Cotton, by and large, is the fibre that the textiles and apparel industry is made of. Even as a substantial chunk of the industry has migrated to other natural and man-made fibres, cotton still remains its soul. Subir Ghosh looks at some trends that may decide cotton's future.
There are few industries that are under pressure both from within and outside to pull up its socks as the textiles-apparel-fashion industry. And there are few agricultural crops/ products that have so much of an overarching bearing on countless industries down a long winding supply chain as cotton; and in this case, it would be the same textiles-apparel fashion industry.
There have been enough damning reports- some contentious, others not-about the way cotton is cultivated and the adverse effects the processes and policies have on cotton farmers in a country under acute climate-induced pressures. At the same time-perhaps a bit slow in reacting-there has been a number of industry initiatives that are seeking a sustainable future for cotton. Few would disagree that the cotton sector in India is under stress, and fewer still would disagree that whether the crisis aggravates or not would depend on whether the mitigation measures take place at a faster pace than at which the climate-driven crisis is accentuating a policy failure.
Recent events, initiatives and movements the world over clearly indicate that certain trends are going to steer industry in the days to come: the cotton industry has no other alternative but to turn and subsequently remain sustainable, and sourcing of cotton will necessarily have to be ethical.
A 2015 briefing of the Innovation Forum for Cotton Connect, Sustainable and ethical cotton sourcing: How to get it right, and make it pay for your business, had said so in as many words, "Experience from other sectors suggests that the business proposition will be driven by two imperatives: firstly, the need for a sustainable supply of raw materials to make the garments and products, and, secondly, demand for ethically sourced clothing from retailers and their consumers."
Cotton, of course, has been grown, woven and worn over thousands of years, and ethical concerns are not new. In modern history, economist Adam Smith and thinker Edmund Burke took the East India Company to task over the way it was building wealth from Indian cotton. The British anti-slavery movement too had a cotton link with the United States. In 1845, the Ladies' Free-Grown Cotton Movement published a leaflet that listed the names of "manufacturers and wholesale and retail drapers" who sold free-grown cotton goods. It was probably the first drive recorded in modern history that exhorted consumers to think beyond the clothes they wore. The #whomademyclothes campaign of today, in that sense, is an old campaign for a new age consumer awareness.
A 360 degree world view
Before taking a deep dive into the rankling issues and emerging trends that may helm the future of cotton, it would be pertinent to look at the global market scenario.
The regular overviews of the industry come from the International Cotton Advisory Committee (ICAC). Its latest overview of May 1, 2017 says that the high prices in 2016-17 is encouraging cotton area expansion in 2017-18: "High cotton prices have prevailed in 2016-17, which are expected to encourage farmers to expand the area under cotton by 5 per cent to 30.8 million hectares in 2017-18. India's cotton area is forecast to increase by 7 per cent to 11.3 million hectares in 2017-18 as farmers are encouraged by better returns due to high cotton prices and improved yields in 2016-17. Assuming yield is similar to the five-year average, production could increase by 3 per cent to just under six million tonnes." World cotton production is forecast to grow marginally by 1 per cent to 23.1 million tonnes in 2017-18. World cotton trade is projected up by 5 per cent to 7.9 million tonnes in 2016-17, after declines during the previous three seasons; India's exports are projected to decrease by 30 per cent to 886,000 tonnes. That is bad news for India in the global theatre.
India, nevertheless, remains the largest cotton producing and second-largest cotton exporting country for the second consecutive year, as per the ICAC statistics for March 2017. With a projected production of 5.97 million metric tonnes (MMT) in 2016-17, India is way ahead of China with 3.69 MMT. India produces roughly a fourth of the global cotton production of 22.69 MMT.
The estimates of the state-run Cotton Corporation of India (CCI), the biggest buyer of cotton, differ from that of ICAC. A Reuters report in May quoted CCI officials as saying that cotton planting in India is likely to rise by 15 per cent in the 2017-18 marketing season to a three-year high. This will boost cotton production and exports, but will also see farmers switching away from other crops.
Meanwhile, the government is also considering increasing the minimum support price (MSP) of cotton by ₹160 per quintal to ₹4,320 for the 2017-18 crop year beginning July, based on the recommendation of the Commission for Agricultural Costs and Prices (CACP). A news agency report said that since much of the cotton area is under Bt cotton seeds of private companies, the government is planning to promote first generation Bt cotton variety developed by the Indian Council of Agricultural Research (ICAR) and has asked National Seed Corporation to ensure sufficient supply in the ensuing kharif season. With higher MSP and normal monsoon forecast, area under cotton is expected to increase next year. That's as far as production at home is concerned.
