FAIRTRADE AND COTTON Millions of small-scale farmers in developing countries depend on cotton for their livelihoods. This briefing provides an industry overview, and explores why Fairtrade is needed and what it can achieve…

March 2015 COTTON AT A GLANCE

fairtrade facts

26

There are 26 Fairtrade certified cotton More than 7.4 million Fairtrade Fairtrade cotton producer organisations producer organisations located in nine cotton items were sold in the UK represent almost 60,000 farmers. In countries around the world: Benin, in 2013, with an estimated retail 2013 they sold 15,900 tonnes of Brazil, Burkina Faso, Egypt, India, value of £23.4m Fairtrade seed cotton, generating Kyrgyzstan, Mali, Nicaragua €644,000 in Fairtrade Premium and Senegal

54% 46%

54 percent of Fairtrade Premium expenditure was invested in 46 percent of Fairtrade Premium strengthening producer organisations (e.g. human resources and expenditure was spent administration; facilities and infrastructure) and providing services to on community services, members (e.g. credit and finance schemes; agricultural tools and inputs) mainly education projects

global facts 25.8m

$20.2bn 2,720 litres

25.8m tonnes of cotton Around a third of this production It takes approximately lint were produced was exported, with an export 2,720 litres of water to globally in 2013 value of $20.2 billion make just one cotton t-shirt

Commodity briefing: Cotton | Fairtrade Foundation January 2015 2 COTTON AT A GLANCE

global facts continued...

$412BN

The global textile trade was Cotton production accounts Cotton is grown in more than 100 worth $294bn in 2011, while the for the use of $2bn of countries on 2.5 percent of the world’s clothing trade was worth $412bn chemical pesticides each year arable land – some 35m hectares

$5.1bn 350m

Government subsidies for domestic 100m rural households are directly An estimated 350m cotton production totalled $6.5bn engaged in cotton production – 90 people work in in 2013-14, led by China with $5.1bn percent of them in developing countries the cotton sector

Over 150 countries are Genetically modified cotton involved in exporting accounts for 81 percent or importing cotton of global planting (2012)

$1.73/KG 31.8%

Polyester dominates the global fibre market Cotton prices are volatile and in long-term decline – real with cotton’s share dropping from 38.5 percent cotton prices, taking inflation into account, have fallen in 2008 to an estimated 31.8 percent in 2013 from more than $3.00/kg in the 1960s to $1.73 in 2014

Commodity briefing: Cotton | Fairtrade Foundation January 2015 3 1. THE ECONOMICS

Cotton is the world’s oldest commercial crop and one of the most important fibre crops in the global textile industry. It is grown in more than 100 countries on 2.5 percent of the world’s arable land – some 35m hectares – making cotton one of the most significant crops in terms of land use after food grains and soybeans.1

Cotton is also a heavily traded agricultural From cotton plant to clothing commodity with over 150 countries involved in exporting or importing it. Cotton plays a major role in the economic and social development of developing and newly industrialised countries. It is an especially important source of employment and income within West and Central Africa, India, Pakistan and Central Asia, accounting for 35.6 percent of Mali’s exports, 63.2 percent of Benin’s and 71.5 percent of Burkina Faso’s.2 1 Cotton is primarily 2 The flower of the 3 After harvesting – grown in dry tropical cotton plant (genus by hand or mechanically As many as 100m rural households – 90 and subtropical Gossypium) produces – the bolls are percent of them in developing countries – climates at seeds and surrounding transported to a ginnery are directly engaged in cotton production. temperatures between white downy fibre where the fibres, known An estimated 350m people work in the 11°C and 25°C. known as bolls. as lint, are separated cotton sector when family labour, farm from the cottonseed. labour and workers in connected services such as transportation, ginning, baling and storage are taken into account.3

China and India account for around 53 percent of global cotton production; the United States and India account for around 50 percent of global cotton exports; and China accounts for around 35 percent of global cotton imports. Additional data on the global cotton market is 4 The lint is compacted 5 ...whether that’s through 6 The cottonseed is available in the Appendix (page 18). in bales and stored weaving, knitting, dyeing used in animal feed before being spun into and printing or being or pressed to make yarn or thread and sewn into garments, cooking oil. processed into a range accessories and of textile products... homeware products.

In 2013, 25.8m tonnes of cotton lint were produced.4 Around a third of production was exported, with an export value of $20.2bn in 2012.5 In 2011, the larger textile trade was worth $294bn, while the apparel or clothing trade was worth $412bn.6

Commodity briefing: Cotton | Fairtrade Foundation January 2015 4 2. THE CHALLENGES

The cotton industry faces a number of challenges to its long-term sustainability – from the intensive use of hazardous chemicals to climate change and low cotton prices. Many of these contribute to the fact that cotton is failing to provide a sustainable and profitable livelihood for the millions of small-scale farmers predominantly in Asia and Africa who are responsible for growing the seed cotton the global cotton textile industry depends on.

