Bangladesh’s import of cotton may see a decline to 8 million bales in marketing year (MY) 2022-23 which began in August, according to a recent report published by the US Department of Agriculture (USDA).
In their latest “Cotton and Products Update”, the report attributed this decrease to rising global raw cotton prices, decreased apparel production as a result of the energy crisis in Bangladesh, an overall global economic slowdown, and high inflation.
According to the latest projection, the import may drop by 10% from the previous one USDA projected in April earlier this year, which was 8.9 million bales.
Moreover, domestic raw cotton consumption is likely to drop 11% to 8.3 million bales in MY23 from the previous forecast, which was 9.31 million bales, said the USDA report.
Bangladesh is the world’s second largest garment exporter and is highly dependent on imports to make yarn.
In the beginning of 2021 after the Covid-19 lockdowns, Bangladesh began receiving more RMG orders as many brands shifted from competitor countries such as Vietnam and Indonesia.
“The higher volumes of RMG exports continued until the middle of this year, with the Russia-Ukraine war and ongoing economic turmoil negatively affecting the RMG sector,” the report added.
The garment industry in Bangladesh is currently facing numerous challenges, including gas and electricity shortages, increased fuel prices, and high levels of inflation.
Most RMG factories are not able to fully operate due to significant load shedding. In addition, some European and American brands are deferring shipments and canceling work orders due to ongoing economic issues and high inflation at home, the report added.
Manufacturers said that the RMG purchase orders slumped approximately 20%-30% in June and July this year due to the global economic turbulent situation.
According to the USDA data, in MY22, Bangladesh imported 8.52 million bales of cotton.
However, data from the National Board of Revenue (NBR) showed that Bangladesh imported around 8.5 million bales of cotton in MY21 then the USDA revised its cotton import estimate.
Bangladesh has been showing a steady increase in cotton imports since MY15, with a dip in MY20 due to the Covid-19 pandemic
The report also said the textiles industry is composed of yarn, fabric, and dyeing-printing-finishing mills and they have about 15 million bales of cotton consumption capacity.
In the MY23, yarn and fabric consumption would be at 1.8 million tonnes and 6 billion meters respectively, down approximately 10% and 3.5% respectively, from the previous year.
Among the major suppliers of cotton to Bangladesh, India is on the top with 24% of the market share, followed by Benin (16%), Brazil (14%), Burkina Faso (10%), and the US (8%) as of October in calendar year 2022, it added.
As of October in this calendar year, raw cotton imports amounted to 7.1 million bales, lower than 7.5 million bales of the same period of 2020.
Total cotton cultivation in Bangladesh covers only 0.55% of the country’s 8.1 million hectares of arable land.
Domestically produced cotton accounts for less than 2% of total cotton consumption in the country.
In MY22, Bangladesh’s domestic raw cotton consumption was estimated at 8.8 million bales, according to the USDA.