Cotton (Gossypium Hirsutum) is a natural fiber of great economic importance as a raw material for the textile industry. The word cotton is derived from the Arabic word 'Qutn' which was often used by the Arab traders. Archaeologists have found that in Egypt cotton was used to make textile fabrics at least 7000 years ago.

Successful cultivation of cotton requires a long growing season, plenty of water and sunshine, with dry weather for the harvest. In general these conditions are met in warm sub-tropical latitudes in the northern and southern hemisphere. The world production of cotton is over 22 million tons which is dominated by 3 producers USA, China and India .The exportable surplus is above 7.0 million tons with USA, Africa and Central Asia accounting for over 65% of the world's exports. The major importing markets are in Asia such as China, Indonesia, Thailand, and Bangladesh etc.

Olam's role in the Cotton business

Olam's role is to efficiently manage the entire supply chain from the grower to the spinning mill. In the development of the Cotton Business, Kewalram Chanrai's rich heritage and expertise in the areas of farming, ginning and textile and garment manufacture has provided a valuable insight and support.

Olam's initial entry into the cotton business was in West Africa during the early 1990's through active participation in the ECOWAS (Economic Commission of West African States) trade between Benin and Nigeria. From these modest beginnings, Olam's cotton business has now grown significantly with a capability to offer a spread of over 30 origins and diverse qualities to meet the majority of the requirements worldwide and provide the best spinning value to its customers.

Olam's business model is structured around buying raw cotton as close to the cotton farm gate as possible. Olam believes that in order to have effective control on the cotton supply chain, it is imperative to have origin presence, strong quality focus and superior logistics management and contract execution skills . Also to maximize returns to the producers and consumers Olam provides risk management solutions

Olam's initial focus for the growth of its cotton business was in Africa and Asia, which has been the main geographical base for Olam's other businesses. Olam is therefore able to leverage its origin management skills, share logistics and human resources across its entire crop calendar leading to greater cost competitiveness.

Olam's key sourcing strategy is to secure cotton volumes at producer level by own/lease ginning and provision of agricultural and ginning inputs. It acts as a one stop supply chain solution to ginners and growers in key exporting countries.

Central Asia has been an important region for Olam's origin investments in cotton. It has created Tashkent as a hub for its logistics, quality control management and coordination within the region spanning Uzbekistan, Turkmenistan, Tajikistan and Kazakhstan. In this region, Olam has a strong team of trained classers who have an excellent understanding of the growing areas and the ginning operations. Olam also has some strategic ginning partnerships in CIS ensuring high quality cotton available round the year.

In West African countries Olam has direct sourcing arrangements from the state marketing boards mainly in Burkina Faso, Mali, Togo, Benin and Cote d'Ivoire. Olam has plans to play active role post privatization of the West African state marketing boards by investments in procurement infrastructure .As and when privatization happens Olam will make use of its strong origin management and local infrastructure to support effective quality buying of cotton.

In the growing Extra Long Staple sector Olam has developed its sourcing activities from the Central Asian origins such as Turkmenistan, Tajikistan and Uzbekistan. demand from its. Plans are underway to increase participation in Egypt and US PIMA. Olam enjoys a dominant share with a loyal and growing ELS customer base.

Olam is one of the leading cotton exporters from Tanzania, Uganda and Mozambique where it has its own / and lease ginning arrangements. In these countries Olam has an extensive seed cotton sourcing infrastructure and strong quality management systems from procurement of seed cotton to the final conversion of lint.

Olam also operates in niche origins such as Nigeria, Zimbabwe, Ethiopia, Malawi and Madagascar, where it has developed important joint venture partnerships with select origin suppliers.

Olam has established origin presence in thee rapidly growing cotton sector in Brazil . With an interest in number of other commodities the investment in warehousing , logistics and quality will be a key focus. Also Olam will play a role in local/mercosur trading.

Olam's cotton business in US mainly focuses on sourcing Texas, MOT and Memphis Eastern cotton. Olam is committed to building long term relationships with US growers through innovative sourcing programs designed to maximize revenues to the participants.

Olam's marketing operations are strategically located in Singapore to serve the growing needs of Asia . We also have sales offices in China, Vietnam, Indonesia, and Netherlands . Olam has a network of experienced agents who have an in-depth understanding of the markets. Olam has a significant market share in Bangladesh, Pakistan Indonesia , Vietnam ,China India and Italy where it has privileged relationships with key customers and a growing presence in Eastern Europe, Korea and Thailand.

Olam's superior network can secure proprietary information, access to which allows the trading team, based in Singapore, to make informed decisions and advise their customers. Olam provides integrated risk management and financing solutions to cotton producer's, ginners and spinners to help them to manage risks and inventory costs in a volatile environment. Our primary aim is to assists its customers to achieve price protection and secure basic margins.

In many of the underdeveloped markets, customers are constantly faced with fluctuating currencies and high interest rates, which make cotton pricing uncertain. Olam provides innovative and flexible financial and currency packages to its valued customers, enabling them to gain competitive advantage in their markets.

Its origination strengths, combined with specific emphasis on quality and timely delivery, enhanced by strong in house order processing systems, enables Olam to provide a superior service and enjoy a preferred status with many spinners.

Olam's future plans

Olam will continue to strengthen its position in its major origins and further deepen its relationships with its origin suppliers and spinners.

Plans are underway to actively participate in agri-input and ginning programs in Africa and Brazil. In addition Olam will play an active role in privatization programs of West Africa and invest in ginning projects to secure a larger share in those markets. Further investment will be made to provide stock and sale and distribution facilities in markets such as China , Pakistan India, Indonesia Brazil and Vietnam.

Olam will also establish HVI/quality control facilities in Central Asia and Africa to provide origin crop quality data to facilitate effective blend rationalization for spinners. Efforts are underway also to develop contamination free cotton in select origins to provide a valuable fiber for the spinners.

Olam is committed to serving the needs of the spinning industry . We regularly provide to the industry perspectives on risk management, cotton buying and market analysis and forecasts.

With a strong foundation established in key producing countries and its plans to develop further the future for Olam's cotton business holds significant promise.