INDONESIA AFRICA COOPERATION COTTON VALUE CHAIN AND MARKET TRANSPARENCY
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1 ACTIVITIES REPORT INDONESIA AFRICA COOPERATION COTTON VALUE CHAIN AND MARKET TRANSPARENCY INDONESIA, 2-6 MAY 2011
2 Mention of firm names and commercial products does not imply the endorsement of ITC. The International Trade Centre (ITC) is a joint agency of the World Trade Organisation and the United Nations. International Trade Centre 2011 Report and pictures by: Adrien Ranchon, ITC FOR FURTHER INFORMATION, PLEASE CONTACT: Matthias Knappe Programme Manager for Cotton, Textiles and Clothing Sector Competitiveness International Trade Centre Palais des Nations Ch-1211 Geneva 10 Switzerland Tel : knappe@intracen.org Cover photo (from left to right): Indonesian textile stakeholders delivering presentations during a one-day conference and buyer-seller meeting between African cotton exporters and Indonesian spinners/participants from West and Central Africa visiting a garment factory in Jakarta. Field visit and on-site training for African participants in a spinning factory. Project INT/75/24E - 2 -
3 Indonesia - Africa Cooperation Cotton Value Chain and Market Transparency Jakarta, 2 6 May, 2011 ALL ACP AGRICULTURAL COMMODITIES PROGRAMME funded by the European Union Introduction The ITC African Cotton Development Initiative consists of three main components: 1. Building Cotton Trading Capacity in developing countries through the Cotton Exporter s Guidebook published in To further reach out to cotton stakeholders around the world with a focus on Africa, the ITC developed in 2010 a multi-lingual website on the Cotton Guide. To access the online cotton exporters guide, click 2. Facilitating South-South Cooperation in Cotton and Cotton Value-addition including: a) Learning from successful cotton producing countries in the south; b) Developing capacity to transform cotton through training; c) Sourcing cotton inputs from other developing countries, and d) Encouraging Intra-African cooperation. 3. Promoting African cotton by providing a firm understanding of cotton markets and client requirements and promoting African cotton in Asian markets through, inter alia, buyer-seller meetings. The International Trade Centre (ITC) organized and managed the training event on the Indonesia- Africa Cooperation on Cotton Value Chain and Market transparency under the supervision of Mr. Matthias Knappe, ITC programme Manager for Cotton, Textiles and Clothing, Sector Competitiveness Section, Division of Market Development. Mr. Anas Sukarmadji, Advisor for Apac Inti Corpora and member of the Indonesian Textile Association (API), coordinated the one day conference and buyer-seller meeting as well as factories visits in Jakarta. Mr. Ben Mohamed Imamo, Regional Trade Promotion Adviser (ITC), provided technical support and coordinated the participation of African delegates in the event. Mr. Adrien Ranchon, consultant (ITC) coordinated the participation of African delegates, managed seminar logistics and prepared this brochure. Photos were taken by photographers and Adrien. The European Commission provides financing to the ITC Cotton Programme under the EU All ACP Agricultural Commodities Programme
4 Within the framework of ITC cotton development activities and under the sponsorship of the EUfunded All ACP Agricultural Commodities Programme, the International Trade Center (ITC) conducted a one week training programme aimed at South-South cooperation and promotion of African cotton to Indonesia from 2 to 6 may 2011 in Jakarta. 23 high-level delegates from West and Central Africa (Benin, Cameroon, Côte d Ivoire, Mali, Central African Republic, Senegal, Chad and Togo) participated in the programme. Regional African Associations such as ACA (African Cotton Association), AProCa (African Cotton Producers Association), UEMOA (West African Economic and Monetary Union) and CEEAC (Economic Community of Central African States) involved in all steps of the cotton value chain were represented. The training programme entitled Cotton Value Chain and Market Transparency was organized by ITC in close cooperation with API (Indonesian Textile Association) and with the support of the Ministry of Trade of Indonesia. Overview of the textile industry in Indonesia Indonesia is the world fourth biggest cotton importer, importing around 500,000 tons of cotton in National cotton production is limited due to the climate, which is less favorable for the growth of cotton plants than in other regions of the world. Indonesian cotton production reached approximately 30,000 bales in 2009/2010. The Indonesian textile and clothing industry employs about 1,3 million workers, equivalent to 10,6 % of the Indonesian total work force and plays a significant and strategic role in the Indonesian macroeconomy. The Indonesian textile and clothing industry is highly concentrated on the island of Java (almost 90% of the textile industry) and particularly in West Java (55%). The following table shows cotton imports into Indonesia, by country of origin, in year 2008, 2009 and 2010 (in ton of lint). No Country (Jan-Oct) United States Australia India Brazil South Africa Burkina Faso Ivory Cost Uzbekistan Mali Tanzania Mozambique Central African Republic Pakistan Zimbabwe Syria Mexico Cameroon Uganda Malawi Togo Greece Nigeria Total African country Total import tons tons (USD ) tons tons (USD ) tons tons (USD ) - 4 -
