Published on March 5, 2014
Take Hold of the Future Key issues for the Cotton Industry Text Dr Patrick Dixon Chairman Global Change Ltd !
ALL BIG TRENDS ARE RELATED ! ! ! ! ! ! ! !
Future of cotton is about EMOTION
Co/on ac3vists need to agree what is best for whole world
More Sustainable Cotton Industry • Be$er use of land, water, transport, energy, labour force ! • Beneﬁt to environment, communi;es and future world
Winning the argument ! ! ! ! ! ! ! ! ! !
Why are synthetics promoted as sustainable? ! ! ! ! ! ! ! ! ! !
1 trillion pages a month !
US consumers willing to pay more for 100% cotton ! !
Emerging Middle Class Love Cotton !
1 billion children alive today
300 million move to cities in China and 475 million to cities in Africa by 2030 ! ! ! ! ! ! ! ! !
Growth of Middle Class in Africa 250m people - $2 trillion by 2040 !
Cotton consumption (m of tons) will be dominated by emerging markets
China stockpiling Cotton Cut need for price subsidies in other nations ! !
US / Brazil World Trade Organisation Dispute ! ! ! ! ! ! !
Historic and Projected US payments to cotton farmers and Prices (Stax / CCIP) ! ! !
Cotton in emerging markets: 96% mill use, 97% imports, 81% production, 52% exports ! ! ! ! ! ! ! ! ! !
Rapid growth of organic co/on will be driven by ac3vist pressure on global corpora3ons as part of their wider CSR commitments, despite lack of interest by most consumers
Most consumers in developed markets and emerging markets are not motivated by organic or fair trade cotton labels
Fair Trade Food Sales up 18% pa ! • In the UK, sales of Fairtrade products in 2012 reached £1.5 • 78 per cent of consumers recognise the FAIRTRADE Mark • One in every three bananas sold • 44 per cent of bagged sugar sold • 25 per cent of all roast and ground retail coﬀee • Fairtrade products are now sold in more than 125 countries • FAIRTRADE logo most widely-‐recognised ethical label globally
Organic v Fair Trade Bananas !
Organic Cotton Supply Issues $8bn industry growing 20% pa Production fell 37% in 2011 !
Problem of Certification !
Managing Supply Chain Better Cotton Initiative Cotton Made in Africa ! ! ! ! ! ! ! ! !
$40 Trillion Green Tech Boom driven by oil price, cost cuts, green activism Lessons for cotton industry
Shale gas 33% US supplies 3.3m US jobs $468bn pa + more oil produced than Saudi by 2020 ! 200 years global supply Up from 60 years in 5 years
120,000 terawatts of sunlight /day “40% EU power = wind by 2050” 7,000 times total global power use Surplus wind to hydrogen -‐ to methane ? Power Moscow from Libyan Desert
120,000 terawatts of ARIZONA sunlight /day QUEBEC from 7,000 times total power use MOSCOW from SAHARA
30% US grain now burnt in vehicles Biofuels link energy and land / food prices 30 million acres lost ! EU 5% gasoline and diesel from food ! ! ! ! ! ! ! ! ! ! !36
80 nations by 50-100m farmers 28m tons of cotton grown on 2.5% arable land ! ! ! ! ! ! ! ! ! !
Doubled production per acre since 1960s 50% increase in US Impact of transgenic cotton on yields ! ! ! ! ! ! ! ! ! !
BT Cotton now 95% of India production Bollworms down, but aphids up, seed shortage, black market, farmer costs up !
Cotton still uses 14% global insecticides 6% global pesticides ! ! ! ! ! ! ! ! !
Water shortage, land damage, pollution 0.3-1% global carbon emissions (International Cotton Advisory Committee) ! ! ! ! ! ! ! ! !
Total use of cotton plant Food source ! ! ! ! ! ! ! ! ! !
Child Labour will be a big issue - not only harvesting but also in manufacturing ! ! ! ! ! ! ! ! ! !
The only corporate value worth having Only sell or do what you believe in and are proud of
Crea3ng a Be/er World • Individuals • Families • Teams • Shareholders • Communi4es • Wide World !
Summary ! Despite some predictions, cotton will have great future Greatest challenge will be activists disagreeing what is best Most cotton consumption growth will be in emerging markets Drivers will be young populations, emerging middle class Cotton will be fabric of choice for emerging middle class Cotton will have natural advantage in hot, humid nations Cotton will be seen more natural, renewable than synthetics Main challenge will be next-generation synthetics eg nanotech coatings / air cleaning / no iron / feel and stretch Few consumers will care about organic or fair trade cotton But use will grow very rapidly - driven by activist pressure on large corporations as part of wider CSR policies Certification will really matter for future credibility / sales Food industry will be key guide to future “ethical” cotton trends eg certification, labelling, integrated supply chains
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