In Hong Kong next month we will hold the first meeting of the Organic Cotton Round Table. And although the meeting has blossomed into more of an open introductory session than a tightly closed meeting in a darkened room I’m delighted to see such interest and enthusiasm coming from so many corners of the industry. I’ll even go as far as claiming that this will be the beginning of a new era for organic cotton... and indeed one we are in desperate need of.
As I reflect on the past 10 years – something I do quite often these days as Textile Exchange celebrates its tenth birthday - I think it’s fair to say that organic cotton is a fascinating case study of how the market can package and deliver ‘eco value-addition’ through market mechanisms. It’s certainly not a perfect system but it’s not a perfect world and I’m positive about the ‘next phase’ in the life and times of the organic cotton sector. I’ll attempt to explain why...
In the beginning we witnessed the rise and rise of organic cotton. Since day one the growth curve was almost vertical – with considerable growth in both production and consumption – and figures indicating a 500 percent increase between 2005 and 2010. In 2010, organic farmers produced 1.1 million bales of organic cotton fiber – and volumes grew from 0.01 percent of global production to over 1 percent.
Today there is a growing mis-match The demand and consumer expectations are merrily – and obliviously - humming along with increased recognition, respect, and desire for all fashion green and ethical... and in fact there is a general expectation ‘out there’ that the industry will just keep on growing. Textile Exchange’s early analysis on the subject found that there is an aggregated growth projection of around 7 percent. However, behind the scenes those of us with our ear to the ground know there are serious barriers to this kind of growth; hence the need for a nucleus to operate from – and the birth of the Round Table on Organic Cotton.
So what’s going wrong? Organic faces two big roadblocks.
The Big Issues
Roadblock 1: Accessing non genetically modified seed: As most of you know organic – and Fairtrade and CmiA certification for that matter – requires the use of non-genetically modified (non GMO) cotton. Those are the rules - and I’m not going to delve into the nitty gritty now – but needless to say ‘seed’ is one of those subjects that I’ve found the more you know the more you realise you don’t know and it’s all very very ... well ... complicated.
What I will say is that in a number of organic cotton producing countries we have seen the introduction and expansion of GMO seed literally change the landscape overnight. And this is before ‘we’ as a ‘community’ (including farmers, scientists, medics, consumers, and so on) have even had a chance to get our heads around the pros and cons of GMOs – let alone to the bottom of the more complex and murky socio-economic issues associated with seed supply facing the worlds farmers and our general [lack of] freedom of choice. Of course seed manipulation is nothing new –‘hybridization’ of seed has brought fundamental changes to the way many countries and corporations produce, disseminate, and control seed – but creating hybrids is not the same as manually inserting genetic material from one species into another that normally wouldn’t have anything to do with each other.
In Hong Kong we will have perhaps an unprecedented situation on our hands where Round Table invitees from retailers to farmers will rub shoulders with seed breeders, grass roots seed specialists, and commercial seed producers. What will come out of this session is anybody’s guess! All I know is that this meeting provides an extraordinary opportunity to begin something constructive for the greater good. I don’t think anyone would disagree that seed integrity and genetic biodiversity is integral to the fabric of life on earth – and we need to keep non genetically modified seed in the suite of offerings – at the very least to respect the precautionary principle.
Roadblock 2: The Quest for a Sound Business Model. Now this is going to be a ‘hot topic’ on the day and one I am really looking forward to with only a little trepidation! Not only do farmers have issues with access to the right seed but how do we attract them to continue – and new ones to take up – organic if the market is not supportive? Despite the proven benefits to health, soil fertility, and food security associated with organic, the business risk has become a deep concern and a risk farmers are feeling less inclined to undertake, alone. There are, of course, some well established value chain partnerships out there that offer a great deal of security to farmers but sadly most organic producer groups are still ‘going it alone’ on the strength of their convictions and the hope that their investment in organic will pay off financially. Either that or they are overly dependent on NGOs and donor funding.
The ‘beauty’ and I suspect the ‘downfall’ of organic is that it has been nudged into the mainstream market as a ‘market driven solution’ (with, as I said, a number of exemplary partnerships and development ‘projects’ showcasing principles and practices, some which are not entirely met financially by the price of the product). The expectation has always been that the market will pay for the embedded environmental and socio-economic sustainability and there has been a tendency to avoid too much proscriptive price setting. However, at the same time, there has been an expectation that the market will pay for the value-add. Worst case scenario is that no one really benefits but the middle men – farmers are under-paid and brands are charged exorbitant rates which taint their perception and ability to participate.
