A World of Opportunity
March 13, 2009 Choosing the theme of “A World of Opportunity” for the 2009 Cotton International Annual seemed, to many, a stretch considering the recent market volatility, ensuing industry struggles and impending economic standstill. Many industry experts were predisposed to share stories of the lingering cloud over global cotton, entrenched in the precipitate pessimism. But success in business has always required vision and resourcefulness; imagination and ingenuity are necessary ingredients for survival. It was not long after hearing about our theme that the members of the cotton industry began to place greater emphasis on prospects of the future. It was no great surprise, with the historic strength and resilience of this industry, that a multitude of opportunities were revealed.
Better Business Practices
An often positive byproduct of calamity is a scrutiny of established systems. Out of the turmoil and insecurity of 2008 has emerged a new analysis of the trading system. A movement toward greater contract sanctity and a more dependable and consistent trading method has begun. To reduce the inherent risks in the buying and selling of cotton, to uphold equitable trading practices and maintain the sanctity of contracts globally, organizations such as the International Cotton Association (ICA) are providing global leadership. David Adcroft, ICA President, identified the potency of the recent market turmoil’s consequences: “In order to service the demands of a constantly evolving, fast-moving industry, a process is in place to ensure that any disputes under arbitration are carried out in a timely manner.” Cotton associations worldwide are promising cooperation towards a common goal of a reduced number of arbitrations.
The commodity markets themselves are another area needing quick reform, which was made glaringly apparent during March of 2008. The fallout from the market distortions seems to have created a united voice from global cotton merchants for regulators to change the current structure. Joe Nicosia, American Cotton Shippers Association President, comments on this requirement for market corrections, saying, “The idea of allowing unlimited index positions with unlimited money to invest in commodity markets designed to handle physical flows instead of financial flows is a formula for failure.”
Sustainability
The world’s concern surrounding economically, environmentally and socially sustainable practices is mounting. Beyond economic considerations, it has become clear that sustainability is not a fleeting trend. The opportunity for cotton is inexorably linked to its natural sustainability. While inter-industry discussions still persist as to the most sustainable, and yet still effective, ways to produce cotton, the production of this natural fiber is undeniably more environmentally and socially sound than other man-made, petroleum-based fabrics. Demand for organic cotton has experienced a surge because of this trend. “The foremost reason (for organic market expansion) is improved consumer awareness of sustainability issues,” says Brendan Condit of the Organic Exchange: “Companies are making sustainability a core part of their business models.”
The on-going challenge presented within this opportunity is how to market the message of cotton’s naturally sustainable qualities to consumers. It is easy to observe the effectiveness of these marketing campaigns. Zbigniew Roskwitalski of the International Forum for Cotton Promotion says, “Cotton merchants discovered that every slogan containing the magic words ‘ecological,’ ‘natural,’ ‘organic’ or ‘environmentally friendly’ evoked positive associations among consumers.”
Innovations
When market conditions become hazardous and a business’s viability is in question, industries are forced to shift their practices to stay competitive. Harsh environments compel people towards greater innovation and intensified development. An old adage is applicable: when times get tough, the tough get going. Out of this market chaos technological advancements will arise that continue to improve yield and efficiency, in every segment of the supply chain, in every participating country.
Enhanced seed varieties are continuing to astonish growers with significantly higher yields across the world. India is a well-known example of this achievement, reports I.J. Dhuria of Vardhman Textiles in India.
The leader in the advancement of these technologies has traditionally been developed nations, but the appeal is being exported to all cotton producing nations. Berrye Worsham, President and CEO of Cotton Incorporated, says, “Developed nations have the resources and responsibility to explore new and better ways of producing cotton. Once established, these innovations tend to be adopted on a global basis.”
Opening Markets
The world is growing increasingly committed to open markets, as well as open to new technologies. The future of cotton is marked by a unified, globalized playing field; all parties of the cotton and textile industry have been forced into an international market. The circumstance of one country in the market will inevitably affect the condition of the others.
Market access and reduced tariffs discussions, while slow and requiring a great deal of compromise, are sure to continue to be a part of the industry dialogue that will result in greater opportunities worldwide. The World Trade Organization Doha Round of negotiations is sure to re-emerge in 2009. Facilitating this movement towards compromise are international organizations designed to protect the interests of all members of the cotton industry. Terry Townsend, Executive Director of the International Cotton Advisory Committee (ICAC), echoes the need for their continued help: “The events of 2008 provide clear evidence that the rationale for the existence of international commodity bodies is as valid today as when the ICAC was formed.”
Growing Demand
Despite what will hopefully be a short-lived global recession, with populations booming in conjunction with growing urbanized middle-class populations, the demand for cotton products can only increase in the coming years. “Countries such as China, India and Pakistan are growing in importance as their markets now dominate global demand and supply numbers,” says Zbigniew Roskwitalski.
A bright spot in 2009 is our shared knowledge that new consumers are going to naturally surface with the evolving world population. Perhaps textile product demand is sluggish in the U.S. and Europe at the moment, but new demand from new areas can mitigate this loss. “I believe we can say that the cotton business has most directly been affected by strong shifts in demand by the global textile industry,” says Robert Antoshak of FCStone. China, the nation often in focus during discussions of emerging markets, is a key point. Karin Malmstrom of Cotton Council International China predicts continued growth in the country. “In these times of runaway-train volatility, China is determined to maintain economic stability and to minimize the impact of the crisis on the country,” she says.
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