Industry challenges the competitiveness of cotton. This can have disastrous consequences that threaten the Competition from synthetic fibres future of the cotton economy, including pushing government Subsidies The decline in prices for consumer goods is retailers to shift to higher blend textiles.9 totalled $6.5bn in 2013-14, placing increased pressure on suppliers along down from a record $7.4bn the cotton textile value chain, and eventually Child labour and forced labour on prices paid to growers for their seed cotton. Child labour in cotton has been reported in in 2012-13, led by China Suppliers are increasingly sourcing cheaper several countries and is most prominent on with subsidies worth man-made fibres, with polyester now small-scale farms, particularly at planting $5.1bn. The US Farm Bill dominating the global fibre market and and harvesting times. In India, over 400,000 cotton’s share dropping from 38.5 percent will end direct payments 7 child workers have been reported as working in 2008 to a projected 31.8 percent in 2013. in the cottonseed industry, some working to US cotton farmers in 9-12 hours a day and suffering from health 2015 but they will continue Government subsidies problems related to exposure to pesticides.10 to receive subsidies for Intended to shield domestic producers from The employment of child labour is aggravated volatile and low cotton prices, government by the use of piecework (where work is paid crop insurance premiums subsidies include direct support to production, according to the amount picked) which – they effectively protect border protection, crop insurance subsidies incentivises parents to bring their children farmers from low and minimum support price mechanisms. to the fields as a way to boost their income for the day.11 An estimated 100,000 children harvests caused by Government subsidies for cotton farmers in rich in Andhra Pradesh, India, work 13-hour days weather, pests, fire and countries create a market with artificially low in cotton fields as bonded labour, paying off other natural disasters prices that small-scale farmers in developing loans taken out by their parents.12 and amounted to $1.8bn countries are unable to compete in. Studies have estimated that cotton price deflation Forced and child labour are major concerns in the three years 14 caused by subsidy schemes in developed in Uzbekistan, Turkmenistan and Tajikistan 2011-12 to 2013-14. countries is associated with an annual loss 8 where tens of thousands of children, students of income to African farmers of $250m. and adults are forced out of school, college or workplaces for several weeks a year and Government policies and direct government mobilised to pick cotton to meet government- interventions in cotton markets contribute to imposed production quotas.13 high price volatility which negatively affects

Commodity briefing: Cotton | Fairtrade Foundation January 2015 5 Figure 1: Cotton prices in real terms 1960-2014

US$/kg

5

4

3

2

1

0 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Real 2010 US$, Cotlook A Index, World Bank Commodity Price Data Trend line

Challenges for farmers fertilisers and other farm inputs. Unstable, $3.00/kg in the 1960s to $1.73 in 2014.16 inadequate incomes perpetuate the situation Low prices have seen farmers exiting Low incomes, low investment, in which farmers lack the finances to invest production as it has become less profitable, high dependency in the infrastructure, training and tools needed with a 35 percent drop in production in Cotton farmers are at the end of a long and to improve their livelihoods. African, Caribbean and Pacific (ACP) complex supply chain in which they are virtually countries between 2005 and 2010.17 invisible and wield little power or influence. Price volatility With high levels of illiteracy and limited land Like many commodities, cotton is traded on Research shows that a small increase in holdings, many cotton farmers live below the international markets in US dollars, while the the seed cotton price would significantly poverty line and are dependent on the middle Cotlook A Index is the recognised barometer improve the livelihood of cotton farmers but men or ginners who buy their cotton, often at of world prices. Market prices are volatile with little impact on retail prices. Depending on prices below the cost of production. and show a long-term downward trend the amount of cotton used and the processing – technology-driven productivity gains, needed, the cost of raw cotton makes up a Rising costs of production, fluctuating market competition with polyester and increased small share of the retail price, not exceeding prices, decreasing yields and climate change competition at the retail level add to the 10 percent. This is because a textile product’s are daily challenges, along with food price downward price pressure along the value price includes added value in the various inflation and food insecurity. These factors also chain, ultimately affecting the prices received processing and manufacturing activities along affect farmers’ ability to provide decent wages by farmers of seed cotton. Global cotton the supply chain. So a 10 percent increase in and conditions to the casual workers they prices hit a five-year low in summer 2014, the seed cotton price would only result in a employ. In West Africa, a cotton farmer’s with slowing demand from China contributing one percent or less increase in the retail price typical smallholding of 2-5 hectares provides the to a glut in the market – prompting the – a negligible amount given that retailers often essential income for basic needs such as food, International Cotton Advisory Committee receive more than half of the final retail price of healthcare, school fees and tools. A small fall in (ICAC) forecast that low cotton prices are likely cotton finished products.18 cotton prices can have serious implications for for several years.15 Figure 1 shows that real a farmer’s ability to meet these needs. In India cotton prices, taking inflation into account, many farmers are seriously indebted because have fallen by 45 percent – from more than of the high interest loans needed to purchase

