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CDO Leads Way for Increased Cotton Subsector Growth

Jolly Sabune, Managing Director, Cotton Development Organisation (CDO), talks to World Business Journal about the role it is playing today in growing the cotton industry and ramping up Uganda’s cotton production heading into 2024.

Can you provide an overview of the Cotton Development Organisation (CDO) and its role in Uganda’s cotton industry?

Following macroeconomic reforms, the CDO was established under the Cotton Development Act of 1994. Our mandate includes promoting production, monitoring, marketing and processing of cotton and representing all aspects of the cotton subsector. The organisation sets standards for Uganda’s seed cotton and lint in line with international benchmarks, collaborates with global bodies and engages with various associations within the cotton sector.

On the production side, we facilitate seed multiplication in collaboration with the Cotton Research Programme under the Ministry of Agriculture, Animal Industry and Fisheries’ National Agricultural Research Organisation. The programme guides farmers on production inputs and technologies to ensure quality cotton production. We have two seed processing stations, one in Kasese District and a larger facility in Pader District. These stations treat seeds with insect and disease management chemicals, and then pack and distribute them to farmers through collaboration with the Uganda Ginners and Cotton Exporters Association. The combined capacity of the two stations is 4000 tonnes, with the annual processing requirement determined by field assessments and feedback of the farmers. In FY2022/23, approximately 2400 tonnes were processed and distributed to farmers. The seeds programme is subsidised by the Uganda Ginners Association.

How do you envision growth of the cotton industry, and how can public sector involvement further benefit the industry?

Currently, much of the industry’s activities, including provision of production inputs and extension services, are privately funded through collaborative agreements. While this approach has been successful, government support in key areas, such as planting seeds, could significantly enhance growth. Additionally, implementing policies to increase domestic value addition, as around 90% of cotton is currently exported as raw material, could create a more robust market and boost farmer confidence. Although the government has introduced some incentives for manufacturers to promote domestic value addition to lint, there is room for further initiatives to achieve these goals.

What is Uganda’s current cotton production?

Last year, our cotton production stood at approximately 116,000 bales, each bale is equivalent to about 200 kg of lint. However, due to factors like climate change, price fluctuations and the recent impact of Covid-19, production has experienced some volatility over the last three years. This year, we anticipate pushing production to at least 130,000 bales, driven by increased farmer interest and cultivation. Weather conditions permitting, we hope for improved performance. Yet, challenges arise as heavy rains may negatively impact cotton growth. In the past, the industry aimed for a production target of 1m bales over a decade ago, but the landscape remains volatile. With various crops promoted by the government and rural-urban migration affecting the availability of farming workforce, the potential is challenging.

What investment opportunities are available for businesses in the cotton industry today?

There are several promising opportunities for businesses to invest, particularly in the textile manufacturing sector. Adding value to more than 50% of the cotton production could open up a substantial local market for lint, creating significant employment opportunities. Additionally, investing in the processing of cotton seed presents a lucrative prospect. Most processors today produce semi-refined oil, with only two exceptions. Upgrading to fully refined oil production represents a particularly appealing avenue for investment. Furthermore, the government has provided specific incentives for textile manufacturers in the cotton sector with textile manufacturers enjoying a special electricity tariff of $0.05 per KWh.

What is the current level of value addition in Uganda’s cotton industry?

Currently, the country engages in value addition to lint through two textile companies and six cotton wool manufacturing entities. However, the value addition to lint stands at around 10%. On the seed front, all seeds are crushed domestically through the operation of about 12 seed processing plants situated across Uganda. Textile manufacturers produce an array of products, including yarn, fabric, garments and apparels. The cottonseed undergoes further processing to yielding edible oil, cottonseed cake, soap stock, and husks used for fuel and as a substrate. Handloom weavers, mainly comprising women’s groups, contribute to value addition by creating fabric and garments from the yarn sourced from the textile companies.

Recently, the focus has been on textile mills, with efforts to enhance the sector’s performance discussed at the 14th National Competitiveness Forum. Stakeholders, including the Ministry of Finance, Planning and Economic Development are exploring solutions to challenges, such as financing, skills and research to propel the industry forward. Commitments are yet to be made to address issues of long-term, affordable financing, specialised skill development, and research funding to overcome constraints and support various stakeholders in the cotton industry. Over the next 3-5 years, we aspire to raise the domestic consumption of cotton lint to 20%, a significant increase from the current 10%. Despite the relatively low starting point, doubling the value addition holds considerable promise.

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