2009: The Year of the Yarn Wars?

Many people think our industry is dominated by the tensions between Western buyers and their suppliers in developing markets. But the current outbreak of Yarn Wars –especially in the Indian subcontinent - shows a completely different set of tensions. And tensions that probably matter a great deal more to many suppliers than their relations with Wal-Mart, Gap or Inditex.
Raw cotton prices are rising: in India they're about 17% higher than they were in early October – though this is still lower than the prevailing price on the world market. Experts are showing this year's worldwide cotton production lower than demand (farmers reduced the acreage planted with cotton), so there's a high likelihood many Indian cotton sellers will export their crop.
Which infuriates Indian garment exporters, who want cotton exports banned. Unsurprisingly, India's cotton growers don't see the logic in this. For years, India's garment makers complained about the injustice of quotas being imposed on their exports by US and European governments (though they were surprisingly silent about just how small a proportion of those quotas they ever filled). So if it's so unjust that the US government should limit Indian blouse makers' sales to the US, it looks even more unjust for the Indian government to ban completely Indian cotton growers' sales to the US.
Now the apparel makers do have a point. Fabric is a significant part of the cost of a garment (though the raw cotton cost is a near-trivial part of the cost of a blouse: it's spinning and weaving that cotton that costs money – and the cost of spinning and weaving aren't at all dependent on the cost of raw cotton, however much spinners and weavers like to pretend otherwise). With Western buyers pushing down prices, they're as happy at raw material price increases as turkeys are about Thanksgiving (or, if you live where we do, Christmas).
But for the moment, the Indian government's not taking the side of the garment makers. Its counterpart in Pakistan seems to be, though: we've had two different orders in the past week requiring cotton export contracts to be registered – widely seen as setting the stage for banning exports.
And throughout the debates in both countries, there's been more heat and emotion aimed at businesses down the street in the same city than we ever hear from garment makers about their clients on the other side of the world. Tensions between different parts of the crop-to-yarn-to-fabric-to-garment chain have always been more emotive than tensions between countries.
And in South Asia, it's not just cotton. For years in Bangladesh, most importers of yarns for woven garments have had to bring them in by sea from neighbouring India (taking 30-45 days) rather than overland for reasons usually explained as preventing Customs duty fraud – but certainly supported by Bangladeshi yarn makers. The country's Export Zone Authority is now trying to get that rule amended – and isn't being welcomed with open arms.
Why does the simple business of moving yarns across borders have to be so complicated? Because people's interests differ. Even in the same country