Turning Point for Cotton: Farmer Investments Must Pay Off
January 5, 2012 By Fritz Grobein
Vice President, Bremen Cotton Exchange
The world’s growing population needs to be fed and clothed in the future, and while we can meet the challenge, it will come at a price. I think that consumers will, to a certain degree, accept paying higher prices as long as they feel that they are getting higher quality and value for the added expense. As a result, we should focus our attention more on his reaction to “soft arguments” such as sustainability.
However, we should never underestimate the consumer’s intelligence. The consumer understands that future consumption will be different from that of the past and is aware of the potential of up-and-coming markets like China and India. Finally, the consumer knows that the world has limited oil reserves and acknowledges that food will always be a higher priority than fiber.
While there is no shortage of challenges ahead, I am convinced that combining our efforts and exhibiting leadership in this volatile environment will deliver us to the appropriate answers. There are a lot of stones in our path, so let’s use those stones to build bridges for the future.
If we look at the price of cotton today, it is still too cheap in relation to other commodities, particularly the most popular tangible asset: gold. Investments in the cotton sector have not paid off for growers in recent years. If cotton can’t yield a fair value for farmers, they won’t consider it a viable alternative to other crops. There must be a financial incentive for them to invest in new farming techniques, seed varieties and machinery.
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