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How to Start Cotton Export from Nigeria
Nigeria is the world’s 3rd largest exporter of cotton. The
industry employs about 2.5 million people and also provides jobs
for many others in the value chain due to its massive size.
Cotton exports represent about 8% of Nigeria’s GDP.
The Nigerian government has created several policies to foster
growth of the cotton industry, but it still faces many
challenges. Here are some ways to export raw cotton from Nigeria
more effectively.
The first step is to determine how much cotton you’re trying to
export. You’ll need to find out how much raw cotton you have on
hand that you want to export. You can do this by weighing your
bales of raw cotton, counting them, or by estimating the weight
of them.
International buyers all over the world are always looking to
purchase Cotton Lint from Nigeria because of its quality,
abundance, and price. They come into the country on a regular
basis for meetings with commodity trading companies and farmers
to see how they can establish long-term relationships with them
to guarantee a steady supply of the commodity every month for at
least one year. Depending on what they agree, they decide which
supplier or suppliers to go with, issue an ICPO (Irrevocable
Corporate Purchase Order), sign a contract, and start
transacting.
The large demand for this agricultural product in Nigeria by
international buyers makes venturing into the export of Cotton
Lint from Nigeria to several countries around the world a
lucrative export business to start up.
The second step is to
Research the current market price for cotton in your area. You
can do this by checking the price for cotton on Reuters or
Bloomberg, or by researching prices on Nigerian or international
commodity markets online.
The third step is to calculate how much money it will cost to
ship your shipment of cotton. You can ask a shipping company
what it would cost to transport your shipment of cotton, or you
can estimate an estimate based on the weight of your shipment
and the distance it
Find The Direct Farms and Sources For Exports: Although this can
be done before, during, or after your company has been
registered with the appropriate bodies, the next step is to
source for the direct farms that would be growing the Cotton
Lint for you on behalf of your clients. It’s usually better you
get direct access to the farmers, so you can get the best
possible price. Going through a proxy would waste more time,
cost more money, and reduce your profit margins.
Setup A Proper Business Structure, Trade Process, & Branding:
During or after registering and securing your buyers, it is
important you set up a proper business structure that looks
internationally reputable. Some ways to do this are to build an
international standard website, get a business address, create a
company profile, and also have a corporate offer format you can
customize and send to buyers who request an offer. Also set up a
corporate email that reads something like this:
“yourname@yourcompanywebsite.com”. If renting an office is too
expensive, you could pay for a virtual office at a co-working
hub and use their address for meetings.
When you organise your company this way, buyers would feel
really confident about doing business with you and would tend to
choose your business as their preferred partner.
The shipment could be done on either Free On Board (FOB) or
Cost, Insurance and Freight (CIF) basis. Where FOB means you
cover the cost of the goods and every other thing till its
arrival at the shipping point, and CIF means that you cover the
cost of everything including insurance and transporting the
goods to the buyer’s port of destination.
Nigeria's cotton industry plays a vital role in the country's
economy, contributing to employment generation, foreign exchange
earnings, and poverty alleviation. Cotton, a soft, fluffy fiber
that grows in a boll around the seeds of the cotton plant, has
been cultivated and traded in Nigeria for centuries. The
industry has experienced significant growth and transformation
over the years.
Cotton production in Nigeria is concentrated in the northern
region, particularly in states such as Kano, Kaduna, Zamfara,
and Katsina. These areas provide favorable agro-climatic
conditions for cotton cultivation, including a long growing
season, adequate rainfall, and fertile soils.
The cotton industry has become an important source of income for
smallholder farmers, who make up a significant portion of the
industry's workforce. Cotton farming provides employment
opportunities and income for rural communities, contributing to
poverty reduction and rural development.
Branding and product differentiation: Developing a strong brand
identity and highlighting unique selling points, such as the
quality and sustainability of Nigerian cotton, can differentiate
it from competitors.
Trade shows and exhibitions: Participating in international
trade shows and exhibitions provides a platform to showcase
Nigerian cotton and network with potential buyers.
Online presence: Establishing a professional website and
utilizing social media platforms allow exporters to reach a
wider audience, promote their products, and engage with
customers and stakeholders.
Collaborations and partnerships: Building strategic alliances
with textile manufacturers, traders, and other stakeholders in
the cotton value chain can facilitate market access and expand
distribution networks.
An Important Point: Trying to buy Cotton Lint from Nigeria
through genuine sellers can lead to a lot of wasted time and
efforts on the part of the Cotton Lint buyers. They spend a lot
of time vetting sellers in Nigeria, doubting their results even
if positive, and going back and forth too many times than they
can count, only to end up either cancelling their decision to
buy or making a purchase after months or years have passed.
Cotton Lint is majorly grown in the in the Savannah belts of the
country which is the Northern & South Western Nigeria such as
Kano, Kaduna, Oyo, Ondo, Kwara, Katsina, Jigawa, Ogun, Kebbi,
Sokoto & Zamfara state.
Growing Cotton Lint can create a great source of employment.
Cotton is white in colour
The profit margins on the sale of Cotton Lint to international
buyers can be anywhere from 15% to 110% depending on if you’re
the farmer or are purchasing from the farms.
Cotton Lint Brokerage:When you have zero cash to start up any
type of business, the first thing you should do is to venture
into the brokerage of that business’ products, and in this case,
Cotton Lint. You could venture into the Cotton Lint brokerage
business by linking a buyer to a seller, and in the process, add
a markup price per metric tonne for your organisation, after
getting the final selling price from the seller.
But to ensure you have a successful brokerage business, it is
important you legally protect your commissions. Any seller who
claims to give you something without a contract backing it is
bullshitting you. If they get arrogant and tell you to wait to
get it without a contract, simply walk away and find another
seller.
98% of all sellers are not trustworthy without a contract in
hand or a bank indemnity to pay you your commissions.
The Cotton Lint export business is a lucrative one for anyone
who chooses to venture into the export of agricultural products
from Nigeria. Depending on the quantity the buyer needs, your
profit margins could be far higher or lower, but still
substantial.
Starting an agricultural export business in Nigeria with an
initial focus on Cotton Lint is a way to not just only get into
the industry, but a great start to building a long-term business
that could someday employ thousands of people directly and
indirectly. Get our Practical Guide on Cotton Exportation in Nigeria. We will provide a comprehensive understanding of Cotton export from Nigeria and insights into the various aspects of the industry.
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