WT/CFMC/W/88  
 
19 February 2021  
(21-1105) Page: 1/44 
Sub-Committee on Cotton  Original: English  
 
THE COTTON BY -PRODUCTS PROJECT – UNLOCKING THE HIDDEN VALUE  
IN MOZAMBIQUE  
IN CLOSE COOPERATION WITH IAM – MOZAMBIQUE INSTITUTE FOR COTTON AND OILSEEDS  
November  2020 
The following communication, dated 12 November 2020, is being circulated at the request of the 
delegation of Mozambique.  
 
_______________  
 
 
Executive Summary  
In 2020 , the Government of Mozambique approved two key policy documents: The Quinquennial 
Plan 2020 -2024 that guides overall development interventions, and the 2020-2024 Program that 
guides poverty reduction efforts in the agrarian sector. One of the priority areas is to reduce 
considerably the importation of cooking oil, which in 2018 accounted for about 14% of the total value 
of importation, ranked third after rice and wheat. This prompted the newly restructured Ministry of 
Agriculture and Rural Development to emphasize the need to increase the production of oilseed 
crops, including cotton.  
Cotton is grown mainly for its fiber, or lint. Nevertheless, commercial applications exist for other 
parts of the cotton plant, such as the stalks, husks, cottonseed and short -staple fibers. 
Cotton  by-products therefore represent an opportunity for producing countries to increase the 
benefits they derive from their cotton prod uction. These benefits can include: i) new income streams 
for farmers and processors; ii)  increased resilience of farmers against external shocks; iii) increased 
domestic value added; iv) access to new markets; v) improved trade balance, through increased  
exports or import substitution; and vi) reduced waste in the cotton value chain.  
Before this study, there was a full gap in the literature about cotton by -products in Mozambique. 
The country has not been exploring cotton by -products due to limited invest ments in infrastructure, 
equipment, technologies , consumption  and know -how over  transformation  techniques , and limited 
export of processed products. There are two main players producing cotton by -products: GEIN and 
MCM. MCM exports all its production. GEI N also relies on exports but some of its products are also 
consumed locally. For instance, t he soaps  produced by GEIN are consumed locally, but only in small 
proportions, relative to what is exported. All of MCM's final product s and  cotton thread s are exported. 
Since  the raw material s are imported, the factories (GEIN and MCM) produce year -round. There is 
an increasing demand for cotton thread, and this explains the plans for expanding the installed 
capacit ies. 
Priority of cotton by -products development should go to northern Mozambique, focusing on 
cottonseed oil and soap production, given their poverty reduction effect s, and the ir alignment with 
policies to increase the domestic production of cooking oil in order to improve the trade 
balance.Given the recent inauguration of artisanal cotton textile in Namialo (also in northern 
Mozambique), in the medium term more emphasis should be equally given to cotton  thread .  Finally,  
mechanisms should be explored to encourage the collaboration of  artisanal textile  producers  with 
the industrial thread producer MCM (production in in southern Mozambique ), either through training 
of farmers ' association, marketing of a rtisanal thread and cloth produced by smallholder farmers in 
the north and that could perhaps  be exported by MCM or other arrangements.     WT/CFMC/W/88  
 
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  Table of Contents  
1   INTRODUCTION  ................................ ................................ ................................ ..........  5 
1.1   Background  ................................ ................................ ................................ ................  6 
1.2   Brief description of what we know about cotton by -products in Mozambique  .......................  7 
1.3   Research objectives  ................................ ................................ ................................ ..... 8 
2   METHODOLOGY  ................................ ................................ ................................ ...........  8 
3   LITERATURE REVIEW  ................................ ................................ ................................ .. 9 
3.1   Identification of constraints to technology adoption in Mozambique and relevant 
recommendations  ................................ ................................ ................................ ...............  9 
3.2   Review of all the main possible applications for cotton by -products  ................................ ...11 
3.3   Relating the experience of commercially viable c otton by -products  
from Southern and Eastern Africa with development potential in Mozambique  ........................... 11 
4   RESULTS AND DISCUSSION  ................................ ................................ .......................  12 
4.1   Raw materials  ................................ ................................ ................................ ............ 12 
4.2   Current production potential of cotton by -products  ................................ ......................... 12 
4.3   Current production level of cotton by -products  ................................ ............................... 15 
4.3.1    GEIN ................................ ................................ ................................ ...................... 16 
4.3.2    MCM – Mozambique Cotton Manufacturers  ................................ ................................ ..16 
4.3.3    China Africa Cotton  ................................ ................................ ................................ ..17 
4.3.4    Other initiatives  ................................ ................................ ................................ .......17 
4.4   What is being marketed locally and what are the regional and global linkages if any?  .......... 18 
4.4.1    Geographical market  ................................ ................................ ................................ 18 
4.4.2    Temporal market  ................................ ................................ ................................ .....18 
4.4.3    Size of the market  ................................ ................................ ................................ ...18 
4.5   Stakeholder analysis  ................................ ................................ ................................ ...19 
4.5.1    Stakeholder mapping  ................................ ................................ ............................... 19 
4.5.2    Stakeholder relationships and the potential for expansion of cotton by -products  .............. 19 
4.6   Policy environment  ................................ ................................ ................................ .....21 
4.6.1    Trade policies  ................................ ................................ ................................ .......... 21 
4.6.2    Analysis of actual and potential bottlenecks  ................................ ................................ 22 
4.6.3    Potential contribution of cotton by -products to poverty reduction,  
inclusiveness and gender equality  ................................ ................................ ........................ 22 
4.7   Cotton by -products to be prioritized and SWOT analysis  ................................ .................. 23 
4.7.1    Cotton oilseeds  ................................ ................................ ................................ ........ 24 
4.7.2    Soap ................................ ................................ ................................ ...................... 25 
4.7.3    Briquettes  ................................ ................................ ................................ ............... 25 
4.7.4    Animal feed, organic fertilizer and particle boards  ................................ ........................ 25 
4.8   Analysis of potential national investors and their potential relationship with farmers  ........... 25 
5   MAIN FINDINGS AND RECOMMENDATIONS  ................................ ...............................  26 
5.1   Findings  ................................ ................................ ................................ .................... 26 
5.2   Constraints  ................................ ................................ ................................ ................ 27 WT/CFMC/W/88  
 
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  5.3   Recommendations  ................................ ................................ ................................ ......27 
5.4   Stakeholders  ................................ ................................ ................................ .............. 28 
REFERENCES  ................................ ................................ ................................ ..................  29 
Annex 1  Formula used for setting up minimum cotton price in Mozambique ............................... 31 
Annex 2   List of participants in the expert panel meeting in Maputo  ................................ .......... 32 
Annex 3   Participation in the Cotton "Conselho Consultivo", Nov 1, Nampula  .............................. 33 
Annex 3.1  List of participants  ................................ ................................ ............................ 33 
Annex 4   Summary of by -product production from other African countries  ................................ .35 
Annex 4.1  Development of cotton by -products in Tanzania  ................................ ................... 35 
Annex 4.2  Development of cotton by-products in Uganda  ................................ ..................... 39 
Annex 4.3  Development of cotton by -products in Zambia  ................................ ..................... 42 
LIST OF TABLES  
Table 1 : Cotton Production Indicators, based on Mozambique Institute for Cotton  .......................  7 
Table 2 : Total value of edible oil imports in '000 USD by year (source: INE data)  ....................... 13 
LIST OF FIGURES  
Figure 1: Trend in total number of farming households that grow cotton by year  ........................  6 
Figure 2: Trend in the average cropped area of cotton in hectares per grower  ............................  8 
Figure 3: Total value of imports of the main edible oils ('000 USD) by year  ............................... 14 
Figure 4: Total value of cotton and cotton by -products imports ('000 USD)  
by year, based on INE data  ................................ ................................ ................................ .15 
Figure 5: Cottonseed cake exports in '000 USD by year, according to INE data  .......................... 19 
Figure 6: Percentage of the rural population with access to electricity in Mozambique  ................. 24 
 
 
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  Acronyms  
AAM Mozambique Cotton Association  
APPSA  Agricultural Productivity Program for Southern Afr ica  
DNEAP  National Directorate of Studies and Applied Policies  
GDP Gross Domestic Product  
GEIN Grupo de Empresa Issufo Nurmamade  
GOT Ginning Out Turn  
IAI/TIA  National Agricultural Surveys conducted by the Ministry of Agriculture  
IAM Mozambique Institute for Cotton and Oilseeds  
IIAM National Agricultural Research Institute  
INE National Bureau of Statistics  
ITC International Trade Center  
LDCs Least Developing Countries  
MADER/MASA  Ministry of Agriculture and Rural Development  
MCM Mozambique Cotton Manufacturers  
MOCOTEX  Mozambique Cotton Company based in Mocuba  
MOZ Algodão  Mozambique Cotton Company  
MOZACO  Mozambique Agriculture Corporation  
NAIP National Agricultural Investment Plan  
OLAM Ribaue  Mozambique Cotton Company based i n Ribaue  
PEDSA  Strategic Plan for the Development of the Agricultural Sector  
PPP Projects  Public -Private Partnership projects  
PROIRRI  Mozambique 's Sustainable Irrigation Project  
PROMER  Rural Markets Promotion Program  
SAM Mutuali  Sociedade Algodeira d e Mutuali/ Mutuali based Cotton Company  
SAN/JFS  Sociedade Algodoeira de Niassa/João Ferreira dos Santos  
SANAM  Sociedade Algodoeira de Namialo/Namialo based Cotton Company   
SUSTENTA  Agriculture and Natural Resources Landscape Management Project  
SWOT  Strengths, Weaknesses, Opportunities, and Threats analysis  
UNCTAD  United Nations Conference on Trade and Development  
WTO World Trade Organization  
 
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  1  INTRODUCTION  
1.1.  Early in 2020, the Government of Mozambique approved its Quinquennial Plan 2020-2024 to 
guide development interventions. In March 2020, an agrarian sector Plan, known as 2020 -2024 
Program was approved by the Council of Ministers, in order to guide interventions in the rural 
economy aimed at achieving five strategic objectives: im proved food security and nutrition; 
increased household incomes; creation of employment; social inclusion; and agricultural productivity 
growth. The 2020 -2024 Program is a replacement and improvement of its successor PEDSA, the 
Strategic Plan for the Devel opment of the Agricultural Sector 2010 -2019.  
1.2.  While PEDSA had a  broad er spectrum , the 2020 -2024 Program outlines priority areas as new 
value chains gain more prominence. One of the priority areas is to reduce considerably the 
importation of cooking oil, whi ch in 2018 accounted for about 14% of the total importation 
value, ranked third only after rice and wheat, according to data from the National Statistics 
Bureau, INE.  This prompted the newly restructured Ministry of Agriculture and Rural Development 
(MADER ), formerly Ministry of Agriculture and Food Security (MASA), to emphasize the need to 
increase the production of oilseed crops, including cotton. This is also aligned with the 2016 -2025 
Industrial Strategy and Polity which includes cooking oil production and textiles as priority areas for 
industrial development.  
1.3.  In the previous structure of the Ministry of Agriculture, cotton development was promoted 
through the Mozambique Institute for Cotton, known as IAM. In the new structure, IAM was 
restructured to in clude other oilseed crops such as sesame, sunflower and soybeans, in addition to 
cotton.  
1.4.  In Mozambique, cotton is grown in a concession system by 11 companies in central and 
northern Mozambique. The total number of cotton growers changes considerably annu ally, 
depending on the price of cotton in the previous season. Between  the 2009/10 and 2010/11 
agricultural seasons the price of cotton almost doubled and this encouraged farmers to grow more 
cotton in  2012. This corresponds to  the peak observed in Figure 1 showing the trend in the number 
of cotton farming households1. However, when prices of other crops increase, farmers substitute 
cotton for crops such as sesame, pigeon pea and others, and this is what happened in 2015 when 
pigeon pea prices reached almost 60 Meticais a kilo, about five times higher than cotton prices in 
that agricultural season.  
1.5.  As discussed in more detail in Annex 1, minimum cotton prices are set by the government 
based on the so -called parity criterion, whereby farmers rece ive 50% -55% of the international 
market that is calculated after accounting for the exchange rate, quality differential, and ginning out 
turn (GOT)2.  
1.6.  Farmers substitute cotton for other crops also because cotton by -products are seldom used in 
value addit ion activities  otherwise, the value of the crop would be significantly higher. By  increasing 
the value of cotton through cotton by -product development, farmers are likely to either continue or 
expand cotton cultivation in the country. While PEDSA (2010 -2017, extended to 2019) had a specific 
program for the revitalization of cotton value chains in Mozambique (updated in 2015), it did not 
have any explicit activity to develop cotton by -products. These were viewed as future  opportunities, 
and the only cotton b y-products mentioned in PEDSA were cooking oil, soaps and surgical cotton 
wool. On the other hand, the 2020 -2024 Program tacitly assumes that cottonseed oil will be 
promoted as a cotton by -product to increase local cooking oil production in order to replac e cooking 
oil importation. The Ministry of Agriculture is currently developing its Operation Plan to detail the 
interventions that will be prioritized under the 2020 -2024 Program in order to increase agricultural 
productivity and crop profitability.  
 
1 The estimates from the IAM of total number of growers are usually higher than those reported by the 
national agricultural surve ys. 
2 The actual formula for calculation of minimum cotton price in Mozambique is shown in Annex 1. This 
year farmers receive a 6 Meticais subsidy raising the minimum price that traders were willing to pay.  WT/CFMC/W/88  
 
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  1.7.  Benfic a (2006) argues that lower profitability of cotton is a result of low producer prices, high 
input costs, lack of effective coordination which results in low productivity and poor quality of farm 
output, in addition to the lack of effective use of cotton by -products. His research shows that 
expansion of cotton production with productivity gains has a more broad -based effect on poverty 
reduction.  Even when impacts are limited among growers, any expansion in cotton 
production results in some benefits to non -growers. Cotton creates about 20,000 jobs in 
the cotton industry, and provides on average livelihoods to about 200,000 households, as 
illustrated in Figure 1 below. However, cotton farmers rely heavily on crop income  since 
their participation in livestock ac tivities, resource extraction, and off -farm 
non-agricultural wage income is limited.  There is less income diversification among cotton 
farmers (Walker et al., 2004).  
Figure 1: Trend in total number of farming households that grow c otton by year  
 
1.1  Background  
1.8.  Cotton is grown mainly for its fiber or lint - the raw material in cotton textiles. Nevertheless, 
commercial applications exist for other parts of the cotton plant, such as the stalks, husks, 
cottonseed and short -staple fibers. In some countries, such as B razil, China, India, Turkey and the 
USA, by -products from the non -lint parts of the plant have been commercialized very successfully, 
adding value and income, as well as reducing waste in the cotton value chain. In other countries, 
especially in Africa, du e to a variety of constraints, there exist fewer commercial applications for 
cotton by -products, often  limited to  oil and meal from crushed cottonseed3. 
1.9.  Cotton by -products therefore represent an opportunity for producing countries to increase the 
benefits  they derive from their cotton production. These benefits can include: i) new income streams 
for farmers and processors; ii) through new income streams increased resilience of farmers against 
external shocks; iii) increased domestic value added; iv) access  to new markets; v) improved trade 
balance through increased exports or import substitution; and vi) reduced waste in the cotton value 
chain.  
1.10.   Through these benefits, value addition including through cotton by -products can contribute to 
poverty reduction, i nclusiveness, and enhanced sustainability of the cotton sector and cotton 
processing technologies in LDCs. Recognizing these opportunities, many cotton -producing countries 
have expressed their interest and willingness to develop cotton by -products, and hav e asked the 
 
3 See proceedings from WTO technical workshop on cotton by -products, 7 June 2019, available here: 
https://www.wto.org/english/tratop_e/agric_e/workshopcottonday07062019_e.htm . 
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  so-called "sister" trade organizations – WTO, UNCTAD and ITC  - to develop a pilot project and action 
plan to meet their specific needs for technology transfer, know how, investments and technical 
assistance towards the development of cotton by -products value chains at the regional level.  
1.2  Brief description of what we know about cotton by -products in Mozambique  
1.11.   There is little information in available literature about cotton by -products in Mozambique. The 
country has not been exploring cotton by -products due to limited investments in infrastructure, 
equipment, technologies and know -how for local transformation , consumption and export of 
processed products.  According to PEDSA, lack of development of cotton by -products means 
that Mozambique is missin g the opportunity to create jobs and reduce the dependency of 
imports of cotton by -products such as surgery cotton  (IAM, 2011; IAM, 2015)4. 
1.12.   As shown in Table 1 below, PEDSA ma de some projections for cotton seed for oil production 
based on the assumption t hat an overwhelming 88% of the seed5 will be used for oil extraction ,12% 
will be reserved for cotton production and overtime the ginning out  in turn will increase slightly. It 
is also based on the assumption that the cotton area will almost triple in just  10 years. However, 
data from the former Mozambique Institute for Cotton show s that total cotton area has declined and 
the average cotton area per household averaged between 0.58 and 0.79 hectares (Table 1). 
Another  data source based on agricultural national surveys conducted by the Ministry of Agriculture 
and Rural Development (MADER) also highlights a declining trend in total cotton area (Figure 2). 
Recent data show s that the total cotton growing area did not increase a s expected, ginning out turns 
remained the same and that the 88% assumption described above was overestimated . The projected 
increase in yields was also too ambitious to accomplish in such short period without radical changes 
in the cropping system.  
Table 1: Cotton Production Indicators, based on Mozambique Institute for Cotton  
Year Total 
cotton 
area  
 
