Bangladeshi terry towel makers badly hit due to drop in cotton price

More than 16 big terry towel factories of Bangladesh have been closed in recent times due to drop in cotton prices across the global as they are gradually losing international competition. The export earnings has witnessed sharp decline in last five years as Pakistan and India are getting major orders from foreign buyers. As per the Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA), at least 16 out of 97 companies stopped operation in last one and half years.

According to a report run by the Financial Times (FT), cotton prices hit a 6-year low to $ 0.60 per pound in December 2014 due to China’s more

restrictive import policy in 2014-15. The main cause of low cotton prices is the fallout from China’s support programme for its growers.

Belayet Hossain, managing director of RTT Textile Industries Pvt Ltd said that they are trying hard to beat Pakistan, although they are enjoying GSP facility from EU market. The falling prices of cotton help competitors cut their prices further.

They purchase yarn from local spinning mills. The cost of yarn sourcing for a Bangladeshi factory hasn’t been reduced to a rate compared to that of Pakistan or India. Many companies have stopped operation because of lower orders, Mr Hossain said.

According to Export Promotion Bureau (EPB) data export of terry towel has been losing ground since the financial year 2010-11. Export earnings plunged to just $ 67 million in FY ’14 from $ 157 million in FY ’10. However, shipment was 120 million in FY ’11 while 92 million in FY ’12 and $ 86 million in FY ’13.

The downward trend continued as shipment came down to only $ 24.3 million in the first seven months of the current financial (FY ’15) from $ 45 million during the same period of FY ’14, down by 47 per cent.

BTTLMEA Chairman Khandkar Abdul Muktadir said that Pakistan is providing more cash incentives to its producers than those of Bangladeshis after getting the GSP plus facility in European market from January 1, 2014.

Bangladesh produces cotton what it exactly needs for terry towel . The high quality yarn (20-double) costs them $ 2.25 per kg in Bangladesh which will be less than $ 1.5 per kg for a Pakistani company.

If the government gives them 9.6 percent cash incentive only on export to EU markets, he said that they could beat the nations competing with them.

BTTLMEA Secretary Md Mujibur Rahman pointed out that towel export witnessed a major setback among home textile items.

Shipment of other home textile items also fell, but not to such an extent like terry towel. The home textile sector is still a $1.0 billion earner.

Mr Rahman also said that the volume of export has not come down, but its value has declined due to plunge in cotton prices as buyers are offering lower prices for products.

Per tonne terry towel is now offered at $ 5,000-5,500 which was $ 8,500-9,000 one and half years back.

Terry towel manufacturing companies have been growing in the country since 1980s. Bangladesh produces different types of terry towels such as face, hand, terry kitchen, stripped bath, assorted coloured bath, dyed terry bath, golf and bath robe for export.

Bangladesh’s terry towel products mainly go to the US, Canada and European markets.