5 Major suppliers of cotton to Indonesia are the United States, Australia, India and Brazil. ( tons of lint in total, or 67% of total imports in 2010). In comparison, total imports of cotton from West African countries to Indonesia reached 62,265 tons in 2010, which represented almost half of the total imports of cotton from Africa (49%) and around 12% of the total import. The most popular cotton types from West Africa used by the Indonesian spinners are as follows: Cote d Ivoire - Type Manbo and Manbo-S Burkina Faso - Type Bola-S Mali - Type Juli-S and Surama Benin - Type Kaba-S Cameroon - Type Plebe Chad - Type Ttamex The parameters of cotton quality required by spinners are as follows: Staple length / 32 to 1 5 / 32 Uniformity - 81 to 83% Micronnaire to 4.9 Strength - 28 to 32 gpt Elongation - 6 to 7% Ra - 75 to 85 Rd to 9.5 Business prospects and trade opportunities The African cotton industry is looking for export opportunities and welcomes investments. The Indonesian Textile industry needs to find alternative sources of cotton to meet the domestic demand and is looking for investment opportunities. This creates a great potential to build relationships between Indonesia and Africa in cotton trade and to develop long term partnership in the textile industry. Opportunities to increase African cotton exports: Indonesia is a large potential market for African cotton as it is the fourth biggest cotton importer in the world and the national production is too limited to meet the domestic demand. Opportunities to develop the textile industry in Africa: African textile industry needs investments, outsourcing and transfers of knowledge from Indonesian Textile Industry. Indonesian textiles companies are interested to invest in Africa
6 Participants Group photo with West and Central African participants, ITC staff, Mr. Sukarmadji, Adviser for the Indonesian Textile Association (API), API members and Indonesian textile stakeholders BENIN CAMEROON COTE D IVOIRE Mr. Jonas GBEFFO Consultant-Trainer in Marketing and Communication Conseil National des Producteurs de Coton du Bénin (CNPC) Mr. Haman HAMADOU Head of Department Marketing Department Société de développement du coton (Sodecoton) Mr. Sobgombe PATCHOUKI Vice-president Conseil National des Producteurs de Coton du Cameroun (CNPC-Cameroun) Mr. Nangalourou YEO President Association des Faîtière de la Filière Cotonnière de Côte d Ivoire (AFFICOT-CI) Mme. Marie Solange YACE AMANI Head of Sales Department Compagnie Ivoirienne pour le Développement des Textiles (CIDT) MALI CENTRAL AFRICAN REPUBLIC SENEGAL Mr. Karamoko KOMANGARA Head of Sales Department Compagnie Malienne pour le Développement du Textile (CMDT) Mr. Francis MONGAI President Union National des Producteurs de Coton Centrafricains (UNPCC) Mr. Saliou SOUSSO Head of Marketing Department Société de Développement des Fibres Textiles (SODEFITEX) - 6 -
7 MALI CENTRAL AFRICAN REPUBLIC SENEGAL Mr. Mamadou TOGOLA Textile engineer Metrology Textile Laboratory Manager Centre de Recherche et de Formation pour l Industrie textile (CERFITEX) Mr. Etienne ZOUIBONA Sales manager Agence Centrafricaine de Développement Agricole (ACDA)/Cellule Coton TCHAD TOGO ACA Mr. Simeon MBAIDOUDJE ROUTINGAR Head of Sales and Transit Department Cotontchad Mr. Nawiekou Baba DJABAKATIE President FNGPC - Faîtière Nationale des Groupements de Producteurs de Coton du Togo Mr. Massaoudou MAMAH CEO Exim - Togo Mr. Jean-Gérard DESANTI Marketing manager NSCT - Nouvelle Société Cotonnière du Togo Mr. Yao Adodo AMECY Representative Association Cotonnière Africaine (ACA) Mr. Idy KA President Committee on Classification and Metrology Association Cotonnière Africaine (ACA) Mr. Camille MADALA Vice President Committee on Classification and Metrology Association Cotonnière Africaine (ACA) Mr. Alidou AMADOU SOULE General Secretary Committee on Classification and Metrology Association Cotonnière Africaine (ACA) UEMOA CEEAC AProCa Mr. Balla DIONG Director of enterprise, industry and handicraft Union Economique et Monétaire Ouest Africaine (UEMOA) Mr. Koffi GNAKADJA Director of Foreign Trade (interim) Union Economique et Monétaire Ouest Africaine (UEMOA) Mr. Donatien Kueci ZOLA Coordinator Regional Focal Point for the Cos Coton in UEMOA Mr. Jules Rommel TOUKA TCHAKONTE Economist Statistician /Macro economic expert Communauté Économique des États d'afrique Centrale (CEEAC) Mr. Essohana SOH Assistant treasurer Association des Producteurs de coton africains (AProCa) - 7 -
