Special Feature: Time to cotton on

With everything going on in our industry, there’s been a lot to think about and plan for within businesses as we head out of lockdown. If you haven’t added it to your list, get ready for what’s happening in the currently crazy world of cotton.

Cotton, you say? The price has always fluctuated, hasn’t it, and it’s not exactly pressing buttons to move ownership of precious gold bars or even volatile bitcoin across the planet. If only it was, because turmoil far beyond anything for which Covid could be responsible has been building into a Perfect Storm for some time alongside the pandemic.

Everything from complex international politics and human rights issues, to what we might think of as ‘hoarding’ of both cotton and the containers it reaches us in, the availability and cost of chemicals used in processing it, alongside the traditional factors of crop yields and weather – not forgetting regional labour disputes – have combined to push up cotton prices and keep them there.

When this might change is a guessing game as so many factors are involved, and while some might be down to short-term issues, when others will be sorted is uncertain. What we can predict is that the price of cotton and polyester items will have to rise as this goes well beyond a ‘blip’ in the markets. Never mind long Covid, this one is going to outlast that. As you will see, it’s not just the price per pound of harvested cotton that is in play here. It’s a long and increasingly tricky route from field to fork on a tablecloth, let alone a store of environmentally-friendly fluffy towels and choice of bedlinen for linen hire businesses or hotel housekeepers to stand back from and admire.

Our top British linen manufacturers will stay on an ethical path throughout that tortuous supply chain, but it’s becoming a costly one to negotiate. “It’s just about everything from a shortage of chemicals used in the spinning process to the political aspects surrounding Chinese cotton,” says Fraser Donaldson, group hospitality director at Vision Linens.

Jan Raycroft unpicks all the factors currently affecting the world of cotton.

Janice Raycroft reports

Cotton boles have been collected and used by humans for thousands of years and is the most widely used natural fibre in garments

Right through from harvesting to spinning and weaving the yarn has been an issue, including workers unable to reach factories due to strict travel controls

Richard Yates, sales director at Linen Connect, warns: “It’s not surprising that a lot of this has passed people by in the year we’ve all had, but there is nothing short of a massive shockwave coming – it’s not just being unable to purchase cotton at the prices we are used to, but actually getting it here. “It’s understandable that laundries are cautious about purchasing new stock right now because they want to see the staycation market thrive, and then that we’ve dealt with Covid, so they get a good idea of how the hotels are doing and what work that will bring in.

But at some stage what’s happened with cotton is going to hit and it’s best that they are fully aware of it now.” Where to start? Perhaps at the end of March last year when the Better Cotton Initiative, the largest cotton sustainability programme in the world, suspended its assurance activities in Xinjiang, China for the 2020-21 cotton season following concerns over alleged labour abuses in the region, planning an expert review of what was going on in Western China. The initiative promised to continue to support local farmers but would not licence Xinjiang’s cotton crop.

As this coincided with something overshadowing all world news, most of us were too busy at that time with the announcement of the first UK lockdown for Covid.

But for those producing cotton goods additional storm clouds were clearly already gathering. By October the situation was even more serious. BCI announced it was to immediately cease all field-level activities in the region, including capacity building and data monitoring and reporting, citing ‘Sustained allegations of forced labour and other human rights abuses in the Xinjiang Uyghur Autonomous Region (XUAR) of China as well as increasing risks of forced labour at the farm level have contributed to an untenable operating environment’. Since then, most of us have seen on TV news reports of what has been happening with the Uyghur community, from ‘re-education programmes’ through to forced dispersal to other parts of China where they are put in work camps while supposedly integrating into wider Chinese society.

As for the missing cotton and processing chemicals, the Chinese government isn’t, just like many others, above artificially inflating prices, and is well placed to stockpile commodities to keep them in short supply.

And Xinjiang is not all of China, even while supplying as much as 20 per cent of the world’s cotton. On top of this, Covid restrictions were also set to make things difficult here and elsewhere in cotton-producing countries. “It’s quite common for the cotton workers to live around the mill during the peak production periods and then go home to their families,” says Donaldson. “Strict travel bans introduced in India and China meant that many of those who had gone home then couldn’t get back to their work.”

The Indian press has reported on ‘a drastic rise’ in the price of cotton. Normally many farmers switch between cotton and maize harvests but with the price of maize dropping, many have switched to a second crop of cotton this year, with an increase in cotton import duties probably helping to make up their minds. This may feed into availability eventually but of course the growing of cotton is not the only issue.

You have cotton mills which stopped working during Covid at the same time as consumer demand for garments and home textiles rose rapidly through online purchases (Raj Ruia, director of the Ruia Group)

As Raj Ruia, director of the Ruia Group including linen specialists Richard Haworth, points out: “In India we’ve seen the price of raw cotton go up by 30 to 40 per cent and, after ‘commercial hibernation’, labour rates increased as employers looked for skilled workers to return at a time when demand for cotton from both there and Pakistan was increasing because of the US ban on importation of cotton fibres, textiles and garments from Xinjiang.” That ban was one of the last moves by the Trump administration and Joe Biden’s term of office has not changed things regarding the approach to the Uyghurs’ treatment, even if he might have been expected to be more conciliatory towards China on both Covid and trade than his predecessor.

There’s now consideration in the States of banning imports from countries which do buy the Xinjiang cotton and transform it into garments, including those in East Asia which rely on this as a secondary source of income after already troubled tourism.

