> Rural Development
WHAT ARE THE CONCERNS ?
Conventional cotton is sold as an export commodity (similar to minerals, grain and oil) on the world cotton market; usually resulting in a ‘raw material’ with no lasting connection to it’s place of origin, let alone the people who grew it, and the conditions under which it was grown. Small scale producers as well as being ‘invisible’, are particularly vulnerable to the fluctuations of the market price and to the impact of subsidies paid in some countries but not others. The volatility of the market and dependence on one crop can result in fragile economic situations for many of the world’s poorest communities. But it doesn’t have to be that way...
WHO'S DOING WHAT ?
Remei AG in Switzerland set up BioRe Tanzania in 1994. BioRe is situated in the Meatu District, one of the 8 districts of the Shinyanga Region in Tanzania. BioRe produces organic cotton in compliance with the US National Organic Program and EU 834/2007 standards. Ninety-four percent of Meatu’s households depend on rainfed agriculture for their livelihood. Each family has about 32 ha of land. On 4–5 ha they grow cotton, yielding 80 percent of their income. On another 2-4 ha they grow sorghum, maize and legumes, mainly for home consumption. The rest of the land is left fallow for grazing. Sixty percent of Meatu’s population live in poverty, and one-third of the children suffer from malnutrition. The cotton season starts in September with the registration and contracting of farmers who want to grow cotton for BioRe. The contract obliges the farmer to use only organic production methods, follow the advice of BioRe’s staff, and deliver the entire output to BioRe. The company, in turn, undertakes to purchase the entire crop, provide seeds and bio-pesticides, and offer training and technical assistance. The contract is for 5 years, but the farmer can terminate it earlier if he or she wishes. BioRe can annul the contract only if the farmer violates the contract, for example by spraying chemical pesticides.
BioRe encourages farmers to work together. The company sets up farmer field schools in each location, where farmers learn about cultivation techniques, pest control, and other matters. One farmer is appointed as location leader. He or she is regularly trained on BioRe’s demonstration farm, and is expected to transfer this knowledge on to the other farmers in his location. The company also supplies implements such as oxdrawn weeders for the farmer groups to use collectively. The actors in the cotton chain rely heavily on BioRe to finance their business operations. The farmers have very little capital. Cotton is their only cash crop, so by the time it is harvested they urgently need money.
Remei AG’s vision is that BioRe should have the opportunity to become independent, so it decided to help the Tanzanian firm build direct relations with financers. There are three key strengths in the BioRe/Remei AG chain:
(1) BioRe’s management capacity: Over the years BioRe has shown it can deal effectively with the problems and risks of cotton production and export. Field officers pay monthly visits to the farms, so the company has realistic forecasts of expected yields. BioRe has close relationships with the farmers, offering 5-year contracts, inputs, training, and technical assistance. And BioRe builds in an assumed default rate of 12 percent into its yearly plans in case of possible setbacks.
(2) Partnership between BioRe and Remei AG: The companies have a sales contract with fixed prices and volumes. So the risk of market fluctuations is eliminated for BioRe and the farmers. Beyond the contract, there is strong commitment and interdependence between the two companies. Any issue will be resolved in close partnership.
(3) The integrated textile chain: All companies in the BioRe chain are partners who have been working together for many years. They are committed to each other and cooperate smoothly to solve problems. As chain manager, Remei AG ensures compliance with quality standards, open communication and efficient coordination in the chain. BioRe’s farmers not only receive a price premium; as organic producers they also avoid the costs of chemicals, while their yields are similar to those of conventional cotton farmers. That gives them an income higher than conventional farmers. In addition, thanks to the training and advice from BioRe, farmers have learned to produce more efficiently, and they are now able to produce larger amounts of cotton. As a result, their income has boomed. BioRe’s farmers also report other benefits. They obtain higher yields in other crops. Their soil is in a better condition since they started rotating cotton with other crops. The soil has more organic matter, which increases its capacity to retain humidity. So a period without rainfall is not as fatal for them as it is for other farmers in the district. Finally the farmers have saved a lot of time for their family, as they have learnt to use oxen for ploughing and weeding.
BioRe now employs 66 staff, most from local villages. It is the only employer in Meatu district which provides such attractive salaries and education opportunities. BioRe’s training centre is developing as a regional centre of competence. In times of need the company supports the local community. During the drought of 2006 the company provided daily lunches to 7,000 schoolchildren for 3 months. BioRe is a key part of a chain that maintains high social, environmental and quality standards. The chain has grown markedly; outperforming conventional cotton chains, and generates profits for all actors. Remei AG and its downstream partners enjoy significant growth and sound profit margins. In the last decade Remei AG has switched fully to organic cotton. Its turnover has remained more or less stable at $25 million. Note: BioRe Foundation is based in India and Tanzania (BioRe).
In 2005, Nordstrom set a goal of introducing 5 percent organic cotton and worked to educate buyers and suppliers about the value of this choice and how to implement it. Nordstrom reached its goal in 2006, and began to take the next step in their organic journey. A supply chain training workshop was held to support implementation and strategic planning around expansion. Africa became a focus area, specifically Eastern Africa, as a part of reviewing regional sourcing strategies, and looking at areas where Nordstrom could have high-impact. 25 Eastern Africa and specifically Uganda has a long history of cotton and food production. The soil is fertile and the farming is rain-fed making it an area with a lower footprint in regards to water utilization and potential for higher quality cotton due to climatic conditions. However, Uganda, and the region are not without challenges - civil war and strife caused a dramatic reduction in farming activity for much of the past twenty years.
During the past few years, as peace has returned to Northern Uganda, farmers have returned to work the land, typically without the use of synthetic fertilizers and pesticides. Most of the residents of this area are involved in agriculture and are extremely poor, with more than 70 percent of the inhabitants of Northern Uganda below the national poverty line. Farmers in Uganda earn less than $200 per year from their farming operations. Most organic farmers are farming “organically by default” and have relatively low yields from their fields. Education is the key to future success for organic cotton farming in Africa. A key partner on-the-ground for Nordstrom is the National Organic Agriculture Movement of Uganda (NOGAMU) implementing training and disseminating educational materials. NOGAMU understand the local issues and politics and have been strong leaders in the organic food movement. By Nordstrom supporting Ugandan farmers to be “Organic by Design” by increasing their knowledge of organic farming practices and helping put them into practice, it is expected that yields can be significantly increased.
Higher yields in combination with the ability to secure a fair price for their organic cotton, is expected to double farmer incomes. Additional income earned from the sale of crops grown in rotation with cotton could increase their incomes by an additional 100 to 200 percent. This would provide a massive boost to a continent plagued by perceptions of inefficiency, high costs and lack of industrial capacity.