Cotton prices continuously marathon in the international market since the beginning of this year. It's no news that cotton is the essential commodity in the textile industry, with the most prominent manufacturer being china, India, Pakistan, and the united states. These producers continue to experience escalating in cotton price, which has a ripple effect on local yarn, affecting finish products like garment and textile industries.
Diverse factors are causing the inflation in cotton price, chief among those being a shortage of raw material. The rise in cotton price is a two-way effect that is advantageous for farmers, but the textile manufacturing industry bears the negative impact.
In the past years, the sluggish global economy experienced an acreage dedication to cotton production, which works for a while before the major cotton-production countries fall considerably as farmers succumbed to the economic recession.
Part of the fall in production was due to subsidiary effort by the government in most cotton-producing countries. In which only a few countries like India have elaborate measures to advance cotton farming. The global meltdown was later expanded by floods in Australia, Pakistan, and some regions in India. Leading to a massive effect on cotton production and made the price sparked up.
Spiking cotton prices result in higher operational expenses for the textile industry, and the effect is passed along to workers. There has been a recent report from Pakistan that factories have shut down and workers have been laid off, while in China, the surge has pushed many Chinese textile companies to the brink of bankruptcy. Some cotton manufacturing sectors are paid the lowest, and the cotton price threatens their jobs' security.
Rising cotton price has shocked the apparel makers, who are now putting artificial fabric into consideration. Retailers try to keep the entry-level prices accessible and strive to safe guide their profit margin as well. Also, customers might consider trimming their spending spree. When the apparel shoppers realize that discount sales are challenging to find, they will prepare to shell out more funds for the apparel requirements. A successful apparel manufacturer should consider the customer, employees, and suppliers.
With the rising cotton costs and diminishing raw material stocks, textile mills worldwide have rushed to secure available cotton stock. This indeed has implemented an adverse effect – on the cost of finished goods.
In countries like India and China, the textile inflation index has increased to the apex, then the overall inflation stats. However, the situation has a different turn for the United States, whereby cotton prices have stabilized relative to other crops. Still, the textile industry is globally interconnected, and inflation in one major cotton producer will be experienced in the textile industry worldwide.