Like China, the US always has chips on the table to play in high stakes games. Powerful garment retailers there with plenty of money and gigantic warehouses.

to store cotton ‘gobbled up’ a lot of the international supply as they waited to see the result of the US Presidency election and the consequences for their country’s relationship with China. Their ‘better safe than sorry’ approach might seem good business sense in a tough world but would always have knock-on effects for others.

Not that the Great British Public hasn’t had a role, particularly those of us working from home who have massively ramped up our online shopping habits since we can’t do an ‘office lunch’ walk around the town. Add in ‘comfort shopping’ of cushions, curtains and nice, new home bedding and you can see why warehouse workers and online shopping drivers have been kept busy. “It’s the ultimate story of supply and demand,” says Ruia. “You have cotton mills which stopped working during Covid at the same time as consumer demand for garments and home textiles rose rapidly through online purchases.” If you thought the at times ruthless worldwide battle to secure PPE was unseemly with Western governments forgoing diplomacy to virtually wave cheque books (remember we even sent the RAF on a ‘sortie’ to collect gowns and masks from Turkey) until UK production of masks and gowns built up, it’s time for the sequel, and we don’t mean vaccine debacles with the EU.

There’s an actual shortage of global shipping containers. They exist, of course, but far fewer are stacked up on ships travelling the world’s oceans. Instead, many are being used for mass storage on land of all sorts of equipment and PPE which might be needed in this emergency or whatever comes next. That and a mountain of goods for which the market is currently flat but should pick up post-coronavirus. No one wants to be caught out again.

Donaldson reveals that a 40ft shipping container that might have cost him 1,500 US dollars pre-Covid is currently 10,000 USD, while Ruia has faced shipping costs 10 to 15 times ‘the norm’ from the Far East, and four times previous charges for a container-load from North America.

Raj Ruia, director of the Ruia Group which includes linen specialists Richard Haworth

Has anyone seen my container of cotton in that lot? Not only have container costs soared, but many are on land being used for secure storage of emergency supplies and unsold goods

And just as all grounded planes in an emergency tend to be ‘in the wrong place’, it’s becoming a long journey in more ways than one to get the world’s available shipping containers back in the right places for the usual scheduled sea trips without them being diverted to a land-based storage spot. The lack of availability and then rocketed freight charges has been a source of frustration for Yates since this all began. As we said, at some stage the price of linen items must go up, but in the meantime our manufacturers will be able to distribute stock they hold at existing prices, recognising that they are not the only ones who’ve had a tough time recently.

Normally people like Stephen Broadhurst, managing director of Star Linen, is duty-bound to keep an eye on cotton crop yields, the quality of that and whether the likes of flooding and drought have had an impact. “You think ‘Are we seeing just a standard fluctuation, a spike’, but this has been a continuous increase. A 90-day window shows our cotton price is up 25 per cent up, while for polyester it’s actually 47 per cent because of the petroleum used in the process, which has also gone up.” He’s more than aware of how commercial retail ‘ringfenced’ a lot of the available cotton as their customer demand increased and has been told by one cotton manufacturer that they will not have anything else to ship until October.

“I think the responsible suppliers in the UK will do their best to absorb the impact of all this for some time and definitely while we hold stock. It may well be that some ranges will be depleted for a while – perhaps all the king size bed linen will go while other sizes, such as super king, will still be available.”

All those that Laundry & Cleaning Today spoke to were keen to stress that this was not a ‘flash sale’ urging people to buy now or regret it later. Their aim is to stay competitive while offering ethically produced linen at fair prices. They are likely to ‘blend’ prices for laundries and hotels and absorb as much as they can for as long as possible, but the time will come when to stay in business themselves they cannot sell linen at a loss. A salutary note on which to end is Ruia’s assessment that he now sells a sheet for less than it cost 30 years ago when he came into the industry.

We must remember there’s a price to be paid for everything, and in the linen world there will be no escape from the combination of extraordinary events around the planet.

THE COTTON WORLD

India remains the world’s top cotton producer, supplying some 6,188,00 tonnes in a normal year, with China rapidly catching up. The USA produces around 360,000 tonnes. Then comes Pakistan, Brazil, perhaps better known for coffee, Uzbekistan, Australia, Turkey and Argentina. Cotton is grown across the world with many countries in South America, Africa and Asia adding to the world total of more than 26 million tonnes in normal times. In Europe only Greece (80 per cent of European grown cotton), Spain, with a growing market mostly in Andalucia and Bulgaria with a small amount are involved in cotton farming.

Australia is among the ‘newer kids on the cotton block’ with much of the crop exported. Its annual production of under 900,000 tonnes might be dwarfed by the Indian, American and Chinese output, but a bumper harvest was expected for 2021 after a poor 2020. Most is exported to Asian spinning mills.

Any form of farming can be tough and in Australia some of the 100 ‘cotton communities’ have come up against environmental campaigners over their use of water, a precious commodity in dry areas. However, Cotton Australia, says the Australian cotton industry is one of the most efficient in the world and has improved water-use productivity by almost half since 1992.

Right now, the most significant concern is that China is refusing to take Australian cotton following increasing trade tensions over hefty tariffs.

Aussie rules

Farmer Mick Humphries is a fifth-generation cotton farmer from New South Wales. The family also grow irrigated wheat, barley, sorghum and chickpeas

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