8 Contributing Associations and Companies Indonesian Textile Association (API) Ministry of Trade, Government of Indonesia Eximbank Ltd. Apac inti Corpora Ltd. Primayudha Ltd., Bitratex Group Sandrafine Garment Ltd. Sritex Ltd. Argo Pantes Ltd. Sulindamills Ltd. Intertek Wakefield inspection Services Ltd. Jakarta 3 May 2011 Conference and buyers-sellers meeting A full-day conference followed by a buyer-seller meeting was attended by the African delegation and 63 representatives of the Indonesian textile industry, cotton traders, the Ministry of Trade and representatives of the Indonesian Exim Bank. During the conference, technical presentations on the main following topics were delivered: On the Indonesian side: Overview of the Indonesian textile industry Technical requirements of the Indonesian textile and clothing industry and experience with African cotton How to facilitate business between Indonesia and Africa On the African side: The cotton situation in West and Central Africa Progress in contamination reduction in West and Central Africa Presentation of the Agenda Coton-Textile of UEMOA Presentations were followed by questions and answers sessions
9 Opening remarks and introduction to the programme At the opening ceremony, Mr. Matthias Knappe, Programme Manager for Cotton, Textiles and Clothing, Sector Competitiveness (ITC), addresses a warm welcome to the participants and guests followed by keynote speeches from high-level dignitaries : Mr. Gatot Prasetyo Adjie, Director of Export Development Cooperation, Ministry of Trade of Indonesia Mr. Mintardjo Halim, Vice Chairman of API and Chairman of Permanent Committee on Africa for Indonesian Chamber of Commerce and Industry (Kadin) In his introductory speech, the ITC Programme Manager highlighted the needs for African cotton producers to better understand the cotton value chain, the market and final customer as well as for Indonesian spinners to increase their knowledge on African cotton supply and to share their requirements on quality and contamination reduction issues. The Director of Export Development Cooperation from the Ministry of Trade expressed the support of the Indonesian government to increase trade relationships between Africa and Indonesia and explore new business opportunities. The Vice Chairman of API highlighted the need for the Indonesian textile industry to find alternative cotton suppliers and concluded that such cooperation between African ginners and Indonesian spinners was a way forward to improve cotton quality as well as services delivered. ITC Programme manager highlights opportunities to increase cotton trade between Indonesia and Africa Director of Export Dvt Cooperation wishes the supply of competitive and quality cotton will help the Indonesian textile industry Vice Chairman of API expresses the support of the Association to implement partnership with African cotton exporters - 9 -
10 Indonesia s textile industry and how to facilitate business between Indonesia and Africa The following technical presentations were delivered: Presentation of Eximbank as a sovereign entity supporting national export programmes in Indonesia Role to facilitate business between Indonesia and Africa, with a case study in the textile industry Financing to the Indonesian textile industry The Textile and Clothing industry in Indonesia and its cotton requirements Experience of spinners with African cotton and contamination issues Methods of contamination reduction used by Indonesian spinners Question-answer session A representative of the Eximbank explains the role of the bank to facilitate business between Indonesia and Africa A representative of the spinning factory Primayudha delivers a presentation on the textile and clothing industry in Indonesia and its cotton requirements A representative of the spinning factory Apac inti Corpora shares his experience with African cotton and contamination issues Both spinners shared their experience with African cotton in details. They drew attention to the fact Indonesian spinners are satisfied with cotton specification from West Africa, in terms of staple length, micronaire, uniformity, strength and neps, but, they are not satisfied with contamination, colour and trash. Due to the above reasons, spinners prefer to blend African cotton with other fiber during process, and to blend with other cotton for 100% cotton products. To avoid contamination in yarn, several steps are executed by spinners as follows: 1. Manual picking from Blow Room lay down. 2. Installing Automatic Removal Machine at Blow Room line, such as Jossi, Loptex or Securamat. 3. Final Clearing of contamination in Winding, such as Loepfe, Uster Quantum or Keisokki Tricord. 4. Educating every staff who will be involved in the yarn making process. Such electronic gadgets and machines used to reduce contamination involve high costs of investments and also lead to additional costs for energy and handling by engineers
