India’s Challenges in Cotton ProductionGlobal Supply Chain Case Study for the Fashion Industry

Aidenn Mullen / FASH 503 / Spring 14’ / Professor Greene

India’s Challenges in Cotton ProductionGlobal Supply Chains for the Fashion Industry

Aidenn Mullen / FASH 503 / Spring 14’ / Professor Greene

Today, the majority of the world’s cotton (75%) is grown in India, China and Bangladesh.

India’s cotton production has grown 300% in the past 10 years, staying even on levels of consumption and production and a steep downturn in export quantity.

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Aidenn Mullen / FASH 503 / Spring 14’ / Professor Greene

There are 4 stages of cotton progression

Raw Cotton and Ginning

Spinning

Weaving

Garments

There are 4 challenges for India’s cotton stages

Volatile prices, dependence on

conventional prices

Varied Product Mix & Demand

Lack of dedicated facilities

Slow to sustain higher revenues

India’s Challenges in Cotton ProductionGlobal Supply Chains for the Fashion Industry

Aidenn Mullen / FASH 503 / Spring 14’ / Professor Greene

The global reliance on India’s Cotton production could present critical challenges for low cost garment manufacturing.

Crop Sustainability

Price

Quality

Geographical Access

India’s Challenges in Cotton ProductionGlobal Supply Chains for the Fashion Industry

Aidenn Mullen / FASH 503 / Spring 14’ / Professor Greene

The global reliance on India’s Cotton production could present critical challenges for low cost garment manufacturing.

ProductionYields

Price

Quality

Employment

Cotton yields in India are forecasted to plummet 20% in 2014.

China is the lead importer of raw cotton from India due to lack of tax.

India is expected to surge in the amount of rural female cotton workers.

India’s Challenges in Cotton ProductionGlobal Supply Chains for the Fashion Industry

Aidenn Mullen / FASH 503 / Spring 14’ / Professor Greene

The global reliance on India’s Cotton production could present critical challenges for low cost garment manufacturing.

Global Markets

Price Surge

India Crop Explotation

Lack of Infrastructure

Lack of Government support

Chinese buyers have struck deals with cotton exporters paying typically $.06 cents less per pound

on average under contract.

India’s transport infrastructure remains inefficient when compared to the overall surge in population.

Pakistan and Bangladesh are being starved from India’s cotton crops in favor of higher price paying

China.

India’s Challenges in Cotton ProductionGlobal Supply Chains for the Fashion Industry

Aidenn Mullen / FASH 503 / Spring 14’ / Professor Greene

Global forecast for India’s Cotton commodity market:

- China continues to buy more cotton yarn in efforts to bypass duties on raw fibre via future contract tools.

- In 2015, India’s cotton crops are forecasted to dip 20% as China proceeds to halt the “stockpiling” efforts of 2014.

- Factually, India’s cotton crops were historically high in 2012/11 at 12.9 million bales to 10.1 million bales in 2012/13.

- Factoring in typical theories of supply and demand, India’s 1 1/8 inch premium cotton prices are higher than other international manufacturers / textile mills.

- India’s cotton quality is much higher than that of China and the rise in need for sustainable cotton crops will increase it’s inherent value in the premium market.

- China has recently declared efforts to discontinue cotton commodity stockpiling by extending government rural farmer subsidiary funds. China has also been forecasted for a downturn in cotton crop growth by 3.9 million bales.

- Key solutions in the battle for global cotton include the deliberate slow stock release by farmers to compensate for better export demand prices in the eastern cotton market.

India’s Challenges in Cotton ProductionGlobal Supply Chains for the Fashion Industry

Aidenn Mullen / FASH 503 / Spring 14’ / Professor Greene

Works Cited:

BUSINESS LINE : Will China’s yarn demand help cotton bloom?http://www.thehindubusinessline.com/markets/commodities/will-chinas-yarn-demand-help-cotton-bloom/article5635380.ece?css=print

Reuters : India’s cotton seen up on export demand, thin supplyhttp://in.reuters.com/article/2014/01/06/india-cotton-idINL3N0KG2SB20140106

Rueters : India’s cotton exports hit as China shifts policyhttp://in.reuters.com/article/2014/04/17/india-cotton-exports-idINL4N0MP2MK20140417

Texoprocil Study finds Robust figures for Cotton Yarn Export from India, Outlook brighthttp://www.pr.com/press-release/560415

Challenges in Cotton Production & Marketing, Policies & Strategies for Sustainable Cotton Farminghttp://www.slideshare.net/donthinreddy/cotton-issues-in-india?qid=ec66edc6-5fa9-402b-944e-07590a877cf0&v=default&b=&from_search=7