Introduction

---

Small-scale producers who want to participate in Fairtrade are certified against the Generic Fairtrade Standards for Small Producer Organisations. The standards require that producers are organised into formal member-owned organisations with the capacity to contribute to the social and economic development of members and their communities.

Farmers who do not yet meet this provision may be eligible for certification under the Contract Production Standards. This means farmers must be contracted to an intermediary organisation (usually an exporter or NGO), known as a Promoting Body, which will support them in the process of forming an independent organisation.

AOFG-Zameen Organic is certified by FLO International as the Promoting Body for two groups of small-scale cotton farmers in the states of Maharashtra and Andhra Pradesh.

Background and structure

---

AOFG-Zameen Organic is a partnership of two organisations. Agriculture and Organic Farming Group (AOFG) is a registered  charity and NGO. It works with small and marginalised farmers from a number of Indian states to support capacity building and establish processing facilities and marketing structures.

Zameen Organic is a private limited company with experience in organic cotton production and value chains. Its role in this partnership is to provide marketing support. It purchases the seed cotton from the farmers then gins it in contracted ginning units in Amravati and Adilabad where the seeds are separated from the lint which is then pressed and baled.

AOFG-Zameen Organic currently works with two Regional Farmers’ Associations (RFA) – Vasundera Organic Farmer Association (VOFA) and Prukriti Organic Farmer Association (POFA). The RFAs are made up of small village groups with a total of 6,072 members.

VOFA is located in Amravati district, Vidharbha region, Maharashtra State. The area is known for the production of rain-fed cotton, vegetables, fruit, soya beans and pulses such as red gram.

VOFA has 3,358 members with a total of 6,458ha of land, of which 3,815ha are under Fairtrade certified seed cotton. The average farm is 1.5ha. Around 500 seasonal workers are hired, mainly at harvest. POFA is located in Kagaznagar, Adilabad district, Telangana region, Andhra Pradesh State. It is a semi-arid area known for the production of rain-fed cotton, sorghum, corn and red gram.

POFA has 2,714 members with a total of 12,444ha of land, of which 2,241ha are under Fairtrade certified seed cotton. The average farm is 2ha. Around 400 seasonal workers are hired, mainly at harvest.

Both areas are drought prone and economically undeveloped with poor roads and infrastructure compared to other parts of their states. Vidharbha area has suffered an epidemic of farmer suicides due to poor rainfall, crop failure and debt, leaving widows to provide for their families without a regular income. The lack of government investment and development in Telangana region has spawned a popular separatist movement.  

 

Production and sales

---

Harvest period: November 2008 – March 2009 
        Total production of seed cotton: 2,263,370kg 
        Total organic production: 583,711kg

Sales period: April 2008 – March 2009 
        Total sales of cotton lint: 529,215kg 
        Sales of organic cotton lint: 109,005kg 
        Fairtrade sales: 100% 
        Fairtrade buyer: Alok Industries, a global textile manufacturer and partner of Zameen Organic

Fairtrade

---

AOFG-Zameen Organic was Fairtrade certified in 2006. Fairtrade standards for seed cotton include a minimum price to cover sustainable costs of production and additional premium to invest in business and community projects. Producers can also request pre-finance of up to 60% of the value of a sales contract.

Fairtrade Minimum Price for seed cotton: €0.38/kg (organic); €0.46/kg (conventional).
Fairtrade Premium: €0.05/kg.

Fairtrade Premium projects

---

An elected Producer Executive Body (PEB) is responsible for deciding how to invest the Fairtrade Premium in projects that benefit the community and for managing the projects. Individual farmers or groups can submit proposals to the PEB for approval. To date, the premium has mainly been used to develop the capacity of farmers to undertake organic cotton farming.

Approximately 60% of the Fairtrade Premium has been used to fund loans to farmers for the purchase of cotton seeds. At sowing time farmers have to make heavy financial investments in their fields. Because of the low prices they receive for their crop and competing household expenses, farmers don’t always have cash available from their previous harvest to invest in the next crop. They therefore have to take out loans to buy seeds and other inputs. If loans are not available from banks they have to use informal sources such as local money lenders whose interest rates vary from 2% to 10% a month. Sometimes farmers even have to mortgage their entire harvest to money lenders at a very low price.

A further 10% of the premium has been invested in developing vermi-composting units that use earthworms to turn waste into organic fertiliser. One of the main benefits of organic farming for farmers is the reduction in production costs that is primarily achieved by replacing costly chemical fertilisers with low cost bio-fertilisers. To ensure a regular and self-sufficient supply of bio- fertilisers for organic farming the farmers are encouraged to develop their own bio-fertiliser production units using methods such as vermi-composting.

Other approved projects include:

• Sinking bore holes for clean water. 
• Construction of premises to house a mechanised mill to process red gram which many farmers grow as a cash crop. Gram is a pulse or lentil used to make dal and must be split before it can be cooked. By purchasing a mill to split the gram farmers will get a much higher price than selling whole gram.

---

Fairtrade Foundation March 2011