11 A representative of UEMOA asks details on how Eximbank can facilitate the cooperation between Indonesia and Africa A participant presents a project jointly implemented by African Associations (ACA/AproCa) aimed at fighting against contamination Discussions between African cotton producers and Indonesian spinners raised the issue of the traceability and image of African cotton During the session, recommendations to fight contamination were delivered and spinners highlighted that bale packing material used was a main factor of contamination as cotton can be contaminated during the shipment or storage if packing is bad. The cotton situation in West and Central Africa, progress in contamination reduction and regional strategy The following technical presentations were delivered by experts from African companies and associations: Main assets of African cotton and quality of cotton fibre produced Cotton fibre commercialization in West and Central Africa Presentation of the African Cotton Association (ACA) and its vision to fight contamination Actions undertaken individually or under regional projects by countries to reduce contamination Joint project ACA/AProCa (Association of African Cotton Producers) to fight contamination Development and promotion of cotton and textiles in UEMOA (West African Economic and Monetary Union) A cotton classifier from Benin gives an overview on the cotton situation and quality of cotton African cotton General Secretary of the ACA Committee on Classification and Metrology delivers a presentation on contamination reduction efforts in Africa The Director of enterprise, industry and handicraft of UEMOA highlights the regional strategies implemented to support the cotton-textile sectors in the region
12 Indonesian spinner asks details on the supply and shipment of cotton from Africa Chief of Sales Department of CIDT from Côte d Ivoire gives details about cotton shipment from the port of Abidjan Participants from African cotton associations and companies keenly listen to the discussions during the conference Buyer - sellers meeting During the networking session, Indonesian spinners, textiles mills and cotton traders met directly and individually with African cotton producers to examine samples and discuss about possible business transactions. Different cottons from West and Central Africa were shown and spinners gained insights on standards quality, production and prices available. For example, cotton from Mali produced under the project on contamination reduction implemented in West Africa was given to spinners. This cotton is in the process of being certificated as non-contaminated cotton. The buyer-seller meeting was therefore a good opportunity for ginners to ensure future feedback on quality. Delegation of Mali explains the different types and grades of cotton produced to the executive from the spinning factory Sulindamills Malian delegate provides spinners with non-contaminated cotton samples produced under a project on contamination reduction in West Africa Discussions between the delegation of Cameroon and executive from Sulindamills about cotton grades and quality
13 Executive from the spinning factory Argo Pantes verifying cotton samples from Cameroon Discussions between delegate from Benin and Indonesian spinner on cotton production and quality Senegal delegate with executives from Indonesian spinning factories Indonesian spinners verifying the quality of cotton samples from Senegal Delegate from Togo gives cotton specification sheet to the executive of Sulindamills Cotton samples from Cameroon are displayed to Indonesian spinners Jakarta 4 May 2011 Field visit to the garment factory Sandrafine Garment Ltd and Sritex Ltd. Sandrafine Garment Ltd. is a leading garment manufacturer of woven shirts for men and women with 135,000 square feet of manufacturing space, supporting 1,200 sets of sewing machines. Sandrafine Garment produces middle to high-end international branded apparel to customers worldwide including USA and Europe, such as H&M or Gap for instance. During the factory tour and on site-training, participants witnessed all the different steps along garment manufacturing from design, pattern making, cutting, sewing, packaging and shipment. A visit was also made to the marketing office of Sritex one of the biggest and integrated garment factory in Indonesia. Around persons work in the factory (95% are women) with a production capacity of around 500,000 garments per month Participants observing design and pattern making in the factory Manager explains the different steps involved in garment manufacturing
