Tuesday, April 21, 2015

How Organic Cotton Caught The Measles

There are times when I have to question some people's sensibilities. We've all heard about the recent measles outbreak in the United States. The debate over vaccinations and the vulnerabilities of the general public due to a relatively small portion of the population refusing to inoculate their children out of fear strikes an odd tone about our society, if not human nature. For some, gossipy, second-hand pseudo-facts about vaccinations -- based in the false, discredited, and retracted finding of some old medical study -- live on as established truth. Blame it on the Internet, or blame it on TV, for some people the threat of vaccinations is real. It reminds me of the resistance of some people to acknowledge global warming or the proclaimed wickedness of genetically modified crops.

Fear, however, is irrational. In many cases, skepticism may be prudent, but ignoring facts can be dangerous. In its worst form, fear may be equated to anti-science, and a closed mindedness, that perpetuates myths with results far worse than fears originally suggest. For a long time, I've heard explanations from some advocates that organic cotton is the only way to be sure the cotton consumed in apparel is grown cleanly and sustainably. That's untrue. The majority of conventional cotton grown today follows sustainable growing practices. There is vehemence on the part of some organic cotton supporters in their beliefs, a doubtlessness of their convictions. I don't fault them for their beliefs, but I do question their willingness to look at the data.

Let me clearly state that I am all in favor of sustainable production. We have to do more as an industry to protect our natural resources. For me, though, organic production does not hold the only answer. Even in a good year, organic cotton makes up less than two percent of the global production. Organic cotton yields are low. It takes a lot of effort to grow organic cotton, let alone conventional cotton. For a farmer's effort, forms of cotton other than organic can often provide a far better return in terms of volumes and quality. Despite rhetoric to the contrary, economic returns for organic farmers can be particularly small and the volumes produced could never meet the broader needs of the global textile supply chain. This, in turn, begs the question: if organic cotton can never meet the demand of the global textile industry can organic cotton ever be truly sustainable? Furthermore, does organic cotton have the means by which to balance both environmental and economic sustainability?

A Possible Future for the Global Textile Industry in 2025

Recently, I was invited by the AgMarketNetwork to participate in their monthly conference call on cotton. For those of you not familiar, the AgMarketNetwork is an online media service that covers the global market for cotton. It is owned and operated by Mr. Pat McClatchy, cotton trader and futures expert based in Memphis, TN. The service provides weekly and monthly podcasts of the observations and opinions of some of the top analysts in the cotton industry today.

The topic of my talk was "A Possible Future for the Global Textile Industry in 2025." I spoke as part of an esteemed panel of cotton experts including Mr. H.W. "Kipp" Butts (Informa Economics), Dr. John Robinson (Texas A&M University), Dr. O.A. Cleveland (Mississippi State University), and Mr. Jarral Neeper (Calcot). My talk focused on ten factors that will affect the global textile industry over the next ten years, including:

1. The Environment
2. Supply Chain Distribution
3. Communications
4. Conflicts
5. Hemispheric Sourcing
6. Technological Innovation
7. Demographics
8. The Limits of Globalization
9. Growing Economic Inequality
10. Energy Resources

To listen to the free podcast (about 40 minutes in length), please click here: April 2015 Monthly Cotton Market Update

Thursday, March 19, 2015

The State of the U.S. Textile Industry

During the most recent State of the Union address, President Obama claimed credit for an apparent turnaround in the American economy. Although not perfect by any means, the economy does seem to be improving. Indeed, unemployment is down, corporate profits are strong, and many people feel better about their prospects. Various industries are doing quite well. However, what he failed to note was the quiet revolution taking place in the domestic textile industry, which is a shame as the industry has become quite a success story.

You may remember the big, bad American textile industry the heavy-handed, anti-trade industry that tried three times to restrict imports via legislation, which fought to maintain quotas via the Multifiber Arrangement, and that struggled to reverse globalization of the textile and apparel business. It was a very large employer and a substantial contributor to the American economy. But it was also an industry whetted to arcane methods of production and management. For sure, the industry had its time, but that time passed quickly as new technology, sophisticated sourcing, and trade liberalization took hold in the 1980s. By the end of the 1990s, the industry was decimated by nimble, cost-effective suppliers in Asia and elsewhere. For many domestic mills, these were the dark days: employment plummeted and companies seemingly went out of business every day while vast swaths of the trade moved offshore. It was grim. 

What a contrast compared to the industry of today, an industry that is anything but a basket case. Certainly the business has changed, but for those portions of the industry that found ways of adapting to that change remain in business and enjoy renewed prosperity. It is a smaller industry, but a far more nimble and productive. Instead of pushing trade restrictive policies of the past, the new industry promotes trade within the framework of creative, government-supported initiatives such as the Central American Free Trade Agreement (CAFTA). As a result, investment has increased in the domestic industry; new mills are built, while existing capacity has been modernized. Concurrently, new management has embraced trade as a positive and has positioned domestic producers to take full advantage of opportunities. Todays industry is export-oriented, with strategies in place to profit from globalized production platforms and new technologies.