cotton on to fairtrade INTRODUCTI0N
Fairtrade Ireland is undertaking a 3 year campaign to promote the sales of Fairtrade Certified Cotton in Ireland. This report aims to provide a brief introduction to global trade in cotton, injustices associated with cotton production, and to raise awareness of Fairtrade Certified Cotton.
Cotton is a highly sought-after humanitarian and corrupt practices commodity in the global market and in cotton producing countries such is central to the textile industry but as Uzbekistan*. Widespread uses of trade in cotton is radically skewed child labour and inordinate because of enormous subsidies government control over cotton paid by governments in developed producers have given rise to issues countries to their cotton farmers. of social justice and human rights This has a direct impact on cotton that are alarming. Europe, farmers in developing countries. The unfortunately, is one of the biggest cotton plant favours dry tropical and buyers of such tainted Uzbek cotton. subtropical climates and is grown as a cash crop in a number of Fairtrade Certified Cotton ensures countries in the global South. the consumer that the person at Cotton farmers in Africa and Asia, the very bottom of the supply however, struggle against a global chain, who has grown the cotton, trade system in which countries has been paid a fair price for his such as the USA wield extraordinary crop. economic power. In the case of West Africa losses are estimated to Fairtrade Certified Cotton is be in the region of $250m per produced under strict Fairtrade annum as a result of USA and EU standards (including standards for subsidies. Cotton is of crucial the environment) and minimum significance to several developing price guidelines. During this three countries. Out of the 65 cotton- year campaign Fairtrade Ireland will producing countries in 2007/2008, encourage Irish consumers to ask 52 were developing countries. Out where their cotton comes from and of these 21 were indexed by the under what conditions they have United Nations are being among the been produced. This will be a least developed countries in the significant step in moving cotton world (LDCs). onto Fairtrade.
Another significant area related to *UN General Assembly Report of the Special global cotton production and trade is Rapporteur on torture and other cruel, inhuman or degrading treatment or punishment, evidence of systemic anti- A/HRC/7/3/Add.2, 18 February 2008
Cotton on to Fairtrade 3 FAIRTRADE CERTIFiED CoTTON
Since the introduction of Fairtrade them to invest in community Minimum Prices for cotton in 2004, projects, such as schools, roads or Fairtrade has shown that it can health care facilities. These substantially improve the lives of methods ensure that Fairtrade cotton producers in developing cotton producers are able to countries. By selling to the operate in a global industry which Fairtrade market, cotton farmers otherwise is exceptionally biased have the security that they will towards developed countries. receive a Minimum Price which aims to cover their average costs Fairtrade cotton standards prohibit of sustainable production. A the use of genetically modified Fairtrade minimum price for seeds in production. They also organic cotton is set around 20% ensure that every operator in the higher than the Fairtrade textile supply chain that takes conventional minimum price. ownership of Fairtrade Certified Cotton submits independent In addition to the Fairtrade price, verification documenting their the buyers must pay a Fairtrade compliance with 11 International Premium of US$ 5 cents per kilo of Labour Organisation conventions. Fairtrade seed cotton. This is used by the producer organizations for social and economic investments such as education and health services, processing equipment and loans to members. Environmental standards restrict the use of agrochemicals and encourage sustainability. Pre-export lines of credit are given to the producer organizations if requested, of up to 60 % of the purchase price.Producer organisations also receive a Fairtrade Premium which allows
4 Cotton on to Fairtrade THE DOHA DEVELOPMENT ROUND
Two months after 9/11, world seen also as an appropriate leaders came together in a spirit of response by the international multilateral co-operation. In the community following the collapse Gulf state of Qatar,143 member two years earlier of a WTO countries of the World Trade Ministerial meeting in Seattle. Organisation (WTO) launched in Then, developing countries walked November 2001 a process aimed out of negotiations frustrated that at creating new global trade rules. their priorities were sidelined by the Known as the Doha Development United States and the European Round (DDR), its stated aim was to Union. It marked a sea change in stimulate growth, opportunity and the balance of power within the wealth in developing countries. In WTO. Until that moment, the WTO, this way, the likelihood of terrorist formed six years earlier, was atrocities recurring would, it was exclusively a forum where rich argued, be reduced. Nearly 10 nations imposed trade rules on years later, least developed nations poorer ones. are still waiting for global leaders to deliver on their lofty promises.
