150th anniversary of the Bremen Cotton Exchange

Why does the Bremen Cotton Exchange exist at all? How did the Bremen Cotton Exchange come to be founded 150 years ago?

Fritz A. Grobien (FAG): Why does the Cotton Exchange exist? Quite simply, an independent arbitration body was needed to settle disputes quickly and effectively, to decide against the background of the complexity of commodity trading. The alternative would have been a civil court. Firstly, that takes too long; that was already the case at the time. But more importantly, in civil court, they don't understand commodities. That means the commodity-related issues would only be resolved by a specialist or expert, and that again takes time. Trade and industry then sat down around a table to agree on a common set of rules, and an institution was created that is non-partisan and independent. That's what's special about the Cotton Exchange, because when it was founded, it also made sure that there was a 50:50 balance in the committees and also in the institution itself. Non-partisanship was the original idea.

Stefanie Silber (StS): Both, of course, and change is always something positive. What has certainly remained is independence, the arbitration board is in transition. While our focus used to be on German imports, it is now worldwide, and the volumes have simply changed. We have leveraged our strengths, expanded the field and now work globally.

FAG: The first thing was the arbitration function, that's sort of the original idea. Then came the actual concept of the stock exchange, where buyers and sellers meet. This was then lived out in the futures market. But many tasks have added. As a result of the fact that the global cotton trade has changed considerably over the course of 150 years, the exchange has also had to adapt.

Jens D. Lukaczik (JDL): The arbitration tribunal is still the common thread that we cover worldwide with ICA Bremen, especially through the qualitative track. And arbitration tribunals only work through credibility. Credibility only works with experience and respect.

Keyword ICA Bremen. The ICA Bremen was created in 2006 through a joint venture with the ICA. Today it is still relatively young compared to the old lady Cotton Exchange, but already relatively successful. Or how do you see it?

JDL: When we classify a certain quality at the ICA Bremen, it is accepted everywhere, even in markets like China and the USA. Everyone knows that we are the reference laboratory in terms of cotton qualities. We owe this relatively quick acceptance to over 150 years credibility. This is where the Bremen Cotton Exchange has come advanced, also in connection with our cooperation with the Fiber Institute, FIBRE. This is where the scientific claim comes into play, on which this quality of testing and outstanding know-how is based.

FAG: But it didn't fall into our lap. No, it was a long road and a lot of work both at the ICA and here. The competence and the physical quality assessment of the cotton, research and development were in Bremen. Of course, we had to overcome some historical resistance and perhaps also resentment and prejudice. I think there is actually something special about this initiative, that the younger generation, which came more into responsibility, wanted this. They have seen how the globe is changing.

JDL: The ICA has a very large, old tradition, so letting go there was not easy at the time. But the development towards further internationalization of the ICA has of course also helped to see beyond the end of one's nose.

Are there any ideas for the future of ICA Bremen?

JDL: Growth is not our primary goal. What is important is that we maintain our excellent level and at the same time continue to develop. We want to transfer our quality standards to other market participants, because the bottom line is that a high level through improved quality can reduce or completely avoid disputes.

StS: Often this certificate, that it was tested here in Bremen, is enough to achieve a fair solution. The arbitrator doesn't even have to look at it.

Stefanie Silber, President of the Bremen Cotton Exchange (Source: Bremer Baumwollbörse)

What challenges has the Cotton Exchange mastered in the last 25 years? What is particularly important to you?

JDL: We have transformed ourselves from an administrative apparatus to a constructive and progressive association. Our basic idea now is: What can we do for cotton? We do not see ourselves as representatives of individual interests, but simply as representatives of the natural product of raw cotton.

StS: The neutrality, the independence, credibility. Because of our progenitors, who built this building, we can think freely and then also make decisions that may not be mainstream, but are sustainable and meaningful in the best sense of the word.

Jens D. Lukaczik, Vice President of the Bremen Cotton Exchange (Source: Bremer Baumwollbörse)

In 1902, the stately building was erected in which the Bremen Cotton Exchange now has its headquarters? Was that the heyday of the Cotton Exchange?

FAG: When cotton came from the USA at the end of the 19th century, practically every bale was classified here. The American shippers had dependencies everywhere here and then sold either through agents or even subsidiaries to the spinning mills, to the textile companies. At that time, cotton was packed onto ships in the USA and then classified here in Bremen at the cotton exchange. This again shows our credibility and the trust associated with it. The association earned a lot of money with this service at that time.

The first foreign representative office of the United States of America was nowhere else but in Bremen. Cotton from the southern states was one of the most important foreign exchange earners. Many companies, if one looks at the history, were either founded by Americans or with American partners. This interconnection is also an origin of our current status. It is the origin of acceptance, credibility, and recognized authority even outside our national borders. It is easy to present that even nationally, but internationally it has been more difficult.

Where do you see the Cotton Exchange in 5 years?

JDL: I see us as a neutral advisor and source of knowledge for relevant issues concerning the cotton supply chain. And that all relevant stakeholders in fact also consider our information important and true and relevant.

StS: I also see a development in that we are establishing ourselves as a force to be reckoned with, both nationally and in European politics. Politics is a good keyword. We have succeeded in establishing ourselves there, and in the future the topic of supply chains will also be on the agenda in Brussels. We still have a lot of work to do here.

The whole chain ultimately needs to know, where do we come from, where are we going? And in a transparent and comprehensible form. How can we provide assistance? Can we also play a role in ensuring that no nonsense happens? We are very active in politics, both globally and in the immediate political environment. We get involved because we contribute our knowledge and our authority in the interests of our industry.

These issues – due diligence, supply chains – will remain the focus for the next 5 years at least. Here, it is important to use our credibility to avoid working with untruths and fake news.

Let's continue talking about the future. What is the global outlook 5 years from now?

FAG: I firmly believe that our issues will be strengthened by the discussions around climate change. We need all fibers, but competition must also remain fair. I'm convinced it's quite important that we play a role.

StS: I would agree with that. With a growing world population, there will be problems. People not only need to be fed, but also clothed. Microplastics and the coming challenges of agriculture are further key words for tasks that are coming our way. We need all fibers in the market, no raw material should be treated unfairly. As the Cotton Exchange, we want fair competition. But what is happening in Brussels at the moment is really critical. This is a challenge for us, and we will face up to it.