With the global credit and financial crisis, particularly during the last five months, it was impossible for the Greek cotton market to be unaffected. As in other countries, the liquidity shortage and the banks’ problems have brought many difficulties in our sector, from business slow down to lack of trust between clients and even small obstacles in contract implementation. The good news is that, so far, despite the collapsing market, we haven’t heard of any default, which proves that the Greek crop is still a secure and mature market.

Reasons for Confidence

In this pessimistic and uncertain cotton market there is some good news for the Greek crop. First, the status of our ports is improving; finally China’s Cosco Pacific signed a guaranteed 3.4 billion deal with OLP (Piraeus Port Authorities) to upgrade and run the port facilities for 35 years at Piraeus. We are expecting similar good news from Thessaloniki port and the joint venture of Hutchison Port Holdings, HPI Sarl and Alapis Holding, who was the winner of a tender to run container operations at our second biggest port. Both agreements will definitely bring new investments to our ports that will improve port operations and overpass problems, such as delays and strikes, of the past.

Secondly, the dropping cotton acreage in our country in favor of alternative crops like wheat and corn has brought some serious worries to all members of our cotton sector. As a result, there are a number of proposals to encourage cotton cultivation that are likely to be valid for the coming seasons. The most important request is the drop of official cotton hectares to about 250,000 hectares, with the aim of increasing the coupled subsidy to the grower. The 35% coupled payment previously was given for 370,000 hectares. Thus by decreasing the acreage, cotton growers will receive higher subsidies.

In addition, the Greek ginners association is requesting a key role change on the prerequisites of the coupled payment that will make cotton cultivation more professional. So far in order for a farmer to get the coupled amount he didn’t have to deliver cotton seed to ginning mills, thus we had too many cases of “subsidy hunting” without good cultivation. The government intends to oblige the grower not only to deliver seed cotton, but also to settle a minimum yield of about 2,500 – 3,000 kgs/ha in order to get this amount. There is no question that, provided these proposals become true, cotton cultivation in Greece will become more proficient.

The 2008/09 Crop

Quality wise, the 2008/09 crop is not the finest. Rainfalls downgraded only the color of our cotton to the so called “after rain” type. About 75% to 80% of the crop ranges from low HVI CG 41 to good HVI CG 51 color. Thankfully all the other specifics remain stable. So far only about 12% of the crop 2008/09 has been sold, justifying the lack of demand and drop of consumption for many traditional Greek buyers. Of course we should bear in mind that several old crop stocks have been committed during the last four months replacing the usual forward sales of the new crop.

As for the future of Greek cotton, it is difficult to make predictions. For the last five seasons, we have been experiencing a drop in cotton acreage due to changes in the subsidy system and competition from alternative commodities. It is more likely that next season we are going to have one more drop in acreage by 10% to 15%, but of course it is too early to make a safe calculation. The main reason for this decline is the fact that farmers can’t handle cost of production for cotton without being paid accordingly. If they see better prices or lower costs of production next season in cotton, they will definitely return to cotton planting.