The global slowdown has hit Tanzania’s Cotton processors. The main market for Tanzania’s cotton yarn exports has been China. The trade war between the United States and China has seen a sharp fall in the volume of garments exported to the US from China which in turn has hit the demand for Tanzania’s cotton yarn from China.
This has led to a chain of effects on the Tanzanian cotton industry affecting Cotton processing factories in Tanzania, ginners and exporters. Cotton Processing factories have slashed the amount of cotton lint they buy from ginners and also the quantity of yarns they export. The result is tons of cotton yarns are piled up in the factories. To add to the misery, a new policy has been introduced by the government which needs cargo to be transported by truck with only specific documents.
During this season, over 4,00,000 tons of cotton were harvested in Tanzania. But the trade war between the US and China has led to a drop in the price of the commodity in the world which led to a fall in prices in the domestic market. The Bank of Tanzania is trying to help the farmers through a mechanism to mitigate the effects of price volatility.
