Dec 17, 2024 (MarketLine via COMTEX) --
Extreme weather events, trade disputes, geopolitical tensions, increasing regulation and more complex shipments are expected to impact the global cotton supply chain in 2025, but traceability and innovation could reinvent the sector.
According to the US department of agriculture 2024/25 global cotton consumption is forecast at 115.2m bales, which is more than 9m bales below the record level witnessed four years ago, thanks to more production and consumption of man-made fibres.AA
Lorena Ruiz, economist at US-based International Cotton Advisory Committee (ICAC), which unites cotton producing, consuming, investing and trading countries, tells Just Style the cotton supply chain should aEURoeencounter several significant challenges by 2025,aEUR including aEURoeextreme weather events, such as droughts and floods,aEUR which aEURoeare becoming more frequent, adversely affecting cotton yields and qualityaEUR.AA
Trade disputes and geopolitical issues, regional conflicts, economic sanctions, and shifts in trade agreements aEURoecan disrupt cotton supply chains, leading to uncertainties in sourcing and pricing,aEUR Ruiz added. There are also concerns about potential trade tensions between the US and cotton industry major China once Donald Trump takes office as he has threatened to impose 60% tariffs on US imports of Chinese goods.AA
Regulations will demand cotton transparencyAin 2025Ruiz notes regulations are aEURoeincreasingly demanding transparency,aEUR and companies must ensure their products are free from cotton sourced in specific regions. For instance, in 2021, the US banned imports from ChinaaEUR(TM)s Xinjiang region without proof they were not made with forced labour. A
Still, aEURoeachieving complete traceability remains a significant challenge,aEUR she said, explaining nearly 40% of global cotton production is exported and processed in more than one country, and aEURoetextile mills often source cotton from multiple origins, blending itaEUR.AA
Moreover, while certifications might improve market access or premium pricing, aEURoesuppliers often must work with multiple certification entitiesaEUR to meet different clientsaEUR(TM) needs, and in many cases, farmers may not be fully aware of the benefits of certification.AA
Risk of audit fatigue AIndeed, her colleague Kanwar Usman, ICACaEUR(TM)s head of textiles, sees a aEURoerisk of audit fatigueaEUR in an aEURoealready stringent compliance environmentaEUR. A
He tells Just Style that, since together the European Union (EU) and the US aEURoerepresent the worldaEUR(TM)s leading import markets,aEUR their policies are likely to shape the textile industry, and currently the EU is formulating and implementing 16 regulations and directives pushing sustainability policies impacting cotton suppliers.AA
For instance, the Corporate Sustainability Reporting Directive, which demands large companies and listed companies publish reports on their social and environmental risks from 2025 onwards, aEURoeadds new layers of complexityaEUR with required information about pollution, water management, and biodiversity, among other indicators, which means aEURoesignificant hurdlesaEUR for SMEs, Usman says. A
Furthermore, he explains circular economy models encouraged by EU policies demand aEURoeinnovative approaches to material sourcing and production processes,aEUR with costs for the entire value chain.AA
While such requirements help to meet consumer demand and build market competitiveness, he advises aEURoetargeted support for SMEs (aEUR) to ensure industry-wide compliance that does not leave too many people behindaEUR.AA
Indeed, according to Dr Keshav Kranthi, ICACaEUR(TM)s chief scientist, such verification and regulation aEURoecan be challenging in Asia and Africa because the crop is primarily grown by smallholder farmersaEUR. Globally, smallholders account for more than 99% of production, he stresses.AA
US Cotton Trust Protocol, which is a voluntary sustainability programme and traceability platform, says the proposed EU green claims directive, which ensures that companies substantiate their claims, will also aEURoehave a significant impactaEUR in 2025. It offers quantifiable measurements across six key sustainability metrics:AA
Water useA
Energy efficiencyA
Land useA
Soil healthA
Soil carbonAA
Greenhouse gas emissions.AA
The current demands are aEURoepushing brands and retailers to rethink their supply chains,aEUR it argues, adding that companies will also have to respond to aEURoeimproved time to market efficiencies.aEUR It adds that to build a aEURoemore resilient and responsible cotton industry (aEUR) collaborative partnerships will be essential.aEURAA
Key industry initiativesAAThere are several key industry initiatives to boost cooperation. Indeed, the Cotton Trust Protocol helps the sector to be more collaborative and connected, and has experienced consistent growth with 45 brand and retailer members and 2,500 mill and manufacturer members in 2024. It notes that sustainable and regenerative farming practices will be key. Despite the challenges, the Trust Protocol has seen progress against its six key sustainability metrics, it tells Just Style.AA
Another solution is forensic technology, which, according to forensic science and data analysis firm Oritain is aEURoea transformative solution that's rapidly becoming the industry standard,aEUR with fashion brands such as Lacoste and Patagonia using it.AA
OritainaEUR(TM)s chief commercial officer Rupert Hodges says forensic science is aEURoeleveraging the indisputable chemical makeup of materials to verify their origins against our map of global cottonaEUR with real-time data. He adds that brands can test cotton and cotton blends aEURoeto identify potential transshipments [shipments to intermediate destinations], ensure compliance with global sourcing standards, and moreaEUR.AA
He does warn, however that aEURoetransshipments have emerged as an issue throughout the entire global supply chainaEUR. He explains manufacturers from what he would call 'high-risk regions' aEUR" or sourcing regions prohibited by acts of legislation aEUR" are sometimes re-routing materials through alternate territories.A
What to expect from cotton in 2025? AHodges expects more investment in traceability technology in 2025. He stresses that even the US Customs and Border Protection, which released its first detailed guidance on isotopic testing in November 2024 to check the unique chemical signature in products, aEURoeencourages importers to take a proactive roleaEUR in testing. A
He also highlights that increasing regulation aEURoewill require proactivity from brands and an intelligence-driven approach that takes both economic pragmatism and thorough supply chain tracing into account.aEUR For 2025, he expects aEURoemore focus on cotton as a superior fibreaEUR and more sustainable options.AA
Indeed, Dr Kranthi notes aEURoecompanies are increasingly exploring regenerative agriculture-based and less water-intensive solutions for cotton productionaEUR.AA
Singapore-based agri-business company Olam Agri International is a good example of this as it launched its Global Regenerative Agriculture Programme in January 2024 to promote traceable and sustainably grown cottonaEUR.AA
Over half (55.5%) of global cotton is produced on rainfed farms without any irrigation, explains Olam Agri, and the solutions applied include aEURoewater harvesting, water conservation, and water-saving irrigation systems.aEUR Plus, sensor-based precision irrigation and Internet of Things (IoT) tools can be used to enhance soil moisture retention, cover crops and improve precision agriculture.AAAAA
Earlier this month Emilie Delaye and Sheng Lu explored Italy as a sourcing base for clothing using recycled cotton.
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