Extreme weather events, trade disputes, geopolitical tensions, increasing regulation and more complex shipments are expected to impact the global cotton supply chain in 2025, but traceability and innovation could reinvent the sector.

According to the US department of agriculture 2024/25 global cotton consumption is forecast at 115.2m bales, which is more than 9m bales below the record level witnessed four years ago, thanks to more production and consumption of man-made fibres.  

Lorena Ruiz, economist at US-based International Cotton Advisory Committee (ICAC), which unites cotton producing, consuming, investing and trading countries, tells Just Style the cotton supply chain should “encounter several significant challenges by 2025,” including “extreme weather events, such as droughts and floods,” which “are becoming more frequent, adversely affecting cotton yields and quality”.  

Trade disputes and geopolitical issues, regional conflicts, economic sanctions, and shifts in trade agreements “can disrupt cotton supply chains, leading to uncertainties in sourcing and pricing,” Ruiz added. There are also concerns about potential trade tensions between the US and cotton industry major China once Donald Trump takes office as he has threatened to impose 60% tariffs on US imports of Chinese goods.  

Regulations will demand cotton transparency in 2025

Ruiz notes regulations are “increasingly demanding transparency,” and companies must ensure their products are free from cotton sourced in specific regions. For instance, in 2021, the US banned imports from China’s Xinjiang region without proof they were not made with forced labour.  

Still, “achieving complete traceability remains a significant challenge,” she said, explaining nearly 40% of global cotton production is exported and processed in more than one country, and “textile mills often source cotton from multiple origins, blending it”.  

Moreover, while certifications might improve market access or premium pricing, “suppliers often must work with multiple certification entities” to meet different clients’ needs, and in many cases, farmers may not be fully aware of the benefits of certification.  

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Risk of audit fatigue  

Indeed, her colleague Kanwar Usman, ICAC’s head of textiles, sees a “risk of audit fatigue” in an “already stringent compliance environment”.  

He tells Just Style that, since together the European Union (EU) and the US “represent the world’s leading import markets,” their policies are likely to shape the textile industry, and currently the EU is formulating and implementing 16 regulations and directives pushing sustainability policies impacting cotton suppliers.  

For instance, the Corporate Sustainability Reporting Directive, which demands large companies and listed companies publish reports on their social and environmental risks from 2025 onwards, “adds new layers of complexity” with required information about pollution, water management, and biodiversity, among other indicators, which means “significant hurdles” for SMEs, Usman says.  

Furthermore, he explains circular economy models encouraged by EU policies demand “innovative approaches to material sourcing and production processes,” with costs for the entire value chain.  

While such requirements help to meet consumer demand and build market competitiveness, he advises “targeted support for SMEs (…) to ensure industry-wide compliance that does not leave too many people behind”.  

Indeed, according to Dr Keshav Kranthi, ICAC’s chief scientist, such verification and regulation “can be challenging in Asia and Africa because the crop is primarily grown by smallholder farmers”. Globally, smallholders account for more than 99% of production, he stresses.  

US Cotton Trust Protocol, which is a voluntary sustainability programme and traceability platform, says the proposed EU green claims directive, which ensures that companies substantiate their claims, will also “have a significant impact” in 2025. It offers quantifiable measurements across six key sustainability metrics:  

• Water use 

• Energy efficiency 

• Land use 

• Soil health 

• Soil carbon  

• Greenhouse gas emissions.  

The current demands are “pushing brands and retailers to rethink their supply chains,” it argues, adding that companies will also have to respond to “improved time to market efficiencies.” It adds that to build a “more resilient and responsible cotton industry (…) collaborative partnerships will be essential.”  

Key industry initiatives  

There are several key industry initiatives to boost cooperation. Indeed, the Cotton Trust Protocol helps the sector to be more collaborative and connected, and has experienced consistent growth with 45 brand and retailer members and 2,500 mill and manufacturer members in 2024. It notes that sustainable and regenerative farming practices will be key. Despite the challenges, the Trust Protocol has seen progress against its six key sustainability metrics, it tells Just Style.  

Another solution is forensic technology, which, according to forensic science and data analysis firm Oritain is “a transformative solution that’s rapidly becoming the industry standard,” with fashion brands such as Lacoste and Patagonia using it.  

Oritain’s chief commercial officer Rupert Hodges says forensic science is “leveraging the indisputable chemical makeup of materials to verify their origins against our map of global cotton” with real-time data. He adds that brands can test cotton and cotton blends “to identify potential transshipments [shipments to intermediate destinations], ensure compliance with global sourcing standards, and more”.  

He does warn, however that “transshipments have emerged as an issue throughout the entire global supply chain”. He explains manufacturers from what he would call ‘high-risk regions’ – or sourcing regions prohibited by acts of legislation – are sometimes re-routing materials through alternate territories. 

What to expect from cotton in 2025?  

Hodges expects more investment in traceability technology in 2025. He stresses that even the US Customs and Border Protection, which released its first detailed guidance on isotopic testing in November 2024 to check the unique chemical signature in products, “encourages importers to take a proactive role” in testing.  

He also highlights that increasing regulation “will require proactivity from brands and an intelligence-driven approach that takes both economic pragmatism and thorough supply chain tracing into account.” For 2025, he expects “more focus on cotton as a superior fibre” and more sustainable options.  

Indeed, Dr Kranthi notes “companies are increasingly exploring regenerative agriculture-based and less water-intensive solutions for cotton production”.  

Singapore-based agri-business company Olam Agri International is a good example of this as it launched its Global Regenerative Agriculture Programme in January 2024 to promote traceable and sustainably grown cotton”.  

Over half (55.5%) of global cotton is produced on rainfed farms without any irrigation, explains Olam Agri, and the solutions applied include “water harvesting, water conservation, and water-saving irrigation systems.” Plus, sensor-based precision irrigation and Internet of Things (IoT) tools can be used to enhance soil moisture retention, cover crops and improve precision agriculture.     

By Just Style