The establishment of the DDR was
Cotton on to Fairtrade 5 THE Cotton 4
Swiftly after the Doha trade world’s ever increasing desire for negotiations began, four cotton cotton products. But a wall of growing, poverty-stricken countries subsidies deployed mainly by four in West Africa became the trading power blocks has fatally embodiment of international trade undermined the C-4’s ability to and economic injustice. With an trade their way out of poverty. Nine average GDP per capita of $637, years since the Doha Development and among the least developed Round was launched, $47bn has countries on earth, Benin, Burkina been doled out by the United Faso, Chad and Mali (known as the States, the European Union, China Cotton-4 or C-4) rely on cotton and India to its cotton growers. more than any other commodity for Over 51% of that $47bn has gone their export revenues. These directly to US farmers. Figures countries produce cotton more from the United States Department cheaply than anywhere else – a of Agriculture (USDA) reveal one competitive advantage that farm in Arkansas has received logically should place the C-4 in a more than $24m in subsidies over prime position to benefit from the the past 14 years. It is American growers, the world’s biggest cotton exporters, and Europeans to a ‘Our demand is simple: apply free trade rules lesser extent, who enjoy the not only to those products that are of interest benefits of ‘white gold’, so creating to the rich and powerful, but also to those a global price dampening effect. products where poor countries have a proven Even today, despite a recent cotton price spike, cotton has lost more comparative advantage.’ than half of its value compared to Amadou Toumani Touré, President of the 1975 once the price is adjusted for Republic of Mali inflation.
6 Cotton on to Fairtrade For the Cotton-4, it is a situation that spells economic ruination. With no subsidies to bail them out, Cotton-4 farmers struggle against extraordinary odds to compete. And a lack of revenue means C-4 governments cannot afford to build roads, ports and other infrastructure to catalyse a garment industry that would employ millions of people and create greater value in a desperately underdeveloped sector.
In 2003 the C-4 became a cause célèbre among campaigners sparking interest in some sections of the West’s media. The C-4 was seen as a litmus test for whether the Doha Round was truly pro- poor. To a degree, pressure paid off. Five years ago, the WTO attempted to thrash out a cotton trade framework that would see the phase-out and elimination of US and EU trade distorting cotton subsidies. But as we now enter the 10th year since the Doha Round was launched, pledges made have not been implemented. After initial attention, the C-4’s story has faded from view. So it is time to remind ourselves what is at stake. While the Doha Round has floundered, the last decade has seen the rapid The West African Cotton-4 case reveals how growth of the global Fair Trade movement, bringing together the global trade system works against the producers and consumers in a interests of the world’s poorest farmers. Cotton citizens’ movement for change. is cheaper to produce from West Africa than Fair Trade seeks to develop trading anywhere else. But subsidies from rich power partnerships based on dialogue, blocks stop West African farmers getting a fair transparency and respect which promote greater equity in price. It is a situation that needs to change and international trade. The success of the time for change is now.’ Fairtrade certification in Ireland and Michael Nkonu, Director of Fairtrade Africa beyond, shows that there is an appetite for a trading system based on such principles.
