How Fairtrade helps cotton farmers and producers
Fairtrade cotton made its early inroads into India as a certified product in 2004. Since then, much has changed: today, approximately 30,000 Fairtrade-certified cotton farmers operate across the country.
Much like its efforts in rural communities across the world, Fairtrade specifically addresses the terms of trade and economic justice to empower farmers, who are often marginalised from equitable profit-sharing. Fairtrade certifies and audits producers to ensure that minimum social and environmental standards are met. Brands are required to perform due diligence to ensure that they pay a fair price, as well as a social premium to the producers in order to receive the Fairtrade mark on their products.
This premium is where Fairtrade makes a difference. Almost 40 per cent of farmers are illiterate, and over half are below the poverty line. Small landholders, who farm on land of 2 acres or less, often have no safety net to protect them from failed crops, high interest loan repayments or illness.
The premium helps provide a buffer against these contingencies. The money is either reinvested into their business or invested into their children’s education—an expenditure that most small-landholders cannot afford to make regularly due to rising input costs for their crops and outstanding monthly debt repayments.
An impact study carried out in 2014 showed that Fairtrade provides positive benefits to producers in India. Fairtrade facilitated reliable payments to these struggling producers and provided added income for social investment at the household level and community level. Sixty per cent of farmers reported that they had better economic benefits after joining the Fairtrade system.
One of the main benefits of Fairtrade is that unorganised small holder farmers are required to work in producer collectives: co-operatives, societies or producer companies. All decisions on how to spend the premium are taken democratically by the collectives. These collectives are organised based on Fairtrade values of gender justice and mostly have equal number of women on the board who play a significant role in the decision-making. This organisational structure places them in a better position to negotiate with brands, gain to access new markets, and to negotiate on input costs like seeds.
But even where farmers aren’t organised in this way, Fairtrade also enables contract production as long as they’re contracted to a Fairtrade supported NGO or trading body—helping them along until they can form a collective.
Many of the cotton belt’s small landholders are often frozen out of mainstream capital channels because they aren’t seen as a worthy investment. They have to resort to borrowing from private money lenders at interest rates as high as 60 per cent. Fairtrade supports farmers with pre-finance of up to 60% of the contracted value of the cotton. This provides much needed capital and reasonable rates.
Organic seeds, better environmental practices
All Fairtrade farmers are required to use non-GM, organic seeds, which has reduced their dependence on pesticide use and brought down input costs. This has also introduced them to more sustainable practices to preserve soil and crop quality.
Several studies of Fairtrade impacts cite farmers’ diversification into projects that reduce vulnerability, such as improving food security through organic gardening or small-stock animal production. Some studies also note that Fairtrade often plays a role not only in supporting individual producers in times of hardship, but of enabling co-operatives to survive economic shocks and stresses. All Fairtrade farmers are encouraged to grow food crops equivalent to the kcal needs of their families.