> Market Growth
WHAT ARE THE CONCERNS ?
Conventional cotton is mostly traded on the commodity market. It is bought and sold as a raw material, with virtually no connection between the product and the people behind its production. Typically, the cotton price is at the whim of ‘supply-demand’ cycles and, until recently, prices for cotton fiber (lint) have not been much different to the cost of production, sometimes dipping lower. Spot market trading, volatile fiber prices, producer powerlessness, and lack of supply chain integration have kept farmers invisible and small-scale farmers or contract farmers in particular, poor.
Organic cotton is very different – it offers an incentivised alternative. Not only is the practice of organic agriculture beneficial to the health and safety of people and planet, but the model for trade is based on ‘rewarding’ growers of organic for their good stewardship, through better financial returns. The model is still based on the commodity pricing system, but usually results in a 10-30 percent organic ‘value-addition’ over commodity prices. Ideally, other favourable terms and conditions are built into the trade of organic, such as forward contracting, prefinancing, and long-term agreements. However, value chains operating this way are still far and few between. There is still a preference to ‘see what the market does’, and little understanding or confidence that trade agreements can work for those involved. For organic cotton to make a viable contribution to environmental degradation and socio-economic despair there is much work to be done to improve the way it is traded, particularly at the farm gate.
One area of concern is the inclination for buyers to use the same system as conventional cotton. Not only does this put pressure on the organic producers to ‘accurately guess’ the market’s appetite for their organic (and that they will get a ‘good price’) but it results in businessas- usual for all concerned inevitably leading to price squeezing which can put pressure on the integrity of the organic production system. Further, it results in a step back from building longer term trade agreements, or connecting the price of the cotton fiber to the actual cost of its production.For brands and retailers, they miss the opportunity to ‘walk the talk’, build loyal supplier relationships, and give their organic products a story from which they could share with staff, shareholders, and customers.
The good news is there are stakeholders out there committed to organic cotton for social, market, and ecological reasons, and who see this commitment as good business strategy in the long run. They include:
• A growing number of brands and retailers with well-established trade relationships, or beginning to move that way. Some are combining with Fair Trade, and investing in in-conversion cotton, and more sustainable cotton, to help bring organic production along, or further improve the credentials of their non-organic cotton consumption.
• Socially and environmentally-oriented financial institutions which can provide credit to suppliers and in the process, strengthen, and make more resilient the value chain.
• Expert and experienced NGOs, government agencies, consultants and extension service providers supporting knowledge intensification on the ground.
• Academic, social, and scientific researchers proving the benefits of organic agriculture for addressing global concerns such as poverty, food security, gender equality, soil fertility, water scarcity, and climate change.
• A growing consumer base wanting to purchase organically and ethically produced products. In regards to consumers, more and more people understand the broader definition of a ‘quality’ product, which includes the social and environmental aspects as well as the direct product appeal. Price volatility (spikes and troughs) in the cotton commodity market only reinforce the need to better support alternative approaches to business that address externalities such as climate change, clean water, and workplace health and safety. Textile Exchange is expecting to see progressive market leaders (such as Anvil, C&A, Egedeniz, H&M, Nike, Nordstrom, Patagonia, Remei AG, Sanko, and many others) become increasingly influential through their commitment to organic cotton and other more sustainable fibers and textile production.
WHO'S DOING WHAT ?
The organic textiles market continues to grow. This in itself is a positive sign that there is support within the textile industry.In fact, the organic textiles industry grew 20 percent to an estimated $5.61 billion in 2010.The Top ten organic cotton-using brands and retailers globally were H&M (Sweden), C&A (Belgium), Nike, Inc. (Oregon, USA), Inditex (Zara) (Spain), adidas (Germany), Greensource (Washington, USA), Anvil (New York, USA), Target (Minnesota, USA), Disney Consumer Products (California, USA) and Otto Group (Germany)(TE). The number one user of organic cotton in 2010, H&M, has been using certified organic cotton since 2004 and has since then gradually increased the amounts used.