 
(ha) Production 
of seed 
cotton  
 
 
(ton)  Yield 
(ton/ha)  Average 
cotton area 
per 
household  
 
(ha) Ginning 
Out Turn 
based  
 
 
(%) Total 
lint/fiber 
production  
 
 
(ton)  Total 
cotton 
seed  
 
 
(ton)  Total cotton 
seed for oil 
production  
 
 
(ton)  
2008/09  165,248  60,303  0.3650  0.79 0.35 21,200  36,182  31,840  
2009/10  125,775  41,287  0.3280  0.67 0.38 15,851  24,772  21,800  
2010/11  128,000  70,649  0.5520  0.75 0.36 25,372  42,389  37,303  
2011/12  188,890  184,181  0.9750  0.64 0.36 66,291  110,509  97,248  
2012/13  142,857  67,392  0.4720  0.58 0.34 22,926  40,435  35,583  
2013/14  157,143  82,063  0.5220  0.63 0.38 31,184  49,238  43,329  
2014/15  120,000  45,824  0.3820  0.75 0.34 15,580  27,494  24,195  
2015/16  101,404  42,641  0.4210  0.70 0.36 15,351  25,585  22,514  
2016/17  114,068  35,832  0.3140  0.67 0.38 13,616  21,499  18,919  
2017/18  180,835  65,653  0.3630  0.79 0.38 24,948  39,392  34,665  
2018/19  100,000  60,000  0.6000  0.59 0.38 22,800  36,000  31,680  
 
4 
http://www.slire.net/download/2105/programa_de_revitaliza_o_do_algod_o_rev_31._03._2011_2_.pdf  (visited 
11 February 2020).  
5 Dividing the last column by the second -last column in Table 1 results in a constant value of 88% . WT/CFMC/W/88  
 
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  Figure 2: Trend in the average cropped area of cotton in hectares per grower  
 
1.3  Research objectives  
1.13.   The objective of this report is threefold:  
• identify cotton by -products to be prioritized, investments and technology gaps;  
• conduct a stakeholder analysis and mapping to identify key actors involved in the value 
chains of  cotton by -products to be prioritized,; and  
• analyze the policy environment,  looking at the actual and potential bottlenecks, and the 
potential contribution of cotton by -products in poverty reduction, inclusiveness and gender 
equality.  
2  METHODOLOGY  
2.1.  The review used a combination of the following four method:  
a. Desk review: the first p art of the review involved a desk review of pertinent documentation 
on cotton production in Mozambique including design and planning documents, technical 
reports, survey and M&E results, publications, partner reports and evaluations. In addition, 
the revie w included relevant technical literature, government and donor reports and 
strategies, research plans, and national agricultural statistical bulletins.  
b. Key Informant Interviews (KII): KII were conducted with relevant stakeholders and 
experts to capture re levant perspectives on the context of cotton by -products use in 
Mozambique. Key informants included IAM staff, implementing partners from research, 
government and NGOs, donor staff, and representatives of key national and provincial 
level agencies. It also  included the private sector that is currently engaged in the 
production of cotton by -products in the country. The "private sector" includes farmers , 
their associations and cooperatives , ginners , edible oil millers and stockfeed producers. 
The list of key informants is presented in Annexes 2 and 3.  
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  c. Data analysis of secondary data : included both project data and national agricultural data 
from various surveys conducted by the Ministry of Agricultur e and Rural Development 
(MADER). Yield data from MADER is usually problematic and requires some trimming. In 
the past , the sample for the national agricultural surveys was not designed specifically to 
capture cotton production so the coefficients of variat ions are high, raising concerns about 
data quality and therefore, making it difficult to forecast future yields in the light of  policy 
interventions. In 2020 , MADER was conducting a  comprehensive household survey  of all 
major crops including cotton  with da ta being representative at the district level .  
d. Expert panel/ stakeholder analysis: an expert panel was organized to discuss an earlier 
version of the review report and develop recommendations for future program focus and 
design. The expert panel met for a 1-day workshop in Nampula city, on November 1, 2019. 
The list of experts who attended the workshop is presented in Annex 3. A second expert 
panel took place in Maputo and the list of participants can be found in Annex 3.1. The  
expert panel meetings  allowed to derive  : 
• an impact -influence -interest stakeholder analysis grid relative to each cotton by -
product;  
• a SWOT analysis to assess the potential expansion of the different by -products;  
• recommendation s on how farmers could benefit more from cotton -by-products given 
the absence of large investment funds;  
• an analysis of potential national investors and their potential relationship with 
farmers;  
• opportunities for PPP projects.  
 
3  LITERATURE REVIEW  
3.1  Identification of constraints to technology adoption in Mozambique and relevant 
recommendations  
3.1.  There are several constraints to technology adoption in Mozambique, but they can be 
summarized into at least six major constraints. First, cotton by -products policy environment is not 
conducive to technology adoption  and by -product development. The current legislation promotes 
burning of cotton crop residues to prevent the spread of pests and diseases. This creates confusion 
of farmers on whether or not to burn the crop residues. In this process, leaves and stalks tha t would 
otherwise be used as raw material for by -product development are lost. FONPA asks why stems and 
stalks are burnt instead of us ed  to produce briquettes. In its article #22, cotton legislation states 
that (IAM, 2015b):  
"After harvesting, cotton stal ks and residues must be destroyed, incorporated in the soil6 or 
burned and the land maintained clear for at least three months between the end of one season 
and the beginning of the other. " 
3.2.  RECOMMENDATION: there should be a revision of the legislation to accommodate and 
protect farmers and businesses involved in the development of cotton by -products. In 
order to avoid conflict with the initial goal of preventing the spread of pests and diseases, 
production of cotton by -products could be a re gistered activity whereby producers are 
waved the obligation to destroy cotton stalks and residues provided that the market for 
cotton by -products is guaranteed. According to JFS, before changing the law a market for 
biomass should be identified.  
3.3.  The secon d constraint, not necessarily in order of importance, is linked to infrastructure.  Many 
drivers of rural transformation are still at their early stage of development  due to limited access to 
proper infrastructures . For example, electricity costs are very h igh. Nationwide only 30% of the 
population has access to electricity, and this is h ighly  skewed toward urban centers. In 
rural areas , the access to electricity is much lower and when there is electricity, there are 
either restrictions in supply, the qualit y is not good, or both.  This makes electricity costs very 
high for agro -industry development. High electricity costs lead to high costs of production. Other 
example s of limited rural infrastructure s include:  the few existing roads . With the l ack of feeder 
roads and poor condition of the main road result ing in high transaction costs;  lack of access to 
 
6 This could be interpreted as allowing the processing of stalks into organic fertilizers before being 
reintegrated in soils.  WT/CFMC/W/88  
 
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  credit  (or high interest rates) accompanied by  difficult ies for financial institution to open a branch 
in remote areas where qualified staff  also lacks ; low coverage of extension services  due to  
difficulties to reach out to smallholder farmers who live in remote areas.  RECOMMENDATION: 
more investments are required  in the infrastructure sector.   
3.4.  The third constraint is  lack of awareness . Farmers are used to produce cotton only for its 
fibers and many are unaware of  the other potential socio -economic benefits of cotton by -products. 
Many farmers do not know that cotto n cake can be used for cattle feeding because cotton is produced 
in agro -ecological zones where animal farming is very limited . The four northern provinces (Cabo 
Delgado, Niassa, Nampula and Zambézia7) only have 8.6% of the total cattle in the country, al though 
more than 50% of the human population live there. Cabo Delgado and Niassa have less than 0.5% 
of the total cattle in the country and this is where many cotton farmers reside.  RECOMMENDTION: 
extension services could include training and dissemination  of information on cotton by -
products, their unexploited potential and how they can be used and promoted in the 
country.  
3.5.  The fourth constraint is lack of financial resources. Data from the annual survey conducted by 
the Ministry of Agriculture and Rural Development show that in 2017 only 1.3% of smallholder 
farmers received credit. In cotton producing areas, only 0.9% receiv ed credit in Nampula, 0.8% in 
Cabo Delgado, and 1.1% in Niassa province (MASA, 2017). Credit risk is higher in rural areas 
both for borrowers and lenders (InfoResources, 2008). The revenues of rural households, whose 
incomes mostly depend on subsistence ag ricultur e and livestock production, are volatile due to 
fluctuating weather conditions and pests or diseases, especially among cotton farmers because they 
have less diversified income sources.  In addition, price fluctuations are high er in agriculture than in 
other sectors of the economy.  
3.6.  Many households either entirely lack collateral or do not have a legal title to their 
house or land . Financial institutions thus have no means of securing their credits against defaulting. 
Defaulting clients run high risks as well: financial institutions will typically impose punitive interest 
rates for delayed payments and might even confiscate assets of defaulting clients.  
3.7.  Furthermore, in developing countries illiteracy rates are particularly higher in rural areas. The 
IAI data (annual agricultural survey) show that on average household heads in rural Mozambique 
only have three to four years of completed education (MASA, 2017). Poorly educated people face 
an additional challenge in accessing financial services: it is diffic ult for them to analyze 
credit risks , the profitability of a loan or savings scheme, to provide all documents and 
information (such as a business plan) required to apply for a loan, and to understand 
conditions and contracts . Furthermore, some institutions  fail to communicate interest rates and 
commissions in a transparent manner, and small prints in contracts can contain additional costs for 
borrowers. On the other hand, financial institutions that want to expand into rural areas experience 
difficulties in  finding, hiring and keeping well -trained staff willing to work in  rural region s. Lack of 
experienced staff, in turn, leads to poor institutional capacity among rural financial institutions 
(InfoResources, 2008).  
3.8.  The fifth constraint is poor access to imp roved seeds. The use of low -quality seeds results in 
lower farmers ' yields , poor quality of cotton fiber and low GOT. This motivates the industry to import 
raw material instead of sourcing it locally. To improve  the access to better seeds, there should als o 
be an emphasis on good management fundaments and better and improved extension service 
coverage.  
3.9.  Lastly, raw material availability poses another constraint to the development of 
by-products in the country . For example, GEIN imports palm oil due to smalle r quantities of 
cottonseed oil available locally in Mozambique. MCM imports cotton fiber to produce thread in 
Mozambique, due to unavailability of raw material in sufficient quantities and quality.  
 
7 Administratively, Zambézia is in central Mozambique but it is better conne cted to northern provinces.  WT/CFMC/W/88  
 
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  3.2  Review of all the main possible applications for cotton by -products  
3.10.   There is a range of applications of cotton by -products. Some are in their infancy, 
e.g. nanocellulose, while others are more developed. Nanocellulose is a plant substance and its 
materials have witness ed rapid development recently because of their excellent physical and 
biological properties, such as biocompatibility, biodegradability, and low toxicity (Jorfi and Foster, 
2014). Nanocellulose is produced from cotton linter, which is a short fiber that ca nnot be used in the 
textile industry.8 Nanocellulose fibers are widely applied in medical implants, tissue engineering, 
drug delivery, wound -healing, cardiovascular applications and other medical applications (Jorfi and 
Foster, 2015); and they can be used  in vehicle manufacture due to their light weight and high 
strength, and as car parts, such as bumpers, side panels, and dashboards (Morais et al., 2013).  
3.11.   Particle boards can be produced from cotton plant stalk or other dry wood particles or fibers  
that are coated with synthetic resin binder and wax  formed into flat sheets under pressure. Large 
quantities of cotton stalks are usually either left in the field or burnt to prevent the spread of pests 
and diseases. Particle boards can potentially replace wood  and be used in the furniture industry.  
3.12.   The seeds can be delinted by a similar process to ginning9. Some linter can be used to make 
candle wicks, string, cotton balls, cotton batting, paper, and cellulose products such as rayon, 
plastics, photographic fi lm, absorbent cotton, and cellophane. The delinted seeds can be crushed 
and the kernel is separated from the hull and squeezed. The cottonseed oil obtained from the kernels 
is the raw material for cooking oil, soaps, and cosmetics. A semi -solid residue fro m the refining 
process is called soap stock  and provides fatty acids for various industrial uses such as insulation 
materials, soaps, linoleum, oilcloth, waterproofing materials and as a paint base. The hulls can be 
used for fertilizer, plastics and paper.  A liquid made from the hulls called furfural can also be used 
in the chemical industry. The remaining mash can be used for livestock feed.  
3.3  Relating the experience of commercially viable cotton by -products from  Southern and 
Eastern Africa with development potential in Mozambique  
3.13.   Cotton by -products are relatively underdeveloped in many cotton producing countries, with 
exceptions of countries like China, India, Brazil, Turkey, and the United States of America 
(Shinyekwa, 2019). Commercially established applic ations that are most common include edible oil, 
soap, and in India, biomass fuels. In Africa , there are several commercially viable by -products and 
experiences from Uganda, Tanzania, and Zambia are discussed in Annex 4. These experiences are 
borrowed from UNCTAD literature in order to relate their potential to develop cotton by -products in 
Mozambique. Examples of cotton by -products being explored in these three Southern and Eastern 
African countries and Mozambique include the following, bearing in mind that  some of the products 
described are raw materials in the production of other cotton by -products.  
3.14.   In Tanzania, there are eight cotton by -products produced: i) cottonseed (18 producers 
nationwide); ii) cottonseed cake (nine producers); iii) linters (two pro ducers); iv) husks 
(six producers); v) extra fabric (two producers); vi) thread (two producers); vii) cottonseed oil for 
cooking (two producers); and viii) cottonseed oil for soap production (two producers). Of these, 
thread and soap are also produced in M ozambique by MCM10 (Mozambique Cotton Manufacturers) 
and GEIN11, respectively, making Tanzania 's experience relevant for the Mozambican context.  
3.15.   In Uganda, farm level products include cotton stalks which are typically destroyed after 
harvesting of seed cotton. Likewise, regulation in Mozambique requires that farmers destroy cotton 
stalks after harvesting to prevent the occurrence of pests and diseases. Farmers in Mozambique 
destroy and burn cotton stalks. At ginning level, in Uganda lint is produced  along with cottonseed  
that millers process into linters, hulls, cottonseed oil and cake. The latter two are further processed 
 
8 https://www.azonano.com/article.aspx?ArticleID=3139  (visited 11February 2020) . 
9 https://science.jrank.org/pages/1832/Cotton -Cotton -by-products.html  (visited on 
22 September  2019).  
10 MCM is a company in cotton business, producing and selling cotton thread.  
11 GEIN or Grupo de Empresa Issufo Nurmamade was established more than 30  years ago, initially 
focusing on trading activities of cotton and cashew nuts. The company was granted concessional areas for 
extensive farming of cotton. It has business interests in cotton production, ginning, exports, palm oil refining, 
soap manufactur ing, cotton seed crushing, and solvent extraction. https://geingroup.com/company -profile/  
(visited 13 February 2020).  WT/CFMC/W/88  
 