Cotton on to Fairtrade 7 WEST AFRICA STITCHED UP
How cotton was introduced into and France settled on the West Africa savannahs of French Equatorial Africa lying between what is now By the 18th century, the Industrial Cameroon, Chad and the Central Revolution in Europe was in full African Republic. This constituted swing and a newly mechanised the first major African cotton textile industry was supplied with basin*. The independence of cotton shipped from America and African nations during the 1960s India. By 1834, America, relying on saw the cotton industry in West African slaves to work the fields, Africa expand. Over the past 50 became the world’s largest cotton years, areas assigned to cotton exporter. A status it has never production have almost quadrupled relinquished. In the 1850s, cotton from 800,000 to 3 million hectares prices rose as a result of major (ha). Yields have more than strikes in India. A decade later, the doubled from 400 kg/ha in 1960 to Civil War in the United States around 1 tonne/ha today.* At its reduced the amount of cotton peak, cotton was dubbed ‘white exported to Europe. So European gold’ as it boosted export revenues powers, desperate to feed their and rural development. booming garment industries, turned to their African colonies for *ECOWAS-SWAC/OECD (2006), 'The Atlas on a cheap alternative. After trials in Regional Integration in West Africa: Cotton', an various parts of West Africa, Britain ECOWAS-SWAC/OECD initiative, August 2006
Cotton production in selected African countries 1960-2009
8 Cotton on to Fairtrade The world in which West African about 4% of global cotton. The cotton operates today West African C-4 nations export virtually all of their cotton, mostly World cotton production doubled to China. China is the world’s between 1960 and 2010. This, biggest cotton producer producing despite the introduction of new and 32.5% of global supply. But China cheaper synthetic fibres such as consumes most of what it polyester that compete with cotton produces to supply its rapidly on price. Globally, much of the growing garment sector, and has growth of cotton production is due become a net importer of cotton. In to improvements in yields rather 2010 India banned exports of its than areas under cultivation. Since cotton to meet the demands of its 1945, yield levels have increased own processors. The United States fourfold whereas the area under is by some way the world’s biggest cultivation has only increased by a exporter of cotton. In the most third.* West Africa today produces recent figures, it accounts for 34% *UNCTAD Info Comm database, "Market information on cotton' http://unctad.org/infocomm The West African C4
Cotton on to Fairtrade 9 of global exports. This is projected low world prices and US cotton 1Hussein, K. (2008), "Cotton to rise. subsidies.3- in West and Central Africa: Role in the regional economy and livelihoods, and potential West Africa’s dependence on Weak Dollar: to add value", Proceeding of the symposium on natural cotton fibres, Common Fund for Increases in cotton prices on world Commodities, FAO, October Many least developed countries are markets between the end of 2007 2008 dependent on cotton for rural and 2008 passed West African 2UNDP (2009), "Human livelihoods and export revenue. But farmers by because the dollar was Development Reports few places rely on it to the extent weak against the CFA franc (the Database" http://hdr.undp.org/en/statisti of Mali, Benin, Burkina Faso and Communauté Financière cs Chad where it accounts for 5%- Africaine/African Financial 3 10% of GDP.1 All four countries are Community currency) which is Bannerman, L. (2007), "The farmers ruined by subsidy", classified as ‘low human pegged to the Euro. While the The Times, April 9, 2007 development’ in the UN’s Human nominal US dollar price of cotton Development Index.2 Unlike other has returned to its 1995 value, the nations, most cotton cultivation in real CFA rate was 65% that of its West Africa is rain-fed, so reducing 1995 value. its water footprint. In fact, only a quarter of global cotton is Low Prices: produced in rain-fed conditions rather than irrigated fields. The decline in real terms of cotton prices over the last 60 years has West African cotton: the disproportionately disadvantaged ‘monster with three heads’ African farmers as they are heavily reliant on cotton exports for their ‘The monster with three heads’ is livelihoods. This partly explains the way people from Burkina Faso why cotton production in the 12 describe the problems besieging main African cotton producers fell their cotton industry: a weak dollar, by 23.7% between 2008 and 2009.
Mali fact file
10 Cotton on to Fairtrade The fall was almost 50% between smallholder farmers in Africa are *Conversation with Damien 2005 and 2009. Increases in global barely surviving.* Sanfilippo, Global Product Manager Cotton, Fairtrade production have affected the price labelling Organizations of cotton. There is 30% more Subsidies: International, September cotton now produced per hectare 2010 compared to 10 years ago as a Global cotton prices are not only result of improvements in dependent on the supply and agricultural technology and demand of cotton. They also innovation such as genetically depend on the level of subsidies modified cotton. External factors, available to producers and including the recent food price hike exporters in other nations. With a together with an increase in the guaranteed price, production price of the inputs needed to decisions are not entirely market cultivate cotton, have led many driven. Subsidies lead to higher farmers to switch to producing levels of production that demand alternative food crops. These are and supply would naturally not necessarily more profitable but determine in a free market. The can ensure food security for world price slumps when the farmers’ families. The current supply of cotton is artificially relatively high market prices are increased in this way. Burkina ensuring farmers stay cultivating Faso, for instance, incurred losses cotton, but the high prices of of $27m in potential revenue in inputs means that many 2002 because of depressed prices
