Organic fiber competes with high-priced cotton

* NAT's fiber made from flax and hemp

* NAT forges deal with uniform maker Cintas

NEW YORK, June 9 (Reuters) - Naturally Advanced Technologies Inc (NAT.V) will sell its organic fiber to uniform maker Cintas which is trying to contain cotton costs.

Made from flax and hemp, NAT's organic fiber was developed to compete with organic cotton, according to a company official.

NAT, based in Portland, Oregon, has similar agreements with Levi Strauss & Co LEVST.UL and HanesBrands Inc (HBI.N) as apparel firms in the United States try to reduce escalating production costs after cotton surged to a record high over $2 per lb earlier this year.

"Cintas is the leading uniform brand in the U.S. and we are looking forward to supporting their manufacturing processes," said Ken Barker, chief executive of NAT.

On Wednesday, Gap Inc (GPS.N) Chief Executive Glenn Murphy said his company would cut back on the number of cotton vendors it deals with, and develop more direct relationships with mills as it tries to rein in soaring yarn and fabric costs. [ID:nN08250020]

This year's rally in cotton prices has made NAT's fiber a competitive alternative to normally produced cotton. It is cheaper on average by about 10 to 30 cents.

"They now find themselves competing on price with ordinary cotton," the official said, referring to the organic fiber created by his company.

NAT has forged a 10-year purchasing agreement with Hanes brands.