Philippine Cotton Crop Down from 1999

July 12, 2000

Cotton production in the Philippines this year is expected to total 500 tons, a significant decline from the 650 tons produced in 1999 and an even more dramatic decline from the 974 tons produced in 1998. Hectares planted also have declined with 3,665 hectares planted in 1998, 2,170 hectares planted in 1999 and 1,700 hectares projected for 2000. One hectare equals 2.47 acres.

Without assistance from the Cotton Development Administration for fertilizer or pesticide inputs, yields are expected to remain well below 1 ton of lint cotton per hectare, according to an attache report to USDA. While both the 1998-99 and 1999-00 crops were damaged by rains, the latter was even more affected by traders and millers who did not agree to offer premiums for domestic cotton as they have in the past to encourage production. While assurances for an agreement to pay premiums for the next crop may encourage increased planting, that may be offset by the current armed unrest in Mindanao where 65% of the crop originates, according to this report.

Since the early1970's, the Philippines cotton industry has never produced more than 25% of its cotton requirements and in more recent years it has provided no more than 5-10% of its domestic spinning needs. Mills that were the least efficient operations have closed. In the past two years the number of spinning mills have declined from 50 plants to 35.

A continued lack of funding for CDA’s Agrikulturang MakaMASA Cotton Program will place any possible resurgence of domestic cotton production in doubt, says the report. Under the 1998 Cotton Industry Development Law, this revitalization program would provide certified seeds and other inputs, an integrated pest management program, technical assistance, financing, additional research, expanded extension efforts and an increase in irrigated areas. Based on this program and with funding, the CDA projects that in the first year they could encourage farmers to plant up to 7,000 hectares and lint cotton production at 3,300 MT and with continued increases in subsequent years with a goal of 20% self sufficiency.

But the U.S. embassy does not see any potential for CDA to obtain funding for the development projects. Other impediments to reaching these goals include failure to focus the program on one or two areas with the best potential; lack of access to credit facilities; the high cost and scarcity of inputs; recurring infestations of bollworm which lead to withdrawal of land from cotton production; and the competition from corn. "With this scenario, textile smuggling continues," says the report.

Consumption for 2000 is projected to increase to 50,000 tons, an increase from the 45,535 tons consumed in 1999. Local mills will be competing with cheap yarns primarily coming from Indonesia and China along with garments imported from China.

For 1999, imports increased by 39% over 1998 to 55,931 tons with 14,400 tons coming from the United States. The U.S. trade share fell to 27% compared to 38% a year earlier. The single most significant increase from other sources in 1999 was Australia registering 12,840 tons, up from 4,923 tons in 1998. Imports for 2000 are projected at 50,000 tons. After declining to a low for 1998/99, imports picked up significantly in order to bring levels up again. With continued prospects for the export market for finished goods, it is expected that imports will be maintained at a level to prevent a repeated decline in stock levels., according to the report.