Cotton and Fair Trade
2015 07 28
In the recent years an increasing number of consumers are becoming more ethically aware about the social and sustainability issues of the clothing industry. Where has the piece of clothing been produced? Have the workers and growers in the whole supply chain received fair payment? Have the working conditions been adequate? Are the enviromental standarts being followed? These and other questions are raised more and more often by social & enviromental NGOs and also by consumers.
Cotton: a short history
Although the cotton plant is considered to have initially grown wild in East Africa, it was first cultivated in the country now known as Pakistan were it was used as a textile for clothing, bindings for sandals and harnesses for elephants.
Cotton was widely used in the ancient civilisations of Mesopotamia, Egypt and the Indian sub continent. Early Mediterranean traders, the Ionians and Phoenicians introduced cotton materials to Europe.
Over the next 2000 years, cotton, wool and silk became the preferred fibres for fine fabrics across the developed world. In less developed and warmer countries where cotton farming, home spinning and village industry were interlocked – cotton was dominant, and still is, 2,000 years later.
In more developed countries the the cotton consumption increased with the Industrial Revolution of the late 18th Century. Spinning mills sprang up in the biggest cities of Europe (.e.g. Manchester) which led to ports like Liverpool becoming major cotton shipping centres. With access to slave labour and new Upland types of cotton, the American colonies, soon to become the USA, provided much of the raw cotton. Nevertheless, the situation changed dramatically after the American Civil war, and Europeans looked to their colonies, including Australia and India (Schulze 2015)
Today cotton is mainly used in the production of clothes, domestic textile products (.e.g bedcloths), hygenic articles and a variety of composite products (tyres, film material, varnish, or even banknotes).
Nowadays countries producing the most of world’s cotton are China, India, US, Pakistan and Brazil, yet cotton is also vital for the survival of many low income countries in Central and West Asia and Africa – it accounts, in value terms, for 26.4 per cent of Benin’s exports and 58.7 per cent of Burkina Faso’s. West and Central African countries account for approximately 15 percent of global cotton exports. Mali is the largest cotton producer in that region (Basset 2010)
The supply chain of the clothing industry is very complex. A typical cotton supply chain would consist of the producer (within a producer or individual cooperative), cotton ginning company, trader, textile firm, garmet factory and a retailer (Basett 2010). The different stages of the value chain can occur in different countries, although in some cases there is a high degree of vertical integration in which a single company or parts of a corporate group perform several chain functions, especially in the stages between spinning and manufacturing. Trade is also affected by a range of distorting practices, including subsidies, quotas, smuggling, exploitative labour conditions, currency manipulation, fake origin labelling and counterfeiting (Smith and Nelson 2011).
Effects on the environment
Cotton is mostly grown in monoculture and is a very pesticide-intensive crop. Although it is only grown on 2.5% of the world’s agricultural land, cotton accounts of 16 % of global insecticide releases – more than any other singe crop worldwide. Almoast 1 kilogram of hazardous pesticides is applied for every hectare under cotton. Between 25-77 million (1-3 %) agricultural workers worldwide suffer from acute pesticide poisoning. Moreover, massive amounts of of pesticides pollute the nearby ecosystems as run-off (Organiccotton.org, 2015)
Cotton production signifcantly affects world’s water resources. In order to get 1 kg of final cotton textile, one requires 11 000 litres of water (aprox 3-4 cotton shirts). In comparison, it takes only 290 litres to produce 1 kg of potatoes, but 3300 to produce 1 kg of chicken eggs.
Social, economical effects
Over 500 companies worldwide are involved in global cotton and textile trade, but thirteen of these handle around ¼ of worlds’ production. Despite for the huge demand for cotton, world market prices are volatile and in overall decresing. One of the main reasons as mentioned in various sources (atsauce) is due to the subsidies granted by the industrialised countries (EU, USA, China). This has created huge difficulty for cotton growers in the Global South, as it is difficult for them to be competitive in these circumstances and they are paid less and less for their production.
As a result smallholder farmer’s income is often lower than the cost of the inputs lowered also by low yields driving them into dept (Nelson and Smith, 2011)
Cotton employs 7 % of the total labour in Global South.
