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The organic cotton conundrum

by Atlanta Business Journal

Demand for organic cotton is growing and far outstripping supply. The Textile Exchange, a non-profit group formed in 2002 to increase global sales of organic cotton apparel, has found organic cotton demand worldwide is estimated to grow by 84% by 2030, compared with a 2019/20 baseline.

Prices are also soaring. Outgoing Marks & Spencer CEO Steve Rowe said in May on his departure from the retailer that prices for organic cotton had gone up 40% in the previous 12 months. Conventional cotton prices reached a 10-year high at the end of 2021 at $1.16 (£0.95) per pound – levels not seen since 2011.

In this challenging context, brands and retailers are committing to ambitious sustainability targets. M&S, for example, achieved its goal of ensuring that 100% of the cotton for its clothing is sustainably sourced in 2019. H&M Group has pledged to use 100% recycled or sustainably sourced materials in its products by 2030. Primark has pledged that 100% of the cotton in its clothes will be sustainable, organic or recycled by 2027.

There are various factors inflating prices, including disruption to supply – such as abnormal weather patterns in the world’s biggest cotton-producing locations – and the rising cost of production, as the costs of vital farm inputs such as seeds, fertiliser, fuel, freight and machinery skyrocket.  A barrel of crude oil, for example – which is used to make the diesel that powers most farming equipment – is currently almost double the price it was this time last year. In addition, the long timescale it takes for farmers to convert to organic production standards means demand for the textile is far outstripping supply.

Marks and Spencer’s cotton fibre mainly comes from India, China, Pakistan, Turkey, Brazil, USA, Africa and Australia

A recent heatwave and deficient monsoon rains have severely impacted cotton output in India, which has been the world’s biggest producer of organic cotton since 2015 and accounts for two-thirds of the global supply. The Cotton Association of India expects crop production during the current cotton season (October 2021 to September 2022) to be significantly lower than the previous year at around 32.36 million bales, compared with 35.3 million bales in 2020/21.

Meanwhile, the US Drought Monitor shows that more than 80% of the state of Texas, home to the largest cotton-producing region in the US, is experiencing the worst drought conditions in decades. About 17% of all land in Texas was experiencing “exceptional” drought in June – the highest figure for the month since 2011, which was the driest year on record for the state, causing an estimated $7.62bn (£6.3bn) in crop and livestock losses. Officials say this year could be as bad as, if not worse, than the historic 2011 drought.

Drapers Sustainable Fashion Awards 2023

The fashion industry’s efforts to become more sustainable were in danger of derailment during the coronavirus pandemic. However, recognising that sustainability is a business imperative, many brands and retailers continued to invest in cleaning up their supply chains and introducing new models of working, despite the unprecedented trading conditions.

The Drapers Sustainable Fashion Awards recognise the strides that are being made in reducing the industry’s environmental impact and creating fairer working conditions across the supply chain.

Judged by an independent panel of experts, this market-leading awards programme shines a spotlight on best practice within the industry, so others can learn how to change for good. The judging will be underpinned by the UN-backed Sustainable Development Goals, which address the global challenges we face, including those related to poverty, inequality, climate change and environmental degradation.

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In 2021, China’s cotton output fell by 3% amid strict Covid lockdowns and uncertainties. The nation produces about 20% of the world’s cotton.

“Cotton prices across the board are going up because of drought and rising input costs,” says Melanie Plank, director of content and research at Common Objective, a network that supports fashion businesses with sustainable sourcing. “Organic cotton is scarce: less than 1% of cotton grown worldwide is organic.”

Simon Shutt, buying and merchandising director at men’s and women’s wear brand Weird Fish, says cotton prices have increased by around 60% since the start of 2021, and a “significant increase in demand for organic cotton has reduced availability”.

Weird Fish is introducing new sustainable fabrics to mitigate the challenges of using organic cotton

“The cost increases have been driven by a number of issues: Covid hitting cotton production, reduced output from China, increasing demand and commitment to farmers’ rights [the costs of ethical working conditions and fair pay are passed on to buyers], shipping and transport costs, and even cost hikes in dyes increasing fabric costs. Our main source continues to be India, which has a UK import duty of 12%. We are working with our supply partners on plans to trail sources from areas with lower duties, and thus reduce average input costs.”

