Acquired knowhow at ITMF Annual Conference 2012
The ITMF Annual Conference 2012 took place in Hanoi, Vietnam from November 4 -6, and was crowned with great success and the participants could acquire a lot of knowhow in view to the cotton and man-made fibre business
The cotton fibre session
The cotton part of the fibre session was focused on the aspects of sustainability, the growing role in retail marketing, the understanding of the Better Cotton initiative and the challenges to be faced in the development of a sustainable supply chain.
Within that framework, Robert Antoshak of Olah Inc defined the relationship between the cotton and the textile industries. Even though the retailers are forming the end of the cotton supply chain, but sustainability starts at this end, because to offer “green” products became a critical success factor for them and the speaker underlined that if retailers can label their products as environmentally friendly they reach an undeniable advantage among consumers. He noted further that buyers believe in “green” and this is what they are going for.
The second speaker, Antonio Vidal Esteve of Ecom Cotton Group described on how the Better Cotton Initiative (BCI) offers ways and avenues in view to sustainability for the entire supply chain. He revealed that it is still a widespread misconception to think of BCI as an NGO non-governmental organisation but it was originally created by retailers such as IKEA, Levi’s, Adidas and H&M because they have foreseen that sustainable production is not just a cotton-only issue and therefore BCI became an industry umbrella solution. The biggest challenge BCI had to face according to Andrew Macdonald of AMCON Consulting and moderator of the Fibre Session was the term “better” not being a reference to quality but referring to improved and best practice production.
The final presentation of the cotton program was delivered by Bayer CropScience’s Richard Shaw highlighting the number of challenges the industry fasces in developing a sustainable cotton supply chain and he lamented on the lack of universally accepted protocols and metrics, as well as the absence of official standards for certification and documentation and the missing consensus on third-party verification. The solutions to be achieved he declared as not easy or cheap and added:”due to the costs inherent in making major changes, additional compensation will be required at various point s in the supply chain, and this is something we simply have to accept, right from the start, if we want our industry to become more sustainable.
The man-made fibre session
Peter Driscoll from PCI Fibres has been giving an overview on global demand for chemical fibres gaining inroad in overall market share due to the growing number of synthetics (above and beyond traditional textile applications), and the influence of cotton price volatility. The later is leading to the fact that a number of retail are making a concerted effort to move away from cotton products to escape the thought of discontinuity of their supplies, stated Driscoll. He added that it took the man-made fibre industry six to nine month to fill in the demand left by the high cotton prices. On the other hand demand from consumers for cotton articles tends to be quite smooth, contrary to the reaction of the synthetic producers. He described also the order attitude of retailers seeing an increase in sales of green shirts and they note that green is now en vogue and the retailer proceeds to order a large quantity of such green sheets from his supplier. Then the market becomes saturated because the anticipated demand has been distorted, but that’s the name of the game or the market and one has to live with these aspects of the business.
The final speaker of this session, Madhu Suthanan of Reliance industries has been focusing on the sustainable advantages of polyester fibres, particularly those related to economics and stated: “Polyester is not only the most affordable of textile fibres, it also has had the lowest levels of volatility in recent years and polyester supplies are easily scalable to varying demand levels, a problem that is much more challenging for natural fibres. He made clear that there is a 98 % correlation between GDP Gross Domestic Product and fibres’ demand, and as the global economy continues on the road to recovery and polyester seems to be the biggest beneficiary, accounting for 65 % of growth in incremental demand in the years ahead. Polyester filaments accounted for less than 10 % of the global fibre consumption in 1980 and the number will approach 50 % of the total fibre market by 2020.
Cotton’s Future in the supply chain
As explained above, there is a lot of discussion about the ongoing competition between cotton and synthetic fibres and the two sectors fight hard for every scrap o the market share to ensure their future profitability, concluded Mark Messura of Cotton Incorporated in his presentation. He sees the biggest threat to cotton’s future not in rayon, nylon or polyester but in the cell phone, education, healthcare, food and fuel.
The competition between cotton and synthetic fibres is intense, but the real concern for all in the textile industry is that people today have increasingly diverging expenses eating into their expenditures on clothing. He mentioned the example of the U.S. where clothing’s share of total consumer spending has dropped from 5.7 % in 1989 to 4.7 % in 1999 and 3.5 % in 2011. On the other hand, during the same timeframe healthcare expenditures grew from 5.1 % to 5.3 % to 6.7 %. Fuel expenditures increased from 3.5 % in 1989 to 5.3 % in 2011, while educational expenditures jumped from 1.3 % to 2.1 %.
He stated that the bigger picture for cotton is the ability to expand its number of uses and applications and added: “Between 80 to 85 % of all cotton produced worldwide goes into clothing , and clothing will continue to dominate the end uses for cotton, but it’s also used in oil, ic cream animal feed and construction materials. Textile companies might not be able to spin cotton seed, so those applications don’t necessarily impact mill owners. But they are critically important to the economic health of cotton farmers, and by expanding the number of cotton applications, they will become a driving force for production in the future and the quality of the cotton fibre is constantly changing and improving through technology and he concluded “Cotton isn’t a synthetic fibre, but it is an engineered fibre and it is constantly evolving”. He defined that environmental friendliness and sustainability are commonly thought of as crucial factors for consumers when they make purchasing decisions, but fundamentally these are chain issues, not market issues.
Cotton Incorporated research proofs that very few consumers are willing to pay a premium for clothing or home textiles that are environmentally friendly, organic, sustainable, recyclable or compostable. However around 27 % of consumers state that they put an effort into finding environmentally friendly apparel, but this number is lower than it was five years ago and is not a factor becoming more important to consumers, actually it is becoming less important for the purchasing decisions of consumers. By all means this does not mean that the research’s finding was that sustainability is not important, but that it is an issue for the supply chain rather than for consumers. He presented also an answer on the question frequently posed: ”how can we strive to plant more cotton when the world needs more food?” He answered: “Well in the future, the world will need more of a lot of things! That’s why cotton has – and will continue to – improve its productions practices, the industry will innovate and find ways for cotton to require less arable land, less water, less energy and fewer chemicals to generate even more fibre”.