USDA – Bangladesh Cotton and Products Annual 2019

Report Highlights

Post’s marketing year (MY) 2019/20 (Aug-Jul) cotton area is forecast to rise to 45000 hectares (HA) as farmers are projected to increase planted area due to government and private support initiatives to incentivize growers in the hill tract region. In MY 2019/20, production is forecast up slightly to 139,000 bales based on favourable weather. MY 2019/20 imports are expected to rise to 8.5 million bales on expectations of increased export market demand for value-added products


Marketing year (MY) 2019/20 (Aug-Jul) cotton area forecast is up to 45000 hectares (HA) due in part to farmers gaining interest to increase cotton area because of expected higher profit margins through contract growing and utilization of land in the hill tract region with joint technical support by the Government of Bangladesh (GOB) and cotton spinning mills. In MY 2019/20, production is forecast to rise to 139000 bales assuming favourable weather and expanded area of high yielding varieties (HYV). In MY 2018/19, Post’s cultivation area forecast is revised down to 44000 hectares (HA), while the production level is also revised down to 135000 bales.

Bangladesh primarily produces American Upland (Gossypium hirsutum) and Tree (Gossypium arboreum) cotton that represent 95 and 5 % of total production, respectively. Upland cotton is cultivated in the southwestern, northern, and central regions, while tree cotton is grown in three Southeastern hill districts. The average length of Upland cotton is greater than 28 millimeters (mm); Tree cotton is less than 10 mm.

The Cotton Development Board (CDB) in Bangladesh is the only responsible organization to work with farmers on cotton area expansion through the provision of various supports, such as the production and distribution of seed, technology transfer through training, and research development. Contacts report that American Upland cotton is currently growing in the hill tract region where food crop cultivation is limited. With the help of CDB and one textile mill, farmers are cultivating cotton under contract farming and shifting from tobacco to cotton cultivation.


MY 2019/20 raw cotton consumption is projected to rise to 8.6 million bales on the expectation of increased yarn and fabric use in the apparel industry due to further international demand as Bangladesh enjoys a competitive advantage. MY 2018/19 consumption is estimated to rise slightly to 8 million bales from increased yarn and fabric use to meet ready-made garments demand by non-traditional importers.

Prices of Cotton

From July 2018, cotton prices started falling in the international market and Bangladesh imported a higher amount of cotton from September 2018 to January 2019 compared to the previous year.

Although cotton prices in India rose within the first two weeks of March, 2019 due to lower production estimates, the country still targets China and Bangladesh as their main export markets.

Some textile millers are struggling with the lower price of yarn and fabric in the domestic market, but export opportunities continue to support cotton imports with strong demand. As a result of cheaper cotton and fabric, Bangladesh continues to receive increased orders for their finished garments from international partners.

Prices of Yarn

In March 2019, the price of cotton yarn reduced due to lower cotton prices in the international market, along with ample supply of yarn and fabric from China, India, and Pakistan.

Local textile millers are facing uneven competition due to abundant imports of cheap yarn and fabrics. The phenomena is attributed to low-priced yarn and fabric imports increased through bonded warehouse import “leakage,” improper utilization declaration (UD) certification facilities of readymade garment (RMG) manufacturers, false declaration of product specification, and smuggling through the border with India. Local RMG manufacturers are importing yarn and fabric from China, India, and Pakistan using a bonded warehouse (zero tariff on import of raw materials for export value-added product) privilege.

The imported yarn and fabric with zero tariff are then illegally sold to the local market which forces down prices in the domestic market and makes local weaving mills and spinners more competitive. Some of them are about to leave the market and are facing a challenge dealing with a huge stockpile of unsold fabric.

As a result of yarn oversupply in the domestic market, prices fell nearly 15-20 %, while some textile millers and spinners suffered as a result. Some millers planned to cut overseas purchases of cotton for yarn and fabric production as they were struggling in the market due to the flood of imported yarn and fabric from China and India. Textile millers urged the GOB to take necessary action in order to protect the textile industry. The total demand for yarn is more than 2.1 MMT per year. Of the demand, 70 % is met by local millers, while the rest is imported mainly from India, China, Vietnam and Pakistan.

News shared that Bangladeshi backward linkage factories (spinning, weaving, and knitting) are running their businesses at a loss because of yarn dumping from India, and fabrics from China and Pakistan. The news source stated that China is providing direct cash returns to exporters of about 15 to 20% on their export of fabric to Bangladesh. The Chinese government also provides direct support for fabric manufacturers and traders to promote their products. Due to the U.S. – China “trade war,” yarn and fabric from China are exported to Bangladesh at a lower price.

Textile industries are facing hard challenges and incurring business losses, as they cannot compete with imported yarn and fabric at very low prices. Although apparel industries seem to benefit more from dumping, it makes them more dependent and vulnerable as a supplier of low-priced garments for export. Business insiders expect cotton imports could fall 15 % due to very high stocks and lower-priced yarn in the market.

Value Added Cotton

For MY 2019/20, yarn and fabric production levels are both projected to increase by around 2.5 % to 820000 tons and 5 billion metres respectively, as domestic demand holds steady while exports rise to meet increased demand for value-added textiles. MY 2018/19 yarn and fabric production estimates are revised up to 800000 tons and 4.85 billion metres. More foreign buyers of value-added apparel are purchasing from Bangladesh due to cheap labour cost, competitive prices, and an appreciated U.S. Dollar versus the Bangladesh Taka. Reportedly, some high-end millers have increased production capacity to satisfy higher domestic and international demand.

