Chinese demand for Myanmar cotton could surge on trade war with US

China, the world’s largest importer of cotton, has been eyeing Myanmar-produced cotton with much greater interest in the wake of its trade war with the US, local cotton growers have told The Myanmar Times.

China has imported cotton from the US for the past 10 years. Last month though, US President Donald Trump imposed $50 billion worth of tariffs on Chinese imports, which includes agriculture. That sparked the ongoing trade war between the two countries, with China retaliating by slapping tariffs on agriculture imports from the US.

Now, China is interested in importing Myanmar cotton, said U Aung Myint, secretary of the Cotton Product Merchant and Manufacturers Association. “Despite being able to also import cotton from India as an alternative to the US, China has offered to buy from Myanmar instead because we do not charge import duties on cotton yet,” he said.

Limited supply

China’s demand for cotton could drive local prices higher than their current levels though. Currently, cotton prices are around K3500-K4000 per viss, which is almost triple the value compared to four years ago due to rising Chinese demand and falling production.

“This year’s pre-monsoon cotton yield is much lower than last year because there are fewer growers. In Myanmar, cotton is grown only in Myitthar and Yamethin townships in Mandalay,|” said U Aung Myint.

On the flipside, rising cotton prices could encourage more growers to return to the industry. “With higher prices for cotton, we would expect more farmers to start growing cotton later this year. Currently, as the price of mung beans, which is a rival crop for cotton, is also good, farmers are planting mung beans instead,” he said.

It may not be smooth sailing for cotton growers who do return to the industry though. The Myanmar cotton industry is already facing constraints due a surge in demand over the past years. Cotton plant cultivators also say they are constantly facing difficulties in obtaining seeds and face challenges due to scarcity of labour.

Cotton is planted twice a year in February and July, with both seasons lasting four months each. The harvest from both seasons is distributed equally between the local and Chinese markets.

Myanmar exported around 4,300 tonnes of cotton to China worth $9.5 million in 2016-17 compared to just 1.6 tonnes worth $3.5 million in 2013-14, according to the government.

Cotton is included in the National Export Strategy and the textile fibre and fabrics industry is included the priority sector for exports.

Source: Myanmar Times

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