Insight: Opportunities to diversify for Australia’s 2021 cotton exports

18 May 2021


  • Australian Economy

Australia’s cotton harvest is forecast to reach 2.4 million bales in 2020–21, according to March Quarter 2021 analysis by the Australian Department of Agriculture, Water and the Environment. This marks a significant recovery from the yields seen in 2019–20 that resulted from prolonged drought.

High yields mean Australian cotton exports are likely to increase. Although recent trade has been dominated by China, growers and exporters may want to explore alternative markets. This insight will examine 5 potential markets:

  • Vietnam and Bangladesh, which are increasing their shares of global apparel production in Asia
  • Turkey, which is driving apparel growth in emerging Europe
  • Egypt, which is driving growth in the Middle-East region
  • Indonesia, where Australia is well-placed to displace US imports.

Australia’s principal cotton export markets

Vietnam, Bangladesh and Turkey are the world’s largest markets for unprocessed cotton outside of China. The Vietnamese cotton market is both huge and fast-growing.

India is the world’s largest producer of cotton fabric. However the government’s pursuit of self-sufficiency policies mean Indian textile factories are less reliant on raw cotton imports than other textile markets.

Indonesia, Malaysia and Pakistan offer appealing cotton markets for Australia, because the demand for cotton in each country is growing. Egypt could also present opportunities, although current supply routes for Australian cotton are limited. 

China’s recent history as an export market

China has eclipsed all of these markets as Australia’s top cotton-export destination since 2010. But India, Bangladesh and Vietnam have all proven receptive markets for Australian exports within the last six years (See Figure 1).

Although manufacturing in Bangladesh was hard hit in the early phases of the pandemic, it has since recovered. Manufacturing confidence in both Bangladesh and Vietnam is currently high.

Source: Trade Maps (2021) International Trade Centre, accessed April 2021; Austrade Economics


Vietnam was one of the few economies that experienced growth during 2020. Its textile and apparel industries have been less affected by the pandemic than the textile industries other countries.

In normal years, the country offers the second largest cotton-import opportunity after China in terms of quantity of raw cotton imported. It also experienced an 11% compound annual growth rate in cotton imports from 2014–2019.

Vietnam was Australia’s second largest export partner for raw cotton after China in 2020. This means Australia is well-positioned to increase import share in Vietnam.


The garment and textile industry in Bangladesh is huge. Currently it accounts for around 80% of the total value of national exports. Bangladesh is a major global clothing producer, especially ready-made garments for retail in Europe and the US.

This textile industry makes Bangladesh the world’s third largest market for raw cotton imports, after China and Vietnam.

Bangladesh’s textile working practices came under global criticism following two major factory disasters in 2012 and 2013. However, this prompted the industry to invest in factory upgrades and led to improvements in safety regulation.

The country’s textile industry was severely impacted by

COVID-19. The recovery was largely complete by April 2021, but further COVID-19 spikes will likely impact production and trade.

Source: Trade Maps (2019) International Trade Centre, accessed April 2021; Austrade Economics


Turkey’s textile and apparel industry is the largest textile exporter in emerging Europe. It offers close proximity to consumer markets in the EU in comparison to alternative Asian markets.

Turkey is one of Australia’s less-prominent trading partners, but cotton forms a major part of Australia’s exports. Australian raw cotton exports to Turkey increased by US$3.1 million (162%) in 2020.

Australia’s share in Turkey’s agricultural imports is at historically low levels. However Australia’s global agribusiness credentials give Australian exporters significant opportunities to grow cotton exports.


Egypt’s textile and apparel industry benefits from relatively low wages and a large labour force. It should also benefit from planned improvements to transport infrastructure and the business environment.

The country offers an advantage for textile production over Asian markets for textile companies that prioritise shorter lead times for manufacturing.

Egypt is highly dependent on cotton imports, however ongoing political unrest poses long-term risks to trade.


By volume, Indonesia was the world’s fifth largest importer of cotton in 2019, after Turkey, Bangladesh, Vietnam and China. In 2020, Indonesia was Australia’s third largest export destination for raw cotton after China and Vietnam.

The United States is currently Indonesia’s largest supplier of raw cotton imports. However, Australia was the largest source of imports before drought impacted cotton yields. 

Australia may be able to compete effectively with US suppliers in the next two years, given increased yields from the 2020–21 harvest and the projected 2021–2022 harvest. Australia’s proximity to Indonesia and our long-standing bilateral relationship should also help.

More information for exporters

Overall these markets have been identified as offering opportunities for increased exports for Australian producers. However, individualised assessments on the viability of entering or expanding in these markets should also be undertaken.

Austrade is working to provide tailored services based on individual business needs to support producers under the broader Agribusiness Expansion Initiative (ABEI). This program includes an additional 20 staff in Australia to support agribusiness exporters.

For more information, please contact:

View more information on exporting at Austrade’s online guide to exporting.