AFCOT - Association Française Cotonnière

AFCOT, Association française cotonnière.

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Speech of the President


Speech of Mr Georges Toby on the occasion of AFCOT's trade event dinner,  in Barcelona,  October 7th 2016

 Ladies and Gentlemen

It’s always a huge pleasure to welcome you to the French Cotton Association’s
annual dinner.
As President, and on behalf of AFCOT’s Executive Committee, I would like to
begin by thanking you for travelling to Barcelona to be here with us tonight.
A special mention has to go to our friends from the CAN (National Cotton
Centre), the Spanish authorities and our ginner friends from Andalusia, who
helped us organize this event.

Tonight, I can’t hide my emotions for two reasons. First because I’ve realized
my dream: bringing AFCOT to my city Barcelona. And secondly, because we’re
holding our dinner in Spain, a country with a long cotton tradition stretching
back over seven centuries.
Tonight, over 370 people from five continents have come together to celebrate
our association’s 126th anniversary.

I would like to thank all the conference’s participants for their contributions
and insights into developments in the cotton sector and the constant
challenges that we all face on a daily basis.
Finally, I would also like to thank our guest of honour, Mr Pergament, CEO of
Petit Bateau. Everyone here must have worn something from the Petit Bateau
brand when they were children. We’re proud of this French brand, which was
launched in 1893 when Pierre Valton opened the first factory in Saint Joseph de
Troyes 123 years ago… Thank you again for honouring us with your presence.

Tradition has it that AFCOT’s President assesses global market conditions over
the past year and ventures some long-range forecasts.
I won’t break with that tradition.

Last year, I suggested that we made the themes of our dinner analysis,
understanding and unity. This year, I propose observation, insight, optimism
and hope as our themes. At this time last year, I remember writing for
Argentina’s Cotton Chamber that "the market could rise to 75 cts/lb in 2016."
That level has been reached and even surpassed.

At the end of summer 2015, our major concern was China, which alone held
45% of the world’s stocks of cotton fibre, unsettling the financial markets that
were predicting the imminent devaluation of the yuan. At the end of
September 2015, the spectacular fall in oil prices caused us to question the
future of cotton versus polyester (there are almost no spinning mills left in
These macroeconomic phenomena immediately caused extreme volatility in
markets across the planet, which was unusually intense, and cotton was no
We can congratulate ourselves as the indices held strong and the central banks’
policy of lowering interest rates (to negative levels) enabled access to
considerable liquidity.
Cotton, along with other raw materials, is currently a safe bet for investment
funds that are facing negative interest rates in the main financial centres. The
biggest threat today comes from the fact that all the weight of the global
monetary and financial system is being carried by central banks, and the
slightest management error could lead to an unprecedented monetary
overflow that would flood the stock markets in record time.
The good news is that we’re now entering a five-year cycle where cotton
consumption is set to be greater than production of approximately a million
and a half tonnes per annum.

The fall in cotton production and consumption in China is being compensated
by the progressive increase in production in India and the vertiginous rise in
consumption in India, Bangladesh and Vietnam, which consumed 250,000
tonnes of fibre ten years ago versus 1,300,000 tonnes today.

The forecasts for the next decade (2024) estimate global production at close to
30 million tonnes and consumption at 31 million tonnes. Supply and demand
are increasingly concentrated; the world’s seven biggest producers represent
84% of production and the six biggest consumers (including four of the world’s
biggest producers) account for 77% of global consumption. Fashion retail is
recovering strongly and the world’s richest man (according to FORBES
magazine) is now the owner of the ZARA chain (ahead of BILL GATES).
For 2016/2017, the best-case scenario according to the experts is global stocks
falling to 18.8 million tonnes, which still represents nine months of
consumption. China will continue its stock reduction policy in tranches of 1
million to 1.5 million tonnes per annum.

In terms of pricing, 2016/2017 will enjoy some stability with a minimum of 64
cts/lb and a maximum of 76 cts/lb. That will depend more than ever on the
global economy and China’s debt policy, which may or may not enable it to
continue reducing its stocks. Remember that Chinese companies have
accumulated unprecedented levels of debt. China must drastically reduce its
overcapacity in production, which is based solely on obtaining cheap loans;
everyone recognizes that the imminent risk is that China has an almost nonexistent
growth rate.

The fashion retail map has been redrawn around the world. Today, 85% of
major retailers are in shopping centres. Last year, 6 million square metres of
shopping centres opened across the globe with 9 million forecast for 2017.
Consumers are more and more demanding. Nowadays, there’s a constant trend
for traceability throughout the cotton chain, and that will be one of the major
challenges in the next ten years. Consumers want to know who produced the
cotton, where, when and how, whether children work in the fields, etc. That
means TRANSPARENCY and TRACEABILITY at every stage in the process: from
the field to the factory.

The introduction of genetically modified varieties of cotton has given countries
such as the US and China a substantial boost in productivity due to the increase
in yields per hectare. In countries such as India, however, the yields remain
very low. In West Africa and Burkina Faso in particular, the introduction of
GMO varieties has given largely unsatisfactory results with silk.
We understand that the result varies from one region to another and that
serious thought needs to be given to sustainable agriculture, looking beyond
the financial criteria.

I won’t explain the work of our various committees in detail as that is more the
role of the General Meeting.
But I would like to reiterate that the European Cotton Rules have been updated
several times, leading to a modernized version ratified by the Executive
Committee on 30 June.
We’re also preparing an annual review that will be distributed to our members
and other cotton professionals at the end of the year. Several industry figures
have contributed to it. We hope that you will enjoy reading it.
In terms of our international relations, the Executive Committee wants to see
them develop as widely as possible because international cooperation is the
best guarantee of stability, confidence and so profitable businesses for

My presidency will end in a few months, and I would like to thank all those who
have helped me and supported me in my role. In particular, I would like to
thank Brigitte, our association’s treasurer, and Gérard Kassarian, our Secretary-
General, who has given me invaluable assistance and doses of common sense.
Thanks also go to my friends and colleagues on the Executive Committee, who
make every meeting enjoyable and are like a second family.
Like all the previous presidents of this association, I’ve realized how important
it is to be united in order to tackle all the problems facing the cotton sector

The next AFCOT president will be Franck Niedergang. I hope that you will join
me in wishing him every success.

Thank you for your attention. I'm already looking forward to seeing you at our
127th dinner in 2017.



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