Interview with Mr Nick Earlam

Our Industry is going through a phase of substantial consolidation. A number of long established market participants have either left the Industry or been merged with other substantial companies and some new participants have entered.

The remaining market participants should do well providing that we do not have another “black swan” situation which occurred twice in 2008 – once in March 2008 and then again with the de-leveraging caused by the Lehmann and AIG crisis.

Our desire is to empower the Farmer in Africa so that his yields can increase and his income increase substantially and to help him realize value down the supply chain. This will have a profound effect on the local economies and help break down the cycle of poverty that goes from one year to the next.

I hope that African governments will look seriously at the genetically modified seed issue as this would have an immediate impact.

The hurdles in achieving this are often that many times the participants involved have different agendas.

The success will be when everybody works in the same direction for the same end goal and we hope this can be achieved by honest and open dialogue.

At the moment it would appear likely that most farmers will achieve better than the MSP so it is unlikely to have much effect on world cotton prices unless international prices go back to this level

I think that the Indian MSP provides a fair return to Growers and the knowledge that it is there for the last two seasons must give confidence to the farmers to plant cotton again, which is healthy for the Indian cotton Industry at a time when acreage for raw cotton has declined globally.

ICAC have stats that show global base acreage for cotton has declined by about 3 percent on account of price and more profitable crops. However if prices stay where they are or increase further it is our strong belief that this acreage can be regained and the new seed varieties will also help yield increases. There is an old saying that low prices cure low prices and high prices cure high prices. We have been in a low price environment for a long time relative to other crops and I sense this might be changing in the short term.

If it is related to income I don’t really understand how organic cotton can increase if farmers achieve the yields they should be achieving with conventionally grown cotton. There is the potential for conventionally grown cotton to out yield organic cotton by a factor sometimes as much as six times so even a 40 percent increase in price for organic cotton does not cover this differential.

The only place where organic cotton works properly is in those areas where yields are so low on conventional cotton that organic cotton becomes an alternative and in time this situation should change.

I do however see any cotton grown in a better sustainable and environmental manner increasing its market share going forward.

I think that there is a big potential with properly provided genetically modified seed of Pakistan substantially increasing its crop one day. I also see a lot of prospects on increasing production in certain parts of Africa if we can get it right on yields and Brazil should have a large part to play. The biggest players in terms of both production and consumption of raw cotton will be China and India and in both countries I see it as a matter of National security to ensure sufficient enough access to raw cotton and man made fibre. These two countries alone consume more than 60 percent of the world’s consumption of cotton and produce more than 50 percent of the world’s production.

Uzbekistan, Australia, African continent, Brazil

I don’t believe that cotton will ever go out of style – at least not in my lifetime but as consumption increases as a result of population growth cottons relative share of the fibre market will slowly decline in relation to overall fibre consumption as food security will eventually take precedence over what farmers choose to plant on their acreage.

Pleasure.