S i n g 2 0 1 0 g a p o r e S i n r e 2 0 1 0 a p o Why ... · a p o r e 2 0 1 0 S i n g a p o r e 2 0 1 0 S i n g Cotton Supply Chain The cotton supply chain is a complex web of

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Why sustainability?Why cotton?Antonio Esteve

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Outline• Why Sustainability?

– What is Sustainability?– Trends and concerns?– What about other commodities?

• Why Cotton?– Why is sustainability important for cotton? – Who is concerned and what are they doing?

• The Road Ahead?– Organic? Fair Trade? Another approach?– Why is this important for you and your business?

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What is sustainability?

• Meet the needs of the present without compromising the ability of future generations to meet their needs.

• Practices to ensure the continued viability of a product or practice well into the future.

• For cotton: Business practices that ensure the viability of the cotton business well into the future.

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Trends which concern us all…Population From 6 to 9 billion by 2050

many new consumersdemand for more of everything

Climate More variable weather (drier, wetter)Water scarcity, crop risk

Energy End of cheap oil ?? (fertilizer, chemicals)Pressure on yields, crop risk

Environment Loss of biodiversity, forests, nature, arable land

Can our earth support us?

Poverty Persistent poverty among smallholdersLow investment, farming knowledge

Land Competition Food vs. fuel vs. fiber vs. forests

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An example of unsustainabilityParaguay• Once a major cotton producer• Lack of investment in farmer knowledge, seeds, land

preservation, correct use of inputs, systems resulted in the following production trend:

0

100.000

200.000

300.000

400.000

500.000

600.000

700.000

800.000

Seed Cotton Production

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Sustainable agriculture

How do we produce

more food, fuel, fibre

with

fewer inputs, less land, less impact

and

engage farmers in a worthy profession?

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Sustainability – What are others doing?• Coffee

– Concerns: forests, chemicals, soils, biodiversity, labor...Rainforest Alliance, UTZ Certified, Starbucks Cafe Practices, Nespresso AAA, ‘4C’Already 10% of world coffee traded as certified

• Cocoa– Declining soil fertility and yields, poverty

Training and certification starting in Africa, AsiaMars committed to 100% sustainable cocoa 2020Kraft, Nestle, Cadbury’s...buying traceable, certified cocoa

• TeaUnilever 100% Rainforest Alliance tea

• BananasChiquita, Dole certifying Rainforest Alliance, SA 8000

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• Palm oil– Deforestation in SE. Asia

Round Table Sustainable Palm Oil (RSPO)Unilever 100% certifed sustainable palm oil

• TimberForest Stewardship Council

• Seafood Marine Stewardship CouncilAquaculture Stewardship Council

• What about cotton ??

Sustainability – What are others doing?

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Cotton40 – 50 % of all textile products

> 30 m farmers > 90 countries, of which > 50% depend on cotton

for export earnings

Source: BCI / ICAC

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Cotton Supply ChainThe cotton supply chain is a complex web of players, including cotton producers, ginners, input providers, traders, agents, controllers, bankers, transport and logistic companies, yarn spinners, fabric mills, garment manufacturers, and retailers, which have intricate relationships and interdependence, located all over the world. Ancillary involvement in the cotton supply chain impacts an estimated 1 billion people worldwide!

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Crop protection is essential, but...

Are we using safe chemicals, efficiently, with protection for people and environment?

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Cotton and agrochemicalsOnly 2-3% use of the total world agricultural area using 10-25% of crop protection chemicals

Cotton is 80-90% produced by smallholdersSafe chemicals? Training? Protection?

Consequences= polluted water= chronic illness= poisoning and death of people and wild life.= indebtedness

Source: Pesticide Action Network UK and NA

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Thirsty crop in dry places

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Cotton and water3/4 of cotton production is irrigated

5,000-15,000 liters water / kg of cotton lintfor irrigated cotton= water stress in cotton growing regions

= reduced water flows

= depleted aquifers and lower groundwater levels

= water scarcity for people and environment

= salinization of soilsSource: WWF, UNESCO-IHE

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Cotton and soil

Poor practices lead to ... the depletion of fertility, erosion, salinization = the loss of arable land which will be an increasingly scarce resource if not dealt with.