Oblivious of the ICAC or CCI forecasts for crop areas, India will be contributing to the highest production outside of China in six years, according to the United States Department of Agriculture (USDA). The USDA's first forecast for 2017-18 said: "Stocks in China are forecast to fall substantially for the third consecutive year, with a decline of about 9 million bales, reflecting continued strong and steady state reserve sales. Despite their aggressive sales and a continuing recovery in consumption, stocks in China will remain very high with the ending stocks-to-use ratio above 100 per cent for the sixth consecutive year." China announced a new plan in 2016 to auction off cotton reserve stocks each year; it plans to gradually reduce stocks each year until the reserves reach what they consider a "reasonable level." According to the National Cotton Council of America's annual economic outlook, "While China's increased consumption of reserve stocks has bolstered mill use in 2016, it has also curbed China's demand for imported cotton fibre and cotton yarn."
Consumption will grow at a faster rate globally than within China (2.7 per cent vs 1.3 per cent), but with higher global production stocks outside, China will be the target of all major producers. The logic is simple: if China's imports expand, production outside will have to meet that demand.
There are too many ifs and buts, and global cotton trade has always been a game of uncertainties. But then, the trade aspect is only one piece of the everchanging cotton jigsaw.
India's agricultural disaster
Statistics of cotton production are fine in themselves, but those do not tell the whole story; certainly not about the crucial human element that forms the backbone of the entire process. At a time when the fashion industry is struggling hard to transform itself into a sustainable entity, the human inputs that make it a lucrative and indispensable industry are impossible to turn a blind eye to. The issue of farmer suicides in India, particularly by those who were cultivating cotton, have figured in the public discourse for years now. There have been fierce debates over the pros and cons of Bt cotton for instance, as well as the failure of the government to ramp up a policy that should stem the rot. But when Andrew Morgan released his hard-hitting documentary True Cost in May 2015, it dovetailed into the global way of looking into the societal and environmental problems that the fashion industry was directly or indirectly responsible for. If the Rana Plaza disaster of 2013 catapulted to the limelight the issue of workers conditions and rights, Morgan's film took the audience right into the end of the spectrum that few ever talked about: farmers who grow cotton.
There were a number of issues that the film raised: the use of pesticides in cotton farming that has led to a spike in cancer rates and birth defects in the children of farmers; farmers are caught in a debt trap in trying to procure expensive seeds; among others. All these facts were not new revelations, but Morgan narrated a gut-wrenching story to consumers, about how their demand for fast fashion was wreaking havoc down the entire supply chain. The film was well researched and incisive, and presented a horror story that no global brand would want to be associated with.
Now, Morgan's film had a backdrop. His was not the first film to delve into the subject; a documentary titled Cotton for My Shroud by Kavita Behl and Nandan Saxena had earlier been awarded Rajat Kamal for Best Investigative Film at the 57th National Film Awards in 2011 for investigating the farmer suicide crisis. There had also been a number of fact-finding reports, including Greenpeace's 2010 study Picking Cotton: The choice between organic and genetically-engineered cotton for farmers in South India, that had highlighted the same problems from a different perspective. And, in between had been a Parliamentary Standing Committee report in 2012 that clearly said that Bt cotton had not improved the socio-economic condition of cotton farmers, and in fact had accentuated their distress especially in rainfed areas which formed the majority of the cotton and farmer suicide belt.
But, for companies higher up in the supply chain- particularly brands, the reports, studies and films did not offer straight-jacket solutions or a way forward; they remained in limbo.
A possible way out for industries was suggested by a May 2016 report from True Price and IDH Sustainable Trade Initiative. Their The True Price of Cotton from India report showed that the cultivation phase accounted for about 30 per cent of total societal costs in the supply chain, with 75 per cent of them being environmental costs. True, several sustainable interventions had improved the livelihood of cotton farmers, but there was still room to further decrease societal costs. The report carried the results of a study on the external costs of the cotton supply chain (smallholder cultivation in India). The external costs of conventional cotton were compared to certified cotton.
External costs are costs caused by economic activities which are not reflected in the prices charged for the goods and services being provided. External costs can be classified as environmental costs if they have a direct effect on the environment and as social costs if they have a direct effect on the well-being of people.
