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The Organic Cotton Accelerator
13.12.2016 Laure Heilbron
Presentation for the “Cotton weaving opportunities for Latin America and the Caribbean” conference
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Founding partners
Network partners
What is the Organic Cotton Accelerator?
OCA is a multi-stakeholder
initiative focused on creating
a prosperous organic cotton
sector which benefits
everyone—from farmer to consumer.
OCA represents a group of frontrunners that represent
~70% of buying power in the organic cotton market
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Organic cotton has many benefits
Sources: FAO (2015) Measuring sustainability in cotton farming systems; Life Cycle Assessment (LCA) of organic cotton – A global average, PE International for Textile Exchange, 2014; Greenpeace (2010) Picking Cotton: The choice between organic and genetically-engineered for farmers in South India
Improves farmer
incomes
Decreases credit
dependency
Promotes gender
equality
Improves worker
health and safety
Livelihood
Fights climate change
Reduces water
footprint
Improves soil health
Improves biodiversity
Environment
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But there are challenges
Fragmented organization of the sector
• Main actors in the sector are not aligned on a vision for the future
• Initiatives to tackle supply and demand challenges are fragmented
An insecure business case for the value chain
• Supply insecurity and integrity challenges
• Quality and contamination issues
• Lack of supply chain transparency
The farmer business case is under pressure
• Lack of access to quality organic seeds
• Lower yields and profits while lacking secure offtake of organic produce
• Organic differentials often do not end up in the farmers’ hands
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What is OCA’s history and future agenda?
Initiation StrategyProto-typing
Scaling
2013-2014 2015 2016-2017
(focus on India)
2018 onwards
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Global organic cotton sales
Demand for organic food and cotton is growing
Global organic sales are growing- Ecological benefits- Health benefits
The market for organic cotton has grown - Most sustainable cotton- Increasing popularity
Sources: FiBL and IFOAM: “The World of Organic Agriculture: Statistics & Emerging Trends 2016”; Textile Exchange Organic Cotton Market Reports 2010-2015
6
Global organic food sales, in billion USD
+141%
2005 2014
2006 2015
+10-15% p.a.
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Average cotton farming P&L: Cotton income of current organic vs conventional cotton farmers in Madhya Pradesh, India
But organic cotton farmers are among the poorest
Difficult enabling environment
Short contracts, low prices Few viable alternatives
Sources: CottonConnect and NewForesight analysis of field data; TruePrice and IDH: “The True Price of Cocoa from Ivory Coast”; Fountain, A.C. and Hütz-Adams, F. (2015): “Cocoa Barometer 2015”
$0.7-1.3 ($330-462)
$0.6-1.9 ($220-695)
$0.5-3.9 ($183-1,423)
$1.1-2.7($402-986)
$1.9($694)
Farmer incomes per day (and per year)
Strict/expensive standard
-80000
-60000
-40000
-20000
0
20000
40000
60000
80000
100000
Cotton revenue Production costs
Net income
INR/ha
Organic Conventional
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The consequences are severe: production drops, integrity is questioned, reputation is at risk
8
Production (MT)
source: TE market reports
Production decrease Integrity issues Reputational risk
• GMO contamination
• Double-selling of TCs
Sustainability claims challenged by media and consumers
-53%
These are crippling, systemic issues; there is no easy fix here!
Sustainability issues
Severe poverty
Indebtedness
Less ecological benefits
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-60000
-40000
-20000
0
20000
40000
60000
80000
Cotton revenue Production costs Net income
Organic
9
If we do it right, there can be a more attractive business case
3: Improved sourcing practices and inputs
1: Work with the farmers of the future
2: Reward farmers for their efforts
Average cotton farming P&L: Cotton income of improved organic farmers in MP, India
INR/ha
Sources: CottonConnect, NewForesight analysis of field data
Income from cotton of $1.25-1.87 p.d.
($456-683 per year)
Conditions:
Profit increase: + Productivity - Input costs and use 4: Access to the
right seeds
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What will OCA do?
Seed breeding programWorking with research institutes and seed breeders to increase the quality and supply of organic cotton cultivars
Farm level incentivesPiloting interventions that improve the farmer business case
Improved sourcing practicesPiloting interventions that balance risk across the supply chain and improve the business case for spinners and garment manufacturers
Traceability systemAccelerating the development of an efficient, up-to-date traceability system to ensure the integrity of organic cotton
Sector organizationAligning civil society-, industry- and government initiatives towards a collective vision and joint interventions that aim for structural change
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How will OCA fix the business case for organic cotton?
OCA aims to fix the business case for organic cotton
Organic cotton
breeding program
Improved farmer
business case
Improved sourcing practices
Traceability system
Secretariat Sector organization
Ginning SpinningFabric
makersGarment
manufact.Farming
Brand/ Retail
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OCA strengthens the value chain of our partners
Source: NewForesight analysis based on interviews and desk study
Demand Program(middle and end of supply chain)
Pilot aims
Attractive incentives throughout supply
chain
Traceable integrity of
organic cotton
Supply Program(start of the supply chain)
Improved integrity at the
source
Improved farmer business case
OCA brand commit-ments
Brands provide information on (organic) cotton sourcing practices for benchmark study
Brands test customized best sourcing practices to learn and consequently improve current sourcing strategy
Brands develop and implement sourcing pilots with farm program(s) in India, incl.:
Purchase guarantees for X volume
Pre-decided differential for farmer
Access to seed clause in contracts
Learn, Adjust, Scale-up
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OCA organizes the organic cotton sector
Sector organization Agenda 1Organic cotton offers an attractive business case for each value chain actor
Agenda 2The organic cotton sector is organized to work towards a shared vision and strategy
Agenda 3Organic and sustainable cotton initiatives collaborate to grow the use of sustainable cotton
Now Future