Over the past few years as the volumes of organic have grown this premium price and associated market advantage has eroded. Not because the eco value-add or the benefits of organic aren’t there – but because the market is reconsidering whether it should pay for it. This is where the disappointment lies and we have to take a cold hard look at how we define ‘sustainability’. Furthermore – these days - there are many other variables in the mix; economic contraction generally, and quite frankly other options that suggest sustainability doesn’t have a price tag by claiming not to interfere with the market (which by the way is almost impossible). This is our challenge – and I believe the discussion underlying this conundrum goes way beyond organic cotton.
The bit that intrigues me most is the basic principle that ‘organic’ is worth more in the market than ‘conventional’, but we have all shied away from setting prices. Instead there has been an acceptance of some kind of ‘price premium’ for the extra work and attention that goes into producing cotton organically, and an expectation that producers are taking care of one and all. Of course there are the star operators that are working in partnership with organic cotton farmers, often within integrated value chains, and are ethically transparent in the way they calculate a ‘fair price’ and keep up with progress on the ground. In these situations, I tend to think the security of business (farm investment, guaranteed trade, improved quality, etc) is just as important to those involved as the premium – but if you were a farmer living from one crop season to the next I imagine both the premium and the security of business would be equally important. What we haven’t properly considered or calculated is the benefit to the brand of this security of business. I’m hoping this subject pops up in Hong Kong.
Our Round Table reminds us that collaboration is stronger than competition It’s fitting that the Round Table is established during Textile Exchange’s tenth anniversary year, as we reflect on how far we have come, influencing progress and change within the textile industry. The mission of the Round Table harks back to why Organic Exchange was created in 2002 - to identify and eliminate barriers to growth and effectively change the world of agriculture. Ten years later, we’ve made tremendous progress. The organic cotton sector has grown from $240 million at retail in 2002 to $5.16 billion in 2010, with strong, stable growth anticipated by many brands and retailers. However 2012, sees the organic cotton sector having reached a point in its growth where we’re running into new barriers to growth, which can only be solved through whole value chain collaboration. Not to mention engaging the hearts and minds of committed individuals – both pioneers and new innovators.
Collaboration with Fairtrade International Organic' and 'Fairtrade' initiatives share very similar values, objectives, and principles, and many grower groups in developing countries (and brands/ retailers) choose to be both organic and Fairtrade certified. Both initiatives also share some of the challenges and barriers to growth such as ensuring farmers have access to non-GMO seed, and finding mutually beneficial ways for producers and brands/retailers to work together - in a way that provides long-term security for farmers, and from which farming communities can flourish. After all isn’t that what it’s all about?
With our shared interests Textile Exchange and Fairtrade International have continued to build stronger working relationships over time and have agreed to co-convene the Round Table in Hong Kong.
Agenda The Round Table will involve facilitated discussion, mostly led by the participants on the day. As a rough agenda we are dividing the meeting into three parts: a context-setting session followed by a deep dive into the most critical issues for the sector, and finishing with an open discussion about how participants want the Round Table to operate from this point forward. This will be a closed meeting, so we will need you to confirm your attendance at your earliest convenience.
See you there!
For more information on the Round Table click here
Find out what others are saying click here
This year is International Year of Co-operatives
In 2009 the United Nations General Assembly declared 2012 the UN International Year of Co-operatives. The UN recognises the diversity of co-operatives around the world and encourages governments to create a supportive environment for their development.
The International Year of Co-operatives (IYC) celebrates a different way of doing business, where the members, who own and govern a business, collectively enjoy the benefits instead of all profits going just to shareholders.
Having an International Year of Co-operatives provides an opportunity to captivate the attention of national governments, the business community and, importantly, the general public on the advantages provided by the co-operative model.
The co-operative model is on track to become the fastest growing business model by 2020.
Co-operatives operate in a range of sectors – ranging from banking, credit, housing, health, retail, food, utilities and agriculture.
Co-operatives are owned by nearly one billion people across the globe.
