Inflation In Cotton Price And It’s Effect On Small Businesses

Cotton, an integral part of the textile industry in India, has recently seen a sharp rise in its price. Since the beginning of 2021, there has been a 13% spike in the rate of cotton fibre, with a further rise predicted. The reason behind this global and Indian price surge is the low production, caused due to sluggish economies, pandemic and natural calamities like floods, droughts and fire in multiple countries.

China, America, Brazil, India, and Pakistan are amongst the five major cotton producers that are all simultaneously experiencing a shortage in raw material production. This has imbalanced the supply-demand chain and resulted in the price influx. The last two years have been catastrophic for the environment. Whether it’s the ongoing pandemic or the constant ecological strain, the road for textile farming is paved with difficulties ahead.

While the increase in price works in favour of the farmers, the small business owners and the apparel shoppers will be affected by the new price. The pandemic has also altered the consumer’s capacity to buy and the designer’s ability to create. In conversation with Shilpi Yadav, founder of the sustainable label Khara Kapas, we dissect the subject in detail.

ELLE: How is the rise in cotton and yarn prices directly affecting small businesses?

Shilpi Yadav (SY): With the ubiquity of e-commerce, consumers can purchase anything they want from anywhere in the world at their own convenience. Price-conscious consumers tend to pick the lowest price. Smaller businesses like ours cannot horde large quantities of raw material and rely on a regular supply. While we attempt to shield our buyers from temporary fluctuations, a long-term increase in raw material prices adversely affects our margins, and at some point, we have to reflect this with an increase in our prices without sacrificing quality and our core beliefs.

 

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ELLE: What are the ways in which this issue can be combated?

SY: Cotton is a natural material, and as such, its availability is subject to seasonal fluctuations. We work closely with our suppliers and understand that they are also under tremendous pressure. We have long-term working relationships, and during times like this, both supply and buying side have to work together to ensure business continuity.

 

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ELLE: Cotton being an integral fabric to our textile industry, will this shift the focus towards alternate fabrics?

SY: All our products are handcrafted and made from pure, homegrown Indian fabrics. When there are supply constraints and rapid changes in pricing, there is a tendency to change to alternative materials, but a lot of this also depends on the ethos of the company. We predominantly work in cotton and other natural fabrics and are not going to readily change our production and sensibilities based on temporary constraints. While a consumer on a tight budget might be motivated to pay less attention to natural fabrics and sustainable practices, some consumers willingly pay more when they perceive value in the product and consider our focus on sustainable practices.

 

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ELLE: Is the sudden stipulation in sustainable fashion the cause behind the rising demand for cotton and its hiking price? What can be a solution for this?

SY: It’s true that the price of cotton has steadily risen since the start of the year, but this is predominantly due to lower than expected production. Large players have been hoarding supply, and this has created further issues with supply. This is an issue caused by supply and demand and will adjust with the production and release of stored supplies into the market. Futures for delivery on commodity exchanges are already indicating a lower price for cotton, but we can expect this to last probably till after the summer season rush.

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