Time for Action
March 31, 2010 We are facing a very challenging moment in our cotton industry and it appears that it will become much more challenging in the future. What are the challenges? One challenge is ground lost to competitive crops such as corn, soybeans and others. Another challenge is dealing with speculative activity that can cause market volatility without any fundamental reason whatsoever. Lastly, a remarkable challenge is the constant decay of consumption and the price relationship that cotton has been facing against polyester in the past few years.
Cotton and polyester have witnessed a significant shift in production capacity from North America to Asian countries in the past few years due to cheaper labor costs. China accounts for the majority of the production and consumption of these fibers around the world.
In the last 50 years, cotton’s share in global fiber consumption declined from 68 to 40 percent. Over the same period, man-made fiber consumption increased at an annual rate of 4.7 percent, while cotton consumption during this period increased by only 1.8 percent annually. The share of man-made fiber in total fiber consumption is currently 57 percent, up from 22 percent in 1960.
Several reasons can be applied to justify or try to explain the strong decay that cotton has been facing against polyester. First, the competition for land that cotton faces against competitive crops highly influences the price and availability of cotton in the market. Second, cotton depends highly on government support to be able to compete against polyester. On the other hand, polyester has a much lower downtime and cheaper cost to produce a fiber. A major portion of polyester costs is influenced by the volatile prices of raw materials such as paraxylene, PTA, and ethylene glycol. In terms of cost, PTA represents the single largest raw material for polyester manufacture.
One of the big questions in the cotton industry is the sustainability of cotton against polyester and other man-made fibers. I believe that it will be almost impossible to compete with man-made fibers bumper-to-bumper in price in the future, but we can make cotton sustainable. We need to continue to develop awareness and promote cotton as a natural fiber to the public. I believe that years from now, cotton will be seen as a more luxurious product than it is perceived as in today’s society. We need to ride the “go green, exercise more, eat healthier” wave and promote cotton’s natural qualities to the public. At the end of the day, consumers will dictate the direction of our market.
There are several projects taking place at the moment in this regard, but we need worldwide awareness and action to develop and promote cotton now. I will cite one example. How did cotton lose ground to polyester in the athletics department in the past few years? I remember growing up and playing tennis and soccer and all of my shirts and shorts were made of cotton. They were extremely comfortable. Today, it is almost impossible to find a nice sports shirt made out of cotton for tennis or soccer. Polyester has completely taken over the market with the development of dry-fit technology. Yes, synthetics do have a moisture release advantage over cotton. However, I believe cotton apparel manufacturers can come up with a better feeling and less sweat absorbing design in the near future and fight for the athletics part of the market again. I would love to see that. This is just a small example showing how important the development of new technologies and the awareness of natural fibers are in today’s market. Synthetic fibers will never compare to cotton when comes to “feeling” — that is cotton’s biggest advantage.
The strong linkage between the price of cotton and polyester was referenced in a letter to the Financial Times on June 12, 2003. In that letter, the Director General of the International Rayon and Synthetic Fibers Committee complained that “recent increases in cotton subsidies have rigged the market even more dramatically in favor of cotton, depressing demand for every substitute product. The result is industrial plants being kept idle… that were built in legitimate expectation that the competitive advantages of manufactured fibers would create demand to fill the capacity.” This statement demonstrates how much influence the government has in the price relationship between cotton and man-made fibers.
Mentioning the many challenges ahead for cotton and focusing on the face-to-face challenge with polyester, I can conclude that cotton is sustainable today and will be in the future. However, we need to work harder today to create a stronger consensus in the minds of our public as to the qualities and advantages of using cotton products. It is all about developing and promoting awareness from the beginning.
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