Egyptian weaving industry: Large factories to accept export terms, smaller businesses suffer

M. Mahrous, E. Abdul Sadik
For Al-Shorfa.com
2008-10-02

Has the weaving industry in Egypt entered a dark tunnel? Why has the state failed to encourage the peasants to grow cotton again? How could the Egyptian weaving industry return to the dark days of 1898 when it faced foreign invasion?

Mustafa Darwish, the owner of a small factory in Shubra

These are important questions. The Egyptian weaving industry has severely deteriorated and the land area cultivated with cotton has shrunk to a mere 300,000 fedans. At the same time, 1.5 quintals of cotton have been imported from Israel and the United States of America, as well as rough cotton from Greece, Syria, China, and Turkey, to overcome shortages in local production.

Mustafa Darwish, an owner of such a factory in Shubra Al-Kheima, said in a special interview, “All weaving companies in Egypt depend on raw materials imported from China. Chinese cotton is estimated at about 13,000 Egyptian pounds per quintal, Turkish cotton at about 13,500 Egyptian pounds per quintal, and Syrian cotton at about 14,000 Egyptian pounds per quintal. In comparison, Egyptian cotton costs up to 16,000 Egyptian pounds per quintal.

Darwish has observed other problems facing the weaving industry, such as the increase in the cost of electricity used to run machines. In his words, “Electric bills have reached an average of 4,000 Egyptian pounds per month. Moreover, transportation is increasingly problematic; the traffic police forbid trucks to drive downtown from 8:00 a.m. until midnight. As a result, factories must ask workers to wait long hours to load their trucks.”

Member of the Cooperative Society for Weaving Factories Owners in Shubra Al-Kheima, Eissa Mustafa Eissa

Eissa Mohamed Eissa, a member of the Cooperative Society for Weaving Factories Owners in Shubra Al-Kheima, has criticized the government, saying, “The cotton policies at the Ministry of Agriculture have lead to a recession, to the extent that the areas cultivated with cotton have shrunk to 250,000 fedans, from 2 million fedans at the end of the 90s. This is the cause of the current cotton crisis.” Eissa emphasizes that, “The local market needs at least 7.5 million quintals per year. Egyptian cotton is the best in the world.”

At the same time, Karim Tawfik, a member of the union committee at the Subra Al-Kheima Factory, notes that, “A $1 tax has been implemented for each kilogram of imported cotton. This decision may prove to be very threatening to the weaving industry.”

Major General Abdul Moneim Al-Asaar, the head of the Egyptian Green Party and a member of the Shura Council, has demanded that, “The government must pass a decision to stop the export of Egyptian cotton abroad. They have already done this with the exportation of cement. We refer to a similar decision within the cotton industry as, ‘the salvage decree.’ Its objective is to provide cotton for the Egyptian market. The same strategy should apply to the agricultural cycle system. We must encourage peasants to cultivate strategic products, such as cotton and wheat.”

Al-Asaar added, “The government is responsible for the problem, since it buys all strategic crops at low prices. Peasants, in turn, are driven to cultivate crops that pay more, such as sugar cane or vegetables.”

Mahmoud Megahid, a member of the Egyptian parliament, stated in an exclusive interview, “The government is myopic in regard to the weaving industry. It is responsible for the current situation. It sought to create a capitalist industry without providing the necessities for it to compete. It failed to protect the weaving industry from the invasion of foreign products and from the Egyptian capitalists, who are like whales. They live only to swallow the weak. What was the Ministry of Agriculture’s role over the last 10 years? Why has the Ministry of Industry not provided feasibility studies to fix the national industrial problems?”

Dr. Salaheddin Fahmy, a professor of economics at the American University of Cairo, explained that, “The weaving industry is considered one of the oldest industries in the country. Its earliest roots date back to 1898, but its true establishment took place in 1927. At that time, Talaat Harb, an Egyptian economist, established three companies: the Egyptian Company for Spinning and Weaving in Al-Mahala Al-Kobra, Misr for Spinning and Weaving in Kafr Al-Dawar, and the Silk Industrial Company.”

The professor added, “The industry flourished under the late President Gamal Abdul Nasser, when the government established many state enterprises in different governorates. The industry, however, suffered a recession starting at the beginning of the Sadat years, when the government adopted a policy of privatisation. It effectively abandoned one of its oldest and most important national industries.”

Dr. Salaheddin affirmed, “The final blow to the weaving industry was the Quiz Agreement. This agreement obligated factories to obtain 11.5 percent of their raw materials from Israel as a precondition to export to the United States. This was the straw that broke the camel’s back for the weaving industry. Small factories could not export their products, as they were not able to comply with the agreement. Israeli raw materials are very expensive, and it became more difficult to compete with larger factories.”

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