14 Participants witness the different steps of the sewing process Women workers sewing in the factory Participants observe the packaging of finished garments Discussions between the participants and the factory manager of Sandrafine Garment Participants observed apparel produced by Sritex, such as shirts, pants or military equipments, etc. Brochures and information about Sritex products are provided to the participants in the marketing office Jakarta 5 May 2011 Field visit to the spinning factory Argo Pantes ltd. Argo Pantes belongs to one of the largest manufacturing companies in Indonesia. The plant visited consists of two mills with capacity of about 120,000 spindles, producing 100% cotton combed and carded yarn and consuming about 18,000 tons of cotton per year from USA, Brazil, Africa and Australia. During the factory tour and on-site training, participants observed the different steps to process raw cotton into yarn (bale opener, blowing, carding, combing, spinning and winding) as well as electronic gadgets and technology used to eliminate contamination (blow room, contamination detector, carding engine, yarn clearing and winding). Manager of Argo Pantes welcomes the participants and delivers a presentation on the spinning factory Participants observe different types of bales covers corresponding to cotton shipments from America, Asia and Africa Participants witness the cotton bale opener as well as technology and clearers used in the blow room
15 Participants observe cotton spinning using open-end technology Manager explains the different electronic gadgets and technology used to eliminate contamination Participants observe a carding machine, which prepares cotton for spinning Participants observe cotton spinning using ring frame technology Technician working on winding machines equipped with clearers to eliminate contamination Question and answer session between the manager of Argo Pantes and African participants Field visit to the spinning factory Sulindamills Ltd. Sulindamills belongs to one of the leading textile groups in Indonesia and processes mainly poly cotton as well as polyester and rayon fibre including various blends. Sulindamills has two spinning factories with a total installed capacity of 83,000 spindles to produce 15,000 tons of yarn, mainly blended with polyester, and use about 6,000 tons of cotton per year, mainly imported from USA, Australia, Brazil, Africa and India. During the factory tour and on-site training, participants observed cotton bales packaging in the warehouse, the various equipments used to process yarn as well as electronic gadgets and technology used to eliminate contamination (e.g. clearers in the blow room, winding clearers). Factory manager of Sulindamills addresses a warm welcome to the participants and delivers a presentation on the spinning factory Participants compare different packing used by cotton exporting countries to cover cotton bales Recommendations are given to ginners to use cotton or transparent polyethylene bale covers to reduce the risks of contamination
16 Factory manager explains in detail the technology on blend arrangements at the bale lay down in the blow room to keep the quality uniformity of the yarn To avoid foreign matters and reduce cotton contamination, manual as well as electronic checking is done Participants witness the spinning process and production of different kind of yarns in the factory In winding a yarn clearer is used (Uster Quantum 2) to detect foreign matters Participants listen to explanations given on the winding process and machines used Factory manager highlights the good quality of African cotton and expressed the wish to buy more African cotton in the future Jakarta 6 May 2011 Brainstorming session between African cotton producers and Indonesian spinners: Development of an action plan As a follow-up of the conference and factories visits, a brainstorming session was organized to identify ideas on how to implement partnerships between Indonesian spinners and African cotton exporters. Both sides expressed their strong willingness to facilitate direct trade relationships in a win-win cooperation. Discussions and exchanges led to the development of a Memorandum of Understanding (MoU) for a future partnership to increase trade relationships between Indonesia and Africa. Pan-African institutions such as ACA and AproCa will work in close relation with API to elaborate and finalize a memorandum of Understanding. The outline for an MoU was elaborated based on the three following main items: Information Exchange Cotton parameters Programme Development Import- Export Process Markets access Length, strength, micronaire, stickiness, colour, trash, short fibre content, neps Technical Assistance Investment Import -Export Rules