Commodity briefing: Cotton | Fairtrade Foundation January 2015 6 Agrochemical use and the environment Other major cotton producing regions, such as consequently, available for agricultural use. There are increasing concerns about the Pakistan, China, Uzbekistan and the US, use In India, farmers are experiencing erratic and sustainability of cotton production as the artificial irrigation, particularly in large plantations. extreme weather patterns, including delayed environmental impacts of conventional cotton Artificially irrigated areas represent about half monsoons, and dry spells and floods during production become more apparent. Cotton the global area under cotton cultivation but, the same season, which have a huge impact farmers rely heavily on agrochemicals such as because of higher yields, account for 73 percent on livelihoods. Similarly, in Pakistan, above- herbicides to eradicate weeds and pesticides of the global cotton production.23 Inefficient average summer monsoon rains have to control the numerous pests which destroy irrigation systems can deplete local water resulted in damaging floods alternating around 15 percent of world production.19 sources, making water a scarce commodity for with extended droughts that reduce fresh Cotton production accounts for the release many cotton growing communities. Traditional water supplies even further. of $2bn of chemical pesticides each year, techniques such as flood irrigation can be of which $819m are classified as hazardous wasteful and also lead to the runoff of fertilisers Similar changes in weather patterns are also by the World Health Organization.20 and pesticides causing the pollution of rivers, likely to have a negative impact on agriculture in lakes and water tables. Similarly, cotton many parts of Sub-Saharan Africa. In particular, The consequences of intense chemical processing industries in many countries pollute dependence on rain-fed agriculture and natural use include deterioration in soil quality natural water sources by pumping untreated resources for livelihoods, combined with limited and productivity; contamination of groundwater waste flows into them. knowledge on climate change and limited – the main source of drinking water for most resources for adaptation, make this region rural populations in developing countries; Climate change especially vulnerable to higher climatic variability increasing resistance of pests; negative effects Cotton’s dependency on water makes and climate change.24 on biodiversity; potential health risks of cooking cotton growth and yields very vulnerable oil and animal feed made from cottonseed; while to water shortages resulting from higher GM cotton poor storage, inadequate or unused personal temperatures and changes in the volumes In 2012, genetically modified (GM) cotton protective equipment and lack of training and patterns of rainfall caused by climate accounted for 81 percent of global planting.25 in safely handling hazardous chemicals results in change. Rising temperatures can also lead Farmers are planting more GM cotton in the widespread pesticide poisoning among to cotton plants suffering heat stress. This hope of increasing yields and incomes. In cotton workers, ranging from headaches, is likely to reduce yields and increase the reality they are tied into buying expensive nausea and vomiting to loss of consciousness prevalence of pests and diseases, particularly seeds and pesticides each year from and seizures.21 in hotter growing environments (e.g. India, multinational companies amid concerns that Pakistan and Sudan). yields actually decline after initial gains.26 In Water use India an epidemic of farmer suicides has been Cotton production and processing is highly Agricultural areas in China, Pakistan, India and blamed on high levels of indebtedness dependent on water – it takes about 2,720 litres Central Asia which depend on fresh water from controversially linked to the rising costs of GM of water to make one t-shirt and 10,850 litres the Himalayan glaciers are very vulnerable to cotton seeds, fertilisers and insecticides27 and to make a pair of jeans.22 Smallholders in India the effects of climate change. The rapid retreat declining yields, while question marks remain and in western and southern Africa generally of glaciers caused by higher temperatures is over the long-term effect of genetically rely on natural rainfall to water their crops, made significantly reducing the amount of fresh modified organisms on the environment, possible by favourable wet and dry seasons. water released into rivers and streams and, biodiversity and human health.

Commodity briefing: Cotton | Fairtrade Foundation January 2015 7 3. HOW FAIRTRADE WORKS IN COTTON

Fairtrade Standards cover all three pillars of sustainability – economic, social and environmental.

What differentiates Fairtrade from better terms of trade as well as giving farmers Fairtrade in brief other certification schemes? greater power within their trading relationships. • Fairtrade Minimum Price protects against volatile market prices The negative aspects of conventional cotton Small-scale cotton farmers have limited production are causing concern to both options for improving their economic and • Fairtrade Premium for strategic consumers and industry. Social and social situation within the conventional supply investment (fertilisers, pesticides, fuel, environmental accountability and sustainability chain. Fairtrade supports farmers with fairer, yield and quality) issues are becoming increasingly important more stable prices and additional income for major brands and retailers. This has seen to invest in infrastructure, training, farm • Fairtrade Premium for community a growth in the number of certification equipment and business improvements investment in essential infrastructure schemes that aim to improve the economic, as well as programmes such as healthcare, (healthcare, education, clean water) social and environmental conditions within clean water and education that contribute cotton production – the Eco-Textile Labelling to flourishing communities. Fairtrade supports Guide 2014 lists more than 60 sustainable • Facilitates access to export markets farmers in managing the environmental and textile labels and standards. In 2012, 933,000 health risks from cotton production and in tonnes of standard-compliant cotton were building stronger organisations with increased • Supports strong, entrepreneurial and produced (3.4 percent of global production) representative farmer organisations bargaining power and a more active role in of which almost half (448,000 tonnes) was global supply chains. sold as standard-compliant.28 • Access to training and capacity building Fairtrade Standards for cotton While other certification schemes aim to • Environmentally friendly and long-term protect the environment or enable companies Fairtrade cotton was launched in 2005 to offer sustainable practices to trace their products, Fairtrade certification cotton producers an alternative to the volatile is unique in being the only scheme whose and unreliable conventional market. Producer primary aim is to tackle poverty through organisations are audited against Fairtrade

Fairtrade is about empowerment and long-term development, as farmers and workers transform deeply ingrained problems step by step to build a better future for themselves, their families and communities. We can and will change the rules of trade, and enable producers and workers to map out their own future.

