Indonesia: Cotton Drops

Avatar for Matt Hopkins By Scott C. Lucas|21 May 2007

Despite low yield levels, the country has not made efforts to reintroduce Bacillus thuringiensis (Bt) cotton since commercial production was stopped in 2002. South Sulawesi, Central Java, and East Java are the major Indonesian cotton producing areas. Indonesia’s mills are currently running at around 71% capacity, USDA-FAS adds. The country has a total capacity of 7.8 million spindles and 90,000 rotors, but around 35% of the total spinning machinery and around 66% of the total weaving machinery is more than 20 years old. Since older machines are making the country inefficient compared to competitors, it is difficult for the textile industry to obtain loans from banks.

Indonesian cotton production fulfills only 0.5% of local demand from the textile industry, the balance being imported. Indonesian total imports of cotton in 2006/07 are expected to slightly increase to 2.24 million bales, mostly due to more competitive cotton prices in the international market compared to the price of synthetic fibers such as polyester and viscose. Indonesian cotton consumption is forecast to further increase to 2.3 million bales in 2007/08, as the Indonesian textile industry will prepare to face the increasing demand from Indonesian presidential election campaign in 2009. The more than 20 political parties in Indonesia will distribute free t-shirts all over the country to promote their political agendas, which will increase demand for cotton garments.

In 2005/06, the US was the major supplier of cotton to Indonesia with approximately 45% market share, followed by Australia (22%) and Brazil (9%). The prolonged dryness in Australia that tightened the exportable supplies of cotton resulted in an increase of US cotton exports to Indonesia. However, imports from India are growing. The industry is looking at Indian cotton as a substitute because of the lower price compared US cotton, but with competitive quality. However, Indian cotton has been found to have a higher amount of contaminants.