Shifting cotton market in China offers huge opportunity says CottonConnect

Cotton Connect in its new report ‘China’s Cotton: A Growing Market Opportunity’ outlined the urgency of taking action at both – strategic and farm levels. It says that by leveraging technical, financial and political support for the industry – as well as providing urgent support at the farm level, brands and retailers have a chance to show leadership in building sustainable cotton interventions to help build a successful supply chain in China.

Chinese government subsidy reforms last January had triggered the latest downward shift in prices for cotton, which fell by around 60 per cent to 13,605 Yuan a ton (about £1,417 per ton) during the last nine months of 2014, the latest China Cotton Association’s price index showed.

China is now the world’s largest producer, importer and consumer of cotton, holding around 58 per cent of the world’s total stockpile of the raw material (International Cotton Advisory Committee). Since China’s accession to the World Trade Organization in 2001, its textile and apparel exports have grown by 50% and the nation has doubled its share of global exports in less than a decade, to around 25 per cent (Global Trade Analysis Project).

However, at farm level, cotton is fast-becoming a less appealing crop for farmers, plantings are predicted to fall 6 per cent to 31.6 million hectares across China by 2015-16, according to ICAC, if intervention does not happen.

CottonConnect warns that more support is needed for smallholder cotton farmers across the country as they continue to grapple withenvironmental, economic and social challenges. On top of falling prices, growers are also struggling with changing rural demographics, an emerging water crisis, rising labour costs and a lack of access to credit and financial literacy.

Alison Ward, CEO, CottonConnect, said:

“As the biggest market for cotton in the world, international brands have a vested interested in ensuring that the market and supply chain is thriving. The Chinese cotton industry has reached a pivotal point.”

“There is a growing need – and a huge opportunity – for international and leading Chinese brands to support the cotton sector in this time of transition by showing leadership, collaborating with others and investing to help build a more sustainable cotton industry for the future.”

Thanks to falling cotton prices, brands and retailers have a significant and strategic opportunity to show leadership by improving relationships with cotton farmers on the ground and sharing best practice in basic agricultural techniques and technologies in China’s key cotton-growing regions.