* Most long-staple cotton last year was fake
* Devaluation and labelling scandal revive interest
* Seed standards imposed to drive up quality
By Arwa Gaballa and Eric Knecht
CAIRO, Feb 13 Egypt's most famous export, the
silky soft cotton prized by makers of luxury bedding and
clothing, has become so scarce as production has fallen that
most supplies sold under its brand name last year were fake.
But a surge in local cotton prices ahead of next month's
planting season, and a crackdown on ersatz Egyptian cotton
worldwide, are reviving interest in cultivating the
Farmers, spinners, and exporters say the weakness of the
Egyptian pound following its flotation in November and a scandal
over the alleged sale of falsely labelled Egyptian cotton have
increased demand for the real thing, injecting life into a
historic industry on its deathbed.
Egyptian cotton output will be "between double and triple
this year," said Ahmed Elbosaty, chairman of Modern Nile Cotton,
a major cotton trading company.
Last year, agricultural production of Egypt's high quality
long-staple cotton hit a more than 100-year low.
Production has slumped since 2011, a year of political
upheaval that coincided with looser regulations that degraded
the quality of local cotton, said Nabil al-Santaricy, head of
the Alexandria Cotton Exporters Association.
Faced with big losses, farmers burned their cotton crops,
with many switching to rice.
In a bid to save its historic crop, Egypt in 2016 banned all
but the highest quality cotton seed, dramatically shrinking the
area under cultivation but restoring quality.
The U.S. Department of Agriculture estimates that in 2016-17
Egypt will produce 160,000 bales, half the previous year's crop
and a fraction of the 1.4 million produced in 2004-05.
SAVED BY SCANDAL
With global stocks low, some foreign suppliers have mixed
lower grade lint into yarns and fabrics, passing them off as
Egyptian cotton, spinners and exporters said.
The Cotton Egypt Association, which provides an official
logo to suppliers of 100 percent Egyptian cotton, estimates that
about 90 percent of global supplies of Egyptian cotton last year
"When the manufacturer can write it's 100 percent Egyptian
cotton, and everyone else does the same, why would he buy the
actual Egyptian cotton?" said association head Khaled Schuman.
The scandal hit the headlines last year when U.S. retail
chain Target Corp accused Indian textile manufacturer
Welspun India of using cheaper, non-Egyptian cotton in
sheets and pillowcases.
Retailers began reviewing whether to stop selling Welspun
products and demanded that those offering 100 percent Egyptian
cotton should show proof.
"This whole thing revived interest in Egyptian cotton and
increased demand," Santaricy said.
Schuman said his association had received an "enormous
number" of requests to use its logo, which guarantees quality,
since the Welspun affair, with 20 companies signed up since
"There's now more focus on selecting suppliers who use 100
percent Egyptian cotton ... Companies are telling us that 'we
are required to get your license because we cannot sell our
product without it'," he said.
Following the scandal, Welspun, one of the world's largest
textile manufacturers, announced an investigation into its
The company said last Thursday that the Cotton Egypt
Association had granted it the right to use its logo through
2022 following a review of its supply chain. Welspun said it now
plans to invest $3 million to market Egyptian cotton worldwide
and may open a plant in Egypt.
"We foresee an increase in demand for Egyptian cotton and
find an ideal condition for making Egypt one of our hubs for
sourcing and manufacturing Egyptian cotton products," Welspun
Schuman says measures such as DNA testing and a system of
international auditing will reduce imitation Egyptian cotton to
30 percent of world supply by the end of this year.
FLOAT TO FORTUNE
Exporters and spinners say one of the biggest challenges is
supply: there simply isn't much Egyptian cotton.
This is set to change. Farmers and exporters expect a
comeback for the crop, spurred by the country's decision to
float its currency, halving its value overnight but helping push
local cotton prices sky high -- to about 3,200 Egyptian pounds
($174) per qintar (160 kg) from 1,200 Egyptian pounds a few
"There was no hope in cotton until this season ... Now all
the farmers are going to grow it," said Nile Delta farmer Maher
Allam, who plans to quadruple his cotton area.
Egypt's sunny skies and superior seed help it grow a cotton
known for unusually long fibres that produce a light durable
fabric with an attractive sheen and soft touch.
Long-staple sells at 155 cents per lb, about twice the price
of common short-staple cotton.
Its return to world markets could provide a lucrative export
opportunity at a time when Egypt has a huge trade deficit and is
seeking to relaunch its stagnant economy.
"The 2016-17 season marked the beginning of the return of
Egyptian cotton ... More farmers want to plant now, because the
crop has become more competitive," said farmer Waleed
al-Saadany, who is doubling his cotton planting this year.
SPINNING A PROFIT
At Egyyarn, a yarn factory on the outskirts of Cairo,
January was the first month its machines had run at full
capacity in over a year, owing to a rise in demand.
The plant, with humidity levels set high to preserve the
soft touch of its long-staple cotton, produced 150 tonnes of
yarn in January, up from 110 tonnes a month earlier.
"Business was bad, but now with this new cotton, things have
become different ... clients are increasing their contracts,"
factory manager Ahmed Hussein said over the steady swish of
yarns whipping around spinning machines.
Egyyarn was among the first to procure the new high quality
crop, said Hussein, prompting the return of clients who had
shunned the company because of quality issues.
"Companies were going to India and Pakistan because the
characteristics of Egyptian cotton were not great," said Khaled
Moussa of Almatex, another yarn producer.
Moussa said increased supplies would allow the company to
increase exports just as the Welspun case and a better crop
drive up demand. His company hopes to nearly double its exports
over the next year to 3,000 tonnes.
"The case exposed those who were bluffing and charging
people for something they were not providing," he said.
(Additional reporting by Zeba Siddiqui in Mumbai; editing by