Friday 24 October 2008

Fair Trade Cotton demand soaring

With all the news about commodity prices taking off and then some, notably oil, declining, I wondered what might be happening in the cotton markets. Thanks to the internet such information is close to hand.

It would appear that cotton about 35% more expensive now than it was 18 months ago but, surprisingly, costs no more than it did at this time in 2003, its previous peak.

My source is Looking at other products I like, over 5 years aribica coffee has increased in price to 250% of it's October 2003 value, bananas 250%, salmon 170% and sugar 240%.

And we see these upward price movements reflected in our shopping bills, although with the producer inevitably getting precious little of what we actually pay, the prices that we see have not moved that greatly. And yes, clothing prices in the High Street have been coming down reflecting the relative stability in the price of cotton.

What made me look at these numbers? It was a little report that I picked up in Images, the trade journal for our promotional clothing industry. According to Images, reports that "the worldwide demand for fair trade cotton has doubled over the past 12 months".

Despite the obvious growth in the fair trade market, this statistic surprised me so I checked out the original report on the fairtrade site. Indeed, it's true - "Fairtrade cotton farmers have... seen demand for their produce more than double in just one year. During 2007, the sales of items made out of Fairtrade certified cotton, ranging from cotton wool to jeans and towels, surpassed 14 million individual items"

And that's just cotton carrying the Fairtrade label, as opposed to carrying other equally worthy certifications such as WRAP (which clothing supplied by our main supplier Starworld carries).

With all this increase in demand, why have our prices have been relatively stable, always a help in times like these? My conclusion is that more and more suppliers are signing up to the fair trade ethos (a good thing) so that supply is to some extent keeping up with demand. And if the prices have been fair in the past, why should they rise anyway?

In the world of commodities today fairness is not exactly an economic concept which is at the forefront of the mind of a commodity trader short selling, but in the fair trade markets where suppliers (like Starworld) buy locally, and then deal directly with buyers (like us), things are perhaps a little different.

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