The cotton challenge

e cotton challenge

e cottonseed oil sector – along with the wider cotton industry – is taking steps to tackle the sustainability challenges it faces Gill Langham

Cott onseed oil producti on is expected to increase – at least in the short-term – mainly due to increasing global demand from the food sector, according to industry analysts.

A by-product of cott on processing, cott onseed oil is extracted from the seeds or kernels of cott on plants and is used for salad oil and dressing, mayonnaise, and is also suitable for cooking and frying.

Cott onseed oil has a mild, nut-like taste and is clear with a light golden colour, which makes it a versati le product.

Global cott onseed oil producti on has been stable at around 5M tonnes during the last decade, according to Stati sta, dipping to 4.25M tonnes in 2015/16, and reaching 4.86M tonnes in 2020/21.

Producti on peaked in 2018 and is likely to conti nue its growth in the immediate term, according to the Global Cott onseed Oil Market Insights 2007-2019 and Forecast 2020-2025 report, available from Research and Markets.

Consumpti on is also expected to conti nue on an upward trend over the next few years, the report says, to reach 6.3M tonnes by the end of 2025.

However, any potenti al growth in the sector would be limited for a number of reasons, according to Stephen Nicholson, vice president, RaboResearch Food & Agribusiness, Grains & Oilseeds.

“In the short to medium term, the demand for vegetable oil is expected to grow due to demand from the biofuels sector, parti cularly renewable diesel. However, I don’t believe cott onseed oil will be a benefi ciary,” he says.

Price is a major factor, according to Nicholson, with cott onseed oil the highest priced vegetable oil in the USA second only to peanut oil.

“Since the mid-1990s, the producti on and demand for cott onseed oil has decreased due to price,” he says.

“Demand for cott onseed and a small supplier base make cott onseed oil someti mes diffi cult to procure.”

Cott onseed producti on has been steady to down over the last 10 to 15 years, according to Nicholson, with the same patt ern for crushing and exports.

More cott onseed is going into dairy feed channels, Nicholson says, which is one of the main reasons cott onseed oil producti on is down. “Cott onseed oil has a place in food applicati ons and that is not going to go away overnight, but if prices persist at these high levels, manufacturers will look for alternati ves to cut cost.”

Market leaders

The top global producers of cott onseed oil in 2021 are India and China with 1.39M tonnes and 1.36M tonnes respecti vely, according to United States of Agriculture (USDA) fi gures.

Other notable producers include Brazil (680,000 tonnes), Pakistan (318,000 tonnes), the USA (220,000 tonnes), Uzbekistan (204,000 tonnes) and Turkey (196,000 tonnes).

Smaller producers include Australia, the EU-27, Mali, Myanmar and Turkmenistan.

From 2007 to 2018, the most notable rate of growth in terms of cott onseed oil producti on, among the main producing countries, was att ained by Australia, according to the Global Cott onseed Oil Market Insights report.

In 2018, approximately 168,000 tonnes of cott onseed oil were exported worldwide, the report says, a 17% increase on the previous year although exports conti nued to decline slightly. Of the main exporti ng countries, Australia experienced the highest growth rate of exports over the 11-year period with a more modest pace of growth for other global leaders.

Global cott onseed oil imports reached 141,000 tonnes in 2018, a 14% increase on the previous year, according to the report. However, imports conti nued to indicate a relati vely fl at trend overall.

Major importers of cott onseed oil in 2018 included Mexico (16,353 tonnes),

Malaysia (14,348 tonnes), Australia (13,963 tonnes), Saudi Arabia (12,915 tonnes) and Tajikistan (11,277 tonnes), the report says.

During the period, the highest rate of growth in terms of imports was attained by Saudi Arabia (+85.1%/year), according to the Global Cottonseed Oil Market Insights report.

Challenges in cotton

Cotton is the most widely used natural fibre globally, with more than 250M people across the world depending on cotton cultivation and processing for their livelihoods, according to the Sustainable Trade Initiative (IDH).

However, the cotton sector faces a number of sustainability challenges, the IDH says.

According to the IDH, around 99% of the world’s cotton farmers across 70 countries are smallholders, who produce 75% of the 25M tonnes/year of global cotton production.

Although cotton covers only 3% of the world’s cultivated land (see Figure 2, p28), it accounts for 24% of global insecticide use and is also a water intensive crop.

Other sustainability issues include the crop’s impact on soil quality and biodiversity as well as profitability, working conditions, gender, health & safety, and child labour, according to the IDH.

Taking action

A number of organisations have launched schemes to tackle the sustainability challenges faced by the sector.

The IDH Cotton programme, for example, aimed to improve the livelihoods of 3.5M smallholder and medium cotton farmers by 2020, across India, Pakistan, China, Turkey, Mozambique and Tajikistan.

IDH’s Climate-Smart Agriculture Programme in Jana, Maharashtra, India, for example, addressed smallholder vulnerability to climate change through public/private action.

In Ambar block in Jana, the IDH partnered with the Watershed Organisation Trust (WOTR) to create access to water in 30 villages, impacting 6,300 farmers.

