The organic cotton market has seen significant growth in 2006 and 2007. Organic Exchange's Organic Cotton Market Report 2007 identifies three factors that have fueled the market growth of organic cotton and it produces increasing consumer demand for organic cotton products, the association among company business, sustainability and organic development strategies, and growing support for organic program development. This sudden change in the market situation has dispelled all cynicisms around the organic cotton production. In the earlier years, organic cotton growers and businesses could not catch the attention of the market significantly in the absence of adequate demand for organic products. Despite the growing demands of organic cotton, the cost of certification and labeling, and complexities in standardization processes are not favoring all organic cotton growing countries in the same way.
Consumers in the U.S. and other countries are increasingly leaning toward “green product choices.” A recent Harman Group finds that 50 percent of women want the U.S. mass retailers to carry more green goods. At the same time, organic food, fiber, and personal care continue to grow at the double-digit in the U.S. and Europe. The organic sector has grown by 21 percent in the U.S. in 2007, while the global market has witnessed a growth of 22 percent. The Organic Exchange (OE) report also projects higher retail sales in 2007. Interestingly, the organic cotton market saw a 'big jump' in the year 2006. Organic retail sales were 85 percent higher than in 2005 sales. In 2007, growth in retail sales is estimated to be around 83 percent higher compared to 2006. OE projects that the global retail sales of organic cotton products will be $3.5 billion in 2008, $5 billion in 2009, and $6.8 billion in 2010.
A growing number of retailers and brands have adopted business strategies aligning with sustainability objectives. As part of that, retailers and brands have integrated organic program development goals with business goals, such as Marks & Spencer's “Plan A,” Wool-worths South Africa's Good Business Journey, Wal-Mart's Sustainability Plan, C&A's “We Care” program, and Carrefour's Sustainable Development Program.
The OE reports that large and small retailers, such as Coop Switzerland, Edun, Gaiam, H&M, Hanna Andersson, Indigenous Designs, Levi Strauss & Co., Loomstate, Marks and Spencer, Nike, Nordstrom, Under the Canopy, Wal-Mart, and Woolworths South Africa, increased their organic cotton programs in 2006 and 2007. By 2007, 25 companies with the largest organic cotton programs accounted for 75 percent of total market demand. Two years before these companies met 52 percent of total market demand. Wal-Mart, Nike, Coop Switzerland, Woolworth's South Africa and C&A are the top five companies producing organic cotton products in 2007.
After 2001, the organic cotton sector got more support from non-profit organizations, too. Among others, these organizations include Organic Exchange, Organic Trade Association, Solidaridad, Helvetas, Soil Association, Oxfam, Fair Trade Foundation, Roots Capital, and Rabobank Foundation. Encouragingly, development agencies and foundations like Shell Foundation have developed information tools and business models for helping companies implement organic cotton programs.
With the growth in market demand, the manufacturing demand for organic cotton has also increased. The demand for organic fiber cotton has grown from 13,610 metric tons in 2004 to 45,837 metric tons in 2006. Thus, there is pressure for increasing the supply of organic cotton fibers. To keep pace with the increasing demand of manufacturers, the organic cotton growers globally increased their production by 30 percent in 2006/07. Turkey, Indian, China, Syria, Peru, the U.S., Uganda, Tanzania, Israel, and Pakistan are the top ten organic fiber producing countries. Projected market growths by 40percent and 55percent per year are going to exceed the supply. There is a chance that fiber shortages could occur in 2009 and 2010. OE has not yet anticipated a shortage of fiber production in the coming years. OE has increased its attention on better coordination between brands and retailers and business and farming partners. The fiber shortage can be avoided if business and farming partner can know the demand of brands and retailers in advance. Brands and retailers also need to go for secured long term fiber agreements and farm development supports for the farming community. In this context, OE has designed “farm development programs” for organic cotton production.
The organic cotton market has also seen continued efforts in the innovations of products, business models and practices in the last two years. Brands and retailers, such as Marks & Spencer, Timberland, Nike and Patagonia, have incorporated organic cotton as a core component of a broader sustainable cotton collection. The organic cotton market has also seen the standardization of processing standards, i.e. Global Organic Textile Standard (GOTS), Oeko-Tex, and health, safety and social standards, such as SA 8000 and Fair Trade.
Initial challenges of organic cotton production:
International Cotton Advisory Committee (ICAC) in 2003 claimed that fiber quality is similar in both conventional and organic farming systems. Organic cotton production yields were not higher than inorganic cotton production. Earlier data suggested that farmers received premium prices for organic cotton 26% when farmers sold seed-cotton, and 20% if they sold lint. Without a price premium, organic cotton was not profitable to the farmers. Thanks to the market demand for shifting manufacturers' attitudes toward organic cotton! Brands and retailers now have long-term and secured contracts with organic cotton growers.
Some 19 countries tried to produce organic cotton during the 1990s. But many of them stopped, not for lack of desire or demand for such cotton, but economic reasons. Synthetic fertilizers and insecticides, ignored in organic cotton produced, were adopted in inorganic cotton production because of the high benefit-cost ratios.
Rotation cropping for maintaining soil fertility appeared as a challenge to farmers. If an organic cotton producer is willing to plant a rotation crop, he has to learn how to produce the second crop under organic conditions also.
Certification and labeling are the areas that also need attention. Certification has also appeared as an additional cost, and in some cases, organic producers have complained about it. The de-facto organic cotton produced in many countries, particularly in Africa, could be easily certified as organic if the service were available at an affordable rate.
Despite all these challenges, consumers' increasing choices toward “green products” have brought significant market growth for organic cotton products. Now the challenge is to meet the market demand by increasing production of organic cotton. It is a great challenge for the organic cotton sector to meet production increase at a rate of 40 percent per year. According to organic cotton experts, it is a doable target; but it is depending on how brands and retailers will work in coordination with their manufacturing partners and farming community. ¨