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President and BU Leader Cargill Cotton
Cotton may not outpace synthetic fibre growth
The Indian cotton industry is set for a revolution in the coming years. In an interview with Fibre2Fashion.com, Doug Christie, President and BU leader of Cargill Cotton talks about the current state of cotton industry in India and worldwide.
Given that there are an increasing number of alternatives to cotton fibre available for the textiles industry, how important is it to ensure security of cotton supply?
Cotton for long has been the fibre of choice. However in the last decade, alternative fibres in particular have emerged as stronger substitutes. What originated from volatility of cotton prices and supply insecurities has been given a new dimension by the way alternative fibres have reinvented themselves, blending style with comfort that was traditionally associated with cotton. For cotton to defend its fibre share, managing supply and volatility will be the key. Both these can be addressed - to a large extent - by increasing efficiencies in the supply chain. The focus is moving from just sourcing to price risk management and from securing supply to buying just in time. This is good for the industry as it pushes it to innovate and throw out inefficiencies. Companies like Cargill play an essential role in this to secure supply and help their customers manage the price risk and volatility.
Ensuring that China has a resilient cotton supply chain is in the interest of the global textiles industry? Do you agree?
China is the largest textiles manufacturer. So in the near to medium term, stability in the Chinese industry will have a calming effect on the global textiles chain. History will show that textiles, being a labour intensive industry, will naturally tend to move towards regions with the lowest input costs. It happened in the west and is happening in China. China is gradually shifting its textiles and other industries to countries having labour arbitrage and to reap the benefits of tariff-free exports to the European Union or the US, such as those in Southeast Asia and Sub-Saharan Africa. This will happen naturally. The key is to avoid any sudden changes which bring in volatility, destabilise the supply chain and affect the industry.
According to you, what exactly is the market opportunity for brands in the Indian cotton industry?
The opportunities are huge. The Indian apparel market is about US$ 3.2 billion, but less than 25 per cent is branded. India has a population of 1 billion that adds 12 million every year. Throw in the fact that GDP growth is around 7-8 per cent, and 36 per cent of the population is in the 20-44 age-group, i.e. upwardly mobile, drives consumption, is brand conscious; the opportunities are immense. FDI in single brand retail, when through, will also act as a catalyst for this growth.
Organic cotton is set to witness greater demand in future. Are major cotton producing countries geared up for the same?
Consumers are attracted to organic cotton because of sustainability, traceability and clear standards and labels. However, organic cotton holds minimal share in the cotton textiles market on the whole. It is important to remember that organic cotton finds resonance with the sustainability platform, but is not the only sustainable cotton product. Products like Better Cotton Initiative (BCI), CMiA, etc, have more flexibility due to mass balancing, etc, and are therefore easier to expand. They are gaining more traction in the supply chain. Due to the forces of demand and supply, the organic cotton market will grow. But because of other products that have the same appeal, it is unlikely that major cotton-producing countries are giving any major focus on development of organic cotton per se.
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