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Controversy Rocks Better Cotton’s Uzbek Program

Better Cotton’s foray into Uzbekistan appeared to signal a fresh start for the Central Asian nation’s cotton industry, which major apparel brands and retailers shunned for years over its rampant use of forced and child labor during harvest time. Now, human rights campaigners say they worry that the Geneva and London-based initiative, which seeks to improve cotton farming and practices worldwide, could jeopardize the sector’s rehabilitating reputation amid its widespread legislative reforms. They say it could also damage Better Cotton’s credibility.

“How could BCI do this after all the scandal in China?” said Umida Niyazova, director of the Uzbek Forum for Human Rights, using an acronym for the Better Cotton Initiative, the name Better Cotton went by before its rebranding in 2021. Major brands such as Adidas, Gap Inc. and H&M Group all use Better Cotton as part of their commitments to adopt “more sustainable” fibers.

It was only in 2019, after all, that the organization cut ties with the Xinjiang Production and Construction Corps, a state-owned paramilitary group that served as its implementation partner in China’s Xinjiang Uyghur Autonomous Region. Despite mounting evidence that Uyghurs and other Turkic Muslims were being rounded up into internment camps and dragooned into forced labor, it would be another year before it suspended licensing and assurance activities in the province’s ample cotton fields.

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Controversy is erupting once again around Better Cotton’s association with Indorama Agro, a sprawling cotton enterprise that is one of six companies participating in its Uzbek program for the inaugural season. While Better Cotton insists that it assessed all farms against the Better Cotton Principles and Criteria by trained third-party verifiers, Indorama Agro’s checkered history with “land grabbing” and other human rights violations should have disqualified it from the scheme in the first place, Niyazova said.

Indorama received 49,000 hectares of land via government decree in 2018 as part of a move to privatize Uzbekistan’s cotton sector and create so-called “cotton textile clusters that combine production, processing and manufacturing.

But the land didn’t come “free,” Niyazova said. Instead, farmers were strongarmed into giving up their land leases, signing new contracts to grow cotton for their new employer under exploitative terms.

“From the very beginning, the project started with illegal land confiscation,” she said.

The cluster system, designed to attract foreign investment, has drawn prominent interest. In 2017, the World Bank’s International Finance Corporation (IFC) helped underwrite a pilot program featuring Indorama Agro among its participants for growing cotton in Uzbekistan based on the Better Cotton approach. Four years later, the IFC gave Indorama Agro a $60 million long-term loan to finance the development of its land while “supporting independent farmers through contract farming.” In parallel, the European Bank for Reconstruction and Development (EBRD) added a $60 million long-term loan, plus a $10 million short-term loan, to the project’s coffers.

The IFC defended its relationship with Indorama Agro, saying that it, like all of its clients has “committed to following IFC’s environmental and social performance standards, which define responsibilities for managing environmental and social risks, including the fair treatment of workers.” The IFC continues to work with Indorama Agro to “help it constructively engage with all stakeholders as it responds to relevant complaints,” a spokesperson told Sourcing Journal. The EBRD declined to comment.

By 2020, however, farmers were reporting that cotton yields on Indorama Agro’s farms had fallen significantly, which they blamed in part on the overuse of chemicals and pesticides, including those banned or restricted for use by the European Union, along with a “basic lack of understanding” about the ecology of the land. They were forced to stay out in the fields, no matter the weather, without any means of shelter, and made to toil beyond their contractual obligations without additional compensation. Indorama Agro also barred locals from renting out plots of land to cultivate vegetables for food or graze cattle, leaving the most vulnerable at risk of starvation. Anyone who spoke out risked threats or retaliation. Incomes, they said, plummeted.

When growing dissatisfaction about poor working conditions and low wages led Indorama Agro farmers in the Syrdarya region to form the country’s first democratically elected trade union in 2021, the company attempted to seize control of the group by installing a member of management as its chair, Niyazova said, though this was ultimately unsuccessful. In December, Indorama Agro reclassified nearly 400 of its 2,000-plus farmers from employees to “service providers,” a move that not only denies them secure employment and social security but also yokes them with “practically all” of the entrepreneurial risks. It’s also “very likely,” she said, that they are no longer eligible for union membership, striking a blow to freedom of association and collective bargaining.

Niyazova is also concerned that with the accompanying reduction of each plot of land from 100 to 125 hectares to just 80 hectares, farmers’ income will take a huge hit. With the roughly $106 per month that they’re given to cover expenses, the use of child and forced labor may result as a “last resort.”

Indorama Agro refutes these allegations, which it called “factually incorrect.” The land was leased from the government, for example, through a “transparent and well-documented process within the legislative framework of the country,” said Indranil Majumdar, its chief operating officer. It also has a publicly stated policy “supporting and welcoming” trade unions.