Marike de Peña, Chair of the Fairtrade International Board and director of Banelino co-operative in the Dominican Republic

Commodity briefing: Cotton | Fairtrade Foundation January 2015 8 Standards, which provide a framework for • Farmers in India who are not organised to • Protect and enhance biodiversity a sustainable approach to production that this level can be certified under the Contract by identifying and protecting natural can have long-term economic, social and Production Standards. Farmers must be ecosystems, protected areas and environmental benefits for farmers and their contracted to an intermediary organisation conservation areas communities. The Standards include a (usually an exporter or NGO), known as a guaranteed Fairtrade Minimum Price for seed Promoting Body, which will support them • Work towards efficient energy use and cotton and the additional Fairtrade Premium in the process of forming a functioning reduction in greenhouse gas emissions for farmers to invest in strengthening their independent organisation organisations, developing their businesses and • Forced labour and child labour are prohibited improving the infrastructure of their communities. • Producer organisations can request pre-finance of up to 60 percent of the • No discrimination of members or workers The main provisions and objectives of Fairtrade negotiated contract value. This is vital on the basis of race, colour, religion, Standards are: in providing small-scale farmers’ gender, sexual orientation, age, marital organisations with the capital to status, disability, HIV/AIDS status, Minimum Price and Premium payment purchase their members’ crop and nationality or social origin, political provide agreed services. opinion, trade union membership. • Producer organisations are paid a Fairtrade Minimum Price for seed cotton. Set by Fairtrade Standards include core requirements region and variety, it ranges from €0.66/kg Environmental and social production standards which must be met by all producer in Kyrgyzstan to €0.39/kg in South Asia organisations (e.g. training in handling Environmental standards promote best pesticides) and development requirements, • The Fairtrade Minimum Price aims to cover agricultural practices that are sustainable, which are a process for making continuous average costs of sustainable production minimise risks and protect biodiversity: improvements within realistic timeframes and provides a safety net when market (e.g. reducing the use of herbicides). Fairtrade prices fall below a sustainable level • Minimised use and safe handling and International provides training and guidance storage of pesticides, herbicides and in meeting standards, supported by training • When the market price is higher than the hazardous chemicals manuals and in-country liaison officers. Fairtrade Minimum Price, the buyer must pay the higher price. Producers and traders • No use of chemicals included in the Fairtrade certification includes regular audit can also negotiate higher prices on the Fairtrade Prohibited Materials List by FLO-CERT (www.flo-cert.net), a global basis of quality and other attributes certification and verification body with the • Integrated pest management including main role of independently certifying Fairtrade • Producer organisations are paid an non-chemical pesticides and biological products. Producer organisations and traders additional Fairtrade Premium of €0.05/kg pest controls pay a certification fee which contributes to the to invest in business development and cost of the service and which is compulsory community and environmental projects • Appropriate and safe use, storage and for ISO65 accreditation.29 Producer chosen by their members disposal of hazardous waste organisations that lack sufficient financial resources to pay the full Fairtrade certification • Trade standards aim to encourage fairer • No use of genetically modified organisms or renewal fee can apply for a grant of up to negotiations and include signing contracts 75 percent of the fee. Certification provides the that allow for long-term planning and • Improve soil fertility, reduce and prevent scrutiny that motivates producer organisations sustainable production practices. soil erosion and traders to actively and effectively ensure compliance with Fairtrade Standards. It also • Efficient and sustainable use of water Organisational development and helps producers to progressively strengthen resources strengthening their organisations by developing and adapting • Fairtrade certified seed cotton is open internal systems and processes. • Maintain buffer zones around bodies to small producer organisations that are of water and conservation areas where owned and governed by their members pesticides and hazardous chemicals must not be used • A democratic decision-making process must be in place, with all members having • Re-use of organic waste for composting, an equal right to vote on key issues mulching and manure

Commodity briefing: Cotton | Fairtrade Foundation January 2015 9 4. THE DIFFERENCE FAIRTRADE MAKES TO FARMERS AND THEIR COMMUNITIES

There are now 26 Fairtrade certified cotton producer organisations representing almost 60,000 farmers across nine countries – Benin, Brazil, Burkina Faso, Egypt, India, Kyrgyzstan, Mali, Nicaragua and Senegal.

In 2013 farmers’ Buying a fairly traded garment is not giving to charity, but is a much more positive organisations sold statement of fulfilling one’s commitment towards all the people who are ultimately responsible for the garment. Fairtrade has helped Chetna to lay additional 15,900 focus on setting up farmers’ institutions and building their capacities on leadership and tonnes of Fairtrade self-sustainability. Other certifications do seed cotton, generating not focus on building producers’ institutions and yet, this is the key to long-term sustainability. With setting up of farmers’ institutions, involvement of women has also slowly started to increase, though there is €644,000 still a long way to go.

in Fairtrade Premium to GS Rao, State Co-ordinator for Chetna invest in business and Organic Farmers’ Association, Odisha, India community improvements.