Child labour is a common problem in the agricultural sector and cotton farming is no exception, several reports especially in the countries Burkina Faso, Pakistan and others. The majority of child labour in the Global South, however, takes place in the cotton smallholding owned by families.
Problems like forced labour, bonded labour and child trafficking still persist in the cotton industry (BCI, 2006).
Fairtrade initiative for cotton
FLO Fairtrade cotton was launched in 2004 in West and Central Africa (Mali, Senegal, Cameroon and Burkina Faso). Now it has expanded also to India, Kyrgyzstan and Egypt. Fairtrade cotton products are primarily sold in Europe – the UK, France, and Switzerland and to a lesser extent in Germany, Denmark and Finland, with additional markets emerging all the time.
The FLO standards require (1) that farmers be organized into cooperatives that function in a democratic and transparent manner; (2) that they receive a fairtrade minimum price plus a development premium to be used by cooperatives for social and economic investments; (3) that they minimize the use of chemical agro-inputs; and (4) that no child labour is used and ILO conventions on human rights are being followed (Basset 2010)
As yet there is no separate FLO standard to cover other vulnerable groups in textile value chains, such as factory workers in garment manufacture, however, FLO’s Trade Standards require all operators in Fairtrade cotton value chains to „submit evidence” of their efforts to comply with key ILO Conventions on labour rights (Nelson and Smith 2011).
The impact of Fair Trade
Fairtrade can have a diverse range of impacts on individual producers, orgnisations and communities, but also on local and natural development and the enviroment. Here we will discuss the main impacts related to the goals of Fair Trade – impacts on social equality, on income of the primary cotton producers, standarts of living, quality of live of the community, and improved capacity of the producer cooperatives. Quite a few studies have been carried out about the cotton production in Central and West Africa, so we’ll take the situation in this region as our case study.
It has been recognised that Fairtrade cotton certification significantly improves the social situation of women in the cotton growing farms. Women are typically excluded from conventional cotton growing because of its high costs and discrimination by extension agents and men. One of the criteria of fairtrade cotton certification is non-discrimination. Certified programs must demonstrate that appropriate measures are being taken to ensure equal representation and membership of women growers. It has to be ensured that payments are given to the woman growers directly (not to the husband).
Women’s low participation in conventional fairtrade cotton may be associated with the widespread use of synthetic pesticides. Women are particularly concerned about the health effects of the highly toxic pyrethroid insecticides used in West African cotton fields. The neem-based bio-pesticides used in the organic fairtrade program are a human and eco-friendly alternative that women readily make and apply to their fields (Basset 2010)
Improvements in women’s representation and participation in Producer Organizations have been frequently found, although there is concern that women may still feel obliged to vote as their spouse does and board representation is sometimes only symbolic (Nelson and Smith 2011).
Findings on the impact of Fairtrade on child labour are not very conclusive, but at minimum there has been sensitization of producer group leaders and male farmers (Nelson and Smith 2011).
One of the main goals of cotton companies and traders participating in the region’s fairtrade programmes is undoubtedly quality. West Africa stands out for its high cotton standarts, and the standarts of Fairtrade cotton have been raised highest, justified by the premium price paid on the international markets. This has increased the demand for Fairtrade cotton significantly (Nelson and Smith 2011).
The precise effect of improved cotton prices on household standards is hard to measure and only seperate observations without any clear conclusions have been made. case study producers reported that cotton income is used to help cover basic household expenses, including health care and children’s education. Wes and Central African case study households said they are more able to cover these costs when Fairtrade prices are available.
The recent lack of sales has undermined the positive income effects in W&CA. In India the impact on household income for case study producers was minimal anyway.
Use of hired labour is relatively common in India, while in West and Central Africa most producers rely on family labour and unpaid labour exchange with neighbours. There is anecdotal evidence of some improvements in working conditions as a result of Fairtrade, but more research is needed to verify this.
Some Fairtrade farmers in all countries reported using surplus income from cotton for small investments in income-generating activities, farm equipment, savings and/or land, but this evidence of sustainable development was less often found for farmers with small areas of cotton and/or low yields (Nelson and Smith 2011).
