Dean Ethridge has seen cotton fibers go in and out of favor in the fashion world in his years of watching prices move up and down in the world cotton markets.

But Ethridge, former chief economist with the National Cotton Council who now works with the Fiber & Biopolymer Research Institute at Texas Tech University, believes the natural fiber is getting a bad rap this time around.

Conventional wisdom says millennials are eschewing cotton and moving to garments such as polyester-filled yoga pants because they don’t like cotton as much as their mothers and grandmothers. Ethridge isnΆt buying it.

“You have to realize that if you take the last five yearsΆ average prices, the textile spinner in China is paying 83 percent more for a pound of cotton than heΆs paying for a pound of polyester,” says Ethridge. “Their margins are much less than that. TheyΆre going to spin what they can that will at least meet the satisfaction of the consumer market.”

Ethridge, interviewed at Dow AgroSciences Media Field Day, says part of that satisfaction has to do with pricing points – the limits of what consumers will pay to buy apparel in these days of a Wal-Mart-driven economy.

Function of cost

“This is not largely a function of consumer preference; it is a function of the cost of the fiber and of the processing efficiency,” he said. “Consumers buy textile products and the manufacturers make them. They have to choose the fibers theyΆre going to use.

“So thereΆs an interaction that takes effect. These pricing points work themselves through the marketing chain. You have to realize fibers will account for about 50 percent or more of the total cost of a pound of yarn. The yarn will account for 50 percent of the cost of the fabric. So as this works through the marketing chain you can see how the fiber choice gets leveraged from the beginning.”

Here are some facts that are driving the worldΆs textile production:

• Between 1990 and 2013, cottonΆs share of the global fiber market decreased from about 50 percent to 28 percent.
• During the decades of the 2000s, global textile manufacturing capacity has grown about four times faster than global population.
• China alone accounted for about 97 percent of this global growth in textile manufacturing capacity.
• Growth in global polyester production has resulted in it being the only fiber to gain market share since 1990.
• World production of polyester is 44 percent larger than world cotton production.
• Growth in global polyester production capacity has far outpaced growth in polyester consumption, resulting in unutilized capacity exceeding 30 percent.
• China is overwhelmingly responsible for the excess polyester capacity; its share of global capacity has grown from less than 13 percent to more than 71 percent.
• China alone is producing almost one-third more polyester than the entire world production of cotton.
• Using average prices over the last five years, ChinaΆs domestic price of cotton is about 59 percent above the world price and that domestic price of cotton is about 83 percent above its domestic price of polyester.

Policy-driven realities

“These are primarily policy-driven, rather than market-driven, realities,” Dr. Ethridge says. “The policies that have developed over the last two decades were made possible by actualization of the World Trade Organization and especially by ChinaΆs accession to full membership in the WTO.”

The events that have occurred since China entered the WTO have meant cotton is struggling to maintain its market share and is having greater than ever demands being made on its properties in order to penetrate and participate in the global market.

“This is occurring not just at the consumer level nor does it mean the consumer demand for cotton has decreased,” he said. “But the ability of the manufacturing sector to source cotton, to use it in a context of economic gain has been compromised by the events that have occurred since China has entered the WTO.”

This has occurred primarily because China has dominated cotton fiber production and textile manufacturing. “Its industry is the dominant industry using the fiber,” says Dr. Ethridge. “At the same time it has priced cotton out of the domestic market and out of the world market so that it is currently holding about one-third of the worldΆs total supply off the market because itΆs far over-priced.

“And it has increased its polyester fiber production capacity to the point it is now producing about a third more polyester every year than the entire world is producing of cotton every year. So all of this has combined to make cotton disadvantaged in the system, not so much with consumers as with the manufacturers themselves. And itΆs at that level in the system where we are having our biggest problems.”

The U.S. cotton-producing sector has been doing its part to meet the quality requirements in the ring spinning systems used by Chinese yarn spinner, who continues to dominate the Asian market, says Dr. Ethridge.

“U.S. Cotton now has to sell the quality of fiber into that market, and itΆs got to do it by competing with everyone else in the world for that ruing spinning market,” he notes. “ThatΆs why itΆs become critical, and thatΆs why the industry has responded. All of the seed companies, all the researchers have marshaled their forces to bring forward longer, stronger, finer cotton fibers.

"And they've done it just at the right time to help the U.S. farmer compete in this market."

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