New York (Dow Jones) - According to a report released by the Organic Exchange on Tuesday, the global retail sales of organic cotton products in 2008 are estimated to increase by 63%, reaching $3.2 billion, up from $1.9 billion in 2007.
The 2008 report of the organic cotton market shows that, although the growth of global textile consumption has slowed down, organic cotton has become a fixed sign of prominent ecological sustainability in the clothing lines of major retailers to stabilize demand.
Organic cotton fiber grows without fertilizer and pesticide. The Texas based Organic Exchange said that the demand of textile manufacturers for organic cotton fiber increased to 92998 tons in 2008, compared with 74839 tons in 2007. In contrast, the US Department of Agriculture estimated that the annual world cotton consumption in the 2008-09 market was 24.2 million tons, down from 26.7 million tons last year.
The current economic situation "does not reduce the company's decision to use organic cotton, because organic cotton is their sustainable input," said LaRhea Pepper, senior manager of the Organic Exchange. The selling price of organic cotton is generally higher than that of conventional cotton through forward contracts rather than exchange traded futures contracts, such as ICE Futures Exchange of the United States.
According to the report, the interest of the public sector in organic agriculture, as well as the expansion of the media promotion of organic and sustainable textiles, stimulate the growth of the wholesale and retail markets. In addition, consumers are increasingly interested in environment-friendly products. Brands and retailers expand their existing plans and introduce new organic cotton products. These factors contributed to the demand growth in 2008.
Wal Mart (WMT), the world's largest retailer, ranks first among brands and retailers using organic cotton. Wal Mart sells organic brand jeans "Fade Glory".
This brand's jeans entered Wal Mart's shelves through the Seattle based Greensource, the ninth largest company using organic cotton in 2008. The report highlighted another trend: business integration, sustainability and organic cotton strategy among large enterprises.
Green resources produce jeans for Wal Mart, Sam's Club, K-Mart, Macy's Department Store, Kohl's and city travel goods stores. The company is exploring the supply of organic clothing to a leading organic clothing retailer in Patagonia.
Looking to the future, the Organic Exchange said that it is expected that the global retail sales of organic cotton products will climb to 5.3 billion dollars in 2010 from 4 billion dollars in 2009.
According to the Organic Exchange, Wal Mart, C&A and Nike are the top three retailers of organic cotton projects in the world. From 2009 to 2010, they accounted for about 50% of the retail demand for organic cotton.
The rapid increase of fiber supply and organic cotton certification may lead to oversupply in 2009 and 2010.
The Organic Exchange said that the supply of organic cotton fiber continued to grow to 145872 tons from 57931 tons last year.
The exchange said that the supply and demand situation will depend on the stocks of organic cotton and the actions taken by farmers and their trading partners. Production meets the demand signal. For example, forward contracts will prevent oversupply, but production based on speculation will lead to large inventories. The inventory of cotton merchants and enterprises will affect the market environment, and the estimated quantity is between 12150 tons and 42000 tons.
94% of the world's organic cotton production comes from five major producers: India, Syria, Turkey, China and Tanzania. The United States is the sixth largest organic cotton producer in the world.