As a result of the programme, approximately 900 more farmers took up a second crop due to increased water accessibility and 4,496ha of land were protected from soil erosion (against a target of 3,000ha), the IDH says.

Water & pesticide use

According to research and marketing company Cotton Incorporated, which is funded by US growers of cotton and importers of cotton, claims that cotton is a water-intensive fibre are primarily based on misleading water consumption data.

“The cotton plant is actually drought tolerant and can grow in a variety of climate conditions,” Cotton Incorporated’s vice president and chief sustainability officer Dr Jesse Daystar says.

Most of the water used to cultivate cotton is naturally-occurring rainfall, according to Cotton Incorporated’s sustainability website Cotton Today, with 64% of all cotton grown in the USA fully reliant on rainfall.

According to the International Cotton Advisory Committee (ICAC), the global area under rain-fed cotton is 16.9M ha, which is equivalent to 55.7% of the total cotton acreage, and the global average irrigation water usage is 1,214 litres to produce 1kg lint + 2kg seeds.

In the USA, the cotton industry has a goal to improve water efficiency by 18% by 2025, the Cotton Today report says, and has also launched the US Cotton Trust Protocol to help the industry measure its progress.

“Compared to 20 years ago, we produce much more cotton per acre, with virtually no increase (or even a small decrease) u

Source: Milling & Baking News, Food Business News, Rabobank 2021

Figure 1: Weekly cottonseed oil prices – Mississippi PSBY (2011-2021)

Figure 2: Share of cotton in world agriculture land

Source: Cotton Incorporated

u in water usage. Technology and better yielding cotton plants have been the key to improving our water use efficiency,” Dr Daystar adds.

Cotton growers are also implementing practices like conservation tillage and other regenerative agriculture techniques to improve surface water quality and reduce runoff, she says.

Today, many cotton growers use an integrated pest management approach rather than applying large amounts of pesticides to crops, according to Cotton Incorporated’s Cotton Today website.

In this way, growers select the right pesticide for the right pests on the right crop, only when and where necessary, and at the lowest possible rates.

In the USA, for example, cotton farmers make 50% fewer insecticide applications than the previous generation, according to the website.

Child and forced labour

Action is being taken by both governments and industry associations to tackle the issues of child and forced labour in the cotton sector.

In January, for example, the USA announced a ban on imports of all cotton products – along with tomato products – from western China’s Xinjiang region due to allegations that they were made with forced labour from detained Uighur Muslims, according to a Reuters report on 13 January.

The US Customs and Border Protection agency, which is part of the Department of Homeland Security (DHS), estimates that the USA imported about US$9bn of cotton products from China in 2020, according to the report.

The region-wide import ban followed a move to block cotton imports from China’s largest producer, the military-linked Xinjiang Production and Construction Corps (XPCC), the report says.

Both bans would have a big impact on cotton production in Xinjiang, which produces as much as 20% of the world’s supply of the commodity, Reuters writes.

China denies the allegations and says the camps are vocational training centres needed to fight extremism.

In Uzbekistan, almost 2M people are recruited every year for the annual cotton harvest, according to the International Labour Organisation (ILO), which worked with the government and clothing producers in the country during the 2020 cotton harvest to end forced labour.

The partnership promotes structural change, global commitments, reform of recruitment practices and third-party monitoring.

Compiled for the World Bank, the ILO’s report ‘2020 third-party monitoring of child labour and forced labour during the cotton harvest in Uzbekistan’, published on 29 January, shows that the systematic and systemic use of child labour and forced labour in the country had been eradicated, although some local vestiges remained.

More than 96% of workers in the 2020 cotton harvest worked freely and the systematic recruitment of students, teachers, doctors and nurses had completely stopped, according to the report.

In 2020, the share of cotton pickers that experienced coercion was 33% lower than in the previous year, the ILO says, with some provinces and districts having very few or no forced labour cases.

However, there had still been cases at the local level of people being threatened with loss of privileges or rights if they declined an invitation to pick cotton, it says.

Although the majority of pickers participated in the harvest voluntarily, about 4% were subject to direct or perceived forms of coercion.

The Uzbek government has significantly increased wages since 2017, according to the ILO, and has introduced a differentiated pay scale so that pickers are paid more per kilogramme of cotton towards the end of the harvest, when conditions are less favourable and there is less cotton to pick. This has led to a significant drop in the prevalence of forced labour, the ILO says. This was followed by the creation of a new co-ordination body – the National Commission for Combating Trafficking in Persons and Forced Labour in 2019.

“ILO believes that responsible sourcing of Uzbek cotton, cottonseed oil, textiles and garments should be facilitated and encouraged,” Jonas Astrup, chief technical advisor for the ILO Third-Party Monitoring Project (TPM), says.

Looking ahead

If cottonseed oil’s current high price continues, food manufacturers could look for alternatives in a bid to cut costs. Meanwhile, the cotton industry is taking steps to tackle the sustainability issues that it faces. ●

OILS & FATS INTERNATIONAL