With the cotton industry gradually making a comeback, the Cotton Industry Indaba will provide a platform where thought leaders and key stakeholders will present topics relating to the progressing industry. Celebrating those that strive for the industry’s success, the Indaba will be followed by the Cotton Awards ceremony, where key role players who have contributed to the growth of South Africa’s cotton production and local beneficiation, will be acknowledged.

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Cotton Fields: Beginning the SA Textile Industry Revival

 

By Isana Cordier, Head of Consumer Goods and Services Sector, Absa CIB

As a young girl, I remember accompanying my mother to Oriental Plaza in downtown Johannesburg where we were surrounded by reams upon reams of fabrics in all different colours, patterns and textures. We were searching for the ideal fabric to be shaped and stitched into my perfect dress.  My mother, the perfectionist seamstress, knew how to negotiate and bargain for the best price for our selected piece of fabric.

Today I am still puzzled that in a country where it is a little known fact that South Africa produces some of the best quality cotton in the world, we still import, en masse, shelves of clothing just waiting to be bought at discounted prices in a seemingly increasing sales culture. This is against the background of soaring unemployment and ample talent waiting to be upskilled in the textile industry.

What concerns me even more are the global sustainability issues we face around ethical sourcing, water efficiency and wastage. The old merchant model of retail in clothing is failing and, if retailers and suppliers don’t drastically reshape their business and ultimately the industry in the near term, the consequences will be catastrophic.

In my quest for clarity and to understand the challenges at the grass-roots level, I met with Heinrich Schultz, Founder and Managing Director of the OrganiMark Group, an international business specialising in virtual value chain integration. In 2013, Heinrich wrote a plan to revive the cotton industry value chain in Southern Africa and co-founded the Southern African Sustainable Textiles and Apparel Cluster (SASTAC) in 2014.  The information I will share in this article is primarily sourced from references Heinrich has guided me to.

As a starting point, we have to look at cotton as it is the foundation of the textile supply chain.  Research carried out by the South African Cotton Industry for its Retail 2030 Masterplan reveals that 97,8% of fabric demand comes from the Retail industry, 1,3% from Industrial and 0,9% from public procurement.  Of the total demand for fabric, 60% is derived from cotton.

Further analysis shows that if we replace the imported goods of only 4 cotton product categories, namely T-shirts, toweling, Chinos and underwear, to being 25% manufactured locally with local sourcing, we will add 37 000 jobs and R5 billion  into the South African economy.

The demand for cotton from local Retail is currently 300 000 tons per annum of fibre.  In 2013, of this demand, equivalent to 5 200 tonnes was produced in South Africa.  The Sustainable Cotton Cluster Programme was formed in June 2014 to bring together the entire cotton value chain and related players, including the public sector, organised labour, consumer organisations, service providers and dedicated cluster management.

Through this initiative and the work that has gone into driving local sourcing and production across the value chain, the production of cotton has increased significantly to 50 000 tonnes in just five years and is projected to reach 80 000 tonnes by 2022. Core to this programme are retail partners such as Mr. Price who are committing to buying locally sourced cotton and the Department of Trade and Industry, which has provided R200m in funding to support a five-year plan that will drive strong momentum for the growth and development of the Southern African cotton sub-national cluster.

Another crucial issue to deal with in the cotton supply chain is a lack of local textile manufacturing capacity which currently creates a bottleneck. There is a severe lack in spinning capacity filling a fraction of the demand, being only 26 000 tonnes in South Africa and 75 000 tonnes regionally, whilst running at near full capacity.

In conclusion there are many concerns about the state of the industry and numerous challenges it faces, but the opportunities are clear and vast.  We look forward to exploring some more of these challenges and opportunities in our future Absa Insight Series on the Textile Industry. 

We will endeavor to consider issues such as the changes required by retailers to switch from a merchant model to a process innovation model, which will be an enabler for quick response, value chain optimisation and sustainability through traceability.  Ultimately we are all trying to form strategic partnerships in our journey to aid the economy by being a force for good.

*Absa is proud sponsor of the Can’t Stop Cotton Industry Indaba & Awards Ceremony.