Commodity briefing: Cotton | Fairtrade Foundation January 2015 10 RESEARCHING THE IMPACTS OF FAIRTRADE COTTON

In 2012, the Fairtrade Foundation published a study of Fairtrade cotton impacts. The research was conducted by the Natural Resources Institute (NRI) and the Institute of Development Studies (IDS) during 2009-10 covering Senegal, Cameroon, Mali and India. The study provided clear evidence that Fairtrade can make a real, practical difference for cotton farmers:

• The Fairtrade Minimum Price for cotton producer organisations. They considered that was significantly higher than the national this had given them more influence over their base price in all three West African household resources. countries (up to 49 percent higher in Senegal and Cameroon and up to 78 The Fairtrade Premium income had been percent higher in Mali) used to support a range of priority community projects in each country. They included • Although the same effect was not visible water wells and primary healthcare services in India on account of high market prices in Senegal, food and water security in Mali for cotton, farmers were appreciative of and supporting children’s education in India. Fairtrade’s role in ensuring timely and regular above-market prices paid to them Many projects focused on mitigating the by the Promoting Body impact of climate change by the efficient use of natural resources: digging and • Fairtrade price incentives and technical deepening village ponds to harvest rainwater, assistance brought improvements in the drip irrigation systems for efficient water use, quality of cotton produced by farmers in land levelling resulting in water flowing uniformly all four countries, enabling them to sell on the farm improving yields, construction of their cotton for a higher price. check dams to prevent rainwater runoff and soil erosion. Farmers also felt that Fairtrade had made a The study highlighted how a requirement positive contribution to community solidarity, in the Fairtrade Standards for seed cotton Fairtrade Standards have led to significant with 90 percent of interviewed farmers in stipulating that women farmers should be environmental benefits (sometimes in Senegal saying that reinforced solidarity paid directly (rather than through their combination with organic certification) in the between and within villages was a unique husbands or other male family members) reduction of the use of harmful pesticides, contribution of Fairtrade. had encouraged more women in West and better disposal of chemical containers, Central Africa to cultivate cotton and led to and the introduction and strengthening The summary report and full research report increased membership of women in cotton of sustainable farming methods. are available here.

Commodity briefing: Cotton | Fairtrade Foundation January 2015 11 FAIRTRADE AND COTTON IN INDIA A. PRATIMA ORGANIC GROWER GROUP

Pratima Organic Grower Group is an association of 2,000 cotton farmers from the Balangir district of Odisha in eastern India. The district is predominantly agrarian, with more than 70 percent of the population dependent on agriculture for their livelihood, and is known for its extreme poverty, with more than 62 percent of households identified as living below the poverty line (official estimate 2001).

The area experiences extreme temperatures, ranging from 5°C-49°C, and an average rainfall of around 1,200mm which is erratic and unevenly distributed. Farmers don’t have access to irrigation facilities so unreliable rainfall and crop failures force many to migrate for seasonal work.

Most farmers have to take loans from local cotton traders/moneylenders at exorbitant interest rates – up to 100 percent for cash and 30 percent when jewellery or land is put up as collateral. They are further exploited by these traders who pay low prices and under-weigh their crop when farmers sell their cotton to them to repay the loans.

Pratima Agro and Paper Ltd operates a ginning unit and works with 4,000 farmers from more than a hundred villages in the contract We’ve been three and a half ‘It’s been great to be a part of Fairtrade. production of organic cotton. It provides years in Fairtrade. Normally Producers are really enjoying being a part services such as pre-finance for seeds and of it. We are setting an example for inputs which enables farmers to bypass local Fairtrade talks about a government to follow in our path. We are traders. The company began working with the transformation from ensuring a minimum support price, which Balangir farmers in 2007, first organising them contract production to small is so important but the government hasn’t into village self-help groups. The farmers gained yet been able to implement. Fairtrade certification in 2010, with the producer organisation in six company acting as the Promoting Body, years. We’ve done it in only ‘Right now we have a kharif crop, which supporting the farmers to strengthen their three and a half. means it is rain-fed so we only have one organisation with the aim of eventually cotton harvest in the year during the rainy becoming Fairtrade certified in their own right. season. Resources are very limited for the producers and many don’t have any other Less than four years on, and Pratima Organic source of income. Grower Group has now become the second Fairtrade cotton producer organisation in ‘Now we are planning water projects, India to transition from contract production including plastic pipes that would give to a fully-fledged, farmer-owned small drip irrigation to the cotton fields. Then the producer organisation. farmers could have a second crop, and we could stop the migration of farmers away Pravakar Meher, Pratima Project Director, from the region. My message to consumers: explained what Fairtrade means to the buy more Fairtrade so we can develop more!’ members: Members of Pratima have invested the ‘The most interesting part about Fairtrade Fairtrade Premium in the construction for the farmers is leadership and ownership. of warehouses also used as community It is a dream for them, owning their own centres, the renovation of village ponds organisation and commanding all the for community water needs, purchase responsibilities. This dream is about to and distribution of non-GM seeds, purchase come into effect. of tractors and provision of student scholarships. The Premium is currently ‘We’ve been three and a half years in earmarked for setting up a pulses Fairtrade. Normally Fairtrade talks about processing unit for villagers to mill dal and a transformation from contract production other pulses ready for cooking. This will to small producer organisation in six years. end the costly and time-consuming need to We’ve done it in only three and a half. take the dal to another town that has a mill.

Commodity briefing: Cotton | Fairtrade Foundation January 2015 12 FAIRTRADE AND COTTON IN INDIA B. PRATIBHA-VASUDHA

The 1,500 cotton farmers from Vasudha Farmers’ Society work with Pratibha Syntex Ltd to produce and market Fairtrade and organic cotton. They are located in very remote villages around Karhi in the Khargone district of Madhya Pradesh in central India.

