Innovation, from cotton growers to apparel manufacturers, will be a key issue in the future of the entire cotton industry, according to Berrye Worsham, president and CEO of Cotton Incorporated.
“We have to continue to innovate with cotton whether we want to or not,” says Worsham. “And, we have to be innovative from the front-end of the industry to the back on a global basis,” he adds.
Speaking at the recent Southern Cotton Growers/Southeastern Cotton Ginners annual meeting, Worsham said the three biggest changes in the cotton industry over the past 25 years have been: Globalization of the market, a quick change to a communication-driven supply chain and customer-driven changes.
No longer is the United States the single driving market for cotton products. China, Japan, western European countries and other emerging countries now compete for high quality cotton products.
It is no secret the U.S. textile industry has dramatically shrunk in the past 25 years. How U.S. cotton growers and the whole U.S. cotton industry react to the global changes in the use of raw cotton is critical to the prosperity, if not the survival of our cotton industry, according to Worsham.
Companies like Wal-Mart, he says, are so advanced in communication technology they know what every store in their chain is selling every day. These huge companies know what their vendors are doing, and they are able to make buying decisions on a global basis very rapidly.
“Companies like Wal-Mart want to know what is happening to products they purchase all the way to the production change. In some cases they even want to know the environmental footprint left behind in the production process.
“To keep up with this rapidly changing marketplace, the U.S. cotton industry must be in position to react to these changes in a positive way,” Worsham says.
“Today’s cotton market is driven by the customer and not just the cotton buyer. The end-user of cotton products is aware of and interested in how these products are made. As an industry, we must address such issues and environmental concerns by end-users of cotton products.
“In addition to highly motivated cotton farmers, we have great people all up and down the line in cotton. And, we have great organizational structure. Because of the people and the structure, we are able to face the changes of the past 25 years and address the challenges of the future,” Worsham says.
“Economic realities today have driven estimates of cotton use worldwide from 125 million bales down to 115 million bales and possibly lower before we begin to recover. In the U.S. the purchase of cotton products was down by five percent in 2008 from 2007. The best we can expect in 2009 is to avoid any further reduction is in cotton product usage.”
On the bright side, Worsham says, cotton is doing well compared to other fabrics. Cotton or mostly cotton clothes still make up 61 percent of the imports of clothing coming into the U.S. — that’s about the same level as 2006 and 2007.
Extensive global polling of consumers by Cotton Incorporated indicates a significant jump in consumer demand for products made from natural fibers.
The environment has become a big issue for consumers in the past few years. In 2006, a CI survey indicated only 53 percent of consumers believed cotton is safe for the environment. Similar surveys in 2008 showed 68 percent now think cotton is a good environmental choice for clothing products.
“This is a significant change in attitude on a global basis, and it offers a big opportunity for U.S. cotton, because we are recognized for producing high quality cotton and for our reliability in delivering our cotton on time anywhere in the world,” Worsham says.
At the Southern/Southeastern cotton meeting, he pointed out the importance of Cotton Incorporated — and other agencies that promote cotton — have a uniform message that promotes the many advantages of U.S. grown cotton.
Worsham noted that EFI licensing, which requires the mill to buy cotton from the U.S., was recently adopted by the largest textile mill in China. Currently, eight mills in China hold EFI licensing, insuring that U.S. grown cotton continues to be important to the world’s largest end-user.
During the same meeting, Georgia cotton grower Ronnie Lee and North Carolina cotton grower Taylor Slade said U.S. cotton growers need to be aware of the importance of China as their customer, but to not overlook possibilities nearer home.
Both growers agree the U.S. textile market is not likely to be a major player in the cotton market, but both contend that textile production in Central America and in a number of Caribbean countries may hold great promise for U.S. growers.
“We toured several cotton mills in Central America and they want to expand. They like doing business with Americans, and they are a lot closer to us than China,” Lee says.
In the summer of 2008, Cotton Council International held one of their more successful meetings in Panama. At a time when economies worldwide were struggling, the turnout was promising.
At the meeting, 26 manufacturers from eight countries throughout the Western Hemisphere met with 15 brands/retailers and nine U.S. mills participating in the Cotton USA Sourcing Program in Playa Bonita, Panama.
The focal point of the two-day event was the private Sourcing Fair, which included over 500 one-on-one meetings to provide retailers with sourcing options in the Western Hemisphere, in addition to their current Asia-based manufacturers. Each of the brands/retailers reported finding several potential vendors in the Western Hemisphere to help balance their international sourcing efforts.
The Western Hemisphere represents 95 percent of the exports of U.S. manufactured cotton products, and the Sourcing Fair could lead to increased sales of U.S. yarn and fabrics to fill these new orders.
Last year Cotton Incorporated worked with 441 textile companies in 19 countries. Of these companies, only 35 percent were in the United States. Evidence, Worsham contends, of the globalization of the cotton industry.
At the grower level, Virginia cotton grower Mike Griffin, says U.S. cotton farmers simply have to understand what type of cotton foreign mills want and strive to grow the fiber they demand.
“I’m a cotton farmer, and I know how to grow cotton, but I didn’t really understand the global nature of this business until I attended one of Cotton Incorporated’s grower tours. It was an eye-opening experience, to say the least, to see what all goes into selling U.S. grown cotton to China and other markets,” Griffin says.
Despite the dire economic forecasts worldwide for the next few years, and the current drag in cotton prices to the farmer, Worsham says the long-term future of U.S. grown cotton is good and will remain good as long as there is a worldwide demand for high quality cotton.