21 July 2023

Australian cotton spins export success in Indonesia

Australian cotton is reaching more markets than ever before, thanks to the work of the Australian Cotton Shippers Association (ACSA). 

Australian cotton is reaching more markets than ever before, thanks to the work of the Australian Cotton Shippers Association (ACSA). The association has worked hard over the past 3 years to find new buyers and markets for Australia’s sustainably grown cotton.

A growing market for Australian cotton is Indonesia. Australia’s competitively priced, high-quality product is stealing market share from the US and Brazil. A long trade history, strong in-market relationships and geographic proximity are also competitive advantages.

‘Indonesia is now our second largest cotton export market after Vietnam,’ says Rob Cairns, ACSA’s Export Marketing Consultant. ‘With support from Austrade, we’re continuing to build relationships with Indonesian spinning mills and making new connections in the textile industry.’

Diversifying into new markets

ACSA is an association of 14 cotton merchants. They buy cotton from growers and sell it to spinning mills and the textile supply chain. Members are involved in the entire cotton supply chain, from field to processing at the gin, and cotton classing, warehousing, shipping and delivery.

Cairns’ job is to help diversify export markets for Australian cotton. ‘In 2022, Australia shipped a record crop of 5.7 million bales globally, thanks in part to ACSA’s work,’ he says.

ACSA and Cotton Australia received funding of almost $3 million through 3 grants from the Australian Government’s Agricultural Trade and Market Access Cooperation (ATMAC) program. The program supports projects that expand and diversify trade in agriculture sectors impacted by market disruptions. The three-phase ATMAC-funded project focusing on Indonesia and the Southeast Asia region, ‘Taking Australian Cotton to the World’, involves a coordinated export market development strategy and roadmap, appointing a market development consultant, the Camp Cotton Farm and Industry Tours, the Cotton to Market Program, an Australian cotton buyers guide, and facilitating attendance at forums.

Export journey to Indonesia

Australia’s cotton trade with Indonesia is several decades old but the market is still growing. Indonesia accounted for 12% of total raw cotton bales exported in the 2022 season. This is up from 9% in 2019 (Source: ABARES, data to 28 February 2023). Australian cotton is well regarded in Indonesia for its high quality, consistency and contamination-free status.

‘Indonesia is consistently one of Australia’s top 3 cotton export markets,’ says Cairns. ‘It is a reliable, solid market. The Australian cotton industry has longstanding, trusted relationships in-market.’

Australian cotton a top choice for Indonesia

One of these relationships is with Indorama, one of Indonesia’s top 3 spinning mills. The company exports its cotton and polyester yarn to Europe, the US, Bangladesh, China and India.

‘Indorama is a long-time, highly valued customer of Australian cotton,’ says Cairns. ‘We have visited their factory twice in the past 12 months. Indorama staff also joined us in Australia in May for ‘Camp Cotton’, where we showcased Australian cotton and the industry.’

Indorama has been buying Australian cotton for more than a decade. Twenty-eight per cent of the cotton it purchased in 2022 came from Australia. This is up from 5% in 2020.

‘We buy Australian cotton because its quality is consistently outstanding,’ says Gaurav Aggarwal, Commercial Head, Indorama. ‘The fibre quality is everything we require to make a high-quality yarn.’

Aggarwal also likes the fact that an increasing amount of Australian cotton is sustainably farmed. In May 2023, he joined a “Cotton Camp” organised by ACSA and Cotton Australia. Six spinning companies from India, Indonesia and Vietnam visited cotton farms and gins, and met with farmers, suppliers, industry, fashion brands and retailers.

‘It was a wonderful experience seeing how Australian cotton is grown,’ says Aggarwal. ‘It was remarkable to see the many sustainability measures the Australian cotton industry is adopting such as reducing the use of pesticides and improving water efficiency.

‘Indorama aims to incorporate sustainability across our business,’ he says. ‘That includes sourcing from suppliers who follow sustainable practices, such as those in Australia’s myBMP program.’

The future is bright for Australian cotton in Indonesia. The country is one of the fastest-growing economies in Southeast Asia. Its textile industry is expanding and demand for natural fibres is rising.

‘Australia can fill Indonesia’s demand for high-quality, sustainable cotton,’ says Aggarwal. ‘We prefer to buy cotton from Australia than from any other country.’

Growing cotton exports with Austrade’s help

Cairns agrees that there are opportunities to increase cotton exports to Indonesia.

‘We would like to continue to take market share away from the US and Brazil,’ he says. ‘Our cotton is of a higher quality and competitively priced. We are close to Indonesia, so shipping is quick, easy and affordable. We can ship to Indonesia within 14 to 28 days, compared to months for the Northern Hemisphere.’

Austrade is working with ACSA to promote Australian cotton and its competitive advantages with local spinning mills and textile manufacturers. Austrade has been supporting the Australian cotton industry with seminars and other outreach activities in Indonesia for almost 2 decades.

Most recently, Austrade organised and co-hosted a lunch with ACSA and Cotton Australia in Indonesia. The event gave ACSA and Cotton Australia the opportunity to showcase Australian innovation, sustainability, traceability practices, and unique value propositions to senior representatives from the Indonesian textile and fashion industry.

‘This was the first time Australian cotton representatives had met with the Indonesian textile industry,’ says Cairns. ‘The attendees were very interested in our sustainability story and safe working practices. We made some valuable new connections. The continued support of Austrade is vital for our future ambitions and growth.’

Supporting the 12,000-strong Australian cotton industry

ACSA’s export diversification benefits growers and other businesses in the cotton supply chain.

Approximately 90% of Australia’s cotton businesses are family farms. These farms employ over 10,000 people, excluding on-farm contractors. The wider cotton industry employs around 1,700 people in marketing and export, cotton classing and in the 41 regional gins. It also supports jobs for agronomists, rural suppliers and other input providers.

‘Cotton is one of Australia’s top 3 commodity exports, worth around $2 billion annually,’ says Cairns. ‘The industry supports thousands of livelihoods in the supply chain. For these reasons, we will continue to build relationships and look for export opportunities globally.’

This article was first published on 10 July 2023. It was updated on 21 July 2023 at the request of the Department of Agriculture, Fisheries and Forestry.

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