GREEK COTTON PRODUCTION INFORMATION

The cotton ginning sector primarily developed during the 1980s and is one of the most important sectors of the Greek economy. Primary production is subject to an aid regime, a particularly significant fact for agricultural income. Moreover, the export orientation of the sector has resulted in an improvement in the country's balance of trade. Greece holds first place in cotton production within the European Union and is one of the major cotton exporting countries at global level.

Demand for ginned cotton is significantly affected by its quality, which depends on the characteristics of the raw material. The quality of unginned (seed) cotton is affected by climate conditions prevailing during the production season , the method of collection, transport and storage and the processing method. The price is also a significant factor in determining demand. Ginned cotton is one of the main commodities and its price is negotiated on the New York Stock Exchange.

The main customers of cotton ginning plants are thread - yarn manufacturing enterprises, which use ginned cotton as a raw material. Consequently, demand for products in the sector depends on the performance of the yarn industry, and in particular on demand for cotton threads and fabrics. According to the ICAP sectoral study for yarn, cotton threads account for approximately 78% of domestic yarn production, with the trend being upward.

The number of enterprises involved in cotton ginning differs each year, depending on prevailing conditions in the market. The number of enterprises which received subsidies for cotton ginning for the 2002 - 2003 period stood at 57, including certain unions of agricultural cooperatives.

Cotton ginning plants are located close to their suppliers, due to the sensitive nature of raw material and cost of transport. Most cotton ginning plants are concentrated in Macedonia (34,6%), Thessaly (29,6%) and in Mainland Greece (25,9%).

The supply of ginned cotton is fragmented, since even the largest enterprises cover only a small part of domestic production. Most production units are involved in intense export activity, selling their products to foreign markets. Some of the largest enterprises belong to Greek textile groups, undertaking to supply them with raw materials or even have vertically integrated production activity themselves.

The price of unginned cotton, which significantly affects the level of production costs, in conjunction with the sale price of ginned cotton, determines enterprise profitability.

The 2000 -2001 period was a characteristic example, during which the unfavorable ratio between the purchase price of the raw material and the sale price of the end product resulted in most enterprises in the sector presenting negative results and preferring to stock their products rather than sell them on the market.

Over the period 1980 - 1999 there was an annual average rate of increase of 7.2% in production of unginned and ginned cotton, while from 2000 - 2002 there was a downward trend (a reduction of 4.4% per year) with production standing at 1,156,000 tons (unginned cotton) and 381,500 tons (ginned cotton) respectively in 2002.

Thessaly accounts for 40% of uniginned cotton in 2001, Macedonia for 31% and Mainland Greece 17.2%.

Domestic ostensible consumption of ginned cotton fluctuates significantly from year - to - year-due to the inventories kept by companies when prices prevailing on international market are not financially advantageous and to the variation in the quantity of exports. The largest part of cotton exports are destined for Turkey, which in 2002 absorbed 48.5% of the total quantity of cotton exported.

In 2002 domestic ostensible consumption stood at 159,672 tons compared to 80,270 tons in the previous year. Domestic real consumption has not shown any significant changes and has ranged between 125,000 - 135,000 tons over the period 1993 - 2000.

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