Empowering smallholder farmers in improving their yields and livelihoods
Louis Dreyfus Company helps feed and clothe some 500 million people every year by originating, processing and transporting approximately 80 million tons of products. Structured as a matrix organisation of six geographical regions and nine platforms, the company is active in over 100 countries and employs approximately 17,000 people globally. In an interview with Fibre2Fashion, Louis Dreyfus Company’s Head of Cotton, India Sumeet Mittal discusses cotton tracing and supply chain in India.
What exactly does Louis Dreyfus Company do?
Louis Dreyfus Company (LDC) is a global merchant and processor of agricultural goods, founded in 1851. Active in more than 100 countries, we leverage our global reach and extensive asset network to serve our customers and consumers across the world. We pride ourselves in sourcing, transforming and delivering the right products to the right location at the right time, in a safe, reliable and responsible manner. LDC’s business spans the entire value chain, from farm to fork, across a broad range of business lines or platforms, including Grains & Oilseeds, Coffee, Cotton, Juice, Rice, Sugar, Freight, Carbon Solutions and Global Markets.
Specifically in India, where we first established our presence in 1997, we have grown from a research centre to become a leading agribusiness player, working closely with Indian farmers and suppliers to originate, process and distribute their products.
Your website says, “We aim to secure a seamless, traceable and responsible supply chain from farmers to end-consumers.” How do you plan to do this in the case of cotton?
From sourcing quality cotton to promoting industry-best practices within and beyond our value chain, we work proactively to integrate sustainability into our everyday cotton operations and supply chains, both as LDC and in collaboration with partner organisations such as the Better Cotton Initiative (BCI).
• Originate & Produce: We source cotton from a wide network of suppliers across India and ensure that they follow better practices to minimise quality and contamination impacts often seen in Indian cotton. We also share our expertise with farmers and producers, our business partners and expert organisations.
• Store & Transport: We leverage our extensive warehousing and logistics network for local farmers around the globe, which enables us to control costs and mitigate risk throughout the product journey.
• Research & Merchandise: Our extensive crop and market research capabilities, global expertise, and in-depth understanding of India’s cotton market allows us to ensure responsive supply.
LDC has also begun using a ‘diagnostic’ system that applies DNA markers to determine the purity, quality and origin of some of its cotton. ‘PimaCott’ and ‘Homegrown’ labels, which are used to brand and trace the cotton through DNA, are useful for manufacturers, traders and retailers, as an absolute guarantee that cotton used in their manufacture was responsibly sourced and produced.
Tell us about LDC’s collaboration with the BCI.
Based on a shared aim to advance sustainable cotton production, our collaboration with BCI in India began in 2018 in partnership with Puneet Enterprises. Working together, we have since supported over 15,000 local farmers to address some of the social, economic and climatic challenges associated with cotton production, such as dependence on credit, unpredictable weather, lack of technical information and market access, as well as gender inequality.
Through this programme, participants acquire knowledge on sustainable farming techniques including intercropping to improve yields and productivity, proper application of fertilisers, effective pest control methods, as well as the key role of women in agriculture and how to engage their active participation in cotton farming.
In India, we support sustainable cotton production by increasing the volume of Better Cotton purchased by 50 per cent year-on-year, bought from ginners and traders who engage directly with cotton farmers to train them in BCI-standard best practices.
You said that LDC has begun using a ‘diagnostic’ system that applies DNA to determine the purity and quality of some of its cotton. How does this work? Will this help in tracing for e.g., Xinjiang cotton?
This technology, SigNature T system developed by Applied DNA Sciences, uses tiny genetic markers that are sprayed on the cotton at the gin just before packaging and being turned into yarn. These DNA markers bind to the fibres and act as a microscopic barcode that can be tracked all along the supply chain.
This barcode acts as an absolute guarantee that the cotton was responsibly sourced and produced, helping to meet increasing consumer and retailer demand for sustainable cotton by facilitating traceability along the value chain.
How is LDC’s sourced cotton different from the ones available in the market?
Our Cotton Platform in India operates as an integrated cotton supply business, from gin to mill, with comprehensive origination, marketing and research activities, as well as large-scale logistics capabilities that facilitate the supply of raw cotton to both domestic and global markets.
In India, the cotton market is very fragmented with over 50 lakh cotton farmers across the country. On the other side, it is very important for customers to receive uniform quality for their raw cotton, to ensure the final quality of their yarn, fabric and end products.
