Cotton is the world’s oldest commercial crop and one of the most important fibre crops in the global textile industry. Although world cotton production is dominated by China, India and the US, cotton is 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.
Cotton farmers in developing countries, including leading producers like India and China, live in hardship. As many as 100 million households are directly engaged in cotton production and an estimated 300 million people work in the cotton sector when family labour, farm labour and workers in ancillary services such as transportation, ginning, baling and storage are taken into account.
For farmers, the challenges range from the impact of climate change, poor prices for seed cotton, through to competition from highly subsidised producers in rich countries and poor terms of trade. In particular, government subsidies for cotton farmers in rich countries, particularly the US, create a market with artificially low prices that small-scale farmers are unable to compete in.
Fairtrade cotton was launched to put the spotlight on these farmers who are often left invisible, neglected and poor at the end of a long and complex cotton supply chain. Through tools like the Fairtrade Minimum Price and an additional Fairtrade Premium and stronger, more democratic organisations, Fairtrade has sought to provide these farmers with an alternative route to trade and higher, more stable incomes.
CHETNA ORGANIC AGRICULTURE PRODUCER COMPANY LTD, INDIA
Established in 2004, Chetna Organic supports more than 15,000 farmers, helping them increase the sustainability and profitability of their farming systems.
About COAPCL Chetna Organic Agriculture Producer Company Ltd (COAPCL) is a part of Project Chetna, a development initiative aimed at improving the lives of smallholder and marginalized cotton farmers in different rain-fed cotton growing regions in India.
Background & Structure
The Chetna Organic and Fair Trade Cotton Intervention Program (OCIP) was launched in 2004 as an ethical supply chain initiative based on sustainable agriculture principles such as organic and Fairtrade and non-pesticide management. OCIP was established with the aim of improving the livelihood of cotton farmers in the Indian states of Maharashtra, Odisha, and Andhra Pradesh.
In order to achieve its goals, Chetna Organic has produced two national level farmer owned and managed institutions: Chetna Organic Famers Association (COFA) and Chetna Organic Agriculture Producer Company Ltd (COAPCL). COFA is a not-for-profit farmer support organisation engaged, among other things, in technical training, social improvement, capacity building, and policy and advocacy work. COAPCL, on the other hand, is a commodity trading company, established in 2009, that works on developing sustainable national and international market linkages for smallholder farmers’ agricultural products.
In 2014, Chetna Organic is supporting 15,279 (234 in 2004) cotton farming families organised into 979 farmer self help groups, which, in turn, are arranged into 13 co-operatives. Almost all of them (94%) are smallholder farmers who own below 2 hectares of land. These farmers live under abject conditions in more than 400 Indian villages, where the dependency on rein-fed agriculture makes them highly vulnerable to the unpredictability of nature and climate. Suicides are a major problem among farming communities in India, especially in Andhra Pradesh and the Vidarbha region of Maharashtra.
Production & Sales
Chetna’s farmers produce around 6,300 tonnes of organic and Fairtrade seed cotton with no use of child labour, synthetic pesticides and fertilizers, and GMOs. The certified cotton, which represents approximately 34% of the total cotton production, is grown on 48,130 acres of land and entirely sold locally. Chetna also produces organic certified non-cotton crops such as pulses (red gram, black gram, Bengal gram and green gram), soya bean, rice, vegetables, non-timber forest produce (such as honey, spices etc).
Chetna Organic Agriculture Producer Company Ltd (COAPCL) was Fairtrade certified in 2005. Out of the 15,279 farming families supported by Chetna Organic, 9,647 farms are Fairtrade certified and produce approximately 6,300 tonnes of seed cotton. Fairtrade sales are continuously growing. In particular, the value of organic seed cotton sales grew from INR 3.5 Crores in 2010 to INR 9.45 Crores in 2011.
For these sales, Chetna Organic receives the Fairtrade Minimum Price of INR 34.45/Kg (or the market price if higher) plus the Fairtrade Premium of INR 3.00/Kg to invest in productivity and quality improvements, business support, and various community interventions in the three regions. Since Chetna Organic is a farmer owned organisation, farmers have a direct role in decision making during production and marketing processes, as well as during the distribution and allocation of the premium.
Fairtrade Premium Projects
The majority of Chetna’s farmers store the cotton they produce in their homes, where it represents a health and safety hazard for the household, as it attracts various insects and fungi and poses a severe fire risk. Additionally, because of economic distress and uncertainty, small farmers are often unable to wait and sell their cotton when prices and, therefore, profits are higher. In order to overcome these difficulties, Chetna Organic has converted part of the Fairtrade Premium into revolving funds at the co-op level. These funds are mainly used to make immediate part payments to the farmers, procure their cotton, and prevent it to be sold when it is less profitable. The premium has also partly financed the construction of warehouses and procurement centres at the co-operative level where cotton from the farmers is aggregated and stored in a safe manner until the low season, when cotton prices are higher.
The premium provides the co-ops with the necessary resources to support farmers in the procurement of non-GM cotton seeds, which are often difficult or even impossible to find during the critical sowing season. In this context, Pragathi MACS, one of the co-ops making up Chetna Organic, has employed a revolving fund mechanism to invest the premium and supply a complete ‘Seed Kit’ to its 3,000 smallholder cotton farmers at the beginning of each season. This kit includes non-GM cotton seeds, as well as different varieties of vegetables for homestead/kitchen gardens, pulses, and oilseeds and nursery plants/seedlings. In order to ensure the sustainability of the project, when the cotton is sold after the harvest, the co-op recovers the cost of the cotton seeds from the members and pools it back into the revolving fund.
Chetna Organic has invested part of the premium in a series of infrastructure projects intended to create viable income generating opportunities for the different co-ops, and to improve the productivity and the livelihoods of smallholder farmers. These projects include, among others, the construction of dhal mills, a bio-fertilizer unit, and a nursery, as well as the purchase of a tractor and attachments. Moreover, the aforementioned Pragathi MACS co-op in Andhra Pradesh has been able to use the premium to instigate larger innovations that can potentially benefit the cotton farming communities as a whole. In particular, the co-op has purchased land and has setup an eco centre to undertake various farm research and innovations and demonstrate best practices for farmers to adopt.
A share of the premium, along with other funds, has served as support for the institution of villages in the Adilabad district, Andhra Pradesh, where all farmers make use of organic and Fairtrade practices and produce certified non-GM cotton.
To read more about Cotton and the Fairtrade Standards see here