Last year was a good one for the organic cotton market and the sector may now be crawling out of niche and materializing in the mainstream market.
In its Organic Cotton Market Report 2015 released Wednesday, Textile Exchange said things are moving in the right direction for the eco-friendly fiber. Grower communities are showing signs of re-invigoration, more textile mills and factories are certified under organic standards like Global Organic Textile Standard (GOTS) and Organic Content Standard (OCS), and brands’ and retailers’ rising demand for organic is leading to its increased share of market.
“After years of organic cotton being described as “niche” we now have really big retailers committing to organic cotton as a major component of their ranges, so I think this has been the year that we broke out of the niche,” said Textile Exchange managing director La Rhea Pepper. “We now need to incentivize suppliers more to keep up!”
The organic cotton sector saw 67 percent growth in market share, bringing its market value to $15.7 billion. Production in the 2013/14 season increased 10 percent to 116,974 metric tons—the largest increase in four years. For the 2014/15 season, organic cotton production is expected to experience 15-20 percent growth.
But short supply has posed a problem. Production isn’t keeping pace with demand and the sector is still recovering from years of decline in production, according to Textile Exchange. And the only way for organic cotton to “catch up” is for brands at the end of the supply chain to pull only cotton grown organically though the system.
Beyond the catching up barriers to entry in the organic market are also hindering growth.
For smallholder farmers, organic cotton prices, timeliness of payments and market access aren’t significant enough to offset the investment risk.
“If sales payments are not timely, farmers will sell organic as conventional, particularly when faced with cash flow challenges. This loss of organic fiber to the market is not only financially painful but also discouraging for the farmer who has spent all year keeping his or her commitment to organic production,” the report noted.
Farmers have also found it challenging to access organic cotton seeds because of contamination with the genetically modified (GMO) variety, and according to Textile Exchange, the lack of investment in non-GMO seeds suitable for low input cultivation can be a problem facing bigger organic cotton regions.
Pepper said three things could help improve the organic cotton sector. “First we need to solve the non-GMO seed supply problem, and secondly we need to make sure that the business benefits reach the farmers,” she said. “My third “wish” won’t necessarily speed things up in the short-term but I want to see supply chains solidifying in Africa, Latin America, Central Asia and beyond. Over the longer term the market will benefit from a supply base that is spread out more evenly.”
For businesses wanting to expand their organic offering, launching a separate organic line isn’t the answer, according to Pepper—turning mainstream product ranges organic could be the better way forward for long-term sustainability.
Fifty-six percent of the 57 companies that participated in this year’s study said they have specific growth targets for organic cotton use and 40 percent indicated awareness of the need to work more closely with supply chains all the way back to the farm level.
Textile Exchange highlighted the top 10 brands using (by volume) organic cotton, including: C&A, H&M, Tchibo, Decathlon, Nike, Carrefour, Target, Lindex, Inditex and Puma. The total amount of organic cotton used by these retailers has increased 25 percent since 2014.
“We continue making progress in bringing more organic cotton within our collections and we are highly committed to continued advancements,” David Miller, C&A’s head of fabric, yarn and components, said. “We have set a long-term plan to procure our entire cotton collection from sustainable producers by 2020 and the company is on track to reaching this goal.”
Pepper added, “With the commitments from the major retailers and all the work going on to sort out our seed and supply chain challenges, I think we’re going to see more growth as the millennial generation brings its buying power to the market. Organic is the best answer to their deep concerns about ethics and the long-term sustainability of our air, land and water, so we’re in the right place at the right time.”