Though the opening of exports and partial retail sales under the level 4 lockdown regime brings some relief for South African cotton producers, the covid-19 pandemic and resultant lockdown measures have had “catastrophic” effects on large parts of the industry.
Retailers are currently allowed to sell a limited range of products after a month without turnover and cotton farmers are now also allowed to export again. This forms part of government’s phased plan to re-open the economy after the initial full lockdown, intended to slow the spread of the novel coronavirus.
Hennie Bruwer, CEO of Cotton South Africa, told Food For Mzansi, “Although agriculture was always in a good position since lockdown, the cotton industry was not included at first. We, however, managed to convince government to allow the industry to continue operating (during lockdown). As far as level four is concerned, the cotton industry is well placed.”
Good news for local cotton farmers
Last week’s announcement by Dr Nkosazana Dlamini-Zuma, minister of cooperative governance and traditional affairs, reopening exports was a huge relief for South Africa’s primary cotton industry. The industry employs an estimated 65 500 workers.
“We are entering the new harvest season, so most probably going forward we might end up with cancelations (of orders) here and there. Hopefully not. But I think what makes us different from the world is that we produce a very good quality cotton, which is a sought-after commodity on the market,” Bruwer says.
In the medium to long term, Bruwer anticipates that retailers in South Africa will be more focused towards localisation. This means that local cotton producers will have first preference, in line with government’s master plan to revive the domestic textiles industry through their “buy local” campaign.
“It’s no longer relatively cheap to import because of the rand losing its value against the dollar. Therefore, it will make more business sense for retailers to support the local industry,” Bruwer anticipates.
He warns, however, that because a large percentage of the inputs (fertilisers, chemicals and machinery) used in Mzansi’s cotton industry are imported, farmers will have to cough up more money as a result of the weakening rand.
“Availability will also prove to be an issue. Most of the countries we source our inputs from are in lockdown, so it will take a while for these producers to get back into production.”
Manufacturers reeling from covid-19 impact
Sinesipho Tom reports that Brent Greenblatt, owner of fabric manufacturer Svenmill Limited, describes the current reality of the cotton industry as “catastrophic”. The Cape Town-based manufacturer uses local cotton to manufacture its products.
From Greenblatt’s point of view, the level 4 lockdown doesn’t bring any improvements.
“Even if we were to get to level 3, 2 or 1, restaurants will now be doing 30% of their normal sales in a month. They still have to pay their rent and staff and I think a lot of their shops won’t open. Will you still risk selling fabrics to a customer you are not sure is going to pay you?” he asks.
GREENBLATT explains that South Africa’s cotton industry was not in a great position to begin with.
The country imports more than it buys locally since it is cheaper to do so. On top of this, the lockdown has frozen local demand.
“The bad news is, I’m trying to develop fabric for the hospital market and hospitals use polycotton fabric. That fabric can be imported from China or Pakistan for around R23 to R25 a metre. The cost of producing that fabric in SA will be R45 to R55.”
He says local manufacturers rely on demand from state-owned enterprises that are forced to buy local products. However, he believes that in six months’ time customers or restaurants “will either buy from China or say they don’t care where they buy, as long as it is affordable.”
He explains that unless consumers are willing to pay more, retailers, consumers, hospitals and the hospitality industry will keep importing.