The cultivation of smallholder cotton in India has total external costs of €3.65/kg seed cotton. By summing up the external costs with the farm gate price (€0.55/kg seed cotton), a true price of €4.20/kg seed cotton is obtained.
Roughly 74 per cent of the total external costs of cultivation are environmental costs, 35 per cent are caused by water use. The other largest external cost drivers are water pollution and underpayment. The cultivation phase accounts for 32 per cent of the total external costs of the cotton supply chain.
Certified cotton has 35 per cent lower external costs of cultivation than conventional cotton. About 70 per cent of this change is caused by higher productivity of certified farms, 20 per cent by better environmental conditions and 10 per cent by better social conditions.
Interventions that reduce scarce water use by 30 per cent have the potential to further decrease the external costs of certified cotton cultivation by around 7 per cent (€0.16/kg seed cotton). Additionally, eliminating income discrimination has the potential to reduce external costs of certified cotton cultivation by 5 per cent (€0.13/kg seed cotton).
The researchers asserted, "Companies can now use this information to reduce their costs with intervention projects, like training farmers on water saving techniques or gender equality."
In the hands of brands
Till a few years ago, no one was sure whose responsibility it was to bell the cat. An April 2016 study pinned the onus on to clothing brands and retailers. The study, carried out on behalf of Solidaridad, WWF and Pesticides Action Network UK (PAN UK), spelt out: international clothing brands and retailers have a crucial role to play in securing the future of the market for more sustainable cotton.
The study pointed out that production of more sustainable cotton had never been higher, reaching 2,173,000 tonnes in 2014 or 8 per cent of the total global supply. This was projected to rise to 13 per cent in 2015. In fact, as the groups insisted, "Buying more sustainable cotton has never been easier. Leading companies like Ikea and H&M are showing it's possible to use 100 per cent more sustainable cotton in their products within a couple of years."
A yawning gap in sales, however, remained. A study by independent researcher Simon Ferrigno (author of An Insider's Guide to Cotton and Sustainability) had earlier found that uptake was lagging behind, with only 17 per cent of all sustainable cotton being bought by retailers. The remaining 83 per cent was being diverted to the conventional cotton market, which was essentially a disincentive to farmers to invest in sustainable cotton production. The researchers cautioned, "If greater demand is not reflected in increased orders from retailers, there is a danger that farmers will abandon sustainable production altogether and the opportunity to improve global standards will be missed."
Titled Mind the Gap: Towards a More Sustainable Cotton Market, the report spelt out: "A number of sustainable cotton standards have been developed in the last 30 years, starting with Organic cotton in the 1980s, followed by Fairtrade in 2004, Cotton made in Africa (CmiA) in 2005 and the Better Cotton Initiative (BCI) in 2009. All of them provide guidance and support for farmers and reassure consumers and retailers that the products they buy are being produced using sustainable farming methods. However, the gap between uptake and supply is widening and at present the bulk of more sustainable cotton ends up in the conventional market." That, of course, is a matter for concern.
Such a gap exists possibly because the message about the need for sustainability is yet to gain sufficient currency across the supply chain. Yet, there is evidence aplenty for a sustainability case. New research released in April this year by Fairtrade Foundation UK showed that the environmental and social footprint of Fairtrade cotton was one-fifth of conventional cotton farming. The data showed that the impacts of Fairtrade farming methods were 97 per cent lower for social elements and 31 per cent lower for the environmental components studied. The aim of the study was clear: to provide fashion brands with a useful new tool to enhance visibility across their supply chain and deepen understanding of their social and environmental dependencies and impacts.
The study used a sustainable metric methodology which measured the environmental and social impacts on poor rural households in India. The rural labour market in India, it was seen, continued to be characterised by child labour, long working hours and low wage rates. Fairtrade's was an environmental profit and loss (EP&L) system, which helps companies identify new opportunities to enhance brands' sustainability. "Unless cotton is grown sustainably, its production leaves a heavy environmental and social footprint which will affect its long term viability," Fairtrade cautioned.