He continues: “We are looking at ways to mitigate the cost increases and still give our customers the opportunity to buy more sustainably sourced clothing at good value for money. We have continued enhancing our sustainability credentials [despite organic cotton costs rising] in line with our ‘The Only Way Is Ethics’ policy by introducing alternative eco-friendlier fabrics including bamboo, Tencel and EcoVero.

“We have also switched our signature slow-spun, cotton-rich Macaroni  fabric [used for sweatshirts and hoodies] to include a mix of organic cotton, recycled polyester and natural viscose. Sales of Macaroni product have risen 50% between 2020 and 2021 since switching to a greener make-up.”

Weird Fish’s Roxi Lenzing EcoVero™ printed culotte jumpsuit

Natalie Grant, design director at sustainable womenswear brand Baukjen, reports similar issues: “We are seeing huge rises in organic cotton this year and there are more to come. Organic cotton has had poor yields recently and the rise in popularity of the fabric means that the supply cannot meet the demand.

“As a medium-sized business, we purchase at the fabric level, so it is difficult for us to share what the price increase in organic cotton is (prices in fabric have gone up but are also being affected by the cost increase of petrol, gas and living wages and general inflation), but for one of our organic cotton jerseys, we’ve seen the price rise by 30% in the last year and a half, and believe it is likely to go up further this year.

“We are taking a mixed approach to this cost increase in the material. First, we are lowering the overall significance of cotton in our materials’ portfolio. We have also absorbed a part of the cost increase, and we are placing larger orders for some key fabrics, which resulted in economies of scale  (we can use the fabrics for restock orders and future styles). However, on some new styles we have had to marginally increase retail price.”

Baukjen: “We are lowering the overall significance of cotton in our materials’ portfolio.”

Andrew Pace, director at Panda Sourcing, which supplies men’s, women’s and children’s wear to the value end of the market, says the cost of organic cotton is prohibitively high for his clients: “We don’t buy organic cotton, as my level of the market can’t afford it. Some buyers have done it with us before but it’s not a viable option at the moment due,” he says. “Indian cotton yarn is generally becoming restrictive at all levels because of yarn suppliers putting prices up every month. Regular Indian yarn is cheaper [than organic].”

A global merchandiser working with farmers and suppliers – merchandising cotton from the USA, Brazil, West Africa, Australia and India into Bangladesh, Pakistan, Turkey, China, Vietnam, Indonesia and South/Central Americas – cites a recent regulatory shift as putting more pressure on organic cotton prices: “During the last 12 months Indian authorities have clamped down on what sellers have been labelling organic, and this has reduced supply considerably. At the same time you have had demand for organic cotton growing, as many retailers see it as an answer to their missions to source responsibly. Hence demand outstripped supply and prices shot up.”

Nancy Wheeler, manager of the Organic Textile Company in Machynlleth mid-Wales, which supplies to retail and wholesale brands, says prices of organic cotton price have risen between 10% and 30% over the past six months. She is forward ordering to try to manage the inflation: “We place our stock orders with our suppliers in India and Turkey well in advance – sometimes up to six months. This helps to secure the yarn before further price increases take place.

“The challenge with this is trying to predict what stock is required. The bonus to this is that we carry large stocks that are ready and available for despatch from our warehouse. Despite the rises in costs, our customers are not being perturbed – together we find a way to make it work.”

Childrenswear brand Frugi says purchasing in-conversion cotton will help producers meet demand

Childrenswear brand Frugi, which only uses organic cotton, is also tackling price spikes with new strategies. CEO Sarah Clark tells Drapers the brand has joined a programme in India to buy greige – an unfinished fabric that comes out directly from a loom – at a fixed price to help offset ongoing price increases. However, she thinks the only way to accelerate the production of organic cotton to meet demand and drive down prices, is through investment from the fashion industry in supporting more cotton farmers to go organic.

