Buyers warned of cotton price risk to workers

27 September 2010

27 September 2010 | Helen Gilbert

Retail buyers have been urged to factor in the cost of a living wage for workers in their price negotiations with garment suppliers after fears of a cotton shortage saw the price of the fibre rocket to $1/lb last week.

Tight supplies, in part caused by devastating floods in Pakistan, have pushed cotton prices to their highest level since 1995.

Martin Cooke, deputy director of the Ethical Trading Initiative, told SM poor workers would be the most vulnerable to any rises in production costs and said it was “critical” that retailers considered their plight.

“[Retailers should] work with suppliers to make sure that workers’ wages rise over time,” he said.

A Marks & Spencer spokesman said that retailers were currently facing a number of increased cost pressures, including rising cotton prices.

He added: “Most of the industry expects prices to go up in the next six to 12 months.”

Earlier this month, Associated British Foods, owner of discount retail brand Primark, said that cotton prices would hit its businesses.

“Higher cotton prices and freight costs and the increase in VAT, implemented in Spain in July and planned for the UK in January, will put pressure on margins next year,” it said in its half-year results.

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