‘Time for Action’ for the Indian Organic Cotton Sector

by Aarthi Rayapura

Organic cotton has enviable growth potential but trends suggest a supply crunch in the years to come, warns Time for Action: Key Issues and Actions Facing the Cotton Sector in India — a report outlining the agreements arrived at the inaugural Organic Cotton Roundtable held in March this year.

The Roundtable, which convened over 170 industry players, was organized by CottonConnectand curated and funded by the C&A Foundation, the philanthropic arm of Dutch fashion retailer C&A.

“The organic cotton sector faces a global shortfall of up to 50 percent by 2015. It is time for action to prevent a gap developing between demand and supply, which could be as big as the current world production,” said Alison Ward, CEO of CottonConnect. “The Time for Actionreport outlines the key areas where the Indian cotton sector has recognised the need to work together on joint action plans. We hope the clear commitment from industry leaders will forge a strong future for organic cotton.”

The key elements of the Action plan are:

  • Set up an Organic & Fair Cotton Secretariat — which will foster the development of responsible organic cotton supply chains, create a credible Indian organic brand and enhance livelihoods for smallholder organic cotton farmers. The Secretariat will focus on policy and advocacy; identifying and leveraging resources; and providing support services — covering social, technical, legal, research and impact aspects of cotton production — to accelerate the growth of the organic cotton sector.
  • Focus on seed supply — through a dedicated resource to be in place by June 2014. This will include forecasting the demand for seed; identifying supply partners; identifying varieties by geographical diversity and distributing accordingly; linking supply partners; and identifying the farmers/land for seed production, storage and distribution.
  • Support seed research and development — Identification and selection of region-specific cultivars that are organic, more responsive and better quality; acquisition and multiplication of hybrids leading to adoption of breeding standards for short- and long-term process.
  • Share best agricultural practices — CottonConnect will compile best practices for organic farming, develop communication tools and conduct capacity-building of workers to train farmers.
  • Improve efficiencies in organic supply chains — Develop practical and replicable supply chain models; develop economics of scales, including identifying areas to work and market; and develop committed supply chains by identifying partners.
  • Improve integrity and use of certification — “The integrity of organic cotton is vital in promoting and growing the sector,” the report says. Action will be taken to improve integrity at the farm level through training of trainers and an in-depth analysis to identify weaknesses in the certification process.
  • Improve transparency and traceability — A feasibility study will be conducted to create a database of all certified organic cotton contributors in order to improve the current supply chain, which is uncoordinated and non-transparent. “Supply chain contributors need to coordinate better and provide trustworthy data,” reads the report.

C&A Foundation executive director Leslie Johnston said: “The challenges in growing the organic cotton sector are immense, and no single entity can solve them alone. Initiatives such as the Organic Cotton Roundtable offer the opportunity to join like-minded partners who commit to helping India to realize its potential in sustainable fibre production. At C&A Foundation, we are inspired by the outcome of this first convening and look forward to supporting the follow-up actions that ultimately will improve the livelihoods of smallholder farmers.”

Many international retailers are fueling the need for organic cotton: H&M has set itself a target to use cotton only from more sustainable sources by 2020, while IKEA now uses 72 percent organic cotton in its products. Companies are also beginning to look at all aspects of cotton production, with H&M, IKEA, M&S and adidas making attempts to source slave-free cotton. As retailers are increasingly growing environmentally and socially conscious, it is critical that the Indian organic cotton industry steps up to meet demand.

Forge stronger ties in your textile supply chain

By Keerti Krishnan

If you’ve taken a minute at a clothing retail store and browsed through a label, chances are that you’ve seen ‘Made in India’ or ‘Made in China’ regardless of where you are in the world! The Asian textile industry has reigned the WTO textile export chart for over a decade. Last year, India and China among other top Asian exporters accounted for 52.31%[1] of the global market. While at the macro level the market position seems grounded, a closer examination would reveal a growing requirement for ethical and sustainably conscious garment suppliers – construing a vulnerability among second and third tier supply chains.

In the wake of the Rana Plaza building collapse in Bangladesh killing 1,129 garment workers, thousands were exposed to ‘unsafe conditions.’ Multinational apparel brands sourcing materials from these suppliers have had their reputation bruised, drawing questions on unethical sourcing and trading. Unfortunately this isn’t the first time a textile sourcing firm has been exposed. Several multinational clothing brands have experienced issues with labour practices and environmental non-compliances. Usually at this juncture, a retailer would mitigate short-term reputational risks by publicising an intended agenda addressing the matter; in the long-term, they may choose to work with the supplier in bettering their standards or replace them all together. The latter has had deeper socio-economic repercussions evident in India.

The competitive micro, small medium enterprises (MSMEs) accounts for 5.33 million[2] producers-suppliers of apparel and textile. Two thirds of Indian textiles (handlooms, hand-made textiles, cotton, wool, jute) are exported primarily to the EU and USA[3]. The Asian market has been lucrative in most ways, cutting manufacturing costs. However for a retailer there are several hidden liabilities. These risks are addressed by sizing potential suppliers against a set criterion designed by the retailer’s ‘Code of Conduct’. Most suppliers are filtered out, usually missing the opportunity to export.

A textile supplier is exposed to several risks including economic turbulence, non-compliance and stiff market competition. Consider Tirupur in Tamil Nadu, a primary textile hub with 750 direct exporters and thousands more as sub-contractors. In a span of just five years the city’s previously bustling streets have several factories shut, owing to a sharp decline in demand during the economic slowdown; non-compliance of zero waste discharge on-site shutting 700 units in 2011 and competitive pricing in Bangladesh. However the price hikes maybe due to a number of factors. Inefficiencies within the factory, is one of them. The Hindu quoted a manufacturer who hiked unit price by Rs.10 owing to high fuel costs to run generator sets during power shortages. Garment factories need to meet manufacturing expenses while sell at a competitive price. When manufacturing costs start to rise, saleability reduces and a shift in market interest re-route sourcing.

While it may seem that there are a plethora of external factors, suppliers need to pedal through, VNV would recommend taking charge of measures within the operation first. Costs could be trimmed when energy deficits, water consumption and waste generation are examined. Leverage on business efficiency by reducing resource ‘leakages’ within the operations to improve company’s sustainable performance and heighten export appeal. Consider acquiring an eco-label for a certain fabric or even an ethical sourcing label to prove credibility in fair labour practices. FairTrade reported a 10-12% rise in products in USA and EU, suggesting a rising sustainable consumer trend. Moreover with the introduction of the Higg index for sustainable apparel and footwear, retailers will rely on their suppliers to ‘do the right thing’.

The sooner you start to review operations, the better you gain competitively.  After all, a stitch in time saves nine!

[2] 20.5 % (IBEF) of 26 million SMES (IndiaStats, Dr. Bhaskaran, 2012).

[3] Ministry of Textiles – International Trade Section

Image source:  Silk weaving in India, dschwab5 flickr,