by Dave Goodyear, Research & Information Manager at Fairtrade Foundation
Fairtrade is calling for brands to pay the true cost of cotton.
Cotton is big business, supplying 25.8m tonnes of the raw material to the $294bn global textile trade and the $412bn clothing industry. Cotton is grown by huge agri-businesses in the US as well as by close to 100 million rural households in developing countries, a number that’s more than doubled when workers in transportation, ginning, bailing and storage are taken into account. As well as providing rural employment, cotton plays a major role in the economic and social development of low-income countries, accounting for around 63 per cent of Benin’s export and 72 per cent of Burkina Faso’s.
High street competition in rich countries fuels consumer expectations of ever cheaper, disposable clothing, pushing manufacturers to reduce cotton purchases and increase sourcing of cheaper man-made fibres such as polyester, which now has a dominant 68 per cent share of the global fibre market. Government subsidies – worth $6.5bn in 2023/14 and led by China and the US – contribute to global cotton price deflation that costs African farmers $250m a year. These factors put downward pressure on cotton prices, which have plummeted by 45 per cent in real terms since the 1960s, drastically squeezing the incomes of struggling cotton farmers.
On the ground
Small-scale farmers often work independently rather than being members of farmer organisations and therefore have little power in the cotton supply chain. They sell their cotton to ginners who are the first in a long line of operators who benefit from various manufacturing processes that add value to the farmer’s raw crop. In India farmers are economically dependent on local ginners or traders who buy their cotton, often at below the cost of production. Many are seriously indebted by exorbitant loans taken out from the same traders to buy essential fertilisers and pesticides. Rising costs of production, decreasing yields, impacts of climate change, and rising household costs add pressure to already unstable and inadequate incomes which prevent cotton farmers from investing in the infrastructure, training and modern farming practices needed to improve their incomes.
But it wouldn’t cause retailers much hardship to turn this around. Depending on the amount of cotton used and the processing needed, the cost of raw cotton makes up a small share of the retail price of a textile product because it includes added value in the various processing and manufacturing activities along the supply chain. So a 10 per cent increase, for example, in the price of raw cotton would only result in a 1 per cent or less increase in the retail price – a negligible amount given that retailers often receive more than half of the final retail price of finished cotton products.
Apart from farmer livelihoods, a number of serious challenges threaten the sustainability of the cotton industry. Cotton production uses $2bn of chemical pesticides a year – nearly half of them classified as hazardous by the WHO – to control the pests which destroy around 15 per cent of world production. These chemicals contribute to deterioration in soil quality, contamination of water sources and present a serious health risk to farmers and workers who often lack the appropriate training and protective equipment to handle them safely.
Cotton production and processing is highly dependent on water – it takes about 2,720 litres of water to make one T-shirt and 10,850 litres to make a pair of jeans. Inefficient irrigation systems can deplete local water sources, making water a scarce commodity for many cotton growing communities. Flood irrigation can be wasteful and cause the runoff of fertilizers and pesticides pollute rivers, lakes and water tables.
Farmers are planting more GM cotton in the hope of increasing yields and incomes. In reality they are tied into buying expensive seeds and pesticides each year from multinational companies amid concerns that yields actually decline after initial gains. In India an epidemic of farmer suicides has been blamed on high levels of indebtedness controversially linked to the rising costs of GM cotton seeds, fertilizers and insecticides and declining yields, while question marks remain over the long-term effect of GMOs on the environment, biodiversity and human health.
Forced and child labour has been documented in several cotton producing countries including Uzbekistan, Turkmenistan and Tajikistan where tens of thousands of children, students and adults are forced out of school, college or workplaces for several weeks a year and mobilised to pick cotton to meet government-imposed production quotas. Hundreds of thousands of children work illegally in the cotton industry in India, often working alongside their parents to supplement miserable wages or as bonded labour, paying off loans taken out by their parents.
A number of certification schemes are available to businesses that want to build sustainability into their supply chains. Many focus on environmental protection or product traceability but Fairtrade certification is unique in being the only scheme whose primary aim is to tackle poverty through better terms of trade as well as giving farmers greater power within their trading relationships.
Fairtrade Standards provide a framework for cotton farmers to form democratic organisations or strengthen existing organisations. This enables farmers to increase their negotiating power in the marketplace, improve business systems, access new markets, develop long-term trading partnerships, implement sustainable farming practices and manage the environmental and health risks from cotton production.
Fairtrade Minimum Prices contribute to financial stability, while Fairtrade Premiums can be invested in improving cotton quality and productivity, climate change adaptation and improving community welfare.
By offering Fairtrade cotton products, businesses are contributing to a more sustainable future for cotton farmers, their communities and the environment. And by purchasing Fairtrade cotton products, consumers are choosing products that change lives.
Read the Cotton Commodity Briefing
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