Capacity of the producer cooperatives
The Fairtrade Premium has been used for a range of purposes including paying for health officers and buildings, construction of schools, scholarships and uniforms, water supply, rural electrification, agricultural infrastructure and sustainable agriculture investments as well as producer organization offices. There have been many positive observations of these outcomes.
Nevertheless, very often individual Fairtrade cotton farmers have only limited knowledge of the principles and (sometimes) the basic mechanisms of Fairtrade and sometimes there is confusion with organic certification. More knowledge is, unsurprisingly, found at higher levels in producer organizations, but few farmers understand where the cotton is sold, and the actors and margins involved, partly because of their lack of involvement in ginning, input supplies and exportation. This lack of understanding worsens the confusion and loss of confidence created by the drop-off in sales (Nelson and Smith 2011)
Fairtrade premium often does help farmers to invest in changing their agricultural practises. However, external support in the case of cotton is critial for delivering sustainable agricultural practises. (e.g. a donor-supported project for Fairtrade producers in Cameroon, donor support for the producer organisations).
Organic certification in countries like Mali and India predates Fairtrade and it is not easy to assess the relative impacts of each certification, in particular where external capacity building support is being provided as well. However, good synergies were found to be occurring between Fairtrade and organic standards in achieving sustainable agriculture – whilst sales are happening – because of investment of the Fairtrade Premium in low input agriculture.
Switching to less toxic pesticides is an important achievement in both organic and non-organic Fairtrade situations. It is not possible to separate out whether these impacts are the result of Fairtrade or Organic certification, but it is likely that both certification systems contribute through their requirements, training and financial mechanisms. In Mali positive human health impacts have been observed by farmers as a result of the decrease in toxic pesticide use. But the consistency/persistence of switching is not always clear. Some farmers in West and Central Africa are resistant to the environmental standarts because of negative side-effects (e.g. more snakes in fields), higher costs and perceived ineffectiveness of the Fairtrade-approved alternatives, although the African national cotton companies argue that the less toxic pesticides work differently and are slow-acting, rather than being less effective.
Organic Fairtrade producers in Mali report lower input costs compared to conventional Fairtrade producers, who are suffering as input prices rise, but they also have substantially lower yields (Nelson and Smith 2011)
Other forces of change
Basset (2010) argues that significant changes in the cotton production of Central and West Africa do not all happen through Fairtrade initiatives. Much success can be attributed to the efforts of cotton growers themselves working and lobbying on local and national level.
In September 2002, Brazil became the first to initiate a formal complaint under the WTO dispute process about US cotton subsidies, arguing that they depressed world prices and were directly harmful to cotton growers. One year later, in September 2003, Mali, Burkina Faso, Benin and Chad joined Brazil’s WTO complaint. In 2005 the WTO Dispute Settlement Body found that US subsidies were indeed contravening WTO rules. WTO ruled that US domestic subsidies had a significant price suppressing effect (by approximately four percent) which seriously undermined the value of cotton for all producers.
West Africa’s cotton growers have also sought to strengthen their position during the privatization process. They have been especially keen to participate in annual price setting negotiations with national cotton companies for seed cotton, fertilizers, and pesticides. Farmer organizations in Côte d’Ivoire and Mali have organized market boycotts and strikes in the 1990s and early 2000s to protest their marginalization at the price setting table (Basset 2010).
These examples show that certification is not the only driving factor of improvements in the cotton sector and that attention should be given also to ongoing local and regional changes and cotton producers’ own initative.
Basset, T. J. 2010. Slim pickings: Fairtrade cotton in West Africa. Geoforum 41:44-55
Nelson, V., Smith, S. 2011. Fairtrade cotton: assessing impact in Mali, Senegal, Cameroon and India.
Gaye, M. 2007. Fair Trade Cotton in Mali. UNDP. Gorwing inclusive markets.
Schulze, Ralph. 2015. Australian Cotton History. Cotton Australia. Available at: cottonaustralia.com.au
BCI, 2006. BCI scoping research on labour and social issues in global cotton cultivation. Final Report. Available at: http://bettercotton.org/wp-content/uploads/2014/01/BCI-scoping-research-PUBLIC.pdf