Supply chain strategy | Opinion

Cotton data digest

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An oversupply problem?

Innovation Forum’s guide to the best research and analysis on global cotton supply

Global supply glut

Cotton stockpiles are expected to continue swelling in 2015 as global production is predicted to continue outstripping demand. Recent figures from the US government indicate that global production will exceed demand for the fifth consecutive season, boosting inventories to an all-time high of 107.4m bales (each weighing 218kg).

The supply glut is exacerbated by a gradual increase in cotton output in India, which is projected to produce at 31m bales in 2014/2015, according to the US Department of Agriculture (USDA). This would make it the world’s largest producer above China, which is forecast to produce 30.5m bales during the 2014/15 season.

Another key factor credited for the supply-demand imbalance is declining demand in China. As a result, USDA predicts that US cotton exports for 2014/2015 are expected to slump to their lowest level since 2001.

The USDA forecasts the total area devoted to cotton production at nearly 34.3m hectares in 2014/15. This is similar to the 2012/13 harvest. However, yields are forecast at 759kg per hectare, which is the lowest in five seasons.

Lifecycle analysis for organic cotton

Organically grown cotton has less than half (46%) the global warming potential of conventionally produced cotton, the first ever lifecycle analysis of organic cotton finds. According to the research, which was carried out by the Textile Exchange, a membership-based non-profit, the greenhouse gases emitted from the production of 1,000kg organic cotton is, on average, 978kg of carbon dioxide equivalent. Conventional cotton is estimated to have almost twice the impact, at 1,800kg CO2 per 1,000kg.

Field emissions (gases emitted from soils as a result of agricultural activity) comprise around half the total. The remainder relate primarily to fossil fuel use in the ginning process (18%) and machinery use (16%).

In terms of primary energy demand, meanwhile, the growing, harvesting and initial processing of organic cotton uses an average of around 5,800 megajoules per tonne of product. That makes it about two-thirds (62%) less energy-intensive as its conventionally produced counterpart. The most significant difference is for water consumption.

Organic cotton requires almost half (a reduction of 91%) of the volume of “blue” water (surface water and ground water) as the standard industry average. The vast majority (95%) of water used in the production of organic cotton fibre is “green” water, which is rainwater and moisture stored in soil and used for plant growth. Almost all of this (97%) is employed in irrigation.

Better Cotton backing renewed in Pakistan

The All Pakistan Textile Mills Association (APTMA) recently agreed to work with the Better Cotton Initiative to promote improved sustainability standards in the country’s cotton industry. The pledge will see the APTMA commit to prioritise efficient water use, natural habitat conservation and farmer training in the 396 mills that it represents.

Pakistan is the world’s fourth-largest cotton producer and it has the third-largest spinning capacity in Asia, after China and India. The Better Cotton Initiative counts 46,500 participating farmers in Pakistan. According to a 2013 study, these farmers are 42% more profitable and use 14% less water than farmers not participating in the initiative.

The Better Cotton Initiative promotes a “holistic” set of standards that cover environmental, social and economic concerns associated with cotton production. As well as Pakistan, it works with participating producers in nine other countries: Brazil, India, Mali, China, Mozambique, Tajikistan, Turkey and – as of 2014 – Senegal and Kenya. Of its 361 partner organisations, 294 are cotton supplier or manufacturers. Its members also include 31 retail brands, among which are H&M, Nike, Tommy Hilfiger and Levi Strauss.

Uzbekistan: 2nd worst in Global Slavery Index

Brands buying cotton from Uzbekistan should stop immediately, recommencing only when the International Labour Organisation has verified that forced labour during the cotton harvest has ended, the Walk Free Foundation states. The Australia-based campaign organisation places the Eurasian state second from bottom in its annual Global Slavery Index. The index highlights the use of coercive labour during the cotton harvest, which allegedly affects up to 1.2 million people (equivalent to around 4% of the population). The only country ranked below Uzbekistan in the index is Mauritania.

Uzbekistan produces an estimated 7% of global cotton and generates revenues of around $1.8bn from the crop. Its main export markets are China, Turkey, Russia, the European Union and Bangladesh. According to a list compiled by the Responsible Sourcing Network, a US-based non-profit, 164 brands now publicly pledge not to buy cotton originating in Uzbekistan. The list, which was last updated in October 2014, includes the likes of Adidas, Burberry, Eileen Fisher, Gucci, Wal-Mart, Zara and H&M.

Central Asian forced labour continues

Meanwhile, other research has found that schools, hospitals, the police and other public-sector organisations in Uzbekistan are obliged to provide between 30-60% of their personnel to assist with the annual cotton harvest. According to a recent report by the non-profit Uzbek-German Forum, the quota can reach up to four-fifths (80%) of staff in some cases.

People forced to pick cotton receive nominal payment, usually between 200-250 soum (around £0.05-£0.07) per kilogramme of cotton harvested). Average harvesting quotas for individuals range between 60-80kg per day. Refusal to consent can result in penalties such as loss of social benefits payments, loss of employment, administrative harassment and even criminal prosecution.

The policy of forcibly recruiting adult workers in Uzbekistan’s cotton industry, which is reportedly widespread across all regions of the country, dates back to 1991. However, there was a marked increase in the number of adults recruited in 2014. Previously, public-sector organisations were only required to send 16% of their staff.

One of the reasons suggested for the increase is a move by the Uzbek government to reduce the mobilisation of children during harvest time. Even so, the report’s authors suggest evidence of child labour remains rife. The report documents state-sponsored forced mobilisation of school-aged children (mostly between 13 and 15 years old) in the regions of Kashkadarya, Jizzakh, and Samarkand.

The Uzbek-German Forum’s investigation is substantiated by previous research by Human Rights Watch, as well as other human rights groups. And the Cotton Campaign reports similar concerns about state-enforced labour during the cotton harvest in neighbouring Turkmenistan as well.

On March 16-17 in London, join CottonConnect, Gina Tricot, Marks & Spencer, Mark’s Work Wearhouse, John Lewis, Nudie Jeans, Lindex, Ikea, Primark, Shell Foundation, Better Cotton Initiative, Textile Exchange, Fair Wear Network, Solidaridad and many more, to discuss sustainable and ethical cotton supply chain engagement and management. Click
here for more details and full agenda: Sustainable and Ethical Cotton Sourcing: how to get it right, and make it pay for your business.

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