Apparel Companies Ask: What Will be The Future of Quality Cotton?

Thursday, February 25, 2010

Is the cotton industry standing in tall cotton? With recent prices soaring to levels not seen in more than two years, it would appear so. But despite all the market talk about cotton’s recent price run, there’s more to the story: The cotton business is changing because the types of products it produces is changing.

After years of successful promotion and increasing market share, the highest quality cotton acreage is on the decline around the world. In China, for example, a major shift is underway from extra long staple (ELS) cotton to long staple (LS) cotton /1/. China is not alone, as ELS production in Egypt has fallen precipitously. Additionally, although Pima acreage is up in the US this season, this is from a very low base. In fact, ELS cotton makes up a relatively small percentage of the cotton grown in the US today as a result of surging growth of LS cotton. It’s the same in India, as well.

Nevertheless, the rise of LS cotton is a development that has ramifications on all sectors of the textile supply chain from merchants to mills to retailers and represents current and future changes in how cotton is purchased, consumed and marketed. Some may say this shift in favor of LS varieties is due to a lowering of cotton standards around the world, as textile companies look for alternative sources of supply that are offered at a cheaper price to ELS cotton. Yet others say that in reality overall quality of average crops has improved thanks to the expansion of LS cotton at the expense of traditional upland cotton and despite declines noted in ELS varieties around the world.

FCStone Fibers & Textiles undertook a multi-client study in late 2009 to identify those forces currently at work in the global marketplace that have helped to expedite the shift in cotton production in favor of LS cotton varieties. The study focused on production in the major ELS-producing countries of China, India, the US and Egypt, and also assessed attitudes of sourcing companies concerning cotton, including retailers and branded apparel firms, throughout the US.



Dozens of sourcing companies in the US were interviewed in the study, along with dozens of suppliers throughout Asia. For sourcing companies attaining quality products for a good price was paramount over any other concerns, but, interestingly, many firms acknowledge that shifts in cotton quality could pose significant problems for their products over time and greatly affect where they source their finished apparel.

However, study findings suggested that many retail or branded apparel sourcing directors could not correctly identify the key differences between ELS and LS cotton on a technical level and had difficulty distinguishing between general cotton descriptions and marketing program designations (for example Pima versus Supima).

Concurrently, the study found that most retail buyers do not acknowledge any perceived shortage in ELS-type cottons and did not indicate any awareness of changes in sources of supply in LS cotton, but many retail/branded apparel sourcing companies indicated a willingness to blend ELS with LS or synthetic fibers as a way of better hedging sourcing decisions and to better address issues of sustainability.

While the study outlined many sourcing firms’ interest in organic cotton and other forms of green or sustainable production, there was some inconsistency noted in survey respondents’ answers to questions concerning green or sustainability as it was evident many sourcing directors were concerned about considerable limitations as to how green some products could become. This is particularly true in the case of cotton, as the definition of organic versus traditional cotton varies from region to region, country to country. Because of this, it is very difficult to determine what really is or is not organic cotton.

/1/ ELS cotton is typified by Pima cotton, while LS cotton is typified by varieties such as Fibermax, in effect a high quality, long staple upland cotton.


As a side note, there’s been reporting in the media recently that some retailers in Europe have allegedly mislabeled clothing stating they contain organic cotton when in actuality the garments contained conventional or genetically modified cotton. Some reports have even termed this a “fraud” and that retailers were complicit in their mislabeling of the fiber content of some of their garments.

It is not clear who is guilty of what (if anything), but, based on the results of our study, many firms indicated that there was not enough certifiably organic cotton grown globally to equate to the number of garments sold at retail with the tag “made with 100% organic cotton.” This isn’t surprising. According to the International Cotton Advisory Committee (ICAC), the well-respected cotton organization based out of Washington, DC, only about 180,000 metric tons of organic cotton are produced globally. This compares to global cotton production of 23.1 million metric tons. Hence, based on these statistics, organic cotton makes up last than 0.8 percent of global cotton production -- a ridiculously small amount of cotton and certainly not enough to meet the global demand.

And herein lies the rub: there’s simply not enough true organic cotton to meet potential demand. The proponents of organic say that it will just take time to build up enough crop to meet demand, but in reality there are so many factors at work it is a certainty there will never be enough real organic cotton production to meet demand. Let’s be clear, in defense of the retailers, all they are doing by labeling something organic is simply meeting the demand of desires of the ultimate customer of the textile supply chain: The Consumer.

What’s more critical, however, is determining whether one type of cotton production is truly sustainable over the long term or not -- regardless whether it is extra long staple, long staple or traditional upland cotton. Sustainability will be more important for both cotton growers, textile mills, apparel companies and retailers than whether something is organic or not. In some ways, the organic movement has its heart in the right place, but it has ignored the realities of the problems inherent with growing truly certifiable organic cotton. But with sustainability, we have an approach to farm practices that can really excite consumers.

So what are the alternatives? How does the shift to LS cotton affect your sourcing decisions? Is LS sustainable? Can it be organic? What about GMO cotton? Like to learn more about our study? Please contact me at robert.antoshak@fcstone.com .

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