While the subject of fast fashion, cheap retail, and American manufacturing has been at the foreground of several debates within the fashion community of late, it seems a simple plant may soon swing the scales: Cotton. Soaring cotton prices are apparently forcing retailers to re-think their rates and threatening to end the days of ten dollar tees overall.
Yesterday, the price of the fiber, which has been steadily climbing for three months, hit a new high ($1.24 a pound), breaking records set in 1870 when the New York Cotton Exchange was first established. Levi Strauss and UK-based retailer, Next, have already announced possible price hikes to compensate for higher costs, the Financial Times reported.
The reason for the price hike? Apparently, the supply-demand balance has grown steadily more lop-sided. China's growing economy is driving demand, while poor weather and natural disasters in cotton-producing regions, from the Midwest to Pakistan, have shrunk global stockpiles.
Companies like Next -- whose CEO has said they may increase retail prices between 5 and 8 percent -- have suggested that cotton prices are forcing their hand, though others argue that the rally will actually have minimal effects on retailers.
"Texas Agriculture Talks" blogger, Mike Barnett, did some arithmetic and figured that new cotton levels will likely only bump retail prices about one percent. Barnett suspects that some companies may actually boost prices well beyond that in an attempt to pull in additional profits. "Fashion retailers are trying to bounce a five percent increase off cotton farmers' backs?" asks Barnett. "Get real."
One way or another, we'd suggest watching the price of the average T-shirt in the States come Spring 2011 closely to see what price fluctuations actually trickle down from fiber to garment.