More Info Needed on Farmer Incomes to Measure Progress

From what you know, how unfair are the responsible practices related to cotton? Could you give us an estimate? By how much should the prices be raised, on an average? To what extent does pricing affect the livelihoods of cotton workers/farmers? Clean Clothes Campaign says it would cost brands only 10 cents per T-shirt to ensure that the garment workers that made it had livable wages. Do you have similar estimates for workers at the commodity end of the chain?
Tamar Hoek: There is a lot of research available on the impact of purchasing practices on the RMG sector. But not on the cotton farmers. 

Later this year, Solidaridad will publish a Small Farmer Atlas, in which a lot of farmers have been interviewed about their position, income and access to water and inputs for the production of cotton. We saw that the answers very much differ between country, regions, type of farmer and type of cotton they produce. 

For the pricing research, we dived a bit deeper into the price breakdown of cotton. But it is hard to give a definitive answer. For organic cotton or Fairtrade cotton the answer is different than for BCI (Better Cotton Initiative) cotton or conventional cotton. What we do know is that the price that farmers receive for their cotton is not enough for a living income, which does not allow for the payment of a living wage to the farm workers. 

For textiles, a lot of living wage benchmarks have been developed, offering the opportunity to calculate wage gaps of workers. For cotton this is not the case. I would not be in favour of spending a lot of time to develop benchmarks, as within textiles the emphasis has been for a long time on calculating benchmarks instead of doing something. 

For initiatives working with cotton farmers it would be helpful to collect wage data or information that they have available and publish that on an aggregated level. One of the impact targets of BCI is, for example, to increase the net income of farmers, with hopefully the potential to be more ambitious in the future and to work towards a living income. To be able to measure progress there will need to be more information available on the income of farmers.

Brands keep squeezing suppliers, suppliers keep squeezing mills, mills keep squeezing farmers. And everyone says that they need to maintain a tricky balance. And there are too many organisations, and most are at loggerheads with one another. What's the way out of this mess?
Tamar Hoek: Know your value chain. Know what steps are in between and if you need all of them. Companies need to be more aware of the pricing through their value chain. Where is the most margin added and is that where the lowest wages are being paid? The EU’s forthcoming Corporate Sustainability Due Diligence Directive makes a good start by mandating that brands and retailers mitigate the negative impacts in the production of their products. Companies need to cascade this down the value chain but are in the end responsible for the whole process. For the whole value chain to be more sustainable, all actors need to do their due diligence and mitigate negative impacts. Cascading is not enough though, not if that just means adding requirements for other actors to figure out on their own. To be effective it really needs to be a joint effort. Prices, purchasing practices, living wage and income need to be firm commitments in the legislation. 

Local legislation needs to be established in line with UNGPs and the OECD due diligence guidance, and then properly enforced, to ensure that positive impact comes from producing countries.  

Then, there's the question of certifications and standards, all of which add to the raw material costs. Since brands effectively call the shots in industry, shouldn't they be paying these overhead expenses? Again, does that work at all? It can probably work if there are just single players at different tiers. Reality, of course, is far more complicated. Comments, please.
Tamar Hoek: Yes, in general I agree that brands and retailers should pay for the additional costs of the certification. And within some initiatives they do that, in part. 

There has been a lot of debate on how to take the costs of labour or income out of the price. What often happens is that when the costs of labour are increased, every actor in the value chain increases their price. Meaning that the margin at the end of the chain is even higher than before, and labour costs have just increased a little bit. Unfortunately, we see that a lot of brands don’t even want to pay for the organic cotton in conversion price. The uptake of sustainable cotton is lower than the production. 

We feel that the debate should not focus on certification, but on improving the situation of farmers. And investing in that improvement. 

Brands and retailers need to do more than just purchasing 100% certified cotton. They need to invest more in the cotton farmer directly, but also update their purchasing practices to ensure, for example, that it does not reduce income for farmers. They need to know where the cotton comes from and demand that a living wage and income are received by the producers and workers.

It's extremely difficult for brands, retailers, mills, farmers... to work at an individual level. Do you think associations and governments have a bigger role to play here? What is Solidaridad doing to make things easier for everyone?
Tamar Hoek: There are initiatives that work on improving the situation of farmers, like the Organic Cotton Accelerator, Fairtrade Cotton and BCI. The combined efforts of these initiatives do help to work on a more effective, and wider scale. Only with such collective effort is it possible to work at the farm level. They can and should bring more farmers or farmer voices to the table, to allow them to contribute to the discussion around responsible purchasing practices as equals. 

When we talk about the role of government, we are talking about two things. Firstly, the governments of producing countries should support pricing mechanisms to support a living income. They should also facilitate brands and retailers with connecting with smallholders.  

On the other hand, governments of consuming countries should adopt or enhance due diligence legislation that can lead to a positive impact for smallholder farmers. And making sure that relevant legislations include living wage and income, and responsible purchasing practices. Crucially they need to ensure competition law does not prevent market players from working together, a major barrier to improving pricing practices. 

As for Solidaridad, with the policy influencing work we do, we try to influence policies of companies, MSIs (multi-stakeholder initiatives) and governments. We want companies to commit to more sustainable practices and market uptake. We want governments to enforce legislation that will lead to decent working conditions, living wage and income, fair purchasing practices and proper environmental conditions. And from MSIs we want them to set stricter requirements for their members. 

Actively our role is bringing the different stakeholders together, and making sure everyone has the right information to make the best decisions possible. We facilitate discussion within local cotton industries, bringing relevant stakeholders around the table. With research like the pricing research and later this year the Small Farmer Atlas we initiate debate on what is needed to work towards better livelihoods for farmers. This is something we can speak to directly as we also work with farmers on the ground to support them in making the transition to more sustainable production. This allows us to bring the voices from the South into the global debate.

Could you give us an idea about the living wages for cotton workers in different parts of the world? How much have these changed over the years? Are garment workers better off than cotton workers in any given country?
Tamar Hoek: As I mentioned earlier, there has not been a lot of research on the wages of cotton workers. So it is hard to say if garment workers are better off than cotton workers. Farmers often get a low price for their cotton, which makes it impossible to earn a living income and with that, impossible to pay a living wage. Suppliers often get a low price for the pieces of garment they produce, hindering the payment of living wages to garment workers. But how that compares, I cannot say. From my perspective what we do know is that neither is making enough.