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How to Keep Organic Cotton Prices Stable in a Volatile Market

For many retailing brands and manufacturers that have been purchasing certified organic cotton, the past months have proven extremely challenging. Over many years, most retailers and vendors have become accustomed to a steady flow of certified organic cotton, costing little more than conventional cotton. Most have relied on their vendor or spinner to provide on a transactional basis. This year the demand for organic cotton has peaked, particularly in India, and in the short-term prices have spiked.

But the big question is: how much of that increased price is actually going to the farmers? I dare to say that many smallholder farmers have not proportionally benefitted from this impact. As in all commodities, price is determined by supply and demand and trading benefits are harvested by those who own the cotton, usually further up in the supply chain (and not the farmers).

Five years ago, a group of frontrunner organizations set up the Organic Cotton Accelerator (OCA) with a clear aim to provide a more stable and equitable trading environment for organic cotton farmers. These organizations realized that there was limited reward (and therefore limited incentive) for organic farming and that organic inputs, especially non-GMO seed, were increasingly hard to procure. Since then, OCA has developed a framework that supports farmers in sticking with organic cotton farming by giving them access to a premium, non-GM seeds and on-site capacity building training from trained field staff. In addition, they receive firm commitments from OCA brands and retailers that their organic cotton will be purchased at a fair price at the end of the season. The model is working; organic farmers in OCA’s Farm Programme have on average been earning higher net profits from their cotton than their conventional peers for three years in a row.

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This year the win for the farmers has also highlighted a win for participating brands and retailers. Through the mechanism of pre-season purchase, which rewards the farmer with a premium and covered costs for training and inputs, the participating brands have this year paid significantly less for their organic cotton than their peers who are buying ex-mill.

It’s clear this model can work. And there is a strong demand to scale. As OCA, we are welcoming everyone to the table to accelerate the progress of our programs and increase the impact we know organic cotton can deliver to farming communities and the organic cotton sector as a whole. The question is reader, are you ready to join us?

Ruud Schute leads the implementation of all programmes at the Organic Cotton Accelerator (OCA), serving as its programme director since 2020. In addition to streamlining the project activities across the running programmes in India, he is also stewarding OCA’s expansion to other cotton-growing geographies around the world. As a supply-chain expert, he brings over 25 years of experience to his role, working across Europe and Asia to develop supply-chain teams and processes. Schute started his career in textiles with a role at C&A, immediately after receiving a BSC degree in Fashion and Garment Technology engineering from the Amsterdam Fashion Institute. He worked in C&A’s department of garment and raw material sourcing for six years, specializing in organic cotton sourcing from farm to consumer.