Programs

PHILIPPINE COTTON INDUSTRY ROAD MAP (2004/05-2009/10)

Summary

Current Industry Status and Problems

The current status of the Philippine Cotton Industry can be described to have the following peculiar characteristics:

    1. Very low production base of 2,500 hectares
    2. Wide fluctuation yield levels, ranging from 0.6-3MT/ha
    3. Unstable farmer’s income (below PhP10,000/ha) due to non-adoption of the RCPT and low prices
    4. Low domestic lint contribution, barely able to supply 5% of the local lint requirements
    5. 95% idling ginnery capacity
    6. Under-utilization of cotton technicians
    7. Vulnerability of cotton to pests
    8. Exploitative, counter productive industry segments under loose linkages with inadequate capital base.
    9. Low public perception of the cotton industry due to low contribution to the national income
    10. Inability of CODA to mobilize assets due to limited financial support coming from the government
    11. Disillusioned industry players which discourage continued participation

Cotton Industry Potentials

Despite these setbacks, the industry remains to hold great potential in contributing to the income of the national economy, as well as in accelerating economic growth in the countryside. Specifically, the strengths of the industry are as follows:
  1. There are 150,000 hectares certified suitable to cotton production in the country.
  2. Commercially homegrown production technology is available.
  3. There is a cadre of trained cotton specialists that can undertake extension activities for the cotton program.
  4. Philippine cotton is acceptable in both local and world markets in terms of quality.
  5. There exists available market for Philippine cotton, domestically and internationally.
  6. Philippine cotton has existing essential investments such as ginneries.
  7. Cotton is a credit-worthy and insurable crop.
  8. Local cotton has a comparative advantage, and can compete in the world market, in terms of prices

Goals of the Road Map

In lieu of these strengths, this roadmap hopes to develop an industry as:
  1. A commercial size production base contributing about PhP2.3 billion to the economy annually, with an average area of about 50,000-100,000 ha, and an average yield of 1.75 MT/ha in Visayas and Mindanao, and 2.25 MT/ha in Luzon.
  2. Nation-wide production coverage covering 25 cotton program provinces.
  3. A well-defined industry structure that orchestrates production and marketing activities and support initiatives.
  4. Dedicated government support to the industry.
  5. A centralized merchant operation to increase industry efficiency.
  6. An industry that is able to carve its niche in the local and regional markets.

Cotton Industry Fundamentals

Attendant to the attainment of the desired industry status are six fundamentals, namely:

  1. A critical mass of cotton farmers, credit, ginneries operating at capacity, and buying capital must be in place.
  2. Industry must adopt practices as well as trade models that are tested and accepted in other cotton growing countries.
  3. Industry must cater to a multi-faceted market.
  4. Government must have limited intervention coupled with recognition and support.
  5. There must be a certain level of earnings generated that benefit all segments of the whole industry.
  6. Free market forces must be in place where textile mills have the option to decide on their purchase program.

Strategies to Sustain Cotton Development

Three major strategies shall be adopted to sustain the development of the local cotton industry:

  1. Industry restructuring
    1. Setting up of a well-capitalized merchandizing and processing company.
    2. Rationalization of CODA.
    3. Organization and mobilization of regional integrators, credit providers, input suppliers and service providers, insurance providers, LGUs.
  2. Industry build-up
    1. Production booster program towards a commercial size industry
    2. Ginnery retooling and upgrading through capacity assessment and technical performance upgrade, ginnery service area capacity matching, and technical personnel training
    3. Credit booster program that includes the expansion of credit portfolios and credit regulation and loan performance evaluation.
    4. Cotton market development by establishing the following for Philippine cotton: high quality premium, positioning it in the high niche markets, growing its share in the domestic and international markets.
    5. Establishment of safety nets, specifically through technology updating, crop insurance and price hedging.
  3. Other Industry Programs
    1. Creating the Philippine Cotton Board, a non-stock, non-profit organization comprising all industry stakeholders representatives. It serves as the industry unified voice and venue for policies and arbitrations
    2. Aggressive product promotion through participation international fora, conferences and industry promotion related activities.
[ Philippine Cotton Industry Roadmap (Full Text in pdf format) ]