Cotton production dates a long way back to the ancient civilization of Indus Valley of India and Pakistan, with some estimates believing cotton farming to be about 7,000-year-old. Cotton, as the modern world knows it, owes its existence to the industrial revolution in England and invention of cotton grin in the US. Although cotton is widely used in the textile industry for clothing materials, they have applications in other areas as well. For instance, cottonseed oil can be used for cooking and in products like cosmetics, soaps, pharmaceuticals, plastics, and rubber. The demand for cotton for various industries from APAC, MEA, and the South American region is driving the growth of the cotton industry (SpendEdge Report – Global Cotton Market – Procurement Market Intelligence Report). However, numerous factors are hindering the growth of this industry.
Challenges Hindering Growth in the Cotton Industry
Growing Popularity of Synthetic Fibers
The demand for cotton fiber is slowing down due to rise in popularity of polyester in the textile and apparel industry. Increase in cotton prices and increasing lack of supply has led to the expansion of production capacities of purified terephthalic acid, which is the primary raw material for polyester. Companies in the textile and apparel industry are switching to polyester because of low-cost and durability.
Increase in Production Cost for Cotton
In comparison to most of the agricultural commodities, cotton has the highest per-acre energy costs. For instance, it can require more than 5,000 gallons of water just to manufacture a t-shirt and a pair of jeans. Also, cotton has a high dependence on oil prices for its energy costs in manufacturing and logistics of textiles and fabrics. In addition to energy costs, the cotton industry is also facing a shortage of labor, which is why suppliers are facing challenges to meet the supply quantity and delivery schedules.
Price Volatility in Cotton Industry
Cotton farming usually starts out in spring and require a favorable climatic condition. Natural disasters and change in weather could affect the demand-supply dynamics in the cotton market. For instance, Hurricane Harvey affected the cotton supply in the US leading to the shortage of materials and forcing the cotton suppliers to import cotton from other APAC countries, including China and India. Such fluctuations in the cotton prices could negatively affect the demand for cotton, and suppliers can opt for more stable alternate materials.
High Competition for Acreage Among Agricultural Crops
Crops such as rice, wheat, soybeans, and corn deliver consistently higher returns to farmers compared to cotton crops. Increasing demand for such staple foods will encourage the farmer to plant food crops instead of cotton crops. The report on the global cotton market – procurement market intelligence report from SpendEdge estimates that growth in demand for these crops can lead to a potential decline in acreage for cotton and could affect the supply globally.
Read more about the challenges in the cotton industry along with market trends, cotton prices, cotton supply chain, and key suppliers of cotton in SpendEdge’s upcoming report on the global cotton market.
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