Cotton Sourcing Faces 11 New Rules as Climate Risk Hits Farm Base

Thirty-five sourcing, materials and sustainability executives gathered in New York in September and left with homework: 11 "new rules" for keeping cotton in apparel supply chains as climate and geopolitical risk mounts. Agricultural biotechnology firm Avalo distilled the Climate Week NYC roundtable, convened by Dana Davis Consulting, into a report that argues cotton sourcing's current operating model is breaking down.

The stakes are concrete. Avalo's report says disruptions in the Strait of Hormuz this year exposed the fragility of global supply chains, while oil markets continue to swing through volatility that could eventually reshape the global economy as energy costs of extraction outweigh returns. On the growing side, record heat hit Pakistan and northern India, floods struck Bangladesh, and droughts worsened in Texas and Australia — four of the world's key cotton regions in a single year.

"Fashion is an agricultural business, whether it thinks of itself that way or not," said Tricia Carey, chief commercial officer at Avalo. "The leaders in that room weren't waiting for permission. They were already looking for ways to share risk with growers, invest in resilience, and make cotton work for the next decade, not just the next season."

What is actually going wrong at farm level?

The report's diagnosis is blunt: current dynamics make the cotton growing business unmanageable. Growers increasingly depend on insurance or subsidies to stay afloat, and the farm base itself is shrinking as cotton farmers exit the business. For sourcing teams, that means the upstream tier — Tier 3 and beyond — is thinning while demand-side volatility accelerates.

What do the 11 rules ask brands to do?

The report's first rule targets the costing model. Cotton can no longer be treated as a stable line item; brands should model crop failure and price spikes directly into product costing rather than assuming flat fiber prices.

Traceability comes next, and at a specific tier: brands should know which gins and regions their fiber comes from, so sourcing and design teams can anticipate interruptions. The report recommends tying every purchase order to fiber origin — not stopping at Tier 1 cut-and-sew visibility.

"Traceability used to be about telling a better consumer story. Now it's how sourcing teams see disruptions coming and prove where their fiber comes from," said Dinelle Salvador, business development manager at TextileGenesis.

On contracting, the report argues the current system dumps too much risk on farmers. Brands should form pre-season or multi-season agreements that guarantee buyers and committed volume. In a bad year, that may demand flexibility — but the report points to offsetting efficiencies brands already control, such as fewer fabric SKUs and tighter sampling cycles.

Regenerative cultivation rounds out the rules. With no globally recognized definition of "regenerative" yet, the report directs brands to organizations such as the U.S. Cotton Trust Protocol and the Better Cotton Initiative to identify growers using cover-cropping, reduced tilling and strategic grazing. Sourcing from these producers, it argues, secures more reliable supply while cutting Scope 3 emissions.

"Growers are carrying more of the climate risk every year," said Liz Hershfield, co-executive director at the U.S. Cotton Trust Protocol. "When brands commit earlier, pay for outcomes, and support the transition to more resilient practices, they strengthen the farms they depend on."

What decision does this force?

For sourcing directors, the report frames a clear choice: keep buying spot cotton against a shrinking, climate-stressed farm base, or restructure costing, contracting and traceability now. The immediate actions are identifiable — fiber-level PO traceability, multi-season grower agreements, and costing models that price in failure — and each one predates any regulatory mandate. The 35 executives in that New York room treated the question as commercial, not charitable: securing supply for the next decade starts at the gin and the farm, not the factory gate.