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  into cooking oil and animal feed, respectively. The lint and cottonseed value chains are more 
developed with limited emphasis on the other cotton by -products (Shinyekwa, 2019).  
3.16.   In Zambia, cottonseed constitutes 55 -65% of seed cotton,  making it the largest by -product, 
but in Zambia the Ginning Out Turn (GOT) for lint and cottonseed is 41% and 55% respectively. 
Cottonseed and waste a re the by -products of ginned seed cotton. Value added products from 
cottonseed may include cottonseed oil, cottonseed cake, cottonseed hulls and linters. Cotton stalks 
are another by -product of the cotton plant that can be processed into fuel, paper or par ticle boards 
products.  
4  RESULTS AND DISCUSSION  
4.1  Raw materials  
4.1.  Some of the seeds  that can be used to process oil and later be used in the production of soap  
suffer at times from quality problems . In 2019 , the cyclone Kenneth affected the quality of the fiber 
and the seed, and in other years late rainfall when cotton was almost ready for harvesting resulted 
in lower seed quality. A value chain study conducted in 2005 (World Bank, 2005) found that most 
cotton companies lack access to affordable high -quality cott on seeds. At the time the 2005 study 
was conducted, only two or three private operators had their own seed program where seed breeding 
and bulking was conducted.  
4.2.  The c ottonseed quality is not the best  and interviewed staff from GEIN reported that locally 
available cottonseed is of poor quality due to varietal mix that leads to seeds of different size. While 
cottonseed is a key input for the production of oils and soap s, itis also unavailable locally in sufficient 
quantity  leading  to the import palm oil as a substitute  by local producers of oil and soap . Cottonseed 
quality is the object of a specific study  conducted in Mozambique by CIRAD in co -operation with GIZ  
. 
4.3.  Cotton is mainly produced in northern Mozambique where cattle rearing is limited . However, 
the production of feed from cotton is also challenged by the remov al of  the enzyme gossypol from 
cottonseed cake, which inhibits absorption of nutrients especially for ruminants. These factors limit 
the use of cottonseed cake for animal feed  (mainly for cattle and poultry)  unless , the gossypol is 
removed . At present, there is little scope to develop feed production from cottonseed cake in the 
north. GEIN sells some of the cottonseed cake to a farmer in Manica province (central Mozambique) 
and exp orts it to South Africa where cattle rearing is traditionally more important. Nevertheless, 
improving and increasing value addition for cake to be used as feed can also be motivated by 
increasing export in addition to increased local consumption. There is some interest in explo ring how 
cottonseed cake can be  used in poultry feeding  in Mozambique  by looking at examples of neighboring 
countries such as Malawi.  
4.4.  There are also some issues with the quality of cotton fiber in the domestic market. 
MCM manufactures  cotton thread using only 20% of locally sourced cotton fiber due to poor quality. 
They rely h eavily on cotton imports from Zimbabwe, Tanzania, Zambia and Malawi. As shown later 
in Figure 4, import of cotton lint is substantial in the country. Due to poor infrastructure connecting 
the south and the north of Mozambique, it is often cheaper to import cotton fiber to MCM located in 
the south than to source it from the cotton production areas in the north. Poor fiber quality is also 
caused by lack of use of imp roved seeds.  
4.2   Current production potential of cotton by -products  
4.5.  The Mozambique Institute for Cotton and Oilseeds has a statistical department that collects and 
synthesizes data on various topics. Unfortunately, there is no available information about curr ent 
cotton oil production levels in the country. Table 2 below shows total value in thousand USD spent 
by the country to import edible oils between 2014 and 2018. In 2018 Mozambique spent almost 
USD $174 million on oil imports, including USD $8,000 on impo rtation of cottonseed oil. Increased 
domestic production of cottonseed oil can have a significant effect on the trade balance and 
household income if it is able to compete and substitute palm oil. Considering  the projection of 
cottonseed of about 84,000 to ns in 2020 (from Table 1) and an oil extraction rate of 15% as in the 
case of Zambia described above, Mozambique has the potential to produce 12,600 tons of cottonseed 
oil. This is just 2.5% of the value of palm oil imports, assuming a cottonseed price of $175/ton. WT/CFMC/W/88  
 
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  The potential production of cottonseed oil is still significantly below the demand for oil in 
Mozambique.   
4.6.  The data presented in Table 2 can be better illustrated by  the oil imports exceed ing USD 
$80,000  in total value in 2014  (Figure 3). This cutoff point was chosen in order to include cottonseed. 
Clearly, palm oil has by far the biggest share in total imports, followed by safflower seed, sunflower 
and soybeans, all three equally important. Palm oil is used as cooking oil and its residues from the 
refinery process find use mainly in the agro -industry for soap production. Total imports of oils in five 
years (2014 to 2018) exceed USD $675 million.  
Table 2: Total value of edible oil imports in '000 USD by y ear (source: INE data)  
Product  2014  2015  2016  2017  2018  
Oil from Fish and Marine Mammals  7 5 0   4 
Oil of Castor Beans  42 10 84 44 70 
Oil of Coconuts  3 1 0 2 6 
Oil of Cottonseed  87 4 10 19 8 
Oil of Groundnuts  17 4 0 1 16 
Oil of Hempseed  102 50 46 242 181 
Oil of Kapok  102 50 46 242 181 
Oil of Linseed  6 49 7 4 11 
Oil of Maize  1 1 33             
Oil of Mustard Seed  2 22 8 1 1 
Oil of Olive Residues  15 12 8 9 7 
Oil of Olives, Virgin  1,014  897 696 1,134  911 
Oil of Palm Kernel  31 8 26 2,283  0 
Oil of Poppy Seed  102 50 46 242 181 
Oil of Rapeseed or Canola oil  34 46 26 19 4 
Oil of Rice Bran  102 50 46 242 181 
Oil of Sesame Seed  285 239 193 198 77 
Oil of Soybeans  18,099  24,954  18,036  19,899  36,270  
Oil of Sunflower Seed  38,136  10,564  14,297  19,084  23,556  
Oil of Tung Nuts  102 50 46 242 181 
Oil of Vegetable Origin nes  1,849  827 853 1,583  1,443  
Oil of citronella  80 40 13 4 12 
Oil of palm  95,209  54,167  50,859  41,003  86,786  
Total 193,563  102,667  99,678  105,584  173,645  WT/CFMC/W/88  
 
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  Figure 3: Total value of imports of the main edible oils ( '000 USD) by year  
 
 
4.7.  The Zambia case shows that about 3 tons of stalks can be produced per hectare of cotton. 
Borrowing the example from Zambia is plausible because productivity le vels or yields are similar, 
ranging between 490 kg/ha and 970 kg/ha, although the latter is a bit high for the Mozambican 
context. Assuming that the optimistic12 area of 133,000 hectares in 2020  is planted with cotton, we 
estimate a total potential of almo st 400,000 tons of cotton stalks in Mozambique. This compares to 
a potential of 305 ,000 tons in Zambia; and between 455,000 and 585,000 tons in Tanzania.    
4.8.  Cotton linters can be extracted from cottonseed and the recovery rate is about 5% -8%, 
depending on crop variety (see Singh, 2016). Based on the projections presented in Table 1, 
Mozambique potentially produced about 94,698 tons of cottonseed in 2019 which suggests a 
potential produc tion between 4,735 tons and 7,576 tons of cotton linters. The import of cotton linters 
is negligible (less than $100 ,000) and therefore  it does not appear in Figure 4.  
4.9.  Mozambique still spends considerable amount of money in importing cotton lint. Efforts should 
be put together to increase the domestic production, including measures to increase cotton yields. 
Since the amount imported is significant (both  for cotton and its by -products), trade policies are also 
equally important in promoting domestic production.  
 
12 Optimistic because in Table 1 total area shows an increased trend, even though th e total number of 
growers fluctuates each year as shown in Figure 1.  
WT/CFMC/W/88  
 
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  Figure 4: Total value of cotton and cotton by -products  imports  ('000 USD) by year, based 
on INE data13 
 
4.10.   The recovery rate of cotton hulls is about 20% -25% of cottonseed. Assuming a total 
production  of 36,000 tons  of cottonseed in 2018/2019 (see Table 1), this give s a potential of 7,200 -
9,000 tons of cotton hulls in Mozambique.  
4.3  Current production level of cotton by -products  
4.11.   There are two main producers: i) GEIN - has a cottonseed processing plant in Namialo district, 
Nampula province; and ii) MCM – producing cotton thread and the factory is based in Marracuene 
district, about 35 km from Maputo city center. GEIN has a crushing capacity of 100 tons/day of 
cottonseed while MCM can process about 10 tons/day of cotton thread. However, most of the raw 
material is sourced f rom abroad.  
4.12.   At present, MCM operates 6 days a week, 24 hours/day, producing about 90% of its installed 
capacity. There are recent plans to produce 13.5 tons of thread per day, which is about 4,400 tons 
of cotton fibre a day. Considering the expected total production of fibre in 2020 described in Table 1 
(65,357 tons), this means that MCM would require less than 15 days to process all lint that is 
produced in Mozambique. In other words, total production of cotton fibre in Mozambique (assuming 
optimistically that all would be of good quality) would only be 4.8% of MCM 's annual requirements14. 
Even if the local production of cotton fibre increases 20 -fold, it would still m eet the demand by one 
company only, that is, MCM . Increases in cotton fibre production must be accompanied by 
improvements in fibre quality. The increase in the production of cotton fibre would obviously be 
positively and significantly correlated with the increase in availability of cottonseed for the ag ro-
industry of oil production. This would equally benefit GEIN, a company that uses cottonseed as a raw 
material for oil and soap production. As discussed later, at present GEIN only sources 15% of its 
cottonseed needs locally, which indicates that a great  potential exists for the expansion of domestic 
production15. 
 
13 INE is the National Bureau of Statistics, the institution responsible for the publication of official 
statistics. Tariff Lines are the following: cottonseed (0329); cotton waste (0769);  cotton lint (0767); 
cotton  linters (0770); cotton, carded or combed (0768).  
14 MCM operates (312 daysx 4,400 tons/day  which gives a total of 1,372,800 tons per year ). 65,357 
tons of annual cotton fib re production  divided by 1,372,800  is equal to 4.8%.  
15 Interview with GEIN was done in November 2019 and follow up questions  were sent  by email in 2020.  
WT/CFMC/W/88  
 
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  4.13.   Both Plexus in Cabo Delgado province and SAN -JFS in Niassa province invested in the 
construction of cottonseed oil factories, with initial production expected as soon as 2020. However, 
Plexus wa s hit by a financial crisis. Early in 2020 , Plexus ' activities were paralyzed by a strike. 
By February 2020 the company had not paid wages to workers for about 4 months, and total debt 
to cotton producers was around USD $1.5 million. The closure had left a round 200 staff and seasonal 
workers out of work and  had affected around 50,000 cotton producers in Cabo Delgado and in 
Nampula16. Plexus was later bailed  out by the Ministry of Agriculture and Rural Development that 
paid out its debt through a loan with a  few conditions, one of which was to continue to promote 
cotton production but also support farmers to grow other oilseed crops.  
4.3.1   GEIN  
4.14.   The cottonseed industry and its by -products employ a total of 1,200 workers of whom 0.25% 
are women. They are distributed across cotton delinting factory, soap production factory, edible oil 
production factory (based on cottonseed, soybeans, and palm tree) and animal feed production.  
4.15.   The cottonseed oil factory is located in Namialo, about 100 km from Nampula city center. 
The installed capacity is 100 tons/day. They produce cottonseed oil when raw material is available. 
Cottonseed is first tested for its quality. The main cotton -product of GEIN is the soap, but this is 
produced out of a mix of cottonseed oil and palm oil, the latter being imported. Most of the times , 
cottonseed is either insufficient  or does not meet the required quality . Therefore , only 15% or less 
of the cottonseed oil is used in the mix for soap production.  
4.16.   The total crushing capacity is about 100 tons/day and 18% is the raw oil output. Palm oil is 
imported to ensure that the factory is operational year -round. The husk and other residues are 
collected by  neighbouring  farmers free of charge and they use them as fertilizers. Farmers have 
reported increased crop production due to the application of those "fertilizers " but no detailed and 
RCT study has been done to show the actual incremental effect of the fe rtilizer in crop production. 
Total soap production is about 75 tons/day.  
4.17.   GEIN is one of the biggest employers in Nampula province. Besides company staff, 
GEIN factories collaborate with 52,000 households that grow cotton in the following districts: 
Mecubur i, Meconta, Monapo, Muecate, Nacaroa and Nampula. This partnership with farmers is a 
result of company 's investment and contributes to significant improvements in household welfare. 
Employment is one of the key elements to reduce the risk of poverty and hu nger, and incomes from 
cotton work can be invested by rural households in children 's education. GEIN also constructed two 
boreholes: one in the Namialo Health Center and the other in Namialo Village Center, in addition to 
a small dam that was constructed t o benefit households producing horticulture.  
4.18.   Furthermore, income from cotton is also spent locally in the villages, thus stimulating local 
trade. GEIN also produces organic fertilizers through decomposition of cotton husks. The other cotton 
by-product is b agasse, which is exported to South Africa for cattle feeding . Locally, they also sell 
bagasse to one farmer in Manica province. Of note is that Manica  and Tete are practically the only 
two provinces with significant cattle production north of Save River. F armers in Nampula where the 
factory is located do not have a tradition of cattle rearing.  
4.3.2   MCM – Mozambique Cotton Manufacturers  
4.19.   MCM is a consortium of Mozambican (Intelec Holdings) and Portuguese (Crispim Abreu, 
Mundifios and Mundotêxtil) investors who own  a thread processing plant in Marracuene district, about 
30 km from Maputo city center. They were founded in 2011 and acquired Riopele in 2012. Riopele 
was a state -owned textile factory. In 2014 they renovated the former Riopele factory, now MCM.   
4.20.   MCM dem ands high quality fiber and uses type 1 and 2 cotton – staple 1.1/8 '' and micronaire 
3.5/4.9. It sources the cotton from Mozambique, Zimbabwe, Tanzania, Zambia and Uganda. Given 
the lower quality of the local cotton , only 20% of the total cotton is sourced  locally in Mozambique 
and used in the factory.  
 
16 https://clubofmozambique.com/news/cotton -plexus -workers -on-strike -montepuez -based -company -
needs -us10-million -to-overcome -crisis-152574/  (visited 14 February  2020).  WT/CFMC/W/88  
 
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  4.21.   The installed capacity can produce 10 tons/day of cotton thread and 90% of the capacity is 
being used. The factory operates 24 hours x 6 days/week and produces 9 tons/day of cotton thread. 
In March 2020 , they plan to increase the capacity to 13.5 ton/day and will consume about 4,400  tons 
of cotton fiber per year. All cotton thread is exported to Europe and South America17.  
4.22.   The price of the exported cotton thread produced by MCM is twice as high as the cotton fiber. 
When the threading and dying project will be  finalized, the price of the final by -product will be almost 
five times more than that of cotton fiber, i.e., the price of cotton cloth  is much higher than that of 
raw fiber. MCM hopes to increase the amount of cotton sourced locally but the quality must improve . 
They also have an interest on organic cotton.  
4.3.3   China Africa Cotton  
Surgical Cotton Factory  
4.23.   In 2011 , China -Africa Cotton Mozambique launched a project in Beira, Sofala province, to start 
producing surgical cotton with an estimated capacity of processing 40,000 tons of raw cotton per 
year. The surgery cotton factory employed about 150 staff and had two co tton by -products: surgery 
cotton and cooking oil. In the next three years after the beginning of operations in Beira, the cotton 
factory expected to invest USD $22 million to boost cotton production, of which USD $6 million would 
be invested in cotton proc essing18. 
4.24.   China -Africa Cotton Mozambique purchased the French cotton company CAN, which had been 
operating in Mozambique for more than a century. The establishment of the project had gained high 
attention and significant support from both Chinese and Mozam bique governments. The surgical 
cotton factory is still in operation,   but little information exists about its production volumes, number 
of employees, etc. The company was contacted several times by voice calls, SMS, and e -mails. 
Unfortunately, no informa tion was provided.  
4.3.4   Other initiatives  
Artisanal textiles  
4.25.   In 2017 , Mozambique 's IAM staff travelled  to Ethiopia for intensive training on artisanal textile. 
The two countries signed a MoU for technology transfer with regards to textile processing, clothing 
and tanning. Mozambique acquired a total of five kits for artisanal textiles which were handed to 
farmers associations in Nampula province in November 2019. The total cost of the equipment, 
including training and installation, was USD $75,000 of which 53.3%  was financed by the European 
Union and the remaining 46.7% was co-financed by Mozambique 's Government19. 
4.26.   A Center for the Promotion of Artisanal Textiles was established in Namialo district, Nampula, 
and as a pilot project, it will benefit 30 farmers (most of them young ) organized in associations. 
They will receive training on artisanal textile for 2.5 months. After the training they will be able to 
produce thread and artisanal cloth, and the expectation is to replicate this initiative to other regions 
of the country. The Center has an installed capacity to produce 10 kg of thread and 60  meters of 
cloth daily, with a demand of 20 kg of raw material, which in this case refers to  cotton fiber. The 
main gains are accrued through price difference: cotton threa d and cloth can be up to seven and 15 
times more expensive than cotton fiber, respectively. However, farmers represented by FONPA in 
Nampula argue that Artisanal Textiles have been left to their fate, no progress has been made, 
therefore questioning its su stainability.  
 
