Egypt's economic ministers approve raising the subsidy for spinning companies (Private and state-run) to purchase abundant Egyptian cotton to become LE350 per quintal instead of LE200 ahead of harvest season in September, announced the ministry of, industry, trade and Small and Medium Enterprises (SMEs) in a statement on Tuesday.

The move is meant to encourage domestic industries to purchase Egyptian cotton as well as support local farmers.

Spinning companies can now buy cotton for LE920 per quintal rather than LE1,070 per quintal under the original subsidy.

Egyptian cotton traders and exporters buy cotton from farmers at LE1,670 per quintal on average, offering it to the spinning companies at LE1,270 per quintal.

Abundant cotton for the financial year 2013/2014 is estimated around one million quintals.

Contracting with domestic spinning companies will take place before August 10th. The remaining cotton which is not purchased by then will be sold to exporters at the original subsidy of LE200 per quintal.

The government, which historically considers Egyptian cotton a strategic commodity, plans to develop weaving, textile and clothes industry with the aim of raising its competitiveness in international markets, according to the statement.

Earlier this year, cotton exports were hit by domestic price hikes following a decline in local production brought about by reduced farm acreage and the lifting of an import ban.

Total exports in the 2012/13 season, which runs from September to August, were worth $215 million, accounting for 22.3 percent of local production, which stood at 300,000 tonnes.