Bangladesh may wind up importing more cotton annually in marketing year (MY) 2024–2025 despite encountering some economic difficulties to supply the rising demand for apparel worldwide.
According to the US Department of Agriculture (USDA), the country—which is the second-largest exporter of clothing after China—is expected to import 80 lakh bales of raw cotton (1 bale is equivalent to 218 kilogrammes). As per the agency’s report on the production, import, and usage of cotton in Bangladesh, this represents a 6.7 per cent rise over that of MY 2023-24, which commences in August.
The report forecasts local spinning mills to use a higher amount of raw cotton due to lower imports of yarn and fabric.
The report by USDA’s Foreign Agricultural Service said Bangladesh’s garment industry is expecting exports to increase by 7 to 10 per cent in 2024, rebounding from a decrease in orders during the global economic slowdown.
It averred ready-made garments (RMG) exports during the first two months of 2024 reached US $ 9.47 billion, posting 13.2 per cent year-on-year growth, and expected this growth to prevail in MY ’25, leading to an increase in the import of raw cotton.
“Industry contacts noted that Bangladesh’s RMG industry is expecting higher numbers of work orders from the second quarter of 2024 with rebounding global demand for RMG products,” stated the USDA.
Another factor that could result in higher cotton usage and less purchases of more expensive textiles is the declining foreign exchange reserve.
According to the US agency, a large number of Bangladeshi garment firms own their own spinning mills and would rather import raw cotton than yarn.
It also stated that because these businesses have their own source of US dollars, they are able to open letters of credit (LCs) and make money from exporting clothing.
“Companies that solely import yarn and fabric will continue to face forex challenges as they tend to be smaller than the fully integrated cotton spinning mills and have more difficulty opening LCs, leading to a reduction in their imports,” it said.
“Industry contacts also anticipate a surge in global RMG demand after April 2024, which could increase cotton demand in Bangladesh.”
It did, however, stick to its prediction that Bangladesh would import 75 lakh bales of cotton in MY ’24 and use 78 lakh bales domestically. It stated that in the first seven months of MY ’24, Bangladesh imported 41 lakh bales of raw cotton, citing data from the National Board of Revenue.
According to the article, which quoted insiders in the spinning sector, in the first and second quarters of 2023, their manufacturing capacity was hindered by gas and electricity shortages.
Nonetheless, things have gotten a little better since MY ’24 started.
According to the research, the sector projects higher cotton imports and utilisation based on the rise in demand for clothing in the remaining months of MY ’24.