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Cotton prices drive up costs

Marlon Madden

Cotton prices drive up costs

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by MARLON MADDEN TWO OF BARBADOS’ leading garment producers are worried that local clothing would continue to attract significant and regular price increases as the global demand for cotton outweighs the supply, and they are uncertain for how long.
Chairman of the Barbados Manufacturers Association (BMA) Garment Group, Ian Pickup, indicated recently in a Press release that “the era of cheap clothing is over”.
He said the world price of cotton had more than doubled in the last year as demand far exceeded supply and therefore caused an increase locally.
“As far as cotton is concerned, we are faced with almost the perfect storm where a number of factors have combined to push cotton prices to this unprecedented level.
“The situation is exacerbated by burgeoning demand in the fast growing economies of China and India, to the extent that India had suspended all cotton exports, only recently agreeing to export a small quantity to Pakistan,” he said.
In a telephone interview with the MIDWEEK NATION, managing director of Yankee Garment Factory, John Hadchity, without giving figures, said they were forced to increase prices.
“From a local manufacturer’s point of view, our fabric cost has increased significantly . . . This has been going on since 2010 when it started with the floods in Pakistan.
“So it is a problem, and what it does is that it would reflect itself in the cost of our products because we wouldn’t be able to absorb that kind of increase,” said Hadchity.
He said the problem not only had to do with the significant increase in the price of cotton but that the increases were “very unstable” since they could change on “a day to day and week to week” basis.
“In the meantime, we as producers, all we are doing is trying to look at our cost options, where we can try and save and try at least [to] minimise the impact on the consumers. My understanding from Mr Pickup is that nobody can give us any clear indication as to when it would come back down,” he said.
Pickup, who is also director of River Bay Trading Factory, said: “Nobody seems to think it is going to end until later in the year. A lot depends on how the weather patterns around the world turn out this year too.”
He said at all stages in the supply chain, people would “try to absorb a little bit of the increase” in order to keep the end price “at a reasonable level”.
“The cotton price is the highest [it has] been for over 40 years now and it is unprecedented. People don’t know how to handle it. If you have to stay in business, you have to pass on some of the increase on to your customers,” he said.
Pickup said the company recently paid an increase of 65 per cent for a shipment of cotton fabric for T-shirts compared to what it paid a year ago.