17 It would have been great to have detailed data about export destinations,  values , quantities and 
existing business linkages. However, this type of information is rarely shared by the company and they did not 
attend the Nampula meeting in November. We will try to collect this information in the next workshop.  
18 http://m.portalangop.co.ao/angola/pt_pt/mobile/noticias/africa/2011/7/33/Fabrica -algodao-entra -
funcionamento -Beira,88c29ebf -aeea-4f21-a6fa-a17f3ff8ef1a.html?version=mobile  
19 IAM to provide relevant EU contacts in charge of this project.  WT/CFMC/W/88  
 
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  Beyond Cotton Fiber Project  
4.27.   The Cotton Fiber Project, or Álem do Algodão  in Portuguese, is a Mozambique -Brazil 
cooperation project20. Its main objective is to support cotton growing farmers and public institutions 
in African countries (Benin, Mozambique, Kenya, and Tanzania) to market cotton by -products and 
products from intercropping systems of cotton and maize, pulses, and other crop s, in order to 
contribute to food security and nutrition of beneficiary farmers. In Mozambique, the project will be 
implemented in two provinces, Manica and Tete.  
4.28.   The p roject implementation period was supposed to be between October 2019 and October 
2022, w ith a total budget of USD $800 million to be funded by the Brazilian Cotton Institute (IBA). 
Initial planning activities already took place in 2019 but due to COVID -19, no activities were carried 
out in  2020. Direct beneficiaries targeted by the project in clude 45 staff from IAM, the District 
Services of Economic Activities, and OLAM; 225 lead farmers, 1,125 smallholder farmers, and 100 
women. Indirect beneficiaries include 1,500 smallholder farmers, 31,000 students/pupils from 
participating schools in the National School Feeding Program (PRONAE) and at least seven public 
and private institutions in the project implementation area.  
JFS  
4.29.   JFS is purchasing cotton plant residues for 1 Metical/kg to use as fuel in improved stoves to 
replace the use of charcoal and firewood. JFS intends to supply briquettes to tobacco companies as 
tobacco curing demands a lot of firewood. Replacing the use of firewood by briquettes would increase 
the sustainability of tobacco farming while simultaneously increasing household inco mes. 
Since  cotton uses a lot of pesticides in its production cycle, JFS wanted technical support to 
determine if there were any problem of residual pesticides in the briquettes. Cotton experts  
concluded  that pesticides are all "consumed " during the product ion cycle and no pesticide residues 
can be found in cotton stalks and husks.  
4.4  What is being marketed locally and what are the regional and global linkages if any ?  
4.4.1   Geographical market  
4.30.   MCM exports all its production. GEIN relies more on exports, but some of its products are also 
consumed locally. Only one farmer in Manica province uses their cotton cake to feed the animals 
while the rest is exported to South Africa.  
4.4.2   Temporal market  
4.31.   Since raw material is imported, the factories (GEIN and MCM) produce year -round. 
4.4.3   Size of the market  
4.32.   There is an increasing demand for cotton thread and this explains the plans for expanding the 
installed capacity. The soap produced by GEIN is also consumed locally, but only in small proportions, 
relative to what is exported. The Na tional Statistics Bureau does not have data on  exported  cotton 
soap, but it shows that in 2018 cottonseed oil export s were valued at about USD  $17,000. This is 
significantly  lower than the value reported back in 2014 when exports accounted for  USD $27,000.  
4.33.   The local market for cottonseed cake is small, with only one farmer acquiring it for animal 
feed in Manica  province. Most of the cottonseed cake find market outside the country and exports of 
cottonseed cake have been increasing following a significant decrease in 2016, which was the 
agricultural season (2015/16) of lowest cotton production in the last decade.  Many farmers had 
migrated to the production of pigeon pea, motivated by high prices in the international markets, 
which were driven by bad harvests in both India and Myanmar, the two major consumers of dahl.  
 
20 The project focal point is Marisete Araújo ( marisete.soaresaraujo@gmail.com ) WT/CFMC/W/88  
 
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  Figure 5: Cottonseed c ake exports in '000 USD by year, according to INE data  
 
4.34.   The local market for oils is high, with USD $675 million spent on oil imports in the last five 
years up to 2018. As previously indicated in the introduction, oil imports are ranked third  out of all 
imported products  after rice and wheat,. The newly approved agricultural strategy, known as 2020 -
2024 Program,  aims to reverse this situation by increasing the local production of cooking oil, 
including cottonseed oil. Mozambique witnessed a historical inte rvention this year w ith the 
Government 's pledge to provide about USD $4 million worth of subsidies21 to cotton farmers.  
4.5  Stakeholder analysis  
4.5.1   Stakeholder mapping  
4.35.   Apart from farmers , ginning companies, oil crushers (GEIN)  and stock feed producers (only 
one farmer buys stock feed from Nampula), there is a former state -owned cotton textile factory that 
has now been converted into a private cotton thread factory (MCM). The other key stakeholder is 
IAM that is responsible of regulating the sector and breeding improved cotton seed varieties. There 
are also farmers who collect cotton residues from GEIN and use as fertilizer. Given  the high 
depen dency of Mozambique on imports of palm and other oils, the Ministry of Industry and 
Commerce is becom ing a key player. There is also the Mozambique Cotton Association (AAM) that 
represents the private sector.  
4.5.2   Stakeholder relationships and the potential for  expansion of cotton by -products  
4.36.   There are five main stakeholders. The first is IAM, which is the Mozambique 's Cotton Institute 
and Oilseeds. It is a governmental institution (Ministry of Agriculture and Rural Development). 
It has the mandate to provide te chnical assistance, coordinate and monitor the sector.  
 
21 See A Carta Newsletter, 14 May 2020.  
WT/CFMC/W/88  
 
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  4.37.   The second is FONPA, which is the National Forum of Cotton Producers established in 2005. 
Its mission is to defend and promote the rights and interests of cotton farmers in Mozambique in 
order to impr ove their livelihoods in accordance with the principles of sustainable development, 
looking in particular at social, economic and environmental dimensions22. FONPA 's strategic 
objectives are the following:  
• improve its  own institutional organization;  
• streng then the ability to provide supporting services to its members ' cotton production;  
• improve profitability of cotton farming;  
• increase its  own ability to influence policy design, implementation and monitoring and 
evaluation;  
• incorporate gender aspects in FON PA. 
4.38.   The third group of  stakeholder s are the ginners. They are distributed in concessions across 
the country, but mainly concentrated in Nampula, Cabo Delgado and Niassa provinces: Plexus, 
SAN/JFS, SANAM Nametil, SANAM, SAM Mutuali, Moz Algodão, MOZACO, an d OLAM Ribaue. Outside 
these three provinces there are only few ginners such as China Africa Cotton operating in Sofala, 
Manica and Inhambane; MOCOTEX operating in Mocuba, Zambézia province; and OLAM AVZ 
operating in Manica province. Ginners provide seeds and other inputs (mainly fertilizers and 
pesticides) to farmers, and the cost of these inputs is subtracted from cotton purchases at the end 
of the agricultural season. This explains in part why the data from the National Agricultural Surveys 
conducted by MADER shows above average percentage use of pesticide in cotton growing areas   
compared to the rest of the country.  
4.39.   The fourth stakeholder, given the amount of fiber and other cotton products that are traded , 
is the Ministry of Commerce and Industry. The fifth stakeholder is the AAM (Mozambique 's Cotton 
Association)  represent ing the private sector.  
4.40.   At present, Mozambique produces cottonseed oil, thread (both industrial and artisanal) and 
soap. These are the three main cotton by -products that are commercially produced in the country. 
Poverty is more widespread in northern Mozambique and despite greate r agricultural potential for 
both cotton (and other cash crops) and staple food crops, chronic malnutrition rates remain higher 
in that region, too. Therefore, the government of Mozambique and its partners are putting greater 
emphasis on development effort s in that region. Agriculture flagship programs and projects such as 
SUSTENTA, PROMER, PROIRRI, APPSA and others are mainly located in that geographic area.  
4.41.   Priority of cotton by -products development should go to northern Mozambique . Cotton by -
products currently produced in that region are cooking oil, briquettes and soap. Given the recent 
inauguration of artisanal cotton textile in Namialo (also in northern Mozambique), in the medium 
term more emphasis should be equally given to cotton  thread . Further,  mechanisms  should be 
explored to foster collaboration between  artisanal textile  producers and  industrial thread  (produced 
by MCM in southern Mozambique)  producers , either through the training of farmers ' association, the 
marketing of ar tisanal thread and cloth produced by smallholder farmers in the north or any other 
arrangements.  
4.42.   One of the reasons for MCM to import most of the fiber it uses in its factory is lack of price 
agreement between local ginners in the north and MCM factory . In addition ,  prohibitive costs of 
transporting the cotton from the production area in the north to the factory that is located in the 
south and poorer fiber quality  have an impact on the price . MCM imports cotton fiber at a cheaper 
price partly because tran saction costs are high in Mozambique and road investments were historically 
made to connect the eastern harbour  cities of Maputo, Beira, and Nacala to the hinterland. There is 
only one main road connecting southern Mozambique to the north (EN1), making dom estic trade 
difficult between the cotton producing areas in the north and the cotton thread factory in the south. 
Some of the development problems , such as poor infrastructure , do not just affect the cotton sector, 
but also overall poverty reduction and de velopment efforts.  
4.43.   Some cotton areas coincide with agricultural potential for tobacco production. Niassa province, 
together with Tete, are the main producers of tobacco. However, i t takes a lot of wood to cure 
tobacco and this can have negative environment al impacts as tobacco farmers cut trees and collect 
firewood to cure tobacco. Exploring "new" cotton by -products such as briquet tes, in regions where 
 
22 https://www.fonpa.org.mz/index.php/downlo ads/category/2 -fonpa  WT/CFMC/W/88  
 
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  both cotton and tobacco are produced, is likely to have significant economic and environmental 
benefit s.  
4.44.   FONPA agrees that there should be a revision of the law that currently promotes burning of 
crop residues, although JFS argues that revoking the cotton legislation should only be done if biomass 
market is assured in order to stop the spread of pests and dis eases, which motivates law enforcement 
on residue burning.  
4.45.   Rather than focusing on cotton by -products, FONPA also argues that more incentives should 
be put in place to increase raw -material availability and local initiatives  should be created for cotton 
by-product processing such as small cooking oil press. There should also be a focus on the 
development of technical skills by expanding and improving extension service access.  
4.46.   FONPA agrees that cotton by -products were correctly mapped in the study, although  in 
addition to cottonseed oil and soap, there should also be investments in products better controlled 
by the household instead of the firm. These include briquettes, bagasse, organic fertilizers and 
artisanal textiles. Briquettes would reduce deforestati on and improve women 's time allocation since 
they are the ones usually collecting firewood.  
4.47.   Farme rs' views of cotton by -products to be prioritized constrast with that of the private sector.  
The private sector agrees that cotton by -products were correctly mapped in the study and that more 
emphasis should be given to cooking oil and soap production, but more investments should also go 
to bagasse, especially  for poultry feeding. Given the poorer quality of local cotton fibre, shorter fibres  
should go to the production of surgery cotton and tennis ball production. It is w orth noting that there 
are two main obstacles: the lack of markets and the current legislation applying to the management 
of cotton by -products.  
4.6  Policy environment  
4.6.1   Trade policies  
4.48.   Figure 3 above showed that palm oil is the main oil that is imported to Mozambique because 
it is cheaper than soybean and cottonseed oil. Although the import tariff on refined palm oil is much 
higher than that of crude oil ,  a study found that 96% of palm oil exported to Mozambique by 
Southeast Asian countries is registered as refined oil, while in Mozambique, 99% of palm oil imported 
from those same countries is falsely registered as crude oil, therefore benefiting from  lower import 
tariff. Importers are systematically misrepresenting the nature of their imports, with adverse 
consequences for both border tax collections and more importantly, the development of the cotton 
sector on which nearly 200,000  farmers directly depend23. 
4.49.   The same study concludes that the most important is to ensure that domestic production is  
protected and not affected by  illegal activities, or by policies and regulations that fail to level the 
playing field for domestic producers. By not managing to e ffectively enforce trade policy measures, 
Mozambique is depriving itself of a potentially useful industrial policy tool.  
4.50.   Cotton exports are subject to a Cotton Development Tax of 3.5 -5%. The export of cotton seed 
is prohibited in principle. Low quality c ottonseeds are sold to domestic oil expell er industries. 
However, when the domestic market is not buying all cottonseed s, the surplus can exceptionally be 
exported after authoriz ation by the IAM. Mozambique imposes an export tax of 18% of the f.o.b. 
customs value on raw cotton24. 
4.51.   One issue that arises in the cotton sector is related to the distortions created by exchange 
rate fluctuations and how to make the Mozambican cotton value cha in more competitive worldwide. 
These affect the minimum price calculation  and the  trade of cotton and its by -products.  
 
23 https://www.theigc.org/blog/public -private -pacts -poultry -cotton -economic -transformation -
mozambique/  
24 https://www.t ralac.org/images/docs/11567/wto -trade-policy -review -mozambique -report -by-the-
secretariat -revision -july-2017.pdf  WT/CFMC/W/88  
 
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  4.6.2   Analysis of actual and potential bottlenecks  
4.52.   One of the main bottlenecks is that cotton regulation demands farmers to burn their cotton 
residues and non -compliance can result in fines. In addition, the current agricultural policy 
documents (PEDSA) say little about cotton by -products. PEDSA was too vague in terms of what was 
being done and what the potential was, and cotton by -products were not monitored in MADER 
surveys to understand their dynamics. PEDSA expired in 2019 and a new Agriculture Program was 
approved in 2020, although its Operational Plan is currently being drafted as of August 2020. This 
provides an opportunity to incorporate detailed information about cotton by -products in the next 
Operational Plan. Technical assistance from both national and international experts could be provided 
under a policy framework support pillar of the implementation project.  
4.53.   The seed system is anoth er bottleneck in the agricultural sector in general and in the cotton 
subsector in particular. Low quality of seeds often with mixed varieties results in lower productivity 
of cotton fiber and cottonseed. Availability of foundation seed, pre -basic and basi c seeds is very low 
and the seed sector is underfunded. There are a few seed inspectors and most of the available 
inspector s tend to specialize in food crops such as cereals and pulses. Breeders at the National 
Agricultural Research Institute also tend to focus on staple food crops. CIRAD and GIZ are conducting 
a study on cotton seed quality, which will shed more light about the topic.  
4.54.   Imports of raw material for the industry of edible oils and soap manufacturing do not pay 
Value -Added Tax (or IVA, using i ts Portuguese acronym). The objective of IVA exemption, according 
to government sources, is to promote growth in those industries25. Tax exemptions are effective 
since 2012 and were supposed to expire in December 2015 but  were extended at least until 
31 December  2016. Relatively cheaper imports of oil due to tax break can work as a disincentive to 
domestic oil production from cottonseed and other sources.  
4.6.3   Potential contribution of cotton by -products to poverty reduction, inclusiveness and 
gender equality  
4.55.   Cotton is grown in northern Mozambique where poverty rates are highest. In 2014/15 about 
59.6% of the population lived below the national poverty line in northern Mozambique, compared to 
the national average of 49.2% (40.7% in urban areas and 53.1% in rural areas), according to the 
fourth national poverty assessment conducted in the country (DNEAP, 2016)26. Increasing incomes 
of smallholder farmers in Nampula, Cabo Delgado, Niassa and Zambézia  will have a significant impact 
on poverty reduction because the majority of the poor lives in those four provinces.  
4.56.   Income gains can be substantial if the country is able to reduce the dependency on oil imports 
by increasing its domestic production of cot tonseed oil. As discussed, between 2014 and 2018 
Mozambique spent about USD $675 million in total imports of oils. Another advantage of cotton by -
products is that their prices can be significantly higher than that of cotton fiber.  
4.57.   The price of cotton thread can be at least twice as high as the price of cotton fibers, which 
suggests considerable potential in poverty reduction in northern Mozambique. At present most of 
the raw material is imported and a substitution of production of c otton by -products by local supplies 
can result in significant improvement in farmers ' welfare through employment gains and direct sales 
of cotton by -products.  
 
