Cotton Conference Highlights Importance of Quality

As the exclusive licensee for Fibermax and Stoneville cotton in the finished garment business, Olah Inc. is fortunate to work with Bayer CropScience in promoting these varieties  to the textile and fashion industries around the world. In fact, thanks to this promotion, we have had the opportunity to interact with dozens of branded apparel and retailing firms regarding the importance of using quality cotton in their products. With the recent volatility in cotton prices over the past year or so, the balance between price and quality has become ever more important to downstream customers.

To help address the issues affecting the cotton market and how those issues impact the fashion industry, in New York City recently, as part of the Kingpins denim show, Olah Inc. hosted a cotton seminar that was attended by more than 100 major apparel companies. The topics of the seminar, which was held in a round-table format, ranged from the health of the current domestic and international cotton crop and how prices will be impacted as that cotton goes to market; when apparel brands can expect to see their fabric costs dip to reflect the current drop in the price of raw cotton; new and emerging technologies that are helping farmers grow healthier, better-quality cotton; and what role organic cotton has in the fashion industry and it's effect on the larger cotton-growing community.

A New Myth of Sisyphus? The Highs and Lows of the Global Price of Cotton

Sisyphus. The French Algerian writer Albert Camus popularized the fate of Sisyphus in his famous essay, "The Myth of Sisyphus." According to Greek mythology, Sisyphus was condemned to forever push a rock up a hill only to have it roll back down time and again. The poor guy was locked in this perpetual struggle -- a metaphor for the absurdity of life, said Camus.

So what can we learn from the plight of Sisyphus? In its simplest meaning, whatever goes up must come down. In today's terms, that can easily apply to markets. Talk about absurdity -- take a look at cotton prices. Going up and down like Sisyphus's rock. After months of soaring prices, it appears that cotton prices may be easing. But the big question is for how long?

An Invisible Hand

As I am waxing philosophical, there's an essential theory in economics that I'd like to mention as I feel it's particularly relevant as a tie in for cotton's Sisyphean behavior over the last year or so -- namely, Adam Smith's "invisible hand" of the market.

The "invisible hand" is an analogy for market forces. As we know so well in the cotton and textile business, we all welcome lower raw material costs, but it's hard to ignore higher costs no matter what we do. When cotton prices rise, sooner or later those higher costs will translate into higher prices for textiles and eventually higher prices for made-up products such as clothing and home furnishings.

Then again, I think the textile supply chain often fights the invisible hand of the market -- with a futility of Sisyphus -- by trying to absorb as much of the higher cotton costs as possible before passing increases on to customers. This is especially true during recessionary times. Yet despite the best efforts to do otherwise, eventually price increases, due to higher raw material costs, have to be passed on to customers. Maybe it's futile to fight higher prices, but that's the point; confronted by such adversity -- and uncertainty -- companies persevere. And it's that perseverance which keeps some companies in business and forces others out.

On The Stump: Talking High Cotton Prices

Over the past few weeks, I've been fortunate to participate in several public events to discuss the recent run up in cotton prices, what it means for clothing companies, and what the prospects are for prices in the future.

Most recently, I was delighted to speak at a webinar hosted by Seattle-based Sanmar, a leading supplier of wholesale apparel. The webinar was entitled "From Cotton To Textiles: Production, Consumption & Future Implications."  A copy of the webinar is available from Sanmar HERE (it's about an hour long) where you can view the slide presentation I used for the talk and download a copy of a white paper I prepared providing additional details on where I see the market going.

About two weeks ago, I was honored to give a presentation at the USDA Annual Outlook Forum in Washington, DC.  I gave a presentation entitled "The Impact of Record Cotton Prices On Consumption" as part of the Cotton Outlook Session. Additionally, as part of the Cotton Session, and available for download,  there's a terrific cotton market overview written by leading USDA analysts James Johnson, James Kiawu, Stephen MacDonald, Leslie Meyer, Eugene Rosera, and Carol Skelly. I also recommend downloading cotton presentations made by James Johnson (USDA), Herman Kohlmeyer (Michael J. Nugent and Co.) and Kater Hake (Cotton Inc.). In addition to the cotton presentations, the main Outlook Conference website provides copies of speeches made on a variety of agricultural topics by a wide range of speakers including former US President Bill Clinton and current Secretary of Agriculture Tom Vilsack.

Finally, I wanted to share a seminar that Olah Inc held in New York last month at the Kingpins Show entitled "The Cotton Conference." I was fortunate to participate in a dialogue with some really terrific analysts and industry leaders to discuss the situation in cotton and the implication of high cotton prices for clothing companies. About 100 brands and retailers attended the seminar. We recorded two hours of video from the seminar, which is divided into sections by each speaker's individual presentation: Jack Matthews (Plains Cotton Cooperative), David Collins (Cotton Council International), Jeff Silverman (Fashion Institute of Technology), O.A. Cleveland (Mississippi State University) and Bob Antoshak (Olah Inc.)

Should anyone wish to discuss these presentations in more detail, I welcome you to email me at Rantoshak@olah.com.