17 Discussions will follow between ACA/AProCA and API to finalize the MoU and start implementing the partnership. Moreover, technical presentations on the following topics were delivered: Presentation of Wakefield Inspection Services, on cotton inspection, including weight control, damage survey and foreign matters survey. Presentation on the results of a contamination survey conducted in Indonesia and Malaysia in 2010 to understand the experiences of the spinning mills on the issue of contamination. Presentation of CERFITEX, a research and training centre on the textile sector based in Mali. African participants and Indonesian textile stakeholders share ideas on how to implement a partnership Discussions on how to implement direct relationships between ginners and spinners The outline of a MoU was elaborated as a first step for the development of a future win-win cooperation between Africa and Indonesia Objectives fulfilled by the training programme On the Indonesian side: 1) Increase knowledge on cotton supply from West and Central Africa 2) Cooperate with African cotton producers to improve cotton supply particularly in terms of contamination reduction On the African side: 1) Better understanding of Indonesian market and market access opportunities 2) Facilitate trade linkages and south-south cooperation between African cotton exporters and Indonesian importers 3) Learn about the success factors of the Indonesian textile and garments industry The African delegation witnessed the activities of the Indonesian textile industries, and had better understandings of the capacity, the requirements, type of process from spinning up to garment. The current main parameter of West African cotton such as staple length, grade, micronaire, strength and neps are highly appreciated by spinners. If minor problems such as contamination, colour and honey dew can be solved, the use of West & Central African cotton will certainly increase and could dominate the Indonesian market as it is with US cotton (SJV, CA, MOT, Fiber Max.)
18 Lessons learned and follow-up activities LESSONS LEARNED FOLLOW-UP ACTIVITIES COTTON QUALITY AND PRODUCTION In general, African cotton has an unfavorable image because of the contamination Train and improve awareness of all actors involved in cotton value chain in contamination reduction from the origin Indonesian spinners are interested to buy non-contaminated cotton Get certification for clean cotton produced Negotiate a premium for clean cotton with spinners Extend the project on contamination reduction to other countries in West and Central Africa Organize a visit of Indonesian textile stakeholders to Africa Indonesian spinners invest a lot in electronic equipments to eliminate contamination Train all actors involved in cotton value chain in contamination reduction from the origin African cotton generally meets quality requirements from Indonesian spinners Develop direct sales between African ginners and Indonesian spinners to improve and have a regular feedback on the quality Invest in HVI and quality control machines Bales covering material is a main factor of contamination Use bales covers made of cotton or transparent polyethylene instead of PP The importance of technology update for fibre and quality testing to address the challenges of the sector Invest in HVI machines in Africa to have all the lint parameters tested before export Differentiation between African cotton origins is not well-known by Indonesian spinners Collaborate with API to promote African Cotton Standards set up by ACA Indonesian spinners are willing to collaborate with ginners to improve quality and reduce contamination levels during the ginning process
19 COTTON TRADE Indonesia is a big potential market for African cotton as it is the fourth biggest cotton importer in the world Create partnerships between African cotton Associations (ACA/AproCa) and API Expand production capacity employing modern technologies Indonesian Textile Industry needs to find alternative sources of cotton to meet the domestic demand Create partnerships between African cotton Associations (ACA/AproCa) and API Collaborate with API to promote African cotton in Indonesian market Opportunities of enhancing trade and investments between Indonesia ad Africa (South-South cooperation) Create partnerships between African cotton Associations (ACA/AproCa) and API Import of Indonesian technology inputs and machinery to Africa Collaborate with Eximbank to facilitate business and investments between Africa and Indonesia Organize a visit of Indonesian Spinners to Africa TEXTILE INVESTMENT AND TRADE African textile industry needs investments, outsourcing and transfers of knowledge from Indonesian Textile Industry Organize a visit of Indonesian textile stakeholders to Africa Indonesian textiles companies are interested to invest in Africa Explore possibilities to attract other Indonesian investors to Africa
20 In partnership with: Indonesian Textile Association Street address: ITC, 54-56, rue de Montbrillant, 1202 Geneva, Switzerland Under the: Postal address: ITC, Palais des Nations, 1211 Geneva 10, Switzerland Telephone: Fax: Internet: All EU ACP Agricultural commodities Programme
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