Published on: November 22, 2019
Cotton is the most widely produced natural fibre on the planet. It comes from the cotton plant where it grows in a protective case called a boll. The case contains both the cotton lint (cotton fibre) and the cotton seed. To separate the cotton lint from the seed, a machine is used known as cotton gin. Although this separation can be achieved manually, the use of machines expediates the process leading to higher productivity. The fibre collected is spun into yarn and then used in textile industry. In addition to this, cotton is used for manufacturing fishnets, coffee filters, archival paper, and other products.
We have categorized the cotton market as a part of the overall agricultural products market. The agricultural products market cover producers of agricultural products which include crop growers, owners of plantations and companies that produce and process foods but do not package and market them.
The global cotton production is expected to reach 29.40 MMT by 2023 growing at a CAGR of 2.64% during the forecast period. Cotton is a vital cash crop and provides income to multiple industries and acts as a catalyst in industrialization. Therefore, economic growth is one of the major drivers of the cotton market. Both the production and the consumption of cotton were reduced compared to last years mainly due to slower domestic economic growth of major producer countries like China and India.
Based on type, conventional cotton segment dominated the market with more than 50% of the total market. However, organic cotton registered the highest growth rate of around 10%. The organic cotton market is driven by the growing number of brands and retailers setting targets and signing commitments to increase their use of organic cotton. Based on geography, APAC region dominated the global cotton market with China and India leading the global cotton production followed by the US. From a trade perspective, China and Vietnam were the major importers whereas the US and Brazil dominated the cotton export market.
The global cotton market can be segmented into the following:
Many factors are expected to drive growth in the cotton market during the forecast period. Our analysis identifies the following factors to be driving the growth in the cotton market:
The market is witnessing an increased demand for mercerized cotton in a wide range of end-user industries. Mercerized cotton offers higher tensile strength, advanced water absorbing properties, and dimensional stability compared to conventional cotton. As a result of this, market vendors are significantly investing in R&D activities so as to increase the application of this type of cotton which is driving the growth of the market.
Several governments across the globe offer various agricultural subsidies to support cotton farming. For instance, Chinese government provided an estimated subsidy of USD 4.3 billion to the cotton sector. Moreover, many governments have introduced new policies to support production, logistics, and import/export activities associated with cotton market to fuel the growth of the market.
The market is witnessing significant growth in the demand for organic cotton. Unlike conventional cotton, organic cotton is never genetically modified and is free from highly polluting agro-chemicals such as those found in pesticides, herbicides and many fertilizers. These polluting agents end up in the ground, air, water and food supply leading to serious health hazards and environmental impact. As a result of this, the demand for organic cotton is gaining pace.
Farmers are increasingly focusing on integrating innovative technologies to increase production. Smart agriculture refers to the application of modern information and communication technologies in agriculture. Various types of smart agricultural technologies such as decision support systems, geo-positioning systems, and global navigation satellite systems are finding increasing applications in agriculture. Smart agriculture has the potential to deliver sustainable and productive output. Farmers can also ensure a more precise and efficient way of farming through smart agriculture. A large investment ecosystem is rapidly developing toward the development of new smart agricultural products.
Meanwhile, the vendors operating in the market face numerous challenges in increasing their sales and improving profitability. Some of those challenges are:
A great deal of negative environmental impacts has been associated with cotton farming. One of the primary concerns is that cotton farming requires massive water irrigation, leading to rapid decline of ground water. Further, conventional cotton requires many pesticides, herbicides and other fertilizers which then end up in food and water supply leading to health hazards.
The ongoing trade war has significantly impacted the cotton industry in many countries specially the US. After the initial tariffs from the US, China imposed tariffs on imported cotton from the US. Although, the US is the third largest producer of cotton, it does not have a technologically capable textile industry. As result of this, the US exports a significant amount to China. But after the imposed Chinese tariffs, US cotton exports declined rapidly, leading to significant drop in price of cotton.
Our reports on the cotton market cover several large and small vendors active in the market including Weiqiao Textile Co. Ltd., Fazal Group, Loyal Textiles Mills Ltd., Bombay Dyeing & Mfg Co. Ltd., and Cotton Corporation of India.
Trade partnership, technological development, and market investment are some of the strategies adopted by the manufacturers in the global cotton market.
Following are a few of the major developments in the market:
Backed with competitive intelligence and benchmarking, our cotton market research report is designed to provide entry support, customer and M&A assessment, as well as go-to-market strategy support.
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