Cotton on to Fairtrade 11 of agricultural products – roughly Committee (ICAC) says subsidies the same amount it saved in debt reduce prices by 10%; the World repayments under the World Bank says 12.9%, amounting to an Bank’s Heavily Indebted Poor annual revenue loss to African Countries initiative, a programme producers of $147m. Oxfam to reduce poor countries’ debts. calculates that removing US cotton While no data exist to measure the subsidies alone would increase impact of trade distorting subsidies world prices, producer prices in at a national level, recent World West Africa and average household Bank studies have projected that income in West Africa, enough to falls in cotton prices of between support food expenditure for a 20% and 40% could lead to million people. increases in overall rural poverty, and even higher increases among cotton farming households. If subsidies were eliminated, production would decline in countries that subsidise cotton, but would rapidly expand in other countries in response to higher prices. As a result production would shift toward lower-cost producing countries. The International Cotton Advisory
Cotton in real terms 1970 - 2010
12 Cotton on to Fairtrade cotTon producers in ASIAn economies
China India To fuel its textile industry, China’s Production of cotton in India grew cotton imports grew eightfold from rapidly after the introduction of 50,000 tonnes in 2001 to 4.2 million genetically modified cotton seed in tonnes in 2006 before dropping 2003. Indian yields have risen 74% down to 2.4 million tonnes in (from 301 kg/ha in 2002/03 to 523 2009/10. It consumes almost half of kg/ha in 2008/09), and the cotton global imports. Chinese imports are harvest has grown 61% (from 14 expected to increase by a third in million to 22.5 million bales). India’s 2011. emergence threatens US dominance of global cotton export The Chinese authorities support markets. However, while their cotton growers with subsidies. production reached 4,930 While the US has consistently been thousand tonnes in 2008/09 the world’s biggest subsidiser of (compared to 2,790 thousand cotton China has recently overtaken tonnes in the US), average Indian it. The International Cotton Advisory government assistance per pound Committee estimates that Chinese to its farmers was no more than producers received about $1.95bn $0.03 – 15 times less than in the in 2008/09 and $1.96bn in 2009/10. US. That means each of the hundred million cotton growers receives Uzbekistan around $20 per head compared Uzbekistan is one of the world’s with the millions received by largest cotton exporters and individual US farmers. generates more than US $1 billion
Cotton on to Fairtrade 13 by exporting around 800,000 one of the most exploitative tonnes of cotton annually. enterprises in the world”; and it is Unfortunately cotton producers the Uzbek state, rather than the (approximately 3 million) receive country’s mafia, that “instigates the only a minimal fraction of the true abuses connected to the value of their cotton. Much of the production and sale of cotton”. production of cotton is under the Apart from economic hardships monopoly of Uzbekistan’s corrupt cotton producers in Uzbekistan are government. According to the subject to blatant human rights office of the UN High abuses which include child labour Commissioner for Human Rights, on a wide scale. Almost 200,000 there is little evidence that children, some as young as 7, work repeated allegations of torture and in the Ferghana region of the other ill-treatment in the state are country. The major market of being successively corrected by Uzbekistani cotton is Europe which governmental action. The buys approximately US$350 million Committee Against Torture at the of it annually. UN noted that it received “numerous, ongoing and consistent allegations concerning routine use of torture and other cruel, inhuman or degrading treatment or punishment committed by law enforcement and investigative personnel or with their instigation or consent, often to extract confessions or information to be used in criminal proceedings”. According to the Environmental Justice Foundation “Cotton production in the Central Asian republic of Uzbekistan represents
14 Cotton on to Fairtrade Mali cotTon farmers fighting for a fair deal in an unfair world