Bangladesh currently has 430 spinning mills, 802 weaving mills, 244 dyeing and finishing mills, 32 denim fabric mills, 22 home textile mills, and a total of 6502 registered and 527 un-registered garment factories. 65 % of these factories are located in Dhaka district. Approximately 4296 Bangladesh Garment Manufacturers and Exporters Association (BGMEA) members employ four million workers, of which 80 % are women.

From July 2018 – February 2019, RMG export earnings were approximately USD23 billion in FY 2018/19, up almost 15 % (Table 10) from last year. In FY 2017/18, the country earned USD 31.6 billion from RMG exports, an increase of 8.77 % compared to FY 2016/17, and contributed 83 % of total export earnings. The export growth was partially contributed to by improved workers’ wages, compliance maintenance investment, workers’ skill development, diversified value addition, increased domestic and foreign direct investment, and more international brands involved in the trade.


MY 2019/20 imports are forecast to rise to 8.5 million bales on expectations of increased export market demand for value-added apparel products, increased capacities of existing mills, stable international prices of cotton, and favourable weather for world production.

MY 2018/19 import estimate is unchanged at 8 million bales on anticipated stronger domestic demand for yarn and fabric production, lower international price of cotton, and international demand for value added RMG.

Bangladesh imported cotton from 41 countries around the world in MY 2017/18. Among them, India (25 %) and the U.S. (10 %) take the largest share of volume, followed by Australia (9 %), Mali (9 %), Burkina Faso (8 %), Benin (8 %), Brazil (7 %), Uzbekistan (6%), and others (Figure 2).

Nearly 80 % of garments made in Bangladesh are sourced from cotton; the rest are made from viscose, polyester and other materials. Local spinners supply 90 % of raw materials for knitwear and 40 % for the woven garments sector.


The Ministry of Textile and Jute revised the projection of the RMG sector, targeted to earnUSD35.62 billion and USD38.73 billion in FY 2019-20 and 2020-21 respectively. The factors identified behind the reduction were poor infrastructure, inadequate energy supply, inefficient port facilities, lack of skilled labour, and low diversification of export markets and products.

The primary textile sector (PTS) is highly active in supporting backward linkages to the RMG sector as the major export earner of Bangladesh. Therefore, any GOB policy change in the RMG sector has indirect impacts on the PTS. In FY 2018-19, the Bangladesh Bank of the Government of Bangladesh revised cash incentive support rules, and announced that apparel exporters who receive three types of cash incentives will get a total of 12 % cumulative in cash incentives per the original rate. Earlier cumulative cash incentives were limited to a maximum of 10 %, although the total incentive rate was 12 % for all three types of incentives. In September 2018, the government announced cash incentives for FY 2018-19 in favor of 35 export products including apparel.

Quoting from textile news sources, Bangladesh apparel exporters get four types of incentives:

1.            Four (4) % cash incentive as an alternative to duty bonds and duty drawbacks;

2.            Four (4) % for apparel products export for small and medium-sized industries;

3.            Four (4) % for export of new textile and garment products and expansion of export of textile items to new markets, markets other than the United States, Canada and the European Union, and;

4.            Two (2) % cash incentive for exports of apparel products to the EU market in addition to a 4 % cash incentive.

Bangladesh has import duties (Total Tax Incidence) of 32.4 % for manmade fibre, 91.37 % for fabric, 38.47 % for yarn, and textile chemical dyes is 32.4 %. Export-oriented RMG factories can import yarn and fabric under a duty draw back incentive, which reimburses all customs duties paid on imported yarn and fabric (but not taxes such as the VAT and Advanced Income tax).

Imports of all textile raw materials, including fabrics, have no quotas.

In 2013, the Government of Bangladesh (GOB) approved Bacillus thuringiensis (Bt) eggplant, and is currently supporting research for a variety of other commodities such as late blight resistant potato, “Golden Rice” fortified with beta-carotene, and Bt Cotton. The GOB promulgated the Bangladesh Biosafety Rules (BR) 2012, and Biosafety Guidelines of Bangladesh (BG) 2007, which create a regulatory framework and approval process for all genetically engineered (GE) products developed domestically or by a third country. All GE products, including raw cotton (or cotton lint), need to be approved before they can be imported, sold commercially, or cultivated in Bangladesh. For more information, please see GAIN report: Bangladesh Agricultural Biotechnology Annual 2018.

In order to boost trade or investment opportunities, Bangladesh is working with EU countries, India, China, Japan, Saudi Arabia, France, South Korea, Brazil, and North American Countries. Bangladesh’s leaders are emphasizing diplomatic efforts to promote commercial investment campaign by showcasing various GOB activities for ease of doing business and investment, such as energy infrastructure development and export processing zones. Countries are invited to invest in high priority sectors such as textile and apparel manufacturing.

Contribution of Textile

  • Investment in the primary textile sector over USD 6.00 billion
  • The textile sector contributes around 13 % of GDP
  • Over 86 % of the export earnings comes from textiles and textiles related products
  • Around 85-90 % yarn demand for knit RMG and 35-40 % yarn demand for woven RMG are met by primary textile sector (PTS)
  • Local fabric demand and the yarn demand for handloom are also met by the primary textile sector (PTS)
  • Backward and forward linkage industries provide employment for more than 5 million people where 80 % are female.
  • PTS industries producing around 1300 MW power through captive generator.
  • Generate huge cliental base for banking, insurance, shipping transport, hotel, cosmetics and toiletries, and related economic activities.
  • Total export of the country USD 37000 million USD (July 2016 to June 2017). Out of 37000 textile and clothing export is USD 31273 million USD, which is around 84.52 % of the total export.