“The intention is to gradually use more organic cotton as part of our target to only use more sustainable cotton by 2020. We want to further contribute towards increased demand for organic cotton and motivate farmers for sustainable cotton cultivation” says Henrik Lampa, CSR Manager Product at H&M. “We want to further contribute towards increased demand for organic cotton and motivate farmers for sustainable cotton cultivation.”
In respect to manufacuting, Egedeniz part of the Kadioglu Group of Companies, based in Turkey, was one of the pioneers. The company started business in the early 20th Century with cotton trading and ginning as well as supplying dried fruit to exporters. Exporting grew in the 1950s. Later in the 1980s business diversified into wheat flour milling and animal feed milling. Then in the 1990s the Company started specialising in organics such as dried fruit and cereal as well as cotton. Garment manufacturing from both organic and conventional cotton also grew around this time.
Today Egedeniz, the first certified organic textile company in Turkey, sells organic cotton at most stages of processing as fiber, yarns, knitted and woven fabrics, and final garments. Egedeniz work closely with their contracted producer groups through the Kadioglu Group. Kadioglu provides technical support for the farmers and handles sales administration. There are over 100 organic cotton farmers working on 600 ha of land – plus seasonal workers during busy times. All organic agricultural practices are in accordance with European Union organic agricultural regulations and NOP of USDA (National Organic Program of USA Dept of Agriculture) and certified by Control Union. Much of the organic fiber coming off these fields goes into Egedeniz’s own manufacturing but some of it is exported to other manufacturing centres around the world. In addition, all processes right up to the end product are in accordance with the rules of the Sustainable Textile Standards of Control Union and GOTS (Global Organic Textile Standards).
Egedeniz follow the 3Q system through all stages; social Quality, product Quality and service Quality. All Egedeniz production operations from cotton fields through ginning, spinning and all textile processes are almost local within a radius of 250 km. This and other activities of educating farmers and its workers to care about their environment, annual tree planting events are part of carbon footprint minimization and environmental awareness policy. Egedeniz is proud to be developing new qualities of sustainable textile products and apparel for its existing (and potential) clients. Nike is one of the world’s leading brands to pioneer organic cotton. They took a significant risk in investing heavily in organic cotton and sustainable practices in the mid-1990s when sustainability was considered either activism or granola.
Nike was also a founding member of Organic Exchange, now Textile Exchange. Nike believes that using organic cotton is a ‘natural fit’ for them and aligns with their drive to find ways to integrate innovative approaches to environmental responsibility into their products. The use of organic cotton is embedded in Nike’s sustainable materials strategy and linked to their commitment to create innovative performance products. The Nike Considered Mission and Vision is rooted in the tradition of Nike innovation; Considered is the Nike commitment to create extraordinary performance products for athletes while managing their business within nature’s limits. Since 1997, when Nike first purchased 250,000 pounds of certified organic cotton for use in their fall 1998 apparel products, they have steadily increased their use of organic cotton. In 2004 Nike shared their company-wide drive towards incorporating environmental sustainability into their business practices and product design.
This new approach focused on a number of key areas: Nike’s overall sustainability goals include targets related to water, waste reduction, chemistry, climate change, packaging, business processes, and incorporating sustainable materials into product design. Nike’s original goal was to blend a minimum of 3 percent organic cotton, later increased to 5 percent into all of their cotton-containing apparel materials by 2010, while steadily expanding their offering of 100 percent certified organic cotton products. By 2010 estimates showed that more than 10 percent of the cotton Nike used globally was organic, representing approximately 15,700,000 pounds of organic cotton fiber. Since Textile Exchange started reporting, Nike has remained amongst the top 2-3 retail users of organic cotton in the world. Nike has now increased its blending target to 10 percent by 2015.
Nike currently sources organic cotton fiber primarily from the United States, India, Turkey and China. Nike is piloting a new traceability process that will provide better visibility to their organic cotton back to its place of origin, which confirms organic certification, and enables Nike to more efficiently manage their cotton value chains.