Fairtrade cotton was launched in 2004. It is the world’s most ethical label with a high amount of consumer trust globally and a multi-stakeholder organization representing over 1.2 million smallholder farmers and workers and USD 6.6 billion in retail sales (Sanfilippo 2013).
It also promotes social and economic development. Between 2004-2007, Fairtrade producers received substantially higher prices, between 22% and 40% higher for conventional cotton and up to 70% higher for organic cotton (Valerie and Smith 2012). Fairtrade organizations allow producers to strengthen their position in international trade and gain improved access to finance. For workers on farms, it guarantees decent wages, better working conditions and privileges.
In 2009 Fair Trade certified sales amounted to approximately 73.4 billion (about £2.8 billion) worldwide, produced by over 1.2 million producers and workers; producers also benefited from pre-financing of around 7100 million (£83 million) (FLO, 2009).
Fairtrade Cotton in India:
India is one of the largest producers of Cotton in the world (U.S International Trade Commission 2001). Cotton is a vital part of the economic and agricultural sector of India. 110 million rural households depend on cotton for their livelihoods (Baffes, 2005). There are 33 cotton producer groups in India. In India Fairtrade has been instrumental in helping over 1 million workers and their families to improve their lives and have access to better working conditions and fair wages.
Production of Fairtrade Cotton in India:
India has the advantage of growing all species of cotton. (The Cotton Corporation of India 2011).
Cotton is grown in Maharashtra, Madhya Pradesh, Karnataka, Andhra Pradesh, Orissa, and Gujarat in India. The production of cotton is more popular in the Kutch district of Gujarat, as it is rich in black soil, which is very important for cotton farming because of its water absorbent capacity (Soil Association of India 2013).
In India, there is production of a large variety and hybrid cotton groups. (The Cotton Corporation of India 2011). Cotton is mainly cultivated from mid April to the last week of May in irrigated areas of the Northern zone like Rajasthan, Haryana, etc. In states like Maharashtra, Gujarat, Andhra Pradesh, planting is taken up in June/July to August. In the Southern zone, planting for summer crop is done in Jan/ Feb and in Jun/July for winter because of the weather conditions; harvesting period is mainly from October to February.
Indian textile mills use nearly 85 to 90% cotton of total availability During 2008-09; the domestic cotton consumption has been estimated at 230 lakh bales (Cotton Corporation of India 2011).
Factors affecting Fairtrade cotton in India:
Decline in Demand
The global recession created disparities between the supply and demand of Fairtrade cotton. (Zameen Organics, 2009). It had an enormous impact on the livelihoods of Indian cotton producers. For example, Zameen Organics. It is a farmer owned company for Fairtrade organic cotton. It enjoyed yearly increases in Fairtrade cotton production and sales from 2006 to 2008. The 2008–09 harvest marked the first time Zameen Organics was unable to sell all of its cotton. Other Fairtrade cotton organizations also had a surplus of Fairtrade cotton and a shortage of buyers. It aimed to increase producers market by linking Fairtrade producers and buyers but unfortunately, the global recession had taken its toll and Fairtrade cotton sales were dismal.
Fairtrade cotton costs higher than conventional cotton. This is because it is produced in an organic manner with different innovative techniques. Also, Fairtrade cotton buyers have to pay two additional payments for Fairtrade cotton: the Fairtrade Minimum Price and the Fairtrade Premium. Cotton products vary considerable in price depending on the quality, economies of scale, branding etc. If the volume of the product is bigger, it will be more competitively priced.
Cotton prices are volatile and in long-term decline – real cotton prices, taking inflation into account, have fallen from more than $3.00/kg in the 1960s to $1.73 in 2014 (Fairtrade Foundation 2015).
Indian domestic cotton subsidies
The Indian Government cotton subsidy introduced a new rule in the Minimum Support Price (MSP) scheme. For example, the Cotton Corporation of India. This is a threat to the Fairtrade system because the MSP provides farmers with a guaranteed price for cotton higher than the conventional market price. This makes it a viable option for farmers in need of selling their harvest. Fairtrade has to constantly match the Government’s price for cotton.
Impact of Fairtrade cotton in the Fashion industry:
Fairtrade cotton is good for people and the planet. Fairtrade cotton has a huge positive response and support in the fashion industry in India. It has changed a lot of lives and has done well in the past few years. However, it still needs to catch up as only a handful of designers support the system. In India, designers like Rina Dhaka, Wendell Rodricks, and organizations like Mehera Shaw (Fairtrade manufacturer and member of the Fairtrade Foundation US) have done amazingly well with Fairtrade cotton and have helped a lot of farmer organizations and artisans, especially, in the rural areas of India.
One of the biggest supporters of Fairtrade cotton is People Tree. It is a UK based brand and has Emma Watson as their brand ambassador. People Tree has helped the Indian farmers immensely. People Tree produces clothing for men and women with organic cotton and they import only from Gujarat, Madhya Pradesh, and Maharashtra. Over 60% of the collection is made with 100% organic cotton (The Fairtrade Foundation UK). Agrocel, an Indian Fairtrade group produces their cotton. It provides Indian cotton farmers with an alternative way of farming cotton and they work in harmony with their land, from sowing seeds to harvesting. They produce cotton in an ethical and organic way, which does not damage the environment. They also grow crops including tomatoes, aubergines and millet alongside their organic cotton, providing a secondary source of income and food. Agrocel and People Tree are helping the Indian community in a big way. ‘Buying organic cotton fashion is a small thing that makes a big difference’ (People Tree UK).
Supplier engagement should be a key strategy: Engagement with suppliers, producers and buyers in the value chain is extremely crucial to build effective partnerships for the Fairtrade cotton sector.
Reducing the volatility of Fairtrade markets: It is very important to guarantee the producers and buyers, a long term and healthy trading relationship for the economic growth and development, as the Fairtrade cotton market is volatile and there are fluctuations in the economies of trade. It is extremely important to maintain a careful balance between demand and supply.
Introduce a new strategy to protect cotton producers from currency fluctuations:
The currency fluctuations between the Euro and the Dollar have a great impact on cotton producers as they directly affect the economies of trade.
The cotton producers should stop being dependent on high volume buyers or single markets: Diversification is very important for the Fairtrade cotton market to build more sustainable and feasible supply chains.
Support learning and networking: Support producer organizations to raise awareness and improve education among themselves about Fairtrade principles and market trends, as many of the small-scale producers and farmers are unaware of the basic Fairtrade rules and principles.
Develop and invest more in environmental projects to mitigate climate change.
Support sustainable practices that connect with the consumers’ values and motivation.
Encourage more fashion designers to support Fairtrade.
Strengthen direct partnerships between cotton producers and buyers.
Minimize water use.
Produce and harvest more in Andhra Pradesh and Maharashtra, as these regions are rich in Black Soil that is very good for cotton production as the lands are water absorbent.
Develop eco friendly fabrics and components from organic cotton and explain the importance of these materials to the general public through events, community projects etc. Blend organic cotton with other materials to produce something new, innovative and creative. Dwelling on all the criticisms regarding Fairtrade, it can be said that Fairtrade is not a long-term developmental strategy. Fairtrade should remove trade barriers against primary products in the West as well as trade barriers in the South, with regard to trade liberalization.