25 http://www.angop.ao/angola/pt_pt/noticias/africa/2016/7/34/Mocambique -Importacao -materias -
primas -para-fabricacao -oleo-sabao -isentos -IVA,39e0aac0 -0ea4-4e46-a00d-a276fd50b617.html  
26 
https://www.wider.unu.edu/sites/default/files/Final_QUARTA%20AVALIA%C3%87AO%20NACIONAL%20DA%2
0POBREZA_2016 -10-26_2.pdf  WT/CFMC/W/88  
 
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  4.58.   Profits from cotton by -products can also have a feedback effect. Once farmers earn more 
money fro m the sales of cotton by -products, they will want to increase cottonseed production 
through adoption of improved technologies. The other potential benefits of cotton by -products 
include the following:  
 
• strengthening of the cotton seed system;  
• stability  of farmers ' revenue s; 
• increase of the cotton seed yields;   
• reduction of environmental pollution;  
• development of the local market;  
• job creation.  
4.59.   One question raised by many farmers is how they can benefit from cotton by -products. 
Farmers prefer dir ect benefits such as investing in briquettes which they have control over, and this 
would also reduce the burden of women to collect firewood. Since the production of cotton is done 
under a concession system, another question that arises is to whom do plan t residues belong to, 
farmers or the concession firm? Farmers represented by FONPA agree that there would be more 
benefits to the farmers if cotton by -products were directly controlled by the farmer.  
4.60.   Cotton by -products such as cooking oil are controlled b y the factory, that is, the private sector, 
and farmers are unclear on how they can benefit from increas ed cooking oil production. One way is 
through employment creati on as it is the case of GEIN which employs about 1,200 people. More 
employment can have o ther positive spill -over effects as farmers ' incomes  increase  and they start 
spending more on local shops, agro -dealers, better and more nutritious food , among others. 
Increased production  also promotes social corporate responsibility as some farmers dril l boreholes 
to ensure th at local communities have better access to water and sanitation. They can also build 
local schools where the cooking oil factory is located to benefit smallholder farmers in communities. 
Furthermore, by reducing the importation of c ooking oil, the government can use the saved funds 
for social projects.  
4.61.   While focusing on cooking oil production, another option would be to invest in small oil press 
machines that are operated by smallholder farmers to ensure that they have better control over 
cotton by -products. This would be aligned with SUSTENTA 's efforts to focus on value chain 
development and benefits of oil production would go directly to farmers.  
4.7  Cotton by -products to be prioritized and SWOT analysis  
4.62.   It is difficult to talk a bout prioritization when there are only a few choices to select from. In 
this study prioritization is rooted on comparative advantages. At present Mozambique produces 
cotton thread, oil , soap from cottonseed, surgical cotton for which there is no available  information 
and to some extent, organic fertilizers. The two main raw materials are cottonseed and cotton fibers, 
and both are in short supply locally and of low quality . Therefore, Mozambique imports a considerable 
amount of raw material.  
4.63.   Given the polit ical will to reduce importation of cooking oil which at present accounts for about 
14% of total imports, it seems logical to prioritize cottonseed oil as the main cotton by -product. This 
is in line with the 2016 -2025 Industrial Strategy and Policy, priorit izing the development of the 
cooking oil and textile industries. It is also well -aligned with the SUSTENTA program which is 
essentially derived from the Government Quinquennial Plan 2020 -2024.  
4.64.   Measures s  that are conducive to increase the supply of raw m aterials locally  should be put 
in place . Cotton yields must increase while its quality also improve d. Subsidies in the agricultural 
sector are rare in Mozambique, but in 2020 the Ministry of Agriculture conceded about USD $4 million 
of cotton subsidies to increase the minimum price of cotton by 6 Meticais. These efforts by the 
Ministry of Agriculture are most likely going to have a positive impact on yields as farmers will be 
more motivated to use improved technologies. Yield growth, assuming total cropped area either 
remains the same or increases, would increase cottonseed and cotton fiber availability in the 
domestic market and substitute part of what is currently imported.  WT/CFMC/W/88  
 
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  4.7.1   Cotton oilseeds  
Strengths  
• It is well -aligned with both the government 's overarching goal of reducing importation of cooking 
oil and the industrial strategy and policy envisioning increased domestic cooking oil production;  
• It is also aligned with the government 's current agricultural development strategy of value 
addition, k nown as Program 2020 -2024/SUSTENTA;  
• It also shows a potentially greater impact on poverty reduction because the project would be 
located in the north where poverty and food insecurity are widespread.  
Weaknesses  
• Farmers are skeptical about  the benefits of industrial oil production  and believe that they  will 
be directed  to the firm s and not to the smallholder farmers;  
Opportunities  
• Employment creation in the cooking oil factory;  
• Investment in small oil press that can be run by smallholders;  
• CIRAD and GIZ are conducting a study to improve cottonseed quality in Mozambique;  
• Through social responsibility the industry can invest in the community.  
Threats  
• As shown in Figure 6, on ly 8% of the rural population have access to electricity 
(World  Bank,  2020), making industrial investments very expensive in rural areas.  
Figure 6: Percentage of the rural population with access to electricity in Mozambique  
 
 
WT/CFMC/W/88  
 
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  4.7.2   Soap  
Strengths  
• Suitable for both industrial and artisanal production;  
• Industrial production creates more jobs and salaries can help boost the rural economy;  
• With artisanal production, farmers feel more in control of direct benefits as some have raised 
concerns about how an industrial product can benefit them;  
• Similar to cooking oil, the project would be located in the north where poverty headcount is 
highest  relative to other country regions, therefore the poverty impact is likely to be significant.  
Weaknesses  
• Unavailability of cottonseed in sufficient quantity which prompts the importation of cheap palm 
oil as a substitute.  
Opportunities  
• CIRAD and GIZ are conducting a study to improve cottonseed quality in Mozambique.  
Threats  
• Competition with other soaps already available in the market.  
4.7.3   Briquettes  
Strengths  
• Preferred cotton by -product by farmers because unlike cottonseed oil that goes directly  to the 
industry, they have more control over it;  
• It can reduce the burden of women collecting firewood.  
Weaknesses  
• Current legislation encourages the destruction of cotton stalks.  
Opportunities  
• Opportunity for a change in cotton legislation;  
• Increase d household incomes through sales of cotton stalks.  
Threats  
• Since briquettes can also be processed by the industry, the price the industry pays for cotton 
stalks can be low and create disincentiv e for farmers.  
4.7.4   Animal feed, organic fertilizer and particle boards  
4.65.   These cotton by -products are currently not being explored commercially in Mozambique.  
4.8  Analysis of potential national investors and their potential relationship with farmers  
4.66.   The public -private partnerships are center ed around three goals (Johansson, 2017): 
strengthening demand, strengthening the enabling environment and strengthening the supply chain. 
Starting with the demand side, the public sector (Ministry of Agriculture and Rural Developm ent in 
general and Mozambique Institute for Cotton and Oilseeds in particular) should engage in awareness 
raising and cotton by -product promotion, such as explaining the health benefits of cottonseed oil 
consumption over palm oil which is currently the mos t imported cooking oil. This would increase the 
demand for cottonseed oil. More demand would imply that the private sector (GEIN and other 
ginners) would be motivated to increase production.  WT/CFMC/W/88  
 
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  4.67.   In terms of strengthening the enabling environment, the public s ector should envision a 
sustainable production of cotton by -products by improving the regulatory framework, promoting 
farmers ' associations to enhance communication and collaboration with the private sector. 
Mozambique Cotton Institute for Cotton and Oilse eds should engage with Mozambique Cotton 
Association (AAM) to broadcast extension messages aimed at saving rather than destroying cotton 
stalks while the IAM promotes regulatory improvements.  
4.68.   In addition to the demand -side, both the public and the private  sector should tackle the 
supply -side, with the objective of improving the supply of desirable and affordable cotton 
by-products. The public sector should work on strengthening the supply chain by reducing business 
costs (investments, working capital and operational costs)  and investing in  research and 
development. The private sector should also work on research and development (including market 
analysis  and increase the number of stores in the rural areas selling cottonseed oil.  
5  MAIN FINDINGS AND RECOMMENDATIONS  
5.1  Findings  
5.1.  Cotton is one of the priority crops identified in the 2020 -2024 Program. It creates about 
20,000  jobs and  provides livelihoods to about 200,000 households. Cotton  farmers tend to have less 
diversified income sources and cotton is currently grown mainly for its fiber, or lint. Nevertheless, 
commercial applications exist for other parts of the cotton plant, such as the stalks, husks, 
cottonseed and linters. Cotton by -products therefore represent an opportunity for producing 
countr ies to increase the benefits they derive from their cotton production.  
5.2.  Through these benefits, value addition including through cotton by -products can contribute to 
poverty reduction, inclusiveness, and enhanced sustainability of the cotton sector and cot ton 
processing technologies in LDCs. Profits from cotton by -products can also have a feedback effect. 
Project inclusiveness objective means that once farmers earn more money from sales of cotton 
by-products, they will want to increase cottonseed production  through adoption of improved 
technologies.  
5.3.  There is little information in the literature about cotton by -products in Mozambique. This report 
borrows the experience of other southern and eastern African countries to review commercially viable 
cotton by -products and explore similarities with Mozambique. A general feature of the cotton sector 
in these four countries (Tanzania, Uganda, Zambia and Mozambique) is that cotton yields are low 
across the board, especially in the Zambia and Mozambique. Unlike Mozambi que where there are 
practically no cattle s in cotton producing areas, the other countries included in the review have made 
strides to take advantage of cottonseed cake and use it in animal feeding.  
5.4.  In all four countries agriculture remains predominantly of  subsistence with little use of improved 
inputs. The policy setting is also similar. In Zambia, it is a criminal offense not to destroy cotton 
stalks and farmers who do not comply can be imprisoned and pay fines. In Mozambique, cotton 
regulation mandates c otton residues  to be destroyed after the harvest.  
5.5.  Cottonseed oil and soap are the main by -products in all four countries, but domestic availability 
of raw material is a common constraint. Mozambique, Zambia and Tanzania must compete with 
importation of ch eaper palm oil and in  the three  countries tax breaks seem to favo ur oil imports. 
The amount of cottonseed produced in Mozambique represents 2.5% of the total value of palm oil 
imports, indicating that significant scope exists for increasing local productio n. Likewise, linkages 
between the cotton by -product sector and the livestock sector are weak in the four southern and 
eastern African countries reviewed, particularly in Mozambique.  
5.6.  Mozambique still spends considerable amount of money in importing cotton lint, too. This is 
beneficial to the industry in the short -run as production of cotton thread doubles the value, but in 
the medium -term efforts should be put together to increase the domestic production, including 
measures to increase cotton yields. Since the amount imported is significant (both cotton and its 
by-products), trade policies are also equally important in promoting domestic production. Even if the 
local production of cotton fiber increases 20 -fold, it would still not meet the local demand. Howe ver, 
the increase in the production of cotton fiber would obviously be positively and significantly correlated 
with the increase in availability of cottonseed for the agro -industry of oil and soap production.  WT/CFMC/W/88  
 
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  5.7.  Imports of raw material for the industry of ed ible oils and soap manufacturing do not pay Value -
Added Tax (or IVA, using its Portuguese acronym). The objective of IVA exemption, according to 
government sources, is to promote growth in those industries. While this is beneficial to the industry 
in the s hort-run, it can also create disincentives for local development of cottonseed oil and soap 
because local farmers will not be motivated to grow more. Relatively cheaper imports of oil due to 
tax break can work as a disincentive to domestic oil production f rom cottonseed and other sources.  
5.8.  Although there is only a small number of cotton by -products in the country (cotton thread, 
cotton oil, soap, stock feed, and organic fertilizer), priority should go to cottonseed oil given its 
alignment with the overarchi ng government objective of significantly reducing cooking oil imports, 
as highlighted in the 2020 -2024 Program. Along with the prioritization of cottonseed oil, soap 
production could be a second alternative since it uses the waste of cottonseed oil. Anothe r reason to 
focus on cottonseed oil is because the existing plants are located in northern Mozambique where 
poverty is widespread.   
5.9.  In Mozambique there are two main players producing cotton by -products: GEIN and MCM. 
MCM exports all its production. GEIN r elies more on exports, but some of its products are also 
consumed locally. Only one farmer in Manica provinces uses their cotton cake to feed the animals 
while the rest is exported to South Africa. Since raw material is imported, the factories (GEIN and 
MCM) produce year -round. There is an increasing demand for cotton thread and this explains the 
plans for expanding the installed capacity. The soap produced by GEIN is also consumed locally, but 
only in small proportions, relative to what is exported.  
5.2  Constr aints  
5.10.   One of the main bottlenecks is that cotton regulation requires farmers to burn their cotton 
residues and non -compliance can  result in fines, as previously discussed. The Ministry of Agriculture 
and Rural Development is currently drafting the Operational Plan for the 2020 -2024 Program. This 
provides an opportunity to incorporate detailed information about cotton by -products in t he next 
generation of agricultural strategy.  
5.11.   The seed system is another bottleneck in the agricultural sector in general and in cotton 
subsector in particular. Low quality of seeds often with mixed  with different  varieties results in lower 
productivity of cotton fiber and oil from cottonseed. Availability of foundation seed, pre -basic and 
basic seeds is very low, and the seed sector is underfunded. There are a few seed inspectors, and 
most of the available inspect ors tend to specialize on food crops such as cereals and pulses. Breeders 
at the National Agricultural Research Institute also tend to focus on staple food crops. Therefore, 
cotton seed system should be strengthened.  
5.3  Recommendations  
5.12.   Four main recommendatio ns can be derived from the study. First, the policy environment 
needs to be improved. While the overarching objective to prevent the spread of pests and diseases 
is important , the regulation should be upgraded to accommodate farmers who want to use cotton 
stalks as raw material for production of particle boards, briquettes and other by -products. This can 
be accomplished by requiring  that farmers who want to develop cotton by -products be registered by 
the regulation board, and registration would waive the re quirement of cotton residue destruction 
after the harvest.   
5.13.   In order to improve the policy environment, the public sector should engage in awareness 
raising and cotton by -product promotion  by explaining the health benefits of cottonseed oil 
consumption ov er palm oil , which is currently the most imported cooking oil. The public sector should 
also envision a sustainable production of cotton by -products by improving the regulatory framework, 
by promoting farmers ' associations to enhance communication and  by encouraging  collaboration with 
the private sector. This could be accomplished by engaging Mozambique Cotton Institute for Cotton 
and Oilseeds and Mozambique Cotton Association (AAM) to broadcast extension messages aimed at 
saving rather than destroying cott on stalks while the IAM would promote regulatory improvements.  
5.14.   In addition to the demand -side, both the public and the private sector should tackle the 
supply -side, with the objective of improving the supply of desirable and affordable cotton 
by-products.  The public sector should work on strengthening the supply chain by reducing business WT/CFMC/W/88  
 
- 28 - 
 
  costs (investments, working capital and operational costs)  and investing in  research and 
development. The private sector should also work on research and development (inc luding market 
analysis ) and  increase the number of stores in the rural areas selling cottonseed oil.  
5.15.   Second, more investments should be attracted and it is recommended that priority in the 
development of cotton by -products should be given to production of  cottonseed oil and its residues 
used in the production of soap. These two cotton by -products are better aligned with poverty 
reduction efforts: interventions in geographical locations where poverty is more widespread; and 
activities that are better aligne d with PGQ (Government 's Quinquennial Plan) and 2020 -2024 
Agricultural Program.  
5.16.   Third, there is a need for agronomic interventions in the cotton sector. While priority should 
be given to two cotton by -products, in the medium -term, interventions should be broaden to expand 
farmers ' opportunities. This includes, for example, dealing with technological challenges involved in 
the extraction of a chemical compound which inhibits the absorption of nutrients, making cottonseed 
cake unsuitable for non -ruminants. P PP opportunities should also be explored more carefully, such 
as linking the artisanal cotton thread project in the north, which is mainly run by smallholder farmers, 
with industrial thread production at MCM in the south. PPP examples include partnerships with: the 
Ministry of Health to produce surgery cotton ; the Ministry of Education and Human Development to 
use particle boards to produce school chairs ; andthe Ministry of Energy to produce improved stoves 
using renewable energy.  
5.17.   Finally, by the end of 202 0 MADER will have collected a detailed household survey that is, for 
the first time, representative at the district level, with a sample purposely drawn to have enough 
observations for all major crops in the country, including cotton. This will provide a s olid basis for 
estimating current cotton yields and forecasting future yields given selected policy interventions.  
5.4  Stakeholders  
5.18.   GEIN is one of the key stakeholders as they are already producing cooking oil and soap from 
cottonseed, and these two cotton by -products ranked first and second in terms of priority products. 
Other ginners in the country have already started investing in oil -pressing factories to produce 
cooking oil and partnerships with those ginners should also be pursued. Since the cur rent regulation 
promotes the destruction of cotton stalks, another key stakeholder is the Ministry of Agriculture and 
Rural Development. In this process, the Mozambique Institute for Cotton and Oilseeds also plays a 
critical role in ensuring better access to improved seeds and other inputs that are conducive to 
agricultural productivity growth.  
  WT/CFMC/W/88  
 