Thanks to insights acquired over the last 15 years of originating cotton in India, our team understands the quality dynamics from different parts of the country and is also very familiar with our customer base, which allows us to help source the right quality of cotton from a particular region or ginner based on our customers’ needs.
Furthermore, our teams on the ground mitigate quality issues by carrying out thorough checks at gins, warehouses and throughout the storage process.
Tell us about LDC India’s participation in the All India Cotton Trade Meet 2022.
LDC was a Platinum Sponsor of the All India Cotton Trade Meet 2022 held at Jalgaon, Maharashtra, on September 17 and 18, where we discussed the outlook of, and key developments in, the cotton industry – both in India and globally.
In India, we have a positive outlook on new crop prospects, with the likelihood of ample availability of raw material for the textile industry at least for the next 6-7 months. This will also be a great opportunity for Indian farmers to capture international market share.
This said, we are also watching for signs of inclement weather, such as October rains in India, that may negatively impact upcoming crops, compounding subdued supply as a result of low cotton production in the US, due to the drought in the key cotton-producing state of Texas. Although demand also remains subdued due to ongoing global economic concerns, cotton mills will need to watch for signs of resurging demand, in relation to global supply concerns.
What is the highlight of LDC’s 2021 Sustainability Report?
LDC’s 2021 Sustainability Report highlights progress on the Group’s sustainability journey, including significant strides to advance transformative sustainability strategies across our operations, assets and supply chain, while keeping our people safe, ensuring supply chain continuity, and working with partners to support farmers and protect the environment.
In particular, we created a Carbon Solutions team to drive Group-wide decarbonisation efforts, including by building an extensive emissions reduction project portfolio, with a focus on collaborative projects in line with LDC’s approach to tackle sustainability challenges through partnerships.
We also advanced traceability, certification and farmer engagement in product-specific supply chains, including cotton, for which we continued to leverage our influence and resources to advance sustainable cotton production, working alongside textile industry partners and expert organisations such as the Better Cotton Initiative and International Labour Organization. In 2021, we exceeded our annual target to increase Better Cotton purchases by 10 per cent and completed ahead of time our long-term goal to purchase 50 per cent more Better Cotton in 2023 compared to 2018.
Going forward, what are the plans at LDC to support the Indian cotton textile industry?
Through our seven offices across India, in both cotton producing and consumption regions, LDC works to support cotton farmers and ginners for greater access to the international market, reducing distress-selling during harvests by helping farmers to access liquidity. We do this by buying immediately from the ginners with a fair and quick payment structure in place. We leverage our extensive crop and consumer research capabilities, robust quality control mechanisms through experienced cotton classing teams, and well-established warehousing and logistics network for optimal supply chain management.
The seasonal nature of the cotton crop means that local textile mills in India once had to invest heavy sums to store cotton. LDC’s warehousing and logistics capabilities and network provides mills with the assurance of a continuous and reliable supply of quality cotton throughout the year.
In 2022, LDC started Project Jagruthi in India to educate cotton-growing farmers on various threats to cotton crops (e.g., Pink Boll Worm [PBW], white fly infestations) and techniques and control measures to reduce the cost of cultivation through better farming practices. In India’s cotton growing states of Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Telangana, Karnataka and Andhra Pradesh, over 7,500 farmers from more than 30 villages have actively participated in this project. Over 35,000 pheromone traps were distributed to the farmers that would help them to control the spread of pink bollworm pest helping them realise higher yields this season.
Meetings were held in each state by LDC agronomists with technical support from the government’s Agriculture Department, with the emphasis on PBW and white fly infestations, along with better field surveillance techniques and control measures. Farmers were also invited to share their concerns and queries during these sessions.
Over the last two years, another key challenge faced by the industry was in securing cotton supplies, with India’s production at its lowest in 20 years. As textile mills traditionally have long term contracts for yarn, fabric and garments, these customers are often exposed to price and supply risks in the event of a crop reduction.
Looking ahead, we will continue to share our in-depth understanding of the local and global cotton market to create fair and sustainable value for customers in India while encouraging mill customers to hedge supply risks earlier. For example, we have been helping Indian mills source their cotton from various countries around the world, so as to ensure continuous supplies of cotton to the mills during the summer months.
Additionally, we continue to empower our smallholder farmers in improving their yields and livelihoods. Asian Development Bank (ADB) and LDC recently signed a loan of up to $100 million to help 50,000 smallholder farmers across selected Asian markets, including India, recover from economic challenges posed by the pandemic, increase their resilience to climate change impacts and improve livelihoods sustainably.
20230103183907.png)
