Farm System Crops Baseline Report A Review of Crops Grown in Rotation or as Part of the Organic Cotton Farm System

Transcription

1 Organic Exchange

2 Table of Contents Table of Contents 1. Farm System Crops Program Overview Background Organic Exchange and ICCO Collaboration with PAN Germany/UK Program Approach Introduction Producer Survey Stakeholder Consultation Findings: Producer Survey At A Glance Africa Latin America South Asia Central Asia Middle East USA Summary findings Findings: Stakeholder Consultation Summary findings The way forward Recommendations Program management improvements Recommendations for action Next Steps...34 APPENDIX 1: Organic Cotton Growers surveyed...36 APPENDIX 2: Stakeholder Consultation...37 Organic Exchange 822 Baldridge Street O Donnell, TX 79351, USA

3 1. Farm System Crops Program 1.1 Overview The economic viability of organic cotton farmers in developing countries depends partly on their ability to sell other crops grown on the farm. These crops are grown either in rotation with cotton, intercropped, or as farm border crops, etc. (farm system crops). In addition, economic security is likely to improve if the farmer can engage in related value-added business activities such as processing, pressing, drying, pulping and packaging. Organic cotton farmers in developing countries, with the support and assistance of Organic Exchange and ICCO (the Dutch inter-church organization for development cooperation) are already improving their farm and business activities in terms of cotton growing. However, for both environmental and economic sustainability, organic cotton farmers may need to establish crop and income diversification for long term security. The findings from this study will also feed into Pesticide Action Network s (PAN) Fibre, Food and Beauty for Poverty Reduction project. The overall goals of the Farm System Crops program are to: Support farmer organizations to reduce their dependency on cotton by facilitating crop diversification, business planning, and marketing of their farm system crops. Analyse the major UK, European and US markets to assess the potential for expanding the market for products using cotton farm system crops. Identify brands and retailers who might have an interest in developing an organic farm system crop program. Help facilitate and support linkages to organic farming projects focussing on India, Africa and South America. Ensure food and nutritional security is central to all project activities. A Brief Overview of Organic Exchange s Activities for the First Year of the Program Survey producer groups in the OE Farm Development Program to create an initial inventory of crops grown as part of the farm system. Identify organizations working with farmers on key rotation crops and explore opportunities for collaboration. Undertake market analysis in the major European markets to assess the potential for expanding the market for organic rotation crops. Identify brands and retailers who might have an interest in developing an organic rotation crop program. Analyse the farm system crop information to identify core rotation crops (those produced by multiple farming groups) and high value specialty crops. Determine which crops will be the focus of OE activity. Sometimes you realize it s fatiguing, it s tiring, but when you really move things in Ghana or when you really move things in Mozambique, your containers are moving, and the farmers are satisfied with the premiums they get, then you realize why you re doing it. It s like being on the bench in a stadium of 60,000 and then you have to perform on the field - it s awfully interesting! -Director, Fairmatch (ex ICCO) 3

4 2. Background 2.1 Organic Exchange & ICCO Vision: Building Sustainable Businesses Protecting the environment, reducing poverty and creating sustained economic and community development through the development of committed, transparent and fair value chains from farm to final consumer. Organic Exchange was launched in October 2002 to serve as a catalyst for creating social and environmental benefits through the expansion of organic agriculture. Organic Exchange sought to deliver these benefits by helping companies create transparent, committed, fair and sustainable supply chains for delivering products that meet basic human needs for food, clothing and other essential items. Organic Exchange decided to focus its first efforts on transforming the way that cotton was grown around the world. Conventional cotton farming uses large amounts of chemicals and in many instances, genetically modified seeds, to produce cotton fibre. Many of the detrimental health, economic, social and environmental impacts associated with conventional cotton cultivation can be eliminated as farmers make the transition to organic farming practices. In addition, because of the transparency and identity preservation inherent in organic production, brands and retailers have the ability to bring the organic farmers story to their customers. tens of thousands of farmers. Each year, Organic Exchange engages with approximately 500 companies and helps them connect and build relationships directly or through their supply partners to organic cotton farming projects throughout the world. At the same time, ICCO (the Dutch inter-church organization for development cooperation) has developed a cotton program as a significant component of its International Markets Program. Major elements of the ICCO cotton program include: Understanding the real needs of farmers in the developing world and finding market-based solutions for addressing these needs in a sustainable way. Creating a policy framework which identifies innovative ways to address social and environmental issues for farmers and farm workers (e.g. organic, Fair Trade and Better Cotton) and labourers in the textile processing chain and to help educate consumers about eco-friendly and ethical products (e.g. Fairwear Foundation, Made-By label, Organic Exchange consumer outreach). Supporting organizations including Organic Exchange, Made-By, Fairwear Foundation and the European Working Group that are focused on building committed, transparent, fair and sustainable value chains that improve the lives and livelihoods of farmers in the developing world, and the Better Cotton Initiative which is focused on creating change through the entire cotton sector. The combined efforts of organizations including the Organic Exchange, ICCO and ICCO s partners have helped catalyse tremendous growth in the production and use of organic During the past five years, Organic Exchange has worked cotton. The global market for organic cotton products has closely with influential North American and European brands more than doubled from an estimated $245 million USD and retailers, their business partners and a network of in 2001 to $583 million USD in 2005, and was projected to organic farming projects to develop knowledge, information, grow to nearly $2.6 billion USD by the end of 2008 and $6.8 new business models and tools needed to start and/or billion USD by During the past few years, production of expand their organic programs. Organic Exchange has built Fair Trade cotton started in Africa, India and South America a global network of more than 3500 business organizations and the demand for Fair Trade cotton products continues to and more than 60 organic cotton farming projects involving grow in the Western marketplace. 4

