Founder’s Letter: US Cotton Should Be Priced As a Fiber Not a Commodity

Sometimes I feel like I am not hearing enough about what I am seeing — like, for example, cotton prices.

Below, I’ve copied a chart showing the annual average cotton price per pound in the USA since 1973 (the year I first started to sell cotton textiles). Take a look and maybe you will get as flummoxed as I did. 

Forget the annual or daily cotton price gyrations for a moment. As I write this, cotton is at 64 cents per pound. In 1973, the average cotton price was 60 cents. Compare that to today and that’s a price uptick of 6.7% in 50 years. House prices in Lubbock, Texas (which is considered by many as the largest “cotton patch on earth”) over in the same period went up twenty times.

So besides the farmers, who are distraught, does anyone in our government, or our industry notice this or care? Anyone have a plan in mind other than to watch in horror?

If I was a cotton farmer, I’d look for a new crop to grow or quit farming and go into another business. Some might say there is no need to stress because farmers receive subsidies. But does any government want to subsidize an industry that has a price likely 20% to 30% below cost of production? Farming costs over the years have not dropped nor have any inputs in the process. The opposite is true.

What’s odd in all this is that the US cotton industry allows its product to be defined as a commodity. It’s like “Oh…this is the way we’ve been doing since 1757. Why change now?”

Being a commodity allows “the markets” to select a price. Not sure why that process is to anyone’s benefit, especially as our farm industry is being so hurt.

I’ve watched this process for too long and always kept my mouth shut. But after 250 years, isn’t it about time for the cotton industry to “alter” their sales system? If we don’t, we could see the end of grown-in-USA cotton. Mercantile capitalists might argue “If you can’t make money, it deserves to be shut.” But is that really the case? Is that the solution for one of our largest and most significant exports?

Here’s an idea to consider. Why not turn US cotton or “traceable cotton” into a brand?  

That way the US Government or the Department of Agriculture, not the market, would dictate the price. In my scenario, everyone in the industry would work together (admittedly not so easy to do) and set prices for the cotton brands the way Ralph Lauren does for its brands. In a small way, that’s already happening. Supima cotton commands a higher price than Upland cotton, organic cotton is priced higher than conventional. But I argue that all US cotton – particularly if it can be traced back to the farm — is superior cotton and should be priced accordingly. If the customers don’t want to pay for US cotton, let them move on and use cotton with unclear provenance, perhaps from China, India or Pakistan.  

Perhaps the USA and another cotton-producing nation, for example Brazil, can work together and set their prices together. 

The point is that the market is treating cotton as if it’s garbage apparel and selling it by the pound the way old garments are sold in Africa. This has to stop. It’s bad business, it’s not fair and not a “sustainable” business model. So either we let it roll in its current historical format and turn a blind eye or we do something about it. I strongly suggest immediately that we ACT on it.

Let’s imagine a world where the US Government (perhaps along with the Brazilians) set the price at 83 cents a pound where farmers are paid fairly. Meanwhile in Asia, the price is the global market price perhaps 67 cents.

In this scenario, brands need to make a decision. Do they buy certified and traceable US branded cotton? Or do they purchase from someplace else, maybe from Pakistan, India or Bangladesh and hope that it’s grown under fair working conditions, or worse, that the country of origin is accurate and not imported from someplace offering an even cheaper price, like 45 cents a pound. Let us be clear-eyed about what it means when the buyer asks for a 25% discount on fabric that costs $2.20 to make. 

Let’s also understand the risks of buying cotton from anyone that cannot ensure where that cotton was grown and under what conditions. Any investigative organization that wishes to do a probe into a brand’s supply chain just needs a plane ticket, a camera, cash and someone who speaks the language to dig up proof of Xinjiang China cotton in their supply chain. In short, brands need to fully consider the risk they’re taking when not buying US cotton. 

And then there is the marketing value of using US cotton and being able to demonstrate full knowledge of its origin. It takes courage to believe in your product and financial resources to bring it to the market the way you envision it. The luxury industry has taught us that if you make a limited quantity of something and that something is high quality, you can charge a higher price. You have to think in the long term.

If the US Agriculture Department believes in US farmers and the quality of their product, they should stop allowing it to be sold in global auction and take control over the price.  Cotton needs to be sold above its cost, not below it. I am sure the market will pay if someone just tries to succeed.