Co-operatives employ nearly 100 million people – 20 percent more than multinational enterprises. For example: In Kenya, 63% of the population derive their livelihoods from co-operatives. Approximately 250,000 Kenyans are employed or gain most of their income from co-operatives. (Source: ILO, 2009). In the United States, 30,000 co-operatives provide more than 2 million jobs. (Source: National Co-operative Business Association).
Co-operatives promote the fullest possible participation in the economic and social development of all people, including women, youth, older persons, persons with disabilities and indigenous peoples.
Co-operatives innovate to meet the needs of their members, and may offer new products or services—ahead of competing businesses—because members ask for it.
Organic cotton co-operatives can be found in almost all organic cotton producing countries. A significant amount of organic cotton is produced within the co-operative business model.
Cooperation has always been a fundamental principle of the Fair Trade movement. This means almost all Fairtrade certified cotton comes from farmer co-operatives.
For more facts visit Co-operative facts & figures
Sustainability, Community and Co-operatives
Co-operatives are values based businesses owned by their members. Co-operatives provide a sustainable business model that supports the social and economic development of economies, communities, and individuals around the world.
Sustainability and co-operatives go hand-in-hand. In the video below Philippe Cousteau calls for a new economic model, necessary in a resource constrained world, to be rooted in co-operatives.
Philippe Cousteau, Keynote Speaker at the 2011 International Cooperative Alliance General Assembly in Cancun, Mexico on Friday, November 18, 2011
Coop Stories and Textile Exchange
Stories.coop is a section of the IYC website dedicated to storytelling. It aims at sharing the diversity of the co-operative enterprise model and to telling stories of successful co-operatives around the world. This global digital campaign provides an insight into a large cross-section of co-operative stories from around the globe. During each day of 2012 the IYC will feature a Story of the Day on their Homepage.
Textile Exchange will also be bringing you inspiring and personalised stories from the organic cotton cooperatives we work with. What better way to open than to share news from the Republic of Tajikistan, where the newly formalised ‘Bio Kishovarz Co-operative’ celebrates its new official ‘co-operative’ status.
Tajikistan, officially the Republic of Tajikistan, claimed independence in 1997. Since then the country has grown in stability and is building a trade economy, partly with the help of foreign aid. Mr Sherzod Abdurakhmano, Helvetas Swiss Intercooperation, tells us how a group of organic farmers have undergone their own ‘independence’ and moved from NGO dependency (and donor funding) in their early days to establishing their own stand-alone co-operative.
We will be regularly posting our stories in the Textile Exchange Farm Hub and at Stories.coop
By Liesl Truscott
Farm Engagement Director
By Liesl Truscott, Director Farm Engagement, Textile Exchange
It’s a sad situation when ‘doing the right thing’ places an organization at risk. Yet, we saw just recently how true this can be when the company Victoria’s Secret, and the NGOs Fairtrade International and Helvetas, were accused by Bloomberg Press of not ‘getting it right’ in Burkina Faso.
Further investigations by Fairtrade International and LimitedBrands (owners of Victoria’s Secret) are showing that things are not quite as Bloomberg painted them. But what I want to talk about today is how far we still have to go towards ensuring that trade is a vehicle for improving livelihoods across the globe and how important certified programs are if we want this to happen. The need for systems to guide ethical business, the procedures for building in integrity, and corporate commitment, are still critical to success. Ideally, businesses mature to a place ‘beyond certification’ but we are clearly not there yet.
Without dwelling on the objectives behind Bloomberg journalist Cam Simpson’s story of ‘Clarisse’ it’s probably enough to say it wasn’t very constructive, even if he had got his facts straight. Impressively, the accused parties have responded rationally, sensitively, and immediately to the allegations by traveling to the farms in Burkina Faso and checking the systems in place. It's times like this that reminds us how much we all (including the media) need formal processes in place to keep records, protect an individual’s rights, and look after an organization’s reputation. LimitedBrands would have been thankful their systems were robust enough to get to the bottom of the allegations so quickly and be in a position to publicly declare a different story based on required record keeping and third-party documentation.
Internalizing the costs of production
Sometimes the question is asked about what we are paying for with certified products. Among the many worthy objectives of Fairtrade and Organic initiatives is an attempt to build in the ‘costs’ (both the environmental and social costs) of doing business. These costs are usually externalized; not ‘owned’ by the business operators, and are therefore not accounted for in the price of the product. externalizing these costs of production has sadly always been commonplace, and what’s most upsetting is that it’s always the most vulnerable members of society that are affected by them. Whether it’s localized water pollution, soil infertility, or pesticide exposure leading to illness, disease, even death; vulnerable people and ecosystems are damaged by the negative side-effects of business.