Malian Organic Movement mainly bumpy dirt tracks. The (Mobiom) is a Fairtrade organic medical centre benefits not just farming co-operative that has Mobiom farmers but families in reduced infant mortality, improved neighbouring villages. maternal health and delivered both education opportunities and Out of Mobiom’s 76 farm co- effective climate change mitigation operatives, 73 cotton storage strategies for tens of thousands of facilities have been built which help West Africa’s extreme, rural poor. protect farmers’ crops, while dozens of water bore holes have Mobiom consists of 8,000 farmers been sunk improving access to who are members of 76 separate water. In addition, farmers are co-operatives in the cotton growing trained in environmental agriculture fields of southern Mali, West Africa. techniques which improve crop Since its 2002 inception, the quality and yields. Abdoulaye experience of Mobiom suggests Diakite, a Mobiom official that significant social and responsible for technical support to economic improvements can be farmers said, ‘There are more than achieved when cotton farming 7,000 farm co-operatives in Mali communities in Mali, the fourth but Mobiom includes social most deprived nation on earth, development on its balance sheet. receive a relatively small uplift over Since Mobiom started with the conventional price of cotton. Fairtrade organic certification, we have helped farmers to increase Extra money generated from income. Farmers have bought Fairtrade organic cotton has donkey carts to transport fertilizers resulted in 95% of eligible children and made further investments in born of Mobiom farmer parents oxen. Fairtrade activities have attending school.9 This compares helped send kids to schools and with a national average of 43%.10 paid school fees.’ Strengthened Mobiom member village communities have banded Though Mobiom farmers enjoy together to employ a trained better incomes than the majority of midwife in a maternal health centre Mali cotton growers, there is still also built with Fairtrade receipts. considerable disquiet over the The initiative has saved lives. huge disparities of income between Previously if a pregnant woman them and their US counterparts. needed medical attention, she Anger and frustration is specifically would have to travel 25km along directed at state subsidy support
Cotton on to Fairtrade 15 enjoyed by US farmers. They from cotton. That makes me really maintain that the tens of billions of angry. If it was you, what would dollars of US government support you think? The economy of the to its cotton farmers have directly country suffers. Mali is hugely led to production decreases in dependent on cotton. It obviously Mali. The result, say Mobiom hurts the economy if there’s less farmers, is increased poverty and people producing cotton. It’s the ‘Subsidies from economic malaise in their country. main export for Mali and the state American does not have funds to pay for Douda Samake is the 42-year-old healthcare and education. They growers give us secretary of a Mobiom co- don’t have money which means it serious concern. operative centred on the village of falls to us to pay the costs. US farmers get Madina about 20km from Bougoni billions. They in southern Mali. Samake signed a ‘The subsidies from American can secure their petition with other cooperative growers really give us a lot of health. Mali secretaries, demanding their serious concern. Because national government do all in its American farmers get billions in farmers can’t do power to persuade the United subsidies they can secure their that. ’ States to eliminate subsidies. The health. Mali farmers can’t do that. Douda Samake, petition was also sent to the They (American farmers) get a lot Mobiom co- American government. No answer of money in international markets operative where Mali cotton farmers don’t has secretary so far been received in Mali from get enough. They can’t send their US officials. kids to school.
‘Cotton is our only income. These ‘It makes me sad because cotton (US subsidies) are the reason we’re production has fallen in Mali. These not producing as much cotton,’ subsidies for American cotton are said Samake. ‘Mali cotton farmers not fair because it’s leading to are hardly able to cover their living decreased income of other cotton costs. They’ve got a lot of debts farmers. Especially in Mali.’ and so people are walking away
16 Cotton on to Fairtrade History of Fairtrade Certified Cotton in European markets
The first Fairtrade Certified Cotton products were launched in France in early 2005, based on exports from four West African countries. In November 2005, the first Fairtrade certified cotton products were launched in the UK by eight dedicated Fair Trade Organisations.
Marks & Spencer became the first mainstream Fairtrade retailer to make a major commitment to Fairtrade Certified Cotton, with the first products launched in 2006. Fairtrade certification of cotton is currently helping over 95,000 farmers, workers and their families to improve their lives in Argentina, Brazil, Burkina Faso, Cameroon, Egypt, India, Kyrgyzstan, Mali, and Senegal where 38 producer organisations are certified to Fairtrade standards. In 2008, global Fairtrade cotton sales reached €176m, amounting to over 27 million items, almost double the sales in the previous year.
Fairtrade sales in Ireland
Cotton on to Fairtrade 17 Fairtrade Ireland would like to thank the Fairtrade Foundation UK for sharing ‘‘The Great Cotton Stitch-Up” for purposes of this report and the Cotton onto Fairtrade campaign.
Photography Credits: Trevor Leighton, Simon Rawles, Peter Caton
This publication has been produced with the financial assistance of the European Union. Its contents are the sole responsibility of Fairtrade Ireland and the Fairtrade Foundation UK and can under no circumstances be regarded as reflecting the position of the European Union.
18 Cotton on to Fairtrade Fairtrade Ireland, Carmichael House, North Brunswick Street, Dublin 7 tel: + 353 1 475 3515 fax: + 353 1 873 2114 email: [email protected] www. fairtrade.ie Registered in Ireland no. 217128 Charity CHY 11264