Blog: Leonie BarrieCotton crisis continues to unravel

Leonie Barrie | 1 November 2010

The ongoing problem of global cotton shortages and rocketing prices took another turn last week when textile groups in the US, EU, Turkey and Mexico decided to call for action against the Indian government for restricting cotton exports and contributing to the crisis.

The groups, who between them employ more than one million workers, claim India has broken WTO rules and say it must be held to account after its "anti-trade actions on cotton have caused turmoil in world markets."

Since India began restricting its cotton exports in April, the price of cotton has increased by nearly 100% - hitting all-time highs in recent weeks. The groups believe the restraints have contributed to an enormous increase in the price of cotton for non-Indian textile producers around the globe.

Rising cotton prices and a worldwide shortage of conversion capacity have forced the European unit of underwear and casual clothing maker Fruit of the Loom to increase prices in the second half of the year, the company said in just-filed accounts. It is also ramping up its operations in Morocco on the back of higher demand from its customers as the global economic recovery continues.

Anvil Knitwear, the world's sixth-largest user of organic cotton - ahead of Levi Strauss and Adidas - and the largest domestic purchaser of US-grown organic cotton, is also in front of some of the world's biggest clothing brands when it comes to sustainability. CEO Anthony Corsano last week spoke to just-style about the business case for social and environmental responsibility, and explained why it is a defining feature of the future of the apparel industry.

Apparel giant VF Corp also believes clothing companies should think outside the box when it comes to sustainability. The head of global sourcing at the firm's Asia unit would like to see more businesses introduce changes - however small - to make their operations more environmentally friendly.

VF, which owns brands such as Wrangler, Lee, Vans and The North Face, produces around one-third of its annual output of 500m garments in its own factories, with the rest outsourced. But this also means the company is in a strong position to invest big capital outlays to take sustainability at its production plants to the next level.

And it was a busy week at sporting goods firm Puma, which booked a 14.2% rise in third quarter profit, but said irregularities at its Greek joint venture could lead to write-offs of up to EUR115m (US$160.2m). The company also revealed it will take control of its long-term Chinese joint venture Liberty China Holding in January, as part of plans to tap into the country's enormous potential.


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