Mozambique’s cotton industry is facing a perplexing paradox: increased national production juxtaposed with a dramatic 61% drop in export revenue during the first nine months of 2024. Official figures reveal a stark contrast between a 2% rise in cotton tonnage and a significant decline in earnings, leaving industry stakeholders grappling with the implications.
According to a report by the Bank of Mozambique, cotton exports from January to September amounted to a mere US$11.9 million (€11.1 million), a sharp fall from the US$30.3 million (€28.3 million) recorded during the same period last year. This downturn, the report attributes, primarily to an 8% reduction in global cotton fibre prices.
Despite this financial setback, national cotton production actually saw a modest increase, reaching 24,000 tons. However, this figure fell short of the government’s ambitious 40,000-tonne target, achieving only 60% of the projected output.
The discrepancy between production and export revenue highlights the vulnerability of Mozambique’s cotton sector to global market fluctuations. While the cultivated area expanded to 96,523 hectares, up from 95,097 hectares, the returns have dwindled, placing strain on farmers and the wider economy.
Francisco Ferreira dos Santos, president of the Mozambican Cotton Association (AAM), emphasized the historical significance of cotton, noting its contribution of US$30 to US$50 million (€28 to €46.7 million) annually in exports over the past decade. He described cotton as an “almost sacred crop, with catalytic effects on the economy and demographics.”
To mitigate the impact of falling prices, the Mozambican government introduced a subsidy of five meticais (US$0.7) per kilogram, aiming to stabilize prices and support approximately 600,000 farmers. This intervention sought to foster a “culture of trust” and ensure the livelihoods of those dependent on the cotton industry.
However, the challenges persist. Factors such as erratic rainfall due to the ‘El Niño’ weather phenomenon, the ongoing instability in Cabo Delgado, a major cotton-producing region, and an oversupply in the global market have contributed to the price decline.
“There is global pressure from countries where subsidies are in place, which is driving down the price of cotton. Too much cotton is being produced and stocks are rising,” explained former Minister of Agriculture and Rural Development, Celso Correia.
Mozambique, accounting for less than 0.5% of global cotton production, finds itself at the mercy of a market dominated by giants like the United States, China, and India. The need for strategic interventions and diversification to protect the sector from volatile global markets is becoming increasingly apparent.