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BULENT UCAK: HARD DAYS IN WHITE GOLD AS THE HARVEST SEASON APPROACHES

Press release…

While cotton prices abroad are at the level of 58-59 liras, the price of 45-46 liras in the country makes producers brooding. Unprecedented negativities threaten the sustainability of cotton production…

As the 2023/24 harvest season approaches, cotton, which is called white gold, is experiencing difficult days. Despite the hike in production costs and high inflation, cotton prices remain below the expectations of producers, which negatively affects the sustainability of cotton production. As a matter of fact, according to the Cotlook A Index, which is accepted as a reference in the markets, cotton prices abroad are at 58-59 liras, while cotton is traded at 45-46 liras in Türkiye.

Bülent Uçak

Evaluating the point reached in cotton, Bülent Uçak, Vice Chairman of the Board of Directors of Izmir Commodity Exchange, Chairman of the Board of Directors of ELİDAŞ (Aegean Licensed Warehouse Inc.) and GMO-Free Cotton Inc, said the following on the subject:

“Cotton, which is the source of livelihood for tens of thousands of producer families, is used as raw material in about 30 industries together with its main and by-products and makes a great contribution to the national economy. Türkiye is one of the world’s leading countries in cotton and cotton industry. Therefore, ensuring economic sustainability in the cotton industry is of critical importance. As the harvest period approaches, the fact that domestic cotton prices remain below world prices is the result of a process originating from global markets and domestic markets. The COVID-19 pandemic that affected the world in the first quarter of 2020, Russia’s invasion of Ukraine in February 2022 and the climate crisis that has ramped up its effects in the last 3-4 years are among the main global developments affecting the cotton industry. Economic growth, problems in access to financing, the spike in the exchange rate and the earthquake disaster on 6 February, which affected 11 provinces that have an important place in our textile production, are among the domestic developments affecting the sector. In addition, the sector is also adversely affected by fluctuations in the supply and demand of cotton and cotton products in the world and geographical changes.”

“Due to high production costs and declining cotton prices, our producers, who cannot obtain the expected income from cotton production, have reduced their cotton cultivation areas in the 2023 planting period, although there is no clear data yet,” he said.

“Unfortunately, our production, which exceeded 1 million tonnes in the 2022/23 season, is estimated to decline to 750 thousand tonnes in the 2023/24 season,” he added.

In addition, as the harvest period approached, the stagnation in global demand, especially in our main export market, the European Union, and the significant decline in our cotton consumption caused a significant amount of stocks to be transferred to the new season. As a result, the gap between foreign and domestic cotton prices widened to the detriment of domestic cotton. According to the Cotlook A Index, which is accepted as a reference in the markets, while foreign cotton prices are at 58-59 liras, domestic cotton prices have reached the point of trading at 45-46 liras.
Considering the increasing production costs and the effects of high inflation, it is not possible for our producers to cover their costs, let alone make money at these price levels. Such a price difference against domestic cotton is a situation that the sector has never witnessed before.

Pointing out that as Izmir Commodity Exchange, they consider it as a necessity for the producers to obtain sufficient earnings for sustainable production in cotton, he explained, “For this purpose, we think that the premium support should be increased to 5 TL per kilogram in order to eliminate the negative impact of today’s price conditions, which emerged as a result of developments in domestic and foreign markets, on our producers in the upcoming harvest period. In addition, we should implement supply models and financial support mechanisms that will encourage the use of domestic cotton by our textile industry as soon as possible. Otherwise, our cotton cultivation areas and thus our production will decline even more in the following year and the foreign dependency of our textile and apparel industry, which has an export income of over 30 billion dollars, will increase in terms of raw materials.”

Bülent Uçak, Vice Chairman of the Board of Directors of Izmir Commodity Exchange, also stated that they called on all authorities to eliminate the negativities affecting cotton producers and tens of thousands of people and 30 sectors dependent on this production…

About İsmail Uğural

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