The impact of colour discounts to the Australian Cotton Industry
Australian cotton growers produce a high quality upland cotton that is highly regarded by spinning mills in many countries around the world. After ginning, most Australian cotton is exported to Asian markets where it is processed into yarn and fabrics. Increasing competition from synthetic fibres and improving cotton fibre quality in other countries has meant a more competitive market place in which Australia must contend.
Australia’s fibre quality has improved over time however it is important that this improvement continues in order to maintain a high-quality reputation. At present, Australia receives a premium for cotton that meets all base fibre property levels. This premium is well respected and appreciated by the industry as input costs rise.
When Australian cotton colour is below base grade, heavy discount values apply. Colour degradation of cotton fibre costs Australian farmers and the industry a substantial amount of money. The major reason for colour degradation is excessive rainfall when the cotton boll is open. Environmental factors such as rain are beyond the control of producers and there is no guaranteed way of rectifying the problem.
The current grading system of Australian cotton is widely used around the world and is based on a USDA classification process. Information gathered from visits to the USDA cotton laboratories is presented and shows the sometimes arbitrary and subjective nature of the classification process.
During travels throughout the USA, Brazil and China, a variety of management practices that can be utilised to help preserve cotton colour were observed. This report details some of those practices that can be adopted to ensure quality downgrades are limited.
Growers should always speak to merchants and discuss Premium and Discount (P&D) values before selling cotton. Cotton moisture at harvest should ideally be kept below 11%. A potential solution in the field may be hand sampling and using a miniature gin after weathering and before picking to ensure fibre quality levels are satisfactory to the grower. While visiting China, a miniature cotton gin was purchased which is now used on the family farm. This system may be useful when used in conjunction with consideration of discount levels and weather forecasts.
Growers would benefit from better communication from cotton gins about the importance of uniform moisture in the module stages. Cotton quality should be the key priority for the cotton gin and moisture management and drying technology should be utilised if available and not currently used. Many Brazilian cotton gins that were observed during the Nuffield travel were in the process of updating their moisture control systems with great success.
Collaboration in the supply chain from the farmer to the spinning mill is encouraged to gain an understanding of the issues faced by each sector. This can also provide valuable feedback as to why downgraded cotton has been allocated the current value. Many growers would appreciate the ability to investigate the current P&D sheet or at least be provided with the rationale behind those values. A graduate system for colour downgrade values would also make this process more equitable and simpler for the cotton industry.
When colour degradation causes the main fibre parameters to decrease, a severe penalty can be expected and there is a valid reason to support this. If fibre discolouration has occurred and other properties are base, this can lead to growers questioning the system. Many end users have limited processing issues with this cotton and are using it very successfully, yet a severe penalty to the grower seems unreasonable. Neps, short fibre content and micronaire appeared to be the greatest concerns to the end users throughout Vietnam and China.
Colour downgrades are not the sole responsibility of any one stage of the supply chain. Each sector should ensure better management and handling of the fibre and utilise new technology to reduce colour issues where possible. At times, the quality may be very low and growers should accept the fair reason for downgrades.
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