The problems faced by farmers range from their children to receive a better education and extreme summer temperatures and erratic learn to communicate in English to improve rainfall to a lack of agricultural infrastructure their employment opportunities. They took a Extending Fairtrade impact such as irrigation systems, cowsheds, safe big step towards their dream in 2010 by using for textile workers storage and transport. The many social the Fairtrade Premium to buy land and set up Fairtrade currently only certifies the challenges include child labour, lack of Vasudha Vidya Vihar School, initially with just cotton used in Fairtrade clothing to equal opportunities for women and the a small number of children and very basic ensure farmers receive a better price practice of open defecation caused by infrastructure. The school has been expanded for their cotton. But once it has left the lack of toilets, which is particularly and now provides quality, affordable education the hands of the farmer, cotton passes problematic for women. for 425 students, employs 25 teachers and staff through a long and complex supply and generates enough revenue to cover its chain of workers who gin, spin, knit, Many village children live in areas too remote expenses. And five school buses have been dye, cut and trim the raw product to attend school so spend their time working purchased to bring more children into the into consumer items such as t-shirts, in the fields. The farmers agreed that the most school from surrounding villages and reduce bed sheets and baby clothes. important change for the region would be for rural child labour. Textiles workers throughout the supply chain are often squeezed to deliver more Premium social projects Premium farmer projects products on short deadlines for lower pay and fewer benefits. Fairtrade, in • Construction of public toilets in five villages • Training farmers in best close collaboration with trade unions, organic practice industry experts and advocacy groups, • Provision of eight stitching centres and is therefore developing a Fairtrade vocational training in knitting, sewing and • Crop insurance scheme to protect Textile Standard. This standard will weaving to empower women, promote farmers from crop failure set requirements at the different levels entrepreneurism and increase incomes of the textile supply chain with the intent • Construction of warehouse to provide of improving livelihoods for workers • Mobile health clinics providing free health safe, long-term storage for crops through greater worker empowerment checks in more than 140 villages and decent wages and working • Distribution of seeds and drip conditions. It will also provide businesses • Water tanks to provide clean water for irrigation kits with the opportunity to have a tangible nine villages and positive impact for workers through • 36 cattle troughs to combat high the entire cotton supply chain. • Solar street lighting installed in 47 villages summer temperatures to provide lighting at night

Commodity briefing: Cotton | Fairtrade Foundation January 2015 13 5. WHY WORK WITH FAIRTRADE? A SUSTAINABILITY OPTION FOR COTTON SOURCING COMPANIES

The success of Fairtrade is due to the rise in public demand for sustainable and ethical sourcing, including procurement tenders. This has encouraged businesses to be responsible for the integrity of their supply chains and to consider carefully how they purchase products.

Enlightened business leadership understands that investing in long-term sustainable practices and more resilient producer communities is a sound business strategy, especially in commodity markets such as cotton where prices and yields can fluctuate greatly.

Fairtrade can offer solutions which meet these consumer demands and give businesses the opportunity to demonstrate their commitment to sustainability through a widely recognised and understood scheme, both in-store and through other channels.

Fairtrade offers the flexibility of two models:

The FAIRTRADE Certified these 82 percent understand what it means.31 Cotton Mark provides physical Globally, more than three quarters of those traceability of the cotton from surveyed say that Fairtrade has a positive a labelled end garment back to impact on their impression of brands that the farmers who grew it, with carry the Mark.32 It is this balanced win-win the assurance to consumers – for producers, companies and consumers that all cotton in a finished product is – that makes Fairtrade unique. Fairtrade certified. Fairtrade cotton provides businesses with The Fairtrade the ability to trace their cotton back to the Cotton Sourcing farmers who grew it with transparency in the Program 30 supply chain, allowing them to communicate the provides flexibility positive impact they are having on farmers’ lives. and scalability to businesses to achieve their sourcing commitments to sustainable cotton As the Fairtrade sector continues to volumes on Fairtrade terms. It is in line with grow, companies are moving from simple their CSR goals with options for corporate compliance with Fairtrade Standards to and consumer communications. a much deeper commitment with, for example, The Co-operative and Ben & Jerry’s recently Sourcing Fairtrade can have a significant going 100 percent Fairtrade with their bananas business benefit – 77 percent of UK consumers and ice cream respectively. For further are familiar with the FAIRTRADE Mark and of information please refer to the Fairtrade Foundation business page.33

Commodity briefing: Cotton | Fairtrade Foundation January 2015 14 6. THE DATA

Producer organisations They grow seed cotton on 86,834 hectares • 46 percent of Fairtrade Premium and produce 49,949 tonnes of Fairtrade expenditure was invested in community In 2013 there were 26 Fairtrade certified certified seed cotton. Global sales of 15,900 services, primarily education producer organisations located in nine tonnes of seed cotton in 2013 generated countries: Benin (1), Brazil (1), Burkina €644,000 in Fairtrade Premium.34 • 54 percent was spent on improving Faso (1), Egypt (1), India (12), Kyrgyzstan (1), producer organisations and services for Mali (1), Nicaragua (1), Senegal (7). Fairtrade Premium farmers – agricultural tools, seeds and fertilisers; credit and finance services. These producer organisations represent Producer organisations report that around half 59,735 farmers (37,687 Small Producer of the Premium is invested in farmers and their Organisations, 22,048 Contract Production). organisations and half in community projects.

