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Interview with Mr Nick Earlam

Mr Nick Earlam
Mr Nick Earlam
Chairman
Plexus Cotton Ltd
Plexus Cotton Ltd

Since launch in 1990, Plexus Cotton- a cotton producing, ginning,and merchandizing company based in UK, has rapidly grown into a global network of partnerships, with an annual turnover approaching half a billion dollars. Its influence and activities comprise farming, ginning, warehousing, logistics and marketing operations. The Group through its overseas operations employs approximately 2,000 people world-wide. Mr Nick Earlam, founder, is the current Chairman of the Group. He has held several posts in the International Cotton Trade, namely President of the International Cotton Association (formerly the Liverpool Cotton Association) 1995 & 2003; Chairman of the Association of Cotton Merchants of Europe 1997; Inaugural Chairman of the Private Sector Panel of the International Cotton Advisory Committee 2000. Besides cotton world he also has been member of the China Advisory Committee to the Evian Group; Chairman of Liverpool Associates for Tropical Health (LATH); member of the Board of the Liverpool School of Tropical Medicine, and trustee of Liverpool Cathedral Centenary Trust. Speaking with Face2Face team, Mr Nick Earlam shares his views on current cotton industry worldwide.

Face2Face welcomes you Sir! Should we begin with a word from you on present state of your industry worldwide?

Our Industry is going through a phase of substantial consolidation. A number of long established market participants have either left the Industry or been merged with other substantial companies and some new participants have entered.

The remaining market participants should do well providing that we do not have another “black swan” situation which occurred twice in 2008 – once in March 2008 and then again with the de-leveraging caused by the Lehmann and AIG crisis.

 

Mr Earlam, Plexus has been into cotton profoundly; that is from seeding to cultivation to processing to marketing. Can you share with us, which all hurdles come in the way of progress of industry?

Our desire is to empower the Farmer in Africa so that his yields can increase and his income increase substantially and to help him realize value down the supply chain. This will have a profound effect on the local economies and help break down the cycle of poverty that goes from one year to the next.

I hope that African governments will look seriously at the genetically modified seed issue as this would have an immediate impact.

The hurdles in achieving this are often that many times the participants involved have different agendas.

The success will be when everybody works in the same direction for the same end goal and we hope this can be achieved by honest and open dialogue.

We too appreciate this spirit of limpidity! Mr Earlam, a lot of talks related to MSP issues in Indian cotton popped up outside India too. Can Indian Cotton’s MSP impact world cotton prices?

At the moment it would appear likely that most farmers will achieve better than the MSP so it is unlikely to have much effect on world cotton prices unless international prices go back to this level

.

I think that the Indian MSP provides a fair return to Growers and the knowledge that it is there for the last two seasons must give confidence to the farmers to plant cotton again, which is healthy for the Indian cotton Industry at a time when acreage for raw cotton has declined globally.

You are right. In fact, acreages figures are going down day by day everywhere. Can we request you some supportive stats on this to have exact info?

ICAC have stats that show global base acreage for cotton has declined by about 3 percent on account of price and more profitable crops. However if prices stay where they are or increase further it is our strong belief that this acreage can be regained and the new seed varieties will also help yield increases. There is an old saying that low prices cure low prices and high prices cure high prices. We have been in a low price environment for a long time relative to other crops and I sense this might be changing in the short term.

Well that definitely would sound music to the ears of industry world over! So, how do you foresee global market of conventional cotton to organic cotton in years to come?

If it is related to income I don’t really understand how organic cotton can increase if farmers achieve the yields they should be achieving with conventionally grown cotton. There is the potential for conventionally grown cotton to out yield organic cotton by a factor sometimes as much as six times so even a 40 percent increase in price for organic cotton does not cover this differential.

The only place where organic cotton works properly is in those areas where yields are so low on conventional cotton that organic cotton becomes an alternative and in time this situation should change.

I do however see any cotton grown in a better sustainable and environmental manner increasing its market share going forward.

And, how do you visualize prospects of sourcing of cotton from emerging countries? Please help us understand it in terms of percent constituted?

I think that there is a big potential with properly provided genetically modified seed of Pakistan substantially increasing its crop one day. I also see a lot of prospects on increasing production in certain parts of Africa if we can get it right on yields and Brazil should have a large part to play. The biggest players in terms of both production and consumption of raw cotton will be China and India and in both countries I see it as a matter of National security to ensure sufficient enough access to raw cotton and man made fibre. These two countries alone consume more than 60 percent of the world’s consumption of cotton and produce more than 50 percent of the world’s production.

Interesting! So geographically, excluding China, India & US, which countries you find have potential to queue up as a major cotton exporter?

Uzbekistan, Australia, African continent, Brazil

And lastly, we would also request you to share some trends forecast for the market in near future.

I don’t believe that cotton will ever go out of style – at least not in my lifetime but as consumption increases as a result of population growth cottons relative share of the fibre market will slowly decline in relation to overall fibre consumption as food security will eventually take precedence over what farmers choose to plant on their acreage.

Well, that was very informative and fabulous talk, Mr Earlam! We are grateful for your time and opportunity.

Pleasure.

Published on: 30/11/2009

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.

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