Blog: India in cotton confusion

Petah Marian | 12 March 2012

To say last week was a confusing one on the cotton front would be something of an understatement. In the space of just seven days India, the world's second-biggest cotton producer, imposed and then scrapped a ban on exports amid protests from growers, traders and China, its largest customer.

First of all, India's decision to suddenly and unexpectedly ban all exports of cotton for the second time in nearly two years put the industry in a spin over fears the move would put pressure on global supplies and prices.

The move came just days after the International Cotton Advisory Council projected that cotton prices would continue to stay low, with higher production than consumption leading to a rise in global cotton stocks.

But complaints from groups including the China Cotton Association (CCA) led India's prime minister to call a group of senior ministers to a meeting to review the ban.

An analysis on just-style looked at the reasons behind the ban, which include efforts by China to build up its strategic reserves after being hit by higher cotton prices last year. With Indian textile companies heavily in debt, the government move was aimed at protecting domestic firms from a spike in cotton costs.

But market watchers seemed to shrug off initial concerns about the ban, with the over-riding view that it would be "short term and have little effect, if any, on garment prices."

In other news, factories in Bangladesh producing sportswear for Olympic sponsors Adidas, Nike and Puma have been accused of beating, verbally abusing, underpaying and overworking their staff, according to an investigation by War on Want.

And fashion firm Fenn Wright Mason became the latest UK retailer to enter administration, after struggling with cash flow problems amid the challenging retail environment.

Meanwhile, Asda announced it has acquired the sourcing arm of its major supplier GAAT. The UK's second largest supermarket operator said the move will enable it to continue to develop its "world class supply operation".

 


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