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Benfica, R., 2006. An analysis of income poverty effects in cash cropping economies in rural 
Mozambique: Blending econometric and economy -wide models. P hD Dissertation, Michigan State 
University: East Lansing, Michigan.  
Chitah, West, 2017. Cotton and its By -Products Sector in Zambia - Background Paper. 
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DNEAP, 2016. Pobreza e Bem -estar em Moçambique: Quarta Avaliação Nacional, Inquérito ao 
Orçamento Familiar IOF 2008/09. Maputo: Direcção Nacional de Estudos e Análise de Políticas, 
Ministério de Planificação e Desenvol vimento.  
IAM, 2011. Plano Estratégico para Desenvolvimento do Sector Agrário (PEDSA): Programa de 
Aumento da Produção Orientada ao Mercado – Sub Programa de Revitalização da Cadeia de Valor 
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IAM, 2015. Plano Estratégico para Desenvo lvimento do Sector Agrário (PEDSA): Programa de 
Aumento da Produção Orientada ao Mercado – Sub Programa de Revitalização da Cadeia de Valor 
do Algodão em Moçambique. Maputo: Instituto de Algodão de Moçambique.  
IAM, 2015b. Regulamento para a Cultura do Alg odão: Decreto nº 37/2015 De 31 de Dezembro. 
Maputo: Instituto de Algodão de Moçambique.  
InfoResources, 2008. Accessing Financial Services in Rural Areas. Focus #2/2008. Center for 
Development and Environment: Bern University of Applied Sciences. Available online at the following 
website: https://web.inforesources.bfh.science/pdf/focus08_2_e.pdf . Visited  13 Feb. 2020.  
Johansson, Eva., 2017. So what 's the problem with public -private pa rtnerships. IRC Blog. 
https://www.ircwash.org/blog/so -what%E2%80%99s -problem -%E2%80%98public -private -
partnerships%E2%80%99 -0 
Jorfi, M., and Foster, E., 2015. Recent advances in nanocellulose for biomedical applications. Journal 
of Applied Polymer. https://onlinelibrary.wiley.com/doi/epdf/10.1002/app.41719  
Kabissa, Joe, 2017. Cotton and its By -Products Sector in Tanzania - Background Paper. 
https://unctad.org/en/PublicationsLibrary/sucmisc2017d1_en.pdf  
Lugojja, Fredrick, 2017. Cotton and its By -Products Sector in Uganda - Background Paper. 
https://unctad.org/en/PublicationsLibrary/sucmisc2017d4_en.pdf  
MASA (2017). IAI: Inquérito  Agrícola Integrado 2017. Maputo: Ministério da Agricultura e Segurança 
Alimentar.  
Morais, J., Rosa, M., Filho, M., Nascimento, L., Nascimento, D., and A. Cassales. 2013. Extraction 
and characterization of nanocellulose structures from raw cotton linter. C arbohydrate Polymers 91, 
229-235. 
PEDSA, 2011. Cotton Revitalization Program. Ministry of Agriculture, Mozambique Institute for 
Cotton. http://www.slire.net/download/2105/programa_de_revitaliza_o_do_algod_o_rev_31._03. 
_2011_2_.pdf  (visited 11 February 2020).  
Shinyekwa, I., 2019, Cotton and its by -Products in Uganda: Analysis of Cotton by -Products Survey. 
Geneva: UNCTAD.  
Singh, A., 2016. Eff ective and practical use of cottonseed and its by -products. Cotton Statistics and 
News #16. Mumbai, India.  
UNCTAD. 2018. Analysis of Cotton By -products Survey in the United Republic of Tanzania. 
https://unctad.org/en/PublicationsLibrary/sucmisc2017d12_en.pdf  
UNCTAD. 2018. Analysis of Cotton By -products Survey in Zambia. 
https://unctad.org/en/Publica tionsLibrary/sucmisc2017d17_en.pdf  
UNCTAD. 2018. Cotton and its By -Products in Uganda: Analysis of Cotton by -Products Survey. 
https://unctad.org/en/PublicationsLibra ry/ditc_com_inf_2018_2_en.pdf  
Walker, T., Tschirley, D., Low, J., Tanque, M., Boughton, D., Payongayong, E., and M. Weber, 2004. 
Determinants of Rural Income, Poverty, and Perceived Well -Being in Mozambique in 2001 -2002. 
Ministry of Agriculture Research Re port #57E. Maputo. Mozambique.  WT/CFMC/W/88  
 
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  World Bank, 2005. Value Chain Analysis for Strategic Sectors in Mozambique. Draft report available 
at http://www.acismoz.com/wp -content/uploads/2017/06/000131.pdf . (visited 14 February 2020).  
Websites  
Article about trade policies: https://www .theigc.org/blog/public -private -pacts -poultry -cotton -
economic -transformation -mozambique/  
Article about trade policies: https://www.tralac.org/images/docs/11567/wto -trade -policy -review -
mozambique -report -by-the-secretariat -revision -july-2017.pdf  
Article about VAT exemption: http://www.angop.ao/angola/pt_pt/noticias/africa/2016/7/34/ 
Mocambique -Importacao -materias -primas -para-fabricacao -oleo-sabao -isentos -IVA,39e0aac0 -
0ea4-4e46-a00d-a276fd50b617.html  
GEIN Company Profile: https://geingroup.com/company -profile/  
https://science.jrank.org/pages/18 32/Cotton -Cotton -by-products.html  
https://www.azonano.com/article.aspx?ArticleID=3139  
Information about FONPA: https://www.fonpa.org.mz/index.php/downloads/category/2 -fonpa  
Plexus strike: https://clubofmozambique.c om/news/cotton -plexus -workers -on-strike -montepuez -
based -company -needs -us10-million -to-overcome -crisis-152574/  
Poverty and wellbeing in Mozambique: Fourth National Poverty Assessment. 
https://www.wider.unu.edu/sites/default/files/Final_QUARTA%20AVALIA%C3%87AO%20NACIONA
L%20DA%20POBREZA_2016 -10-26_2.pdf  
Surgical cotton factory in Beira: http://m.portalangop.co.ao/angola/pt_pt/mobile/noticias/africa/ 
2011/7/33/Fabrica -algodao -entra -funcionamento -Beira,88c29ebf -aeea-4f21-a6fa-
a17f3ff8ef1a.html?version=mo bile 
  WT/CFMC/W/88  
 
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  Annex 1  Formula used for setting up minimum cotton price in Mozambique  
Column/  
Row B 
Indicator  C 
Year 2016  Formula  
3 PIR- (NYF/ICE (cts/lb)  75.85    
4 Quality Differential (1 cts/lb) - 1.00   
5 FOB 74.85  C3-C4 
6 IAM  Transaction  Tax (3.5%) - 2.62 C5*0.035  
7 FOB (cts/lb) - Transaction Tax  72.23  C5-C6 
8 Conversion factor (1lb to kg)  2.20   
9 FOB ( USD/kg)  1.59 (C7*C8)/100  
10 Exchange rate (Meticais/USD)  63.79    
11 FOB ( Meticais/Kg)  101.58  C9*C10  
12 GOT 38%  0.38   
13 Seed Cotton FOB (MT/Kg)  38.60  C11*C12  
14 Seed value (10%)+      
15 FOB + 10% Seed  38.60  C13+C14  
16 Minimum Price Variation (58%)*  0.58   
17 Price (Meticais)  22.39  C15*C16  
18 Minimum Price Variation (63%)*  0.63   
19 Price (Meticais)  24.32  C15*C18  
 
  WT/CFMC/W/88  
 
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  Annex 2  List of participants in the expert panel meeting in Maputo  
Name  Position  Contact  Date  
Luís Zeca Tomo  Director General, IAM  tomoluis@gmail.com    19 Feb 2020  
Adalberto Banze  SITP Director, IAM  adalbertobanze@gmail.com   19 Feb 2020  
Dércia Bai -Bai Guedes  Head of Department, IAM  debaibai2@gmail.com   19 Feb 2020  
Alfane Olaia  Head of Department,  IAM alfaneolaia2@gmail.com   19 Feb 2020  
Águeda Tembe Cuna  Head of Department, IAM  abelunga@gmail.com   19 Feb 2020  
Jeremias Sacuze  Head of Department, IAM  jersacuze@yahoo.com.br   19 Feb 2020  
Paulo Utui  IAM Staff  utuipaulo@yahoo.com.br   19 Feb 2020  
Victória Chaquisse  IAM Staff  vnhampalele@gmail.com   19 Feb 2020  
Fernando Nhampossa  IAM Staff  f.nampossa@gmai.com   19 Feb 2020  
 
 
  WT/CFMC/W/88  
 
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  Annex 3  Participation in the Cotton "Conselho Consultivo ", Nov 1, Nampula  
Annex 3.1  List of participants  
Name  Institution  E-mail Phone  
Catija Zulficar Ali  MOZACO  catija.ali@jfs.co.mz   872191063  
Avelino Lopes  SAN-JFS avelino.lopes@jfs.co.mz   843983506  
Philip Ashcroft  Plexus  ashcroft@plexusmoz.net   843022600  
Jeremias Sacuze  IAM – SEDE  jersacuze@yahoo.com.br   873088690  
António Pereira Raice  FONPA   866029281  
Oliveira Eciate  DPASA   849399836  
Albertina  DPASA Nampula   843991980  
Maria Joaquim  DPASA Nampula  maryjoaquim@gmail.com   845190978  
Rafael H. Lambo  IAM rafaellambo@gmail.com   841247131  
Elisa Pondja Bene  IAM Maputo  elisaaugustopndjab@gmail.com   824333877  
Alberto Mangue  SANAM  mangue@gein.co.mz   842334080  
Massuhuze Zacarias  APIEX Nampula  mzacarias11@gmail.com   844397180  
Elina Judite Massangale  IAM Nampula  jmassangale@yahoo.com.br   844728499  
Amélia Jorge Sidomo  BCI - IAM asidomo2@gmail.com   861001050  
Célia Malamule  EDM cmalamule@edm.co.mz   843338111  
Francisco Fontes  FAO francisco.pereirafontes@fao.org    
Domingos Ajuda  FAO domingos.ajuda@fao.org   873819960  
Ana Salvado Sebastião  EDM ana.salvado@edm.co.mz   845949469  
Beatriz Bernardo  EDM beatriz.bernardo@edm.co.mz   847758059  
Cláudia da G. Muendane  EDM claudia.muendane@edm.co.mz   848576790  
Frei Sualehe  IAM  842283993  
Marco Machado  AAM marco13machado@gmai.com   823161736  
Benedito Cunguara  Consultant  cunguara@gmail.com    
Adalberto Banze  IAM/MASA  adalbertobanze@gmail.com   845651347  
Gonçalves Mandava  AT  843186160  
Celma Esmael  EDM celma.esmael@edm.co.mz   845911908  
Benjamim Fernandes  EDM benjamim.fernandes@edm.co.mz   823029777  
Luísa Filipe  IAM  849010509  
Joel Como  IAM   
Délcio  Manuel Notiço  BCI delcio.notico@bci.co.mz   840746542  
Júlio Ramos  IAM julioramos@yahoo.com.br   847660349  
Vicente Morais Sando  FONPA  sandovic@fonpa.org.mz   847215813  
Francisco Santos  AAM – JFS   
Eugénio Macamo  FAO eugenio.macamo@fao.org   823264750  
Benson K.  FONPA   848423103  
Manuel Caetano  FONPA   866457440  
António Sicozocuma  FONPA   875370518  
Águeda Tembe  IAM abelunga@gmail.com   875352299  
Darcília Matusse  IAM  845323793  
Armando Cardoso  IAM armandocardoso107@gmail.com   823861850  
António Kanhandule  MLT  868798702  
José Cardoso Camuho  FONPA   860725839  
Joana Camilo  FONPA   866633154  
Ivan Amade da Silva  SANAM  ivan@gein.co.mz   874266010  
Xang Yitong  China Africa Cotton  yangyitong@ca -cotton.com   865774719  
Ynlnym  China Africa Cotton  ynluym@ca -cotton.com   844882905  
Julius Mapanga  Klein Karoo  julius@seedmarketing.co.za   844880118  
Sérgio Valentim  IAM Nampula  valeentim@yahoo.com.br   842621480  
Manuel Delgado  SAN-JFS  842892471  
Manuel Maleia  CIMSAN/IIAM  mmaleia@gmail.com   844588271  
Victor David  China Africa Cotton  casagersone@gmail.com   846947855  
Helder Orlando Uacitela  China Africa Cotton  helderwacitela@gmail.com   877752000  
Rafcur Correia  Plexus  rcorreia@plexusmoz.net   860160872  
Gracinda Mussale  MIC/DNI  graloi77@gmail.com   847887265  WT/CFMC/W/88  
 
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  Name  Institution  E-mail Phone  
Paulo Marques  SAM-MUTUALI  paulomarques802@gmail.com   843963250  
Maria Helena Gabriel  IAM mariahelenagabrielg@gmail.com   840203358  
Edson Vasconcelos Tenga  IAM edsont08@gmail.com   843977992  
Ximena Peon  MLT peonx@mozltc.com   850610732  
Felisberto Capota  FOPACO C. Delgado   878220841  
 WT/CFMC/W/88  
 
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  Annex 4  Summary of by -product production from other African countries  
This section is based on reports conducted in three African countries (Tanzania, Uganda, and Zambia) 
by UNCTAD. The references are provided in the reference list.  
Annex 4.1  Development of cotton  by-products in Tanzania  
Overview of the cotton sector  
In Tanzania cotton is the second most important cash crop after coffee in terms of its contribution 
to foreign exchange earnings. It is also by far the most widely cultivated cash crop when compared 
to coffee, tobacco, cashew, tea, sugar cane, sisal and pyrethrum. Its value chain supports directly 
and indirectly livelihoods of up to 40% of the population. Cotton farming involves around 
400,000  smallholder farmers in Tanzania, which is around double the size of Mozambique. The size 
of cotton farms ranges from 0.4 to 40 hectares, and averages 1.5 hectares with a yield of about 
750 kg/ha of seed cotton per hectare or 220 kg of lint per ha. Yields in Mozambique are slightly 
lower, between 415 and 600 kg/ha1. 
The smallholder farmers use limited amounts of inputs including seeds and pesticides, with most of 
them using hand hoes and animal traction for tillage. The Mozambican agriculture is similar, with 
less than 4% of farmers using fertilizers or pesticides a t the national level. The use of animal traction 
differs between cotton growers in Tanzania and in Mozambique because there is practically no cattle 
in cotton growing provinces in the latter.  
Both in Tanzania and Mozambique farmers tend to make their farmi ng decisions based on previous 
season 's price and rainfall patterns, as cotton cultivation is rain -fed in Tanzania. Due to fluctuation 
in cotton prices, some farmers in both countries tend to move in and out of cotton cultivation by 
planting competing crop s that sold at higher prices at the end of the previous season, such as green 
peas and sunflower in the case of Tanzania, and  sesame, pigeonpea and soybeans in the case of 
Mozambique . Consequently, the total cotton sown fluctuates yearly with correspondi ng effects on 
the total harvest.  
For 64 years (between agricultural seasons of 1945/46 and 2009/10), the average yield in Tanzania 
remained between 121 and 156 kg/ha of lint. Available data from Mozambique show that yields are 
highly correlated with the qu ality of agricultural season in terms of rainfall total and its distribution 
across the season since access to improved inputs, on average, has not changed significantly 
between 2002 and 2017. In contrary, the global average yield for cotton rose significa ntly from 
210 to 738 kg/ha of lint.  For instance, in countries such as Australia, Brazil, China and the USA, the 
average yields increased three to thirteen times. In Africa, countries such as South Africa, Cameroon 
and Burkina Faso, the average yields inc reased three to ten times.  
Low production and productivity of cotton in Tanzania and Mozambique is due to several factors 
mainly poor -quality seeds (largely recycled), farmers prefer to broadcast seeds during plant instead 
of correct spacing, uninformed i ntercropping with food crops (maize), non-use of inorganic fertilizers 
and limited use of pesticides to control pests due to lack of input credits, among other factors.  
Up to 70% of the raw cotton in Tanzania tend to be exported overseas annually. Because of the 
present downward trend in global prices of cotton due to supply being out of balance with demand 
and the cotton fiber losing its market share on the global fiber market, Tanzania and other commodity 
dependent countries must seek to promote the conve rsion of lint into textiles, garments and apparel 
domestically. Farmers and ginners are likely to benefit even further from cotton farming and ginning 
respectively, provided that the processing of two major by -products of farming and ginning namely 
cottons eeds and cotton stalks respectively into value added products is also seriously taken in 
consideration.  
 