One can throw the words of caution to the winds only at one's own peril. Among other things that the Innovation Foundation briefing had pointed out, "Whilst consumers may state a preference for ethical sourced cotton, in reality they don't go to the shops to buy cotton, they go to buy garments. How they are made is often a secondary concern after price and style. What may change this is the view of the millennial generation-in their 20s and early 30s-who are more aware than their parents of the need for sustainably and ethically sourced products, and are more willing to pay for it. Retailers have a dual role to educate their customers on the one hand and to provide what they want on the other. A recent survey from the Fairtrade Foundation found that 82 per cent of UK teenagers think companies need to act more responsibly, while just 45 per cent said they trust businesses to do so. In general, 33 per cent of the global population is willing to pay more for sustainably manufactured and sourced goods." Those numbers are only increasing, by the day.
Brands take it forward
That brands would sooner or later make sustainable cotton the mainstream choice was arguably a foregone conclusion. A major initiative towards this direction came from leading international brands and retailers, cotton standards, existing industry initiatives and other stakeholders across the supply chain in May this year in the form of Cotton 2040. Helmed by sustainability non-profit Forum for the Future with support from the C&A Foundation, this cross-industry initiative wants to drive change by taking collaborative action to scale up and overcome barriers to sustainable cotton uptake across multiple standards, so that more sustainable cotton becomes a mainstream commodity.
The initiative includes leading retailers M&S and Target; industry standards Better Cotton Initiative and Cotton Made in Africa (CMiA), organic standards (represented by Textile Exchange), the Fairtrade Foundation, industry initiatives Cotton Connect, IDH, Cotton Australia, Value Added in Africa and Organic Cotton Accelerator as well as Centre for Sustainable Fashion at London College of Fashion, UAL. In other words, it is a group of leaders in their own right now leading the way.
The path has been paid out. Through 18 months of research, dialogue and development work with global stakeholders and experts, the initiative developed proposals for four cross-industry areas for action (workstreams) with the potential to create a systemic shift in cotton:
Building demand for more sustainable cotton: enabling an increased demand for sustainable cotton within the fashion and apparel industry
Closing the loop on cotton: scaling up cotton recycling and circularity
Traceability: building greater visibility and transparency throughout the cotton value chain and across standards
Upskilling for resilience: creating a cross-industry forum to build resilience among smallholder cotton farmers in a changing world.
Sally Uren, CEO of Forum for the Future, said on the occasion: "Past debate around sustainable cotton standards and industry initiatives has at times been polarising, but we know to make effective progress we need to work together. At Forum, we believe that collaborative action is essential in order to address complex issues that no one entity-whether a business, standard, consumer group, NGO or government-can tackle alone. We're delighted that leaders across the global cotton industry are ready and willing to come together and are excited to help steer them forward through this unique and growing partnership." Uren's sentiments were emphasised by Mike Barry, Sustainable Business Director at M&S, who remarked: "We're supporting Cotton 2040 as we recognise the important role that retailers play in driving demand for sustainable cotton. We have set out to significantly increase the amount of cotton we procure from sustainable sources by 2020 and we want to work collaboratively to affect material, lasting change across the industry."
As it happens-not without reason-the Mind the Gap report of Pesticides Action Network UK, Solidaridad, and WWF finds resonance in Cotton 2040's statements and assertions. The coalition, as is obvious, seeks to mend that disconcerting gap, and go beyond.
The C&A Foundation's executive director, Leslie Johnston, reflected in a blog post on why efforts to date have so far failed to create a genuine breakthrough. She narrowed down on two factors:
Lack of urgency. Until environmental profit and loss statements are widely adopted by the industry, the cost of water is not being factored into the economics of cotton. And the disastrous effects of climate change still seem far off. Why should a company act now when cotton prices are low? As a result, more sustainable practices are not fully embedded in businesses. They often sit in the silo of CSR departments, if anywhere. And this won't change until companies feel more pressure - whether from a higher consumer demand for sustainable options or concern about the environmental and social costs of sourcing decisions.
Lack of efficiencies. There are many approaches to more sustainable cotton all working to tackle the ghastly effects of one of the world's thirstiest crops. There are more similarities than dissimilarities amongst them; but efforts are not always aligned. We can learn from the tighter collaboration across these approaches (e.g from the partnership between BCI and CmiA) as we work together toward increased efficiencies.
Now that leaders from different sectors of industry have charted out a well-defined course, they will need to stick to it, and ensure that the word 'cotton' would necessarily mean clean and green. But to do that, the coalition will need to expand and take everyone else along with it.
For those producing cotton or manufacturing cotton products, it does not matter whether the battle is between organic cotton and genetically modified cotton, or whether it is between cotton fibres and other man-made/natural fibres. Cotton needs to have a green future.