Cotton prices are on the rise and recently hit the highest price in nearly a decade. The impacts could reach far beyond the cotton industry.
“We cut and sew the clothing,” Holli Gibson explained. She is with Direct to Source, an apparel manufacturing company.
They supply garments to several brands.
The pandemic and issues with the supply chain have caused a lot of disruption in the past year and a half.
“Carton prices are going up. Thread prices are going up,” she said. And cotton is also going up.
“Cotton is one of the most popular fibers, and the shortage of cotton, the cotton prices, have impacted us anywhere in the world we’re working,” Gibson said. “We were expecting cotton prices to start stabilizing. It’s not happening. It’s going through the roof, and so literally we see 20, 30, 40 percent increases.”
It’s something she hasn’t seen in her 30 years in the industry.
“We’re used to seeing spikes from time to time on different products, but cotton has become so expensive we’re converting away in some cases,” Gibson said.
“The demand grew for cotton, and the supply is just simply not there,” said Priscilla Rodriguez, the Director of Regulatory Affairs at the California Cotton Ginners and Growers Association.
“For the Upland variety, right now we see over a dollar a pound, and typically that's 70 cents per pound,” she said.
Rodriguez said drought and severe weather are to blame for the supply shortage and rising prices.
“Cotton growing regions that were affected by hurricanes or natural disasters,” she explained.
“I think the whole supply chain is in kind of a disarray right now,” Kishore Kulkarni, an economics professor at the Metropolitan State University of Denver, said.
“The labor has been in short supply in recent days, which means higher wages. And higher wages mean higher cost of production,” Kulkarni said. “Our boats are not working as fast, it's all because of the labor shortage, and that is creating a constraint on the supply even more.”
Kulkarni said rising cotton prices would eventually be passed on to consumers.
“Time is hard to predict, but one can easily say in six months to a year you can see the reflections...in the market,” Kulkarni said.
For example, a simple cotton t-shirt could cost you more at the register.
“Our cotton prices have risen 50%," Gibson said. "So any new cotton for any new projects that we’re buying we want to turn into the fabric, the raw material is 50% higher, making the finished price 50% higher."
“There are a lot of factors which are telling us the prices are going to go up, if not already gone up like in housing,” Kulkarni said.