1 http://www.acismoz.com/wp -content/uploads/2017/06/000131.pdf  (visited 14 February  2020).  WT/CFMC/W/88  
 
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  Cotton by -products and its potential for income generation  
The primary goal of cotton production is lint. Several cotton by -products can be derived to increase 
value added in the sector and benefit actors such as farmers, ginners, oil millers and other 
downstream actors. Cotton by -products include cottonseed oil u sed for human consumption and 
soap manufacturing; cottonseed cake for use as animal feed; and waste used for industrial 
application, such as polishing clothes and wipers. In addition, cotton stalk can be used in the 
production of pellets and briquettes for  heating; mushrooms; compost; manure; particle board; pulp, 
paper and corrugated boxes. Crushed cottonseed is processed into crude cottonseed oil which is then 
refined into edible cooking oil. Often, cottonseed oil is used for deep frying, and some margari nes 
and salad dressing, as well as for making products such as soap, emulsifiers, cosmetics, 
pharmaceuticals, rubber, paint, water proofing agents and candles.  
Cottonseed cake is used as a source of protein for livestock, particularly dairy and beef cattle , goats 
and sheep. The cotton cake is not good for non -ruminants as it contains the enzyme gossypol, which 
inhibits absorption of nutrients. However, nowadays technologies for removing the enzyme the 
enzyme gossypol is available. Hulls are another by -produ ct, a valuable feed source for livestock when 
blended with the cake to provide roughage. Short, fine or curly fibers – linters, typically less than 3 
mm long, remain on the cottonseed after the ginning process. These can be processed into various 
by-produc ts such as pulp, bandages, ear buds, cotton balls, pads and cushion material. Cotton linters 
can also be processed into medical grades for absorbent cotton wool. They are also used in to 
manufacture paper, such as securities (bonds, bank notes and debentur es) as well as a raw material 
in the manufacture of cellulose plastics.  
In terms of volume, cotton stalks are the major by -product of the cotton farming process, 
representing potential source of additional income to farmers after the sale of seed cotton. T hey can 
also be processed into particle and hard boards used in housing construction.  
The economic importance of cotton by -products comes from the fact that there is a tendency for lint 
prices and those of by -products namely cottonseed, oil, cake, linters,  husks and waste to move in 
opposite directions. Thus, an understanding of the status of the by -products would help in deciding 
how they can be streamlined in mechanisms used for setting producer prices. For example, 
considering the rising prices for cotto n by-products such as cooking oil that is purchased by farmers, 
the latter have tended to query on whether the producer price for seed cotton is adequately 
accounted for by the value by -products at the time of setting the seed cotton prices.  
According to s everal researchers, focusing on domestic value addition to lint and fuzzy seeds will 
reduce farmers ' exposure to volatile international lint prices. The more the seed cotton prices paid 
to farmers as the result of the value -added activities, the more farme rs are uncoupled from 
international prices. Making full use of cotton by -products will not only bring economic benefits and 
additional income to small cotton producers but would also help to reduce the sector 's adverse 
environmental impacts, such as carbon  dioxide and insect infections and related problems. Although 
cotton products have considerable potential to increase the income of producers in the value chain 
of Tanzania, several challenges have been identified such as the (i) falling volume and quality  of 
seed cotton production; (ii) almost half of the 79 ginners in Tanzania remained inactive due to various 
reasons which include shortage of seed cotton, high processing costs due to low ginning capacity 
utilization and technological obsolescence; (iii) c ompetition from cheaper imported palm oil and other 
edible oils locally produced and (iv) lack of linkages between sectors and likely disincentives to invest 
in the sector.  
Assessment of Each Cotton by -Product  
The first product in the cotton value chain is  the seed cotton that farmers produce. They sell their 
seed cotton to ginners, cooperative unions and private buyers in the market. According to Tanzania 
Cotton Board in 2015, one ton of crushed cottonseed yielded, on average, 16% crude oil (12% after 
cleaning), seed cake 45 – 55%, husks 25% - 27%, linters 8 – 10% and 4% wastes.  
Ginners and oil millers referred as producers of cotton by -products. There are eight cotton by -
products produced in Tanzania including cottonseed, cottonseed cake, linters, husks, e xtra fabric, 
thread, cottonseed oil for cooking and making soap.  WT/CFMC/W/88  
 
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  a) Cottonseeds  
Commercially, cottonseed is vital for its oil and other by -products. The seeds are also sold for planting 
by farmers. Often, cottonseeds belong to ginners and some ginners rese rve some seed to sell to 
farmers for planting in the following season. For those with milling facilities, they process cottonseed 
for oil, and those without mills sell their cottonseed to oil millers. However, the market for cottonseed 
is big, and includes  both domestic and international markets. The strength of cottonseed as a 
by-product in Tanzania is that it has a ready market and the stock can be stored for extended periods 
without spoiling. Moreover, products derived from cottonseed have good market.  
However, when the quality of cottonseed is compromised, its price and durability decline. In addition, 
poor quality seeds yield less oil, and when planted, do not grow well. Therefore, the quality of 
cottonseeds is a crucial issue regarding its market and t he consequent by -product from oil 
production. The survey conducted with farmers in Tanzania concluded that cottonseed lead to several 
by-products which have a good market; promoting its production and quality would boost production 
of its oil and related b y-products.  
Delinting cottonseed gives two products – seed and linters, and therefore improves the quality of 
the seeds. Improved seeds have a big market in Tanzania – for replanting and for production of 
cottonseed oil. Delinted seeds produce more oil dur ing milling than fuzzy seeds; also, the quality of 
the remaining cake improves because when seeds are crushed with linters, some oil remains in the 
cake with the linters – which compromise the quality of the cake – usually used to make livestock 
feed.  
b) Cotton linters  
Linters are the short fibers that remain on the cottonseed after the ginning process. These are 
recovered from fuzzy seeds with de -linting machine at the cottonseed oil mill or at the ginnery before 
processing the cottonseed for oil or black  seeds for planting. Various types of linters would be 
produced, depending on the number of times the cottonseed passes the de -linting machines. Linters 
have a number of uses, including the manufacture of cellulose products like cellulose acetate, viscose 
rayon, carboxymethyl cellulose, microcrystalline cellulose, cellulose nitrate and the preparation of 
specialty -grade paper.  
In Tanzania, the production of cotton linters is minimal due to methods used in oil extraction. The 
use of older expeller pressing m achines is more common than the newer solvent extraction 
technology. Unfortunately, the production of linters is confined to the few oil millers using the solvent 
method. Efforts to delint cottonseeds and promote commercial uses for linters within the loca l and 
regional markets is a prerequisite to attract new investment in value added linter products.  
c) Cottonseed oil  
Cottonseed oil is produced from the kernel of the cottonseed – the inside meat of the seed that 
remains after removing the surrounding hard  outer hull. The cottonseed processing segment only 
uses local seeds to produce oil for both edible and industrial uses, such as soap and margarine. They 
also produce linters in negligible quantities, hulls and cottonseed cake for animal feed. Many of the 
oil millers (expellers) press the seeds physically without removing the husks. Some mills produce 
semi-refined cottonseed oil, while others produce refined cooking oil. Semi -refined oils yield lower 
quality oils, unsuitable for human consumption. There is potential for increasing cottonseed oil 
production if solvent extraction technology is used to fully extract oil from seeds.  
The main local market for cottonseed oil in Tanzania is in the lake zone, where the oil is used for 
roasting fish. Export markets f or cottonseed oil are mainly Switzerland, China and India. Cottonseed 
oil is healthful, retains most of its natural colors, flavors and nutritional qualities. The cost of installing 
and operating improved technologies for extracting cottonseed oil is high.  The main threats of the 
cottonseed oil production sector include decreasing quantity of cotton production, competition from 
other sources of edible oil such as sunflower, palm, coconut, sesame and groundnuts. Lack of skilled 
people to operate factories; h igh competition from imports of cheap and subsidized edible oils, mostly 
palm oil from countries such as Indonesia, Bangladesh and Malaysia. Oil expressers also said that 
their product should be promoted in the market because they are domestically produced , but also WT/CFMC/W/88  
 
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  proposed additional measures to increase the production such as removing VAT on local cottonseed 
oil, controlling imports of edible oil.  
d) Cottonseed cake  
Cottonseed cake is a solid mass residual product obtained after the oil is extracted from cottonseed. 
The local market for cottonseed cake is relatively small compared to available markets in neighboring 
countries such as Kenya, Uganda and Rwanda. The main  buyers of cottonseed cake include livestock 
keepers, private shops and producers of animal feed. Cottonseed cake is not available all over the 
country and its price is high compared to other livestock feeds. The local market is small compared 
to the expor t market, leading to relatively low domestic prices. The main threats facing the 
cottonseed cake sector include dependency on seed cotton production; a narrow domestic market, 
competition from sunflower cake; poor quality; and high perishability if stored for a long time.  
Cottonseed cake is a good animal feed for ruminants but not so for non -ruminants because the cake 
contains the enzyme gossypol, which inhibits absorption of nutrients, as discussed earlier. The 
presence of this enzyme in the cake reduces i ts market for non -ruminants like poultry, fish and 
piggery cannot feed on the cake.  
d) Cotton Husks  
Husks, also known as hulls, are the tough outer shell of the cottonseed. They are removed from the 
cotton kernels before they are taken for oil extraction.  These are sold for livestock feed, charcoal 
making and for burning bricks. With advance technology, the hulls can be incorporated in the mud 
used in oil well drilling and can also be used in the production of synthetic rubber and in petroleum 
refining. Cu rrently oil millers press cottonseed without removing hulls, which as result increases 
production of cottonseed cake feedstock. The current volume of husks produced is insufficient and 
they do not have standards for external markets because the technology used to separate husks 
from the inner part of seeds is not yet common. Although the market for husks is small, there is 
potential for them to be used in charcoal briquettes and fertilizer production.  
e) Cotton Stalks  
Cotton stalks are by -products of seed c otton harvest. They are the leftovers after picking the raw 
seed cotton from the cotton plants on the farm. During preparation of farms for the coming season, 
farmers burn stalks to prevent cotton pests and diseases from passing to the next cotton -growing 
season. The potential supply of cotton stalks is therefore considered, as the other uses such as 
animal feed or fuel are relatively uncommon.  
Promoting the use of cotton stalks to produce briquettes will yield additional income to farmers and 
reduce consumption of charcoal in urban areas. In addition, production of charcoal briquettes is done 
by small and medium size machines, which are availabl e in Tanzania and relatively affordable. This 
is a source of employment and income for youth and other low -income groups.  
Stakeholder Analysis  
The potential stakeholders for cotton by -products in Tanzania include the dairy, poultry and pig 
keeping busines ses. Cotton farmers earn half their incomes from cotton production. They are 
organized under the Tanzania cotton Growers Association. Their major concern relates to increasing 
the profitability of cotton as well as keeping their livestock fed and healthy a ll year around. Ginners 
and oil millers are members of the Tanzania Cotton Association . They buy seed cotton from farmers 
and gin it into lint and seeds, and own cottonseeds from which they extract oil and other by -products. 
Under the present market arrang ement,  they also supply seeds and pesticides to farmers on behalf 
of the Cotton Development Trust Fund.  
The Tanzania Cotton Board licenses legal entities to buy, gin and market cotton. It coordinates 
stakeholders and advises government on cotton developmen t related matters. It monitors buying, 
ginning and export of cotton as well as the quality of seed cotton and lint. Local Government 
Authorities are responsible for provision of agricultural extension services to farmers of all crops 
including cotton. They  collaborate with the Cotton Board during the licensing of cotton buyers. On 
behalf of the central government they oversee the enforcement of all laws and regulations relating WT/CFMC/W/88  
 
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  to rural development as well as whole. Financial Institutions are responsible fo r provision of credit 
needed by ginners and oil millers to run their business.  
The Ministry of Agriculture, Livestock and Fisheries provides policy guidance for the development of 
the agricultural, livestock and fisheries sectors. The Tanzania Food and Dr ug Authority is responsible 
for controlling the quality, safety and effectiveness of food, drugs, herbal drugs, cosmetics and 
medical services imported into Tanzania. The Tanzania Investment Centre is responsible for 
providing relevant information to inves tment promotion and facilitation into Tanzania.  
Analysis of policy environment  
One of the challenges for the development of cotton by -products in Tanzania is competition for 
market share that it gets from cheaper imported palm oil and other edible oils, pa rticularly sunflower 
oil that is produced locally. However, Tanzania does not have a national policy guidance for 
development of edible oil as reflected by the current position on taxes on imported oils that seem to 
favor imports. Linkages between the cott on by -products subsector and the livestock sector tend to 
be very weak partly because trading of cake, hulls and linters is strictly informal. As a result, 
coordination between oil millers, traders, consumers, policy makers and other potential stakeholders  
remains extremely limited.  
In the case of cotton stalks, there is a need to develop a policy to convince farmers to switch from 
their traditional use as firewood to alternative and newer sources of energy. The other challenge is 
to attract investors into new venture involving the manufacturing of particleboards and other 
products. Such investor will need to be assured on whether cotton farmers can be organized to 
produce quality stalks on annual basis to guarantee a profitable business. Trading in by -produ cts is 
currently quite informal. As a result, coordination and regulation within the subsector is problematic 
because officially the major stakeholders are largely unknown.  
Policies can support vertical integration of by -products in the cotton sector in t hree ways. One is for 
the public sector to extend subsidized credit to selected investors, particularly ginners, who are 
willing and have viable business plans for installing and operating an appropriate solvent -based oil 
extraction technology and delintin g machines. The second is to assure and promote domestic 
production of medical products from linters – given the recent appointment of Tanzania as the SADC 
sole procurer of certain medical products including those originating from linters. The third is to 
design a tax -related incentive package for motivating potential investors – this can include free 
importation of the technology plus a few years tax break, as appropriate.  
Annex 4.2  Development of cotton by -products in Uganda  
Overview of the cotton sector  
Cotton remains an important crop in Uganda, ranked as the country 's third largest export crop after 
coffee and tea. It is the main source of income for about 250,000 households, who cultivate cotton 
under rain -fed conditions and with minimal use of inputs such as fertilizers and other chemicals. 
There is also limited funding for research and technology development (new varieties). The sector 
generates export revenue which increased from US$20.8 million to 31.6 million in 2016. It offers 
employment opportuni ties and incomes to families, particularly in rural areas.  
The total area under cotton cultivation in Uganda has fluctuated over the years due to several 
reasons, including weather, price expectations and the provisions of farm inputs. The same pattern 
is observed in Tanzania, Mozambique, and other countries. Efforts by the government to improve 
productivity have yielded some positive results, but the desired yields remain out of reach. Cotton 
yields between 2013 and 2017 varied between 700 and 850 kg/ha of  seed cotton, relatively higher 
than in Mozambique.  The average cropped area of cotton is about 0.5 hectares. .  
The cotton produced in Uganda is mostly exported to Bangladesh, China, Switzerland, United Arab 
Emirates, Singapore, the United Kingdom of Great Britain and Northern Ireland and Hong Kong 
(China).  WT/CFMC/W/88  
 
