Cotton price surge threatens ‘cheap fashion’

DHAKA, November 28, 2010 (AFP) - In the home of cheap clothing manufacturing, the record price of cotton is causing havoc for producers -- and the pain will pass down the chain to buyers in developed countries, analysts say. Bangladesh, the third-biggest producer of clothes worldwide, is one of the cheapest locations for manufacturing in the world and its factories churn out clothing for leading brands from Wal-Mart to H & M and Gap.

After reluctantly agreeing to a sharp rise in the minimum wage, under pressure from the government and violent protests from workers, the industry is now grappling with price and supply issues with its main raw material.

Cotton's price on world markets reached 1.50 dollars a pound (0.45 kilograms) for the first time on November 9, double its level of 12 months ago.

"Top global retailers have for years cut buying prices of clothing to ensure higher profits for their shareholders. But they must now understand that the era of cheap fashion is all but over," Hasan Khaled, former chief of Wal-Mart's Bangladesh buying office, told AFP last week.

"Western consumers will have to bear some pain of higher cotton prices even though they are facing tough times due to the global melt