5 2.2 Collaboration with the Pesticide Action Network Fiber, food and beauty for poverty reduction make it move! Pesticide Action Network (PAN) Germany and PAN UK received a EuropeAid grant from the European Commission to advance cotton farm rotation crops and business awareness. One of the priorities for PAN is to raise the awareness of poverty reduction potential of rotation crops in the European market. OE agreed to work closely with PAN on this and contributed to the workshop held by PAN Germany in Hamburg in September The joint project targets European businesses donor organizations and NGOs involved in setting-up organic cotton projects or trade, and consumers. In consultation with these groups and organic cotton projects, the partners will develop trade models bearing the potential to help reduce dependency on cotton for small-scale farmers, and to increase interest among target groups in using these models. 3. Program Approach 3.1 Introduction This report summarizes the research undertaken during the first phase of the Farm System Crops program. The Farm System Crops program has been developed to explore opportunities for organic cotton farmers to improve their livelihoods through the improved marketing of crops grown as part of the organic system. These may be in rotation with the cotton, intercropped, on the periphery or grown as pest management. Geographically, focus has been on India, Africa and South America although Organic Exchange s reach includes farmers in Turkey, Central Asia, and the United States. The first phase of the program has involved two major streams of research. First, finding out what is going on, on 5 the ground a detailed picture of the crops grown within organic cotton farm systems. This involved collecting information via surveys sent to organic cotton project contacts, interviewing farmer associations and/or NGO s coordinating projects, and interviewing Organic Exchange Regional Directors in Africa, India and South America. Secondly, exploring market opportunities (plus barriers, challenges and other issues) by gathering information from retailers, brands, traders, NGOs, financiers, academics and other key stakeholder groups. This work was conducted via interviews, surveys, workshops and multi-stakeholder conference calls.

6 At present there are no existing arrangements for marketing of the crops that are grown in the project area. Products other than cotton are sold in the open market at a lower price as the traders don t treat these products at par with the conventional produce. Lack of awareness among the local consumer about organic and its availability is one of the reasons for this misconception. -Arvind Mills, India 3.2 Producer Survey The survey was two-fold; designed to capture information relating to the types of crops grown on organic cotton farms, and views on the potential for expansion or other market development prospects. The Crop Survey requested information concerning crop roles in the organic system, quantities, grades, existing markets, and how much is kept for household use. Other questions were asked relating to additional processing, organic and/or fair-trade certification and farm improvement progress. The Market Development Assessment asked questions relating to views on increasing crop production, introducing new crops, and value adding potential. Information on business planning, financial management and more commercial orientated feedback was requested here. There was also an attempt to capture an overview of existing markets, household and community circumstances. Within the early stages of the program Organic Exchange discovered overlap with the Pesticide Action Network s success in securing funding to undertake similar activities. OE and PAN (UK and Germany) agreed to collaborate where appropriate and this resulted in a two-day workshop hosted by PAN Germany, in Hamburg. Issues of food/nutritional security, food sovereignty/gender issues and the careful consideration of Organic Exchange s role were central to the task Stakeholder Consultation The other significant stream of research was dedicated to finding out what key players and other stakeholders thought. Stakeholder groups identified included buyers (retailers, brands, intermediaries, traders, processors), NGOs working with producers, international donors and NGOs, consultants, academics, financial services, regulators, and other governmental bodies. Stakeholder consultation was conducted in a variety of ways: surveys, interviews and workshop groups. Surveys requesting comments from organizations concerning markets, food security, value adding, financing, business management and other advisory input were administered. Interviews and conference calls were conducted across the globe. Interviews focused on: Is there a market opportunity here? Where should the focus be? What are the challenges? And what can OE do to best facilitate the market (if appropriate)? The PAN-hosted workshop titled Using crop diversity to reduce dependency on cotton and combat poverty was held in Hamburg in September This was an opportunity to get almost 30 individuals - with vast knowledge, skills and experience together; representing farmer groups, certification bodies, and other NGOs. The information sharing, prominent views and workshop outcomes are taken into consideration as part of this program s stakeholder