All chemicals used by Indorama, he added, are not only permitted in Uzbekistan but the company also goes “an extra mile” to follow European Union standards, even though this is unnecessary. It also uses beneficial insects to feed upon cotton pests, reducing its chemical footprint.

“Taking the 2020 cotton crop as the base, we have already reduced our synthetic chemical consumption from 144,000 liters to only 17,000 liters in 2022,” Majumdar said. “That represents a drop of more than 85 percent in Cotton in two years. No other cotton company in Uzbekistan has achieved so much reduction in such a short time—probably nowhere in the world, too.”

He noted that nearly 200 hectares have been given to farmers for “their private reasons” and that the company allows the local community to graze on select fields. The total size of fields allotted to grazing in 2022 was more than 800 hectares.

Regarding the new contracts, Majumdar said that Indorama initiated them to “improve the incomes of families and to reach out to [a] larger section of the population within our farming districts.” It has received an “overwhelming response” to this initiative, he said, and all its newly appointed service contractors are “excited to start their work.” Indorama Agro “strictly follows” all legislative provisions regarding labor practices in Uzbekistan, Majumdar added.

The Uzbek Forum for Human Rights is a frontline partner of the Cotton Campaign, a coalition of retail trade associations, human-rights organizations and investor groups that called off the decade-plus-long global boycott of cotton from Uzbekistan last March after finding no state-sanctioned modern slavery during that year’s cotton harvest. This was a “landmark achievement,” it said, that could reopen Uzbekistan’s textile industry to international markets.

Even so, Uzbekistan isn’t completely devoid of risks, said Lynn Schweisfurth, a consultant for the Uzbek Forum for Human Rights. Many of Indorama Agro’s actions, for instance, are “clear violations” of Uzbek labor law, driving dozens of farmers to file complaints with the administrative court. She and Niyazova have also raised their concerns to the IFC and EBRD, albeit to little avail.

“Of course, the banks always want to give the client, understandably, the space to show that they’re making progress, that they’re improving things,” Schweisfurth said. “But what we’re finding is that the company is actually getting worse. Everybody seems to be investing in Indorama as the showcase cotton company, and from our experience, it’s the worst example they could have come up with.”

Better Cotton says that the Cotton Campaign alerted it to the allegations in January and that it’s in “regular dialogue” with campaigners, other partners in the country and Indorama Agro itself as it “responds to relevant complaints.”

“It is important to note that because there have been historic issues of systemic forced labor in Uzbekistan, our approach there includes enhanced Assurance activities that are geared to the local context,” a spokesperson told Sourcing Journal. “All farms receive additional decent work monitoring visits that focus on extensive worker and community interviews, along with management interviews and documentation reviews.”

Cotton, as a fiber that is vital to the global economy, is “not immune” to environmental and social challenges, the organization said.

“To create positive and lasting change, we engage in challenging contexts with diverse stakeholders on a long-term basis to promote continuous improvement across all seven principles outlined in the [Better Cotton] standard,” the spokesperson added. These include minimizing the harmful impact of crop protection practices, promoting water stewardship, caring for soil health, enhancing biodiversity and promoting decent work.

Any licensed Better Cotton from Uzbekistan, the organization noted previously, will not currently be sold via the mass balance chain of custody, which allows Better Cotton to be substituted or mixed with an equivalent amount of conventional cotton after ginning and spinning.

Still, what is happening at Indorama Agro “exposes the limitations” of focusing reforms solely on eliminating forced labor without also ensuring a broader enabling environment for labor rights, such as freedom of association and collective bargaining, said Allison Gill, forced labor program director at Global Labor Justice-International Labor Rights Forum, the Washington, D.C. workers’ nonprofit that hosts and coordinates the Cotton Campaign. She recently called Uzbek cotton’s removal from the U.S. Department of Labor’s annual list of goods produced by child labor or forced labor not so much a “green light” to buyers but more of a “yellow light.”

“Indorama is a company that has received millions of dollars of investment from international development banks—whose mission is to end poverty and promote sustainable development—as well as training and resources and other resources to pilot the Better Cotton standard system, which includes requirements that producers do not interfere with freedom of association, among other labor standards,” Gill said. “And yet, despite all this, at a time when global brands are closely evaluating Uzbekistan as a possibility for textile sourcing, Indorama is trampling on workers’ rights and doing so with apparent impunity so far.”

The case, she said, is indicative of the need for worker-led, ongoing monitoring and other mechanisms for grievance and remedy. Anything short of that leaves brands vulnerable to serious labor risks in their supply chains.

“If Uzbekistan, the development banks and other international institutions are serious about promoting responsible sourcing from Uzbekistan, they should take action now to hold Indorama to Uzbek law and international labor standards and reverse the decisions that pushed close to 400 farmworkers out of their union and into precarious and exploitative work,” Gill added.