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Who cares about sustainable cotton?

• Large branded retailers– Ikea, Levi’s, H&M, M&S, Nike, Adidas

• Global NGOs– WWF, Pesticide Action Network, Oxfam,

ICCO, Organic Exchange, Rabobank Foundation, Solidaridad

• Governments, Farmer Organizations, Merchants, Textile Mills?

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Who cares about sustainable cotton?• Some big players with bold commitments, like IKEA, Levi's,

H&M, and M&S, all gung ho for 100% Better Cotton. Just this week, on March 2-3, these 4 retailers called all of their Bangladesh/Pakistan/Indian suppliers to tell them what is coming with BCI ... next China, SE Asia, and Turkey.

• IKEA specifically is using 230,000 ts lint, on growth track to 500,000 ts by 2015. Their goal is 100% Better Cotton. They have already "created" projects which should produce 100k in the next season or two. They are already working with thousands--they say 25 thou or so--of farmers in India and Pakistan and are seeing reductions in fertilizer, chemical and water use, and increases in net income.

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Better Cotton is produced by farmers who:

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A Sustainable Cotton Supply Chain also ...

… does not stop at the farm gate

… includes good working practices and efficient use of inputs and resources, by gins, spinning mills, garment manufacturers right through to the retailers

… also includes contract sanctity throughout the supply chain from field to retailer.

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Approaches to Sustainable Cotton• Organic

– Represents ONLY 0,80% of world cotton production– High production cost, low yields, high risk– Niche production areas = niche consumer market

• Fairtrade– Represents even less than organic cotton – Price driven for low income farmers; – Inflexible pricing structure, too high cost across the supply

chain making it high risk for the players along the chain– Very little buy-in by retailers

• BCI – Better Cotton InitiativeA mainstream approachDesigned for large scale

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What is BCI?• The Better Cotton Initiative

• A forum to provide leadership from within the cotton industry to promote the sustainability of the cotton supply chain by promoting good practices, transparency and traceability.

• Founded 2006 by Adidas, Gap, H&M, IKEA, plus ngo’s ICCO, IFAP, Organic Exchange, Oxfam, PAN UK, WWF and IFC

• 2007-2009 developed criteria and systemMulti-stakeholder consultationInput from ICAC, India, Pakistan, Brazil, W.Africa

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What is BCI?BCI promotes good farming practices & traceability

Projects to train farmersMinimum Production Criteria and Progress RequirementsSegregation and traceability through ginFarm assessment to claim « Better Cotton »BCI monitors and evaluates impact and improvementNo fixed premium, no label

Targets 2012: testing, learningMembership = 15% of global demand (now 5%)IKEA, Levi’s, H&M, M&S, Adidas, Nike, ASDA...and growingStarting India, Pakistan, Brazil, West Africa300,000 tons in 2012

www.bettercotton.org

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• Because a loss of arable land + a shift from cotton to other crops would pose serious business risks to all members of the cotton supply chain

• Because sustainability is a growing concern, and it is not going away

• Because retailers, especially the Big Brands, are very concerned, so are their clients, and so are coming to the table to see what to do about it.

• Because traders and textile mills, despite their dependence on cotton for a successful business, and being in strong positions to motivate positive change, are not acting.

• Because doing nothing is a high risk option.

Why is this important for you and your business?

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Why is this important for you and your business?

• Unsustainable cotton practices lead to:– Volatility and risk in supply– Depletion of soils, low productivity– Cotton will not be competitive with other crops– Cotton will not be attractive, profitable for farmers

Sustainability is in our collective interest

• Brands will be increasingly focusing on traceability and proof of good practices

Efforts underway in nearly every commodityYour clients will ask you for it

Sustainability will be in your business interest

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Moral of the story

Put Cotton Sustainability on your radar screen !!!