7 consultation process. Now food prices are higher, they get good prices for their crops and then they do not keep enough for their own consumption, so they sell and then they are forced to rely on public distribution. -Food/nutritional security. Regional Manager, India, OE 4. Findings: Producer Survey 4.1 At A Glance Out of the 45 surveys sent out 27 responded (approx 60%). The coverage centers around three hubs namely Africa (7 responses), Latin America (8) and South Asia (9). A further 3 responses came from California USA, Turkey and Kyrgyzstan in Central Asia. The responses represented over 50,000 farmers, >15,000 women and 69 different crop varieties. Turkey Kadioglu (9) Kyrgyzstan Bio Service (10) USA Terranova Ranch (13) Mali Mobiom (6) Pakistan Kings Group (8) Nicaragua Coproexnic (7) Senegal ENDA (9) Brazil Peru Esplar (3) Bergman Rivera (2) Oro Blanco (3) Cedepas (2) Tusa (2) Paraguay PNP (4) Prorganica (5) Benin OBEPAB (6) Egypt Sekem (6) Uganda LOFP (4) Tanzania BioRe (4) BioSustain (6) India Agrocel(9) Arvind Mills (9) Chetna (9) Mahima (4) Organic Farms (7) Vasudha (9) Zameen (6) Numbers shown in brackets indicate number of crops reported per project 7

8 At A Glance There were 69 types of farm system crops identified from the surveys, of these the top ten crops were maize, sesame, wheat, mung beans, beans, groundnut, soya, sunflower, sorghum and black gram. When crops were listed according to the region in which they are grown it becomes obvious that, whilst some crops are common across the globe e.g. maize and soya, some are more specific to each country - by and large reflecting local diets. For example in Africa we see a lot of beans, groundnuts and millet, South Asia chickpea, grams, and jower, whilst Latin America has introduced sweet potatoes, tropical fruit and cassava. Note: This product list is limited by the tendency to report cash crops and common rotation crops. We know that other crops/farm products to be found in the system have not been considered significant by the growers and have not been itemized in our survey. We will be exploring this issue further in phase II of the program. 8

9 Sale of farm system crops for Latin America appear to have the most even spread between local, international, and exchange (XC) markets. Africa focuses slightly more on local markets while South Asia sells the majority of its crops to local markets with minimal types of crops channeled (directly) to international markets. The graph below reflects the roles the various crops play in the organic farm system. Rotation crops are the most common. However, intercropping and border cropping is usually also carried out. Latin America, whilst having fewer varieties compared to the other regions (see table on page 12), reported the most complex farm systems. 9

10 Cotton producers in all regions surveyed carry out some kind of processing. This is rather limited in Central Asia to sorting and cleaning. Latin America carries out some cutting and packing. In Africa, processing is varied and includes some cleaning, boiling, pulping, cutting and drying, whilst in South Asia we see primary and further processing focused on drying, threshing and packing. We will encourage more farmers to promote this crops/access to better variety of seeds, assistance in research, putting up processing plants where applicable, assistance in packaging material & marketing. -BioRe, Tanzania 10

11 The top chart highlights that despite almost all crops grown in the organic farm system being organic, the process of certifying these crops is more advanced in some regions. The chart however indicates that certification is in process in all regions that are not currently fully certified. Unfortunately, the question of who owns the certification cannot be answered but would provide an interesting insight. Fair-trade certification is less common although it is interesting to see that there is also progress being made here in Africa, South and Central Asia. Note: For organisations that hold certification, responses included both FLO-cert and Eco-cert. It is very unlikely that farmers located in the West, such as those in the USA, will hold fair trade certification. Further, in terms of FLO (the Fairtrade Labelling Organization) certification criteria, only specific countries, approved by the United