Global Cotton Shortage
The current worldwide and unparalleled cotton shortage is expected to have serious consequences that could critically impact the uniform business and textile industry
The Man Store is working hard to minimize the impact on it’s customers. Many of our products (work gloves and safety apparel, to name a few) are made with cotton components, which affects us all in the end.
How did we wind up in this mess? Like many crisis situations, it comes down to multiple factors. Here’s a brief overview of the circumstances:
The economic recession of 2009 hit the apparel industry hard. Many suppliers in the textile industry simply couldn’t survive. In 2010 economies were booming in China, India, Brazil and Western Europe – recovering faster than the U.S. The demand for apparel increased, but with so many suppliers out of business, there weren’t enough of them to deal with the higher fabric demands. China anticipated this and secured contracts to buy large amounts of yarn from Pakistan. As orders began to rise in Pakistan, they realized they were going to have shortages. This created major price increases in products manufactured in Pakistan.
The main cotton growers – China, India, the United States, and Pakistan – produce over 80% of the world’s cotton. In China massive rains and earthquakes resulted in large crop losses. India’s harvest was better, however, government policy limits exportation and Indian exporters are now demanding much higher prices because they have more cotton than other countries.
U.S. farmers have to plan how much to plant approximately 9 months ahead, which was before the shortages and price increases. Unfortunately, they did not plant enough.
Pakistan’s fall harvest was disastrous due to massive flooding. The estimated loss was between 25 to 40 percent. The law of supply and demand rules: When demand is high and supply is short, prices will go up.
Mills are forced to quote fabric pricing from week to week, because suppliers don’t know what their costs will be. Suppliers and manufacturers don’t have enough time to negotiate agreements with consumers before the raw material prices rise again
This problem may remain with us depending on future Chinese and U.S. crops. If the world continues at a faster pace than the U.S., the situation could get worse. As always, there is no guarantee the 2011 crops will come in at a level that will provide relief to price increases.
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