The thing that’s changing over time is the direct impact back onto the business. The once ‘invisible’ consequences of externalizing environmental and social degradation is truly starting to affect business productivity, and inevitably profitability. Fairtrade and organic production is not necessarily getting ‘cheaper’ but conventional farming (including the cost of raw materials) is most certainly getting dearer. We are seeing this with many commodities such as cocoa, coffee and beauty products, which as a result, are further ahead in addressing shared value and building business partnerships, than cotton. This leads us to the importance of systems such as Fairtrade and Organic certification as ‘change agents’ if you will, to improving business practices.
Great thinkers on the subject of shared value, such as Michael Porter and Mark Kramer, will say that building competitive businesses based on product quality and so on are essential for addressing poverty. And while this is true, ‘positive discrimination’ (on the proverbial unequal playing field) based on rewarding operational internalization of environmental and social impacts, is still necessary; not till we move into an age of internalizing these impacts, and until other systems provide the checks-and-balances, can ‘fair-and-ecologically-sound trade’ stand on its own two feet.
Fairtrade and Organic projects are not a ‘handout’. Producers are not paid more for simply being poor and marginalized, they are incentivized through financial rewards for their contribution to sustainable development; something that society as a whole will agree is justifiable. This means the environmental and social costs of production are brought into the equation - internalized, even while the ‘conventional’ market in effect encourages hiving them off to other parts of society to pay for, or clean up after.
Why we still need Certification
It is fair to say things are changing; often in response to the dwindling of the earth’s resources and recognition that more sustainable production is good for the bottom line as well as reputation. Organic and Fairtrade Organic initiatives are also behind the change; acting as the beacons or the ‘gold standards’ in sustainable production, Organic and Fairtrade Organic projects show the rest of the industry what can be achieved through formalized improvement systems based on holistic (people and ecosystem) sustainability criteria.
Standards based on sustainability criteria are developed to help guide producers, companies and consumers; including systems to train, organize farmers, and monitor compliance are put in place to ensure the integrity of the system, and labels are applied as a convenient way for consumers to identify and reward ethical business.
They don’t come cheap but they pay back in terms of risk management, reputation, and quality systems management. Evidence gleaned by Business In the Community shows that companies performing well in CSR are also leaders in successful business, and further find implementing integrity systems more efficient and effective since its fully embedded into the way they do business.
Critical to the whole system working is a commitment to integrity and the courage to go beyond business as usual. I think the phrase coined by green economist E. F. Schumacher -“doing business as if people mattered” – is particularly useful since it sums up how taking care of people is not automatically considered by conventional economics. Relearning family and community values, such as looking after the vulnerable (and that includes children) is everybody’s businesses. This is something that the ‘shared value’ fraternity subscribe to but it does require very close working relationships to ensure complete confidence it is being delivered. It requires going beyond certification.
Going beyond certification is being promoted by the think tank SustainAbility and if you haven’t taken a look at their latest report Signed, Sealed... Delivered? yet it’s worth a go. Essentially, SustainAbility is pushing companies to not stop at certification but to move beyond to ‘collaborative competiveness’ which takes progressive companies to an even higher position of personal accountability and delivery of responsible business.
At Textile Exchange we use our three pillars: Informing, Connecting, Leading, to help support our members on their sustainability journey. Creating that platform – and a safe place - for sharing and learning we believe is a great place for companies to build their integrity measures and dare to be more courageous. We don’t think pointing the finger at those risking business reputation by going beyond business as usual (which is what Victoria’s Secret is doing by investing in Fairtrade Organic production initiatives in one of the poorest countries on Earth) is going to help either improve integrity or encourage courageousness.
We do hope, however, that the recent Bloomberg article will refresh our sensitization to the heart-wrenching reality of illegal child labor taking place in war-torn poverty-entrenched countries, such as Burkina Faso, and renew our vigor in taking action to bring about change. It will require systems that monitor activities and build in integrity. But most of all it will require courageousness to get stuck in, even when the starting position is so far from where we want it to be.
Please share your thoughts and help us encourage constructive debate on this topic!
See our website for information on Industry Integrity and Integrity at the Farmgate