It takes up to three years and significant financial resource to convert a conventional cotton farm to organic (see box). Farmers must only use organic growing methods – which include eliminating all harmful pesticides and fertilisers – and non-GMO (genetically modified organism) seeds, which cost around two and a half times more per ton than conventional seeds. The farmer continues to grow and harvest cotton while working towards achieving full organic certification, and buying this conversion product is a way to help support more farmers to go organic.

“We support farmers with in-conversion cotton,” Frugi’s Clark explains. “The only way we will have more organic cotton is if farmers are supported to get there.  We choose year three, but there’s year one, two or three and organic. The more companies that buy in-conversion [cotton], the quicker there will be organic [cotton] in the fields. Hopefully that will be picked up by the bigger players.”

Organic vs Better Cotton Initiative cotton

Organic cotton Better Cotton Initiative
No synthetic pesticides or fertilisers Allows the use of synthetic pesticides and fertilisers (issues guidance on limits)
No GMO seeds – non-GMO seeds cost around two and a half times more than GMO seeds Allows use of GMO seeds
Crop rotation, keeping soil fertile and reducing water demand Guidelines when dealing with water, soil and the natural habitat
Safe working conditions Safe working conditions and training programmes for farmers
No synthetic chemicals in textile factories Conventional industry regulations apply at factory stage, focus is at growing stage
No child or forced labour No child or forced labour
Equal pay Equal pay

Bart Vollaard, executive director of the Organic Cotton Accelerator, which promotes organic cotton in the supply chain, agrees: “To tackle the issue of supply, bring stability on prices and secure the future supply of organic cotton is to invest now in in-conversion programmes. Ultimately, you can only get more organic cotton if you make it a viable option for the farmers to grow, address their needs for support, and provide all the tools and resources for the organic cotton sector as a whole to thrive.

“The next generation of organic cotton will come from the emerging organic farmers participating in these programmes. During the season of 2021/22 alone, in-conversion farmers made up 26% of the 80,000 farmers we have worked with. The most important factor is that the sector recognises the solution and acts fast.”

“I see this trend growing, fuelled by the increased attention and targets set for organic agriculture in the international policy space, paired with funding aimed at bolstering the organic cotton farming sector. This is in large part because of the recognition of organic cotton’s positive impact on economic, social and environmental systems.”

Frugi only uses organic cotton

Better cotton

Another way fashion businesses are increasing the sustainability credentials of their cotton products, while mitigating the issues around organic cotton, is by sourcing through the Better Cotton Initiative (BCI) – a programme that promotes higher standards in cotton farming and practices across 21 countries, including India, Turkey and multiple African countries. It accounts for around 23% of global cotton production and, although most BCI cotton is usually not certified organic, it does guarantee certain sustainability credentials – such as using less water and better soil care – and many are turning to it as a cheaper, more readily available alternative.

BCI cotton is usually less expensive than organic cotton. While the BCI trains its farmers to use water efficiently and to care for natural habitats, reducing the use of harmful chemicals and respecting the rights of workers, it does permit the use of pesticides and genetically modified seeds – allowing for higher yields and lower input costs (using cheaper conventional cotton seeds, for example) for farmers.

Marks and Spencer’s Fairtrade cotton is just one part of a complex global cotton industry

In the face of organic cotton scarcity, M&S, for example, now sources all its cotton through the BCI, and 3% of that is organic.

“Right now, all M&S clothing cotton is BCI. The lack of use for organic cotton isn’t because of the cost – the main reason is lack of supply,” a spokeswoman for the retailer says. “Globally only 1%-2% of cotton supply is organic, so it is very limited. We are actively looking into options, but it requires a strategic approach, as it is not readily available in the open market.

“We have chosen to focus on converting all other priority fibres to sustainable alternatives such as recycled polyester and MMCF (man-made cellulosic fibres), but also look at increasing organic cotton in the future.”

The obstacles to using more organic cotton are wide ranging and unpredictable, from droughts reducing organic yield, to rising input costs dissuading farmers from even trying to producing organic – all increasing price and reducing availability. While some brands and retailers are mitigating this through forward planning and rethinking their buying strategies, and in the long term, putting investment into the organic system, others are turning to other fabrics altogether while still attempting to stick to sustainability commitments. However they tackle this challenge, it is the fashion businesses that think creatively that will successfully navigate the organic cotton conundrum.

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