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  Cotton by -products and potential for income generation  
Lint is typically the product derived from the cotton plant. However, other parts of the plant can be 
used and processed into cotton by -products. Farm level products include cotton stalks, which are 
typically destroyed after harvesting of seed cotton. At ginn ing level lint is produced along with 
cottonseed, which millers process into linters, hulls, cottonseed oil and cake. The latter two are 
further processed into cooking oil and animal feed, respectively. In Uganda, the lint and cottonseed 
value chains are m ore developed with limited with other emphasis on the other cotton by -products.  
It is increasingly understood that cotton by -products can have a significant impact on the economic 
benefits as a crop enterprise.  
Assessment of Each Cotton By - Product  
a) Co ttonseed oil  
Cottonseed oil is used in cooking, bakeries and confectioneries due to its thickness. There is high 
demand for edible oil in Uganda, standing at 120,000 MT against a production capacity of 40,000  MT, 
leaving a deficit of 80,000 annually. The t rends suggest that cottonseed oil has a potential market 
in the country and can contribute to narrowing or eliminating the trade deficit in edible oils. Uganda 's 
high and rising edible oil trade deficits are a strong indicator of unmet demand in domestic m arket, 
representing an opportunity for investment. The demand for cottonseed oil is high partially due to 
limited supply, related to low production volume of seed cotton and thus, cottonseed. Nevertheless, 
cottonseed oil is relatively cheaper than other ed ible oils like sunflower and palm oil.  
b) Cottonseed cake as livestock feed  
Cottonseed cake is used in livestock and aquaculture feeds as major source of crude protein. 
Livestock feeds are principally composed of energy concentrates sourced from products s uch as 
maize and maize bran, rice bran or wheat bran and protein concentrates sourced from fish meal, 
soybean, sunflower cake or cottonseed cake. The annual production of livestock feeds by the 
commercial and small -scale feed millers is estimated at over 8 0,000 MT yet the demand is increasing 
rapidly due to the estimated 3% annual growth of the livestock sector and the decline in forage 
production. There is a need to strategically develop the livestock feeds sector to meet the increasing 
demand.  
c) Surgica l cotton wool  
Although absorbent cotton /surgical may not be classified as cotton by -product, field experience 
shows that is partly a by -product. The domestic market for cotton wool is quite large, the main 
buyers and distributors in Uganda being the Natio nal Medical Stores and Joint Medical Store, which 
must import some cotton wool to meet their annual requirements; the rest is supplied to clinics, 
pharmaceutical shops and beauty parlors. At a cotton wool outturn of 86% and total installed 
capacity of 2,01 0 MT, existing companies can produce all the cotton wool needed in Uganda if barriers 
related to the development of cotton by -products are addressed.  
Uganda is a net importer of cotton wool and related products. Although domestic production is 
growing due to increase in the number of cotton wool processing plants, they are operating below 
their installed capacity of around 33%. The challenge is because cotton is a seasonal crop meaning 
that processors have very short period of approximately four  months to purchase all raw material 
needed for year 's production. The other challenge is related stiff competition from imported cotton 
products. Despite differences in quality, growth of this node of value chain is further hampered by 
tax policies, as im ported cotton wool benefits from duty exemptions.  
d) Hulls or Husks  
They are a by -product of the de -hulling, a necessary procedure before oil extraction. Specifically, 
after removing linters from the fuzzy cottonseed, the hulls are separated from the kerne l by 
screening. According to stock feed manufacturers, hulls are roughage used to add bulk to diets rich 
in protein and energy to reduce digestive upsets in ruminants. Cottonseed hulls are also used as 
substrate for mushroom farming, after which the used s ubstrate can be used to feed livestock. WT/CFMC/W/88  
 
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  Mushrooms are a rich source of protein, minerals and vitamins and they are increasingly being grown 
in urban areas.  
e) Linters  
There are a range of products produced from linters which include: security paper, curre ncy paper, 
and as a raw material in the manufacture of cellulose plastics commonly used for medical supplies 
such as bandages, cotton buds, cotton balls and X -rays. In Uganda there was an experiment by 
installing a handful of delinting machines to perform this function but due to technology limitations, 
the quality remains poor and cannot compete in the export market. Likewise, it is unlikely that there 
are enough volumes of linters to achieve economies of scale, given the low quantities of seed cotton 
produced.  
The top priority of cotton by -products for development in Uganda is cottonseed oil due to high 
demand. The cottonseed cake as livestock is the second priority in Uganda because the demand is 
also increasing rapidly. The third by -product is cotton wo ol and the fourth is particle boards from 
cotton stalks.  
Stakeholders Analysis  
The stakeholders in Uganda are classified in four groups, namely:  
i. Farmers and private sector (cotton farmers; Uganda Ginners and cotton Exporters 
Associations; Uganda Cottonsee d oil Processors Association; Textile Manufacturers, 
Association Uganda; Textile Development Agency; Cotton Wool Manufacturers; and NGO 's, 
CBO's and other community structures);  
ii. Government and UNCTAD/UNECA/COMESA (Ministry of Agriculture, Animal Industry and 
Fisheries; Cotton Development Organization; National Agricultural Research Organization; 
Ministry of Trade, Industry and Cooperatives; Uganda Industrial Research Institute; Ministry 
of Finance, Planning and Economic Development; Uganda Investment Autho rity); higher 
education and public institutions; and local politicians. Farmers and private sectors include.  
iii. General and institutions of higher learning;  
iv. Local politicians.  
Analysis of Policy Environment  
The policy environment guide to opportunities to add value on development of cotton by -products in 
Uganda. Therefore, there is a presidential directive to Uganda Prisons Service to grow cotton on 
prison land, which will increase seed cotton production and thus the availability of raw material for 
developing the cotton by -products value chain. It is recommended to increase both public and private 
investments in the development of cotton by -products to harness their potential. Public investment 
may take the f orm of building required infrastructures, institutional frameworks, research and 
development.  
The government should support the development of the local textile industry to increase the demand 
for seed cotton, which will make available additional raw mater ial for cotton by -products. There is a 
need to design training programs to build the capacity of the technical workforce in their respective 
manufacturing and processing plants to effectively manage the equipment and undertake repairs 
and maintenance work,  through coordination among ginners. Additional recommendations include:  
• To conduct further studies on the feasibility of exploiting the potential cotton by -products to 
be developed;  
• To ensure the availability and affordability of electric power to red uce the unit cos production;  
• To review government taxes that have high chances of increasing the unit cost of production 
at both farm and ginnery level, as well as for other processors and manufacturers.  
 WT/CFMC/W/88  
 
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  Annex 4.3  Development of cotton by -products in Za mbia  
Overview of the Cotton Sector in Zambia  
Cotton is the top cash crop among smallholder farmers in Zambia, grown by 200.000 households 
under out grower schemes. Advancements in this sector provide a means of tackling rural poverty. 
The sector generates export revenues for the government, as well as employment and incomes for 
families, particularly in rural areas. The cotton sector contributes an average of about USD 60 million 
per year to Zambia 's GDP or 0.32% of the total. Cotton production and marketin g are labor intensive. 
These two activities can employ over 10.000 permanent and seasonal employees.  
Zambia seed cotton production has been characterized by low yields. The average yield of seed 
cotton between 1994 and 2017 ranged from 490 kg/ha in 2017 to  as high as 970 kg/ha in 2011, 
with a national average of 850 kg/ha, which is below its potential of more than 2000 kg/ha for most 
of the seed varieties that are available in Zambia. The low yields are due to poor agronomic practices 
and non -use of fertili zers in the seed cotton production system by most farmers.  
Cotton by -products and its potential for income generation  
Cotton is grown mainly for its fiber, which constitutes an estimated 35 -41% of the seed cotton. 
However, cottonseed constitutes 55 -65% of seed cotton, making it the largest by -product, but in 
Zambia the gin out turn (GOT) for lint and cottonseed is 41% and  55%, respectively. Cottonseed 
and waste are the by -products of ginned seed cotton. Value added products from cottonseed may 
include cottonseed oil, cottonseed cake, cottonseed hulls and linters. Cotton stalks are another by -
product of the cotton plant tha t can be processed into fuel, paper or particle boards products.  
There are many opportunities to develop the cotton -by product value chain in Zambia. These include 
a large ginning and crushing capacity, a vibrant livestock sector, especially for large rum inants; and 
the government is prioritizing cotton and textiles as key sectors for job creation and economic 
diversification. The potential for the development of cotton by -products value chain is therefore high. 
However, the cotton by -products value chain has not realized its full potential and further investment 
and policy support is needed to tackle the various challenges.  
Assessment of Each Cotton By -Product  
a) Cotton Stalks  
They are rich in cellulose and its fiber composition is comparable to hardwood s pecies, making cotton 
stalks a potential input to many wood -based industries. Likewise, cotton stalks are the only by -
products that are utilized, and value added at farm level. Four key by -products can be derived from 
the cotton stalks: briquettes or pelle ts, particle boards, pulp and paper. However, little value is added 
to cotton stalks in Zambia. The destruction of cotton stalks is required by law in Zambia, in order to 
prevent breeding of pests and diseases that may have a negative impact on the cotton sector. If 
farmers do not comply with this regulation, they are liable and can be fined or imprisoned.  
Representatives of cotton companies are aware of by -products that can be obtained from cotton 
stalks, particularly particle boards, pellets or briquettes . There is a high potential for utilizing cotton 
stalks in Zambia. About 3 MT of cotton stalks can be produced per hectare. At a four -year average 
of 105.000 ha under seed cotton, this represents approximately 305.000 MT of cotton stalks that 
can be utiliz ed. If this value chain is developed and farmers are engaged in supplying cotton stalks, 
and if we assume that a tones of cotton stalk would cost about USD 10, it may mean that about USD 
3 million would be expected as additional revenue for smallholder far mers.  
b) Cottonseed  
Cottonseed are separated from lint in the ginning process and constitutes about 50% of the weight 
of seed cotton. All the ginning companies produce cottonseed through the ginning process, where 
seed cotton is separated into lint and cot tonseed. Due to the way the marketing of seed cotton is 
managed in Zambia, almost all the cottonseed is owned by the ginning companies because, after 
buying and ginning seed cotton, the ginning company owns both lint and cottonseed. Most of the 
cottonseed produced in Zambia is consumed locally. About 85% of cottonseed is retained for local WT/CFMC/W/88  
 
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  use while about 15% is exported to neighboring countries such as Namibia, Botswana and South 
Africa. For cottonseed that is retained for local use, 90% of cottonseed is c hanneled toward 
commercial oil and cake production and about 10% if retained for replanting as cotton seed.  
Only two ginning companies (Parogate and China Africa Cotton) with a total crushing capacity of 
17,000 MT per year process cottonseed into oil and c ake. The main reason why other ginning 
companies have not engaged in cottonseed crushing is the excessive competition experienced in the 
oil sector. According to the Cottonseed oil crushers and ginning companies, cottonseed can be 
processed into various by -products with commercial and nutritional value. And these may include: 
cake, edible oil, margarine, soap, linters, hulls and waste which is further refined into cosmetics and 
soap. But the by -products that are being produced from cottonseed in Zambia are only cottonseed 
oil and cake.  
c) Cottonseed cake  
Cottonseed cake is the main product and constitutes 45% weight of the cottonseed. This is another 
by-product that is well -developed in Zambia. Cottonseed cake is produced by all the cottonseed 
crushing compa nies. The cottonseed cake produced is rich in protein and is used as an ingredient in 
the production of animal feed for ruminant animals, especially lactating cows. The cottonseed cake 
is sold to the stock feed industry and commercial farmers in the local and export markets for use in 
making feed for ruminants. The main limiting factor in the utilization of cottonseed cake for non -
ruminants is the presence of gossypol in the cake. Because of this limiting factor, cottonseed is not 
used in the production of feed for poultry and other non -ruminants such as pigs and goats. The 
source of protein for stock feed of non -ruminants is soybean or sunflower cake.  
d) Cottonseed hulls  
The cottonseed hulls are used in making stock feed for ruminant animals where they are  blended 
with the cottonseed cake to make roughage. According to oil crushers, the cottonseed hull constitutes 
23% of the cottonseed weight and is therefore second from cake in terms of quantity of by -products 
extracted from cottonseed.  
This cotton by -product is produced in Zambia by one company only, Mount Meru. Official data show 
that after processing of cottonseed, the local market for cottonseed hulls/cake consumes \about 
24% of the resulting cake and hulls. The major buyers of cottonseed cake and hulls  are commercial 
and medium -scale farms, as well as stock feed companies. The majority of the cottonseed hulls/cake 
is exported to South Africa, Namibia and Botswana due to vibrant livestock sectors in those countries, 
particularly cattle. The value of cott on exported was over USD 10 million in 2016.  
e) Cottonseed oil  
Cottonseed oil is another by -product from cottonseed and accounts for 13 -16% of cottonseed 's 
weight. Considering 48,523 MT of as quantity of cottonseed and an oil extraction rate of 15%, Zambi a 
can potentially produce 7,300 MT of cottonseed crude oil. According to processors, two methods of 
extracting oil are used: solvent extraction and mechanical oil expelling. The big companies use the 
solvent extraction method, which yield about 16% of crud e oil from cottonseed. The medium and 
small companies use mechanical oil expelling machines, which yields about 13% of crude oil. Crude 
oil is further refined into edible oil, and the waste from this process could be used to make soap, 
margarine, and biodi esel. However, margarines, soaps and biodiesel are not produced from 
cottonseed oils but other oils such as palm oils and soybeans because the quantities of seed cotton 
are inadequate to guarantee a sustained supply.  
The total oilseed crushing capacity in Zambia is over 500.000 Mt, while the refining capacity stands 
at 250.000 MT, more than twice the national annual demand. Therefore, the excess crushing capacity 
represents an opportunity for the sector to grow, while excess refined capacity represents an 
opportunity to export refined edible oils. The market for refined edible oil, including cottonseed, is 
mainly the local market and all ginning companies in Zambia and other oil crushers and refinery 
companies sell most of the oil in the local market. Nevert heless, they face stiff competition from 
cheap imports of palm and other oils. Therefore, the sector has potential to promote the production 
of local oilseeds (cottonseed) included to bridge the gap which is widening between imports and 
exports.  WT/CFMC/W/88  
 
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  f) Cotton linters  
In Zambia, only three out of eight ginning companies delint the fuzzy cotton seed to get delinted 
cottonseed and linters. In addition to ginners, oil crushers can also delint the fuzzy cottonseed to get 
linters. The linters represent 6% of t he total weight of fuzzy cottonseed.  
All companies that delint fuzzy cottonseed sell over 90% of the linters to the export market and the 
remainder is sold locally. The export market for linter in 2016 was mainly South Africa, Switzerland 
and to a lesser e xtent China. The export linters increased by 40% from USD 1.9 million to USD 4.3 
million between 2015 and 2016. The local market are the furniture manufacturers, who use them in 
filling the sofa cushions and other carpentry products. The other high -value u ses of linters include: 
paper currency, gun powders, x -ray tape packing materials, food casing for sausages, medical grade 
cotton, paints and mattress comforters upholstery. The low use of linters in Zambia may be attributed 
to lack of knowledge and techno logy and low quantity of linters that can be produced from 
cottonseed. With 6% of extraction rate and current four years average of 55,000 MT of cottonseed, 
Zambia can only produce about 3,300 MT of linters annually.  
Stakeholders Analysis  
Apart from farmer s and ginning companies, oil crushers, stock feed producers, there are associations 
and other institutions that support the production of seed cotton. These stakeholders include the 
Cotton Board of Zambia which regulates the production and marketing of see d cotton trhough the 
Cotton Act. Cotton Development Trust spearheads the development of parent cotton varieties and 
cotton extension guidelines for cotton production. The Zambia Cotton Ginners represent the interest 
of the ginners in the sector, including in interactions with the Government, where nine are active in 
the Country. The cotton Association of Zambia represents the interest of cotton farmers.  
Analysis of Policy Environment  
The industrialization strategy paper, the commercial and industry and tra de policy and the 7th 
National Development Plan are examples of policies that can spur the development of the cotton by -
products in Zambia. However, the local cotton by -products sector needs policy instruments that are 
aimed at making the sector more compe titive despite the importation of cheap by -products. Tax 
exemption, especially VAT exemption on cottonseed may help the development of the cotton by -
products sector and make it more competitive against the competing imported products. Market 
incentives are  lacking. For instance, the price of seed cotton is volatile and, transmitted to farmers, 
causes them to vary their acreage under cotton or some cases just switch to competing crops such 
as soybean. The government, in collaboration with ginners need to est ablish a cotton price 
stabilization fund to ensure farmers receive an economical price for their cotton and avoid them 
incurring losses. This may revamp production of cotton and hence support sustainable production of 
the crop.  
Government facilitation is k ey in the development of cotton by -products. There is a need to advocate 
and stimulate demand for local products, through a requirement to buy local products (cottonseed 
oil or cake, before allowing imports). Government and stakeholders also need to suppor t the 
development of cooperatives as a model of engaging farmers in input, extension service and market 
provision. On the other hand, it is recommended training of the farmers in most appropriate cotton 
production practices to improve the productivity and production of cotton. The ginning industry need 
to invest in cotton extension services as they are a key beneficiary of the cotton industry. This could 
be achieved through the recruitment of qualified extension workers specially focusing on cotton 
agronomy  as well as pest and disease management.  
Development and effecting tax incentives for cotton production inputs (pesticides, foliar fertilizers, 
equipment  and other inputs) would also play a critical role in lowering the cost of cotton production 
and attract more investment by the ginning industry into the sector. Therefore, it is recommended 
that tax incentives should not only focus on outputs but also on cotton production inputs. 
Development of varieties that are resilient to climate change and have high oil content should be a 
high priority for breeders in the cotton sector, as this directly impacts on the development of the 
cotton by -products. The oil co ntent for the current varieties is low, thereby undermining the 
profitability of the fuzzy cottonseed business.  
__________