BTMA) of the total fiber imported for spinning.
Figure: BTMA Member Mills Import of Raw Material in 2020
|S/L||Description of raw material||Import (In Mil kg)||% of total import|
|3||Viscose (VSF) Fiber||71||4.5%|
Figure: A snap shot of import of raw materials for spinning in 2020 (Source: BTMA).
As per BTMA annual cotton requirement of spinning industry in future would remain roughly 8-10 million bales and mostly imported from different countries like India, Africa, USA, Australia, CIS, etc.
Is cotton production viable for Bangladesh while we have limited land?
- First of all, the yield of cotton in Bangladesh has improved significantly in recent years from 5-6 Mon per Bigha to 15-18 Mon per Bigha with the good work of Cotton Development Board and active leadership of current Executive Director. This effort of improved yield needs to be carried out in future to double the productivity to 30 Mon per Bigha (Say; 25 and 30 Mon per Bigha during 2022-2030 and 2031-2041, respectively) from the current level that would add to the long term viability of cotton farming in Bangladesh. As per USDA January 2022 report 1 hector of land produced 2,217 kg, 1,976 kg, 1,804 kg and 1,720 kg of cotton in Australia, China, Turkey and Brazil, respectively, in 2020/21 while Bangladesh can produce only 900 kg of cotton which is better than many other countries like; India (462 kg), Pakistan (445 kg), etc.
- Secondly, in order to secure raw material for the export oriented spinning mills, having domestic production of 24% (2-2.4 million bales of cotton production per year) is not a bad option if it is viable. Major spinning countries are having their own raw material; i.e. China, India, Pakistan, Turkey, except Bangladesh and Vietnam. We can find it from the table given bellow:-
|Table: Global Cotton Consumption in 1,000 MT (Season Beginning August 1)|
|Consumption||2017/18||2018/19||2019/20||2020/21||Dec 2021/22||Jan 2021/22|
Source: USDA, Global Market Analysis, January 2022
- Thirdly, if we don’t focus on domestic cotton production, we would be spending roughly USD 4 billion (8-10 million bales) annually to import cotton. If we can substitute 24% of our cotton use with domestic production by allocating total 11 lac Bigha land for only six months for cotton cultivation (Say; 5.5 and 11 lac Bigha, respectively during 2022-2030 and 2031-2041, respectively) to produce 2.4 million bales of cotton, we can save USD 1.27 billion at the same time add the same amount in Gross Domestic Product (GDP). In addition we would get edible oil, cottonseed oil cake, firewood, fertilizer, and create employment and business opportunity in the rural areas.
- Fourthly, Global cotton production and consumption is confined within 120-126 million bales (Around 127,000 MT). So, fundamentally cotton is limited while 89% of raw material of our spinning mills is cotton.
- Fifthly, considering per capita domestic fiber consumption @ 2 kg local consumption of cotton for 18 crore people is 1.6 million bales per year.
- Sixthly, thrust areas for cotton farming are needed to be analyzed and allocated 5.5 and 11 lac Bigha of land during 2022-2030 and 2031-2041, respectively like;
- Drought area (Mainly Barind Tract)
- Hill area
- New Alluvial Char Land
- Coastal Saline and non-saline area
- Cotton in Agroforestry
- Intercropping with other crops
- Tobacco replacement
- Introduction of 3 crops in Cropping Pattern (Cotton-Lentil/wheat-Mung bean/Sesame/Pumpkin).
- Finally, unlike tobacco, cotton is an ecofriendly fiber that can ensure long term sustainability to the clothing value chain along with a better life for the farmers if an appropriate “Road Map” can be developed to make it sustainable in the long run.