KENYA’S COTTON SUB-SECTOR REFORMS

HIGH GROWTH POTENTIAL

PRIVATE SECTOR PERSPECTIVE

COTTON IN AFRICA SEMINAR Ngurdoto Mountain Lodge, Arusha

7TH SEPTEMBER, 2007

By Fred Kong’ong’o

African Cotton & Textile Industries Federation (ACTIF)

Secretariat

Cotton-to-Garment Market and Cotton-to-Garment Market and Institutional Support StructureInstitutional Support Structure

Source: Global Development Solutions, LLCTM

Cotton Growers Association

Kenya Agricultural Research Institute (KARI)

Kenya Cotton Ginners Association (KCGA)

Kenya Association of Manufacturers (KAM) – textile sector Kenya Apparel Manufacturer Exporters Association (KAMEA)

Smallholder Cotton Farmers

Ginneries

Spinners Integrated Mills

Textile Mfs Garment/Apparel

Local MUB EPZ

Local Market Export Market

Imported lint cotton

Imported fabric

Second Hand Garments

Dotted line (------) indicates a weak linkage, lack of organization, and areas where technical support is required to help strengthen linkages along the supply chain.

Kenya’s Cotton Sector Profile

Production level

Rain-fed production (potential) 260,000 bales (lint)

Irrigated production (potential) 108,000 bales (lint)

Actual production (2005) 30,000 bales (lint)

Realized production potential 8.2%

Land available for cotton production

Rain-fed production 350,000 ha

Irrigated production 34,500 ha

Actual land currently under production 40,000 ha

Capacity utilization 10.4%

Kenya’s Ginning Sector Profile

Number of ginneries 24

Cotton Board of Kenya

Cooperatives

Private investors

1

6

17

Ginning capacity

Number of gins

Total ginning capacity

327

132.375 tons

Technology in use Roller technology

Average capacity utilization 24%

Ginning outturn (GOT)

Potential

Actual

43%

33%

Cotton purchasing method

Direct purchase from farmers

Intermediary/brokers

77%

23%

ReformsGovernment - Private sector Donor

led•Most Gins bought by private sector •Struggled to survive•Reforms currently supported and funded by the World Bank •Provide matching grant•All supply chain stakeholders; Established an Apex committee•Positive results; Apex committee developed cotton price formula acceptable to all•Influencing policy chainGinners initiative

• Formed Association to improve competitiveness and market access

• Organized- regional basis -Eastern region well organized so far

Buy input and spare parts together: Economies of scale Enter contract with farmers-protect territory Organize joint training for Technicians/ farmers-reduce cost Joint marketing and export of surplus cotton Make sense in establishing price and market Utilizes www.cottonafrica.com for price/market discovery

Government

• Established cotton Authority• All stakeholders represented• To regulate the sector

• Research to improve seed variety

• BT trials on going

• Supply seeds free, motivate farmers

Bottom Line NeedsBottom Line Needs

• Is the glass half full or half empty?Is the glass half full or half empty?

• Associations’ commitment to co-operate - Associations’ commitment to co-operate - formalformal

• Communication & information keyCommunication & information key

• Platform for information sharingPlatform for information sharing

• Public sector partnerships / dialogue a mustPublic sector partnerships / dialogue a must

• International alliances / linkages key International alliances / linkages key

• Institutional support paramount; still work in progressInstitutional support paramount; still work in progress• Quality lint and honouring of contracts bottom lineQuality lint and honouring of contracts bottom line

WHAT DO WE SAY ABOUT KENYA’S COTTON SUB-SECTOR

THE GLASS IS HALF FULL….

the key to market development and enhancing competitiveness - directly linked to the industry’s ability & desire to organise itself!

Regional & Global Regional & Global CooperationCooperation ~ ~