Figure 2: Fairtrade seed cotton – Fairtrade Premium use 2012-13

40% Education 3% Healthcare 1% Social and economic services for communities

0% Other services to communities

46% Services for communities

38% Services for farmers

16% Investing in producer organisations

1% Other

1% 2% 6% Human 9% Education for 5% Credit 30% Provision Community resources and Facilities and farmers and and finance of agricultural infrastructure administration infrastructure 1% Other their families services tools and inputs

1% Other services 1% Healthcare for to farmers farmers and their families

Source: Monitoring the scope and benefits of Fairtrade, Sixth Edition, 2014, Fairtrade International

Commodity briefing: Cotton | Fairtrade Foundation January 2015 15 THE DATA CONTINUED...

UK Fairtrade cotton sales Fairtrade cotton sales grew rapidly in Producer ownership of Fairtrade the early years but have slowed down since 2009-10 due to the challenging Fairtrade International co-ordinates the committees – including setting Fairtrade retail environment prompted by the onset Fairtrade system at the international level. Standards and developing global strategies. of recession in 2008-09, combined with It sets international Fairtrade Standards, price sensitivity of the types of products organises support for producers around At the regional level, Fairtrade producer sold as Fairtrade. In 2013, more than the world, develops global Fairtrade strategy networks are beginning to take over the 7.4m Fairtrade cotton items, mainly and promotes trade justice internationally. producer services function from Fairtrade garments, were sold in the UK, with Fairtrade farmers and workers are joint International, giving producers a greater an estimated retail value of £23.4m. shareholders in Fairtrade International through say in the type of services and support they their three regional producer networks. receive. Fairtrade Africa now handles producer This means they share decision-making services in Africa and the Middle East, while responsibilities in the general assembly, the producer networks in Latin America and on the board of directors and in various Asia are moving in a similar direction.

Commodity briefing: Cotton | Fairtrade Foundation January 2015 16 7. CONCLUSION

Despite supplying the raw commodity that the multi-billion dollar global clothing and textile industries depend on, growing cotton is failing to provide millions of rural households in developing countries with a sustainable and profitable livelihood.

Cotton farmers’ incomes are being hit by low Fairtrade Standards provide a framework for Premium can be invested in improving cotton and volatile cotton prices and by the rising cotton farmers to form democratic quality and productivity, climate change costs of food, fuel, transport and farm inputs, organisations or strengthen existing adaptation and improving community welfare. preventing investment in modern farming organisations. This enables farmers to increase practices and technology. Their families’ health their negotiating power in the marketplace, By offering Fairtrade cotton products, and the environment are at risk from the improve business systems, access new businesses are contributing to a more widespread use of hazardous agrochemicals, markets, develop long-term trading sustainable future for cotton farmers, their child labour and forced labour continue to partnerships and implement sustainable communities and the environment. And by blight the industry, while climate change is farming practices. Fairtrade Minimum Prices purchasing them, consumers are choosing bringing more unpredictable challenges. contribute to financial stability, while Fairtrade products that change lives.

Commodity briefing: Cotton | Fairtrade Foundation January 2015 17 APPENDIX COTTON: GROWERS AND BUYERS

Main producing countries Figure 4: Largest cotton producing Nearly 26m tonnes of cotton were produced countries as percent of world in 2013-14 by around 85 countries worldwide. production, 2013-14 The largest cotton producers are China, US Pakistan Brazil Others India, the US and Pakistan; in 2013-14, 11% 8% 7% 21% these four countries accounted for 72 percent of world production.

Figure 3: World cotton production 2013-14 (1,000 tonnes) China 6,967

India 6,750

US 2,811

Pakistan 2,060

Brazil 1,698

Others 20,286

TOTAL 25,844 India China 26% 27%

Source: Cotton world markets and trade, Source: Cotton world markets and trade, FAS/USDA, September 2014 FAS/USDA, September 2014

Commodity briefing: Cotton | Fairtrade Foundation January 2015 18 APPENDIX COTTON: GROWERS AND BUYERS

Main exporting countries Figure 6: Largest cotton exporting Around 35 percent of cotton production – 9m countries as percent of world exports, tonnes of raw fibre – is traded. The US is the 2013-14 largest cotton exporter, accounting for 26 Australia Brazil Uzbekistan Others percent of exports in 2013-14. 12% 6% 7% 26%

Figure 5: World cotton exports 2013-14 (1,000 tonnes) US 2,293

India 2,047

Australia 1,056

Brazil 486

Uzbekistan 588

Others 2,445

Total 8,915

Source: Cotton world markets and trade, India US FAS/USDA, September 2014 23% 26%

Source: Cotton world markets and trade, FAS/USDA, September 2014

Commodity briefing: Cotton | Fairtrade Foundation January 2015 19 APPENDIX COTTON: GROWERS AND BUYERS

Main consuming and importing Figure 7: World cotton consumption countries and imports 2013-14 (1,000 tonnes) Since the 1940s, world cotton consumption Consumption Imports has increased by an average of 2 percent a year, roughly the same as production. China China 7,512 China 3,075 is by far by the world’s largest consumer of cotton, accounting for 32 percent of total India 5,117 Turkey 914 consumption in 2013-14. With its huge textile industry, China is also the world’s largest Pakistan 2,264 Bangladesh 893 importer of cotton. Turkey 1,361 Vietnam 697

Brazil 914 Indonesia 577

Bangladesh 904 Thailand 337

US 773 Pakistan 261

Others 4,666 Others 2,034

Total 23,511 Total 8,788

Source: Cotton world markets and trade, FAS/USDA, September 2014

Commodity briefing: Cotton | Fairtrade Foundation January 2015 20 NOTES

1 Cotton Exporter’s Guide 2007, P.3 13 Cotton campaign, www.cottoncampaign.org 25 The State of Sustainability Initiatives International Trade Centre UNCTAD/WTO Review 2014, P.193. International Institute 14 Production and Trade Policies Affecting for Sustainable Development (IISD), and 2 Cotton Exporter’s Guide 2007, P.16 the Cotton Industry, International Cotton the International Institute for Environment International Trade Centre UNCTAD/WTO Advisory Committee, November 2014 and Development (IIED) 3 Cotton Exporter’s Guide 2007, P.3 15 Low cotton prices a ‘long-term problem’, 26 GM Crops Do Not Increase Yield Potential, International Trade Centre UNCTAD/WTO says ICAC, Agrimoney.com 6 Jan 2015 Institute for Responsible Technology 4 Cotton world markets and trade, FAS/USDA, 16 Real 2010 US dollars, Cotlook A Index, Newsletter, August 2011 September 2014 World Bank Commodity Price Data 27 ‘India’s farmer suicides: are deaths 5 The State of Sustainability Initiatives Review 17 More trouble ahead for the cotton linked to GM cotton? – in pictures’, 2014, P.187. International Institute for sector, BTC Trade for Development 2013 theguardian.com, 5 May 2014 Sustainable Development (IISD) and www.befair.be 28 The State of Sustainability Initiatives the International Institute for Environment 18 Fairtrade Cotton: Assessing Impact in Mali, Review 2014, International Institute for and Development (IIED) Senegal, Cameroon and India, Summary of Sustainable Development (IISD) and the 6 The State of Sustainability Initiatives Review Synthesis Report, May 2011 Valerie Nelson International Institute for Environment 2014, P.187. International Institute for and Sally Smith and Development (IIED) Sustainable Development (IISD) and the 19 Cotton Pests and Diseases, 29 ISO 65 is the standard set by the International Institute for Environment and www.unctad/infocomm International Organization for Standardization Development (IIED) for bodies certifying products, processes 20 EJF. 2007. The deadly chemicals in 7 Report from the Task Force on the and services, and is intended to ensure cotton. Environmental Justice Foundation Challenges from Competing Fibers to the they operate certification schemes in a in collaboration with Pesticide Action 72nd Plenary Meeting of the International competent, consistent and impartial manner. Network UK: London, UK. ISBN No. Cotton Advisory Committee, September http://www.iso.org/iso/catalogue_detail. 1-904523-10-2 29-October 4, 2013 htm?csnumber=26796 21 The Impact of the FAO-EU IPM Programme 30 8 http://www.traidcraft.co.uk/get_involved/ Fairtrade Sourcing Programs overview, www. for Cotton in Asia, Pesticide Policy Project campaign/trade_rules/US_cotton_subsidies/ fairtrade.net/fsp-overview.html Publication Series Special Issue No. 9, July Q+and+A+on+cotton+subsidies 2005 University of Hannover, Germany 31 Fairtrade Survey March 2013, TNS 9 Report from the Task Force on the 22 The water footprint of cotton consumption, 32 Fairtrade International Consumer Challenges from Competing Fibers to the A.K. Chapagain, A.Y. Hoekstra, H.H.G. Perceptions Survey 2013, Globescan 72nd Plenary Meeting of the International Savenije, R. Gautam September 2005, Cotton Advisory Committee, September 33 http://www.fairtrade.org.uk/en/for-business UNESCO-IHE 29-October 4, 2013 34 2013 data provided by Global Product 23 The State of Sustainability Initiatives Review 10 International Labour Rights Forum et Management Cotton, Fairtrade International 2014, P.187. International Institute for al, Child bondage continues in Indian 13 October 2014 Sustainable Development (IISD), and the cotton supply chain, September 2007 International Institute for Environment and 11 ‘Literature Review and Research Evaluation Development (IIED) relating to Social Impacts of Global Cotton 24 Gwimbi, P., and T. Mundoga. 2010. ‘Impact Production.’ Prepared for ICAC Expert Panel of climate change on cotton production on Social, Environmental and Economic under rainfed conditions: case of Gokwe.’ Performance of Cotton (SEEP). ERGON. Journal of Sustainable Development in 2008 Africa 12 (8): 59-69 12 Cotton and Child Labour http://ejfoundation. org/cotton/cotton-and-child-labour

Commodity briefing: Cotton | Fairtrade Foundation January 2015 21 fairtrade.org.uk Fairtrade Foundation, 3rd Floor, Ibex House, 42-47 Minories, London, EC3N 1DY Tel: +44 (0) 20 7405 5942 Email: [email protected] Registered Charity No. 1043886 A company limited by guarantee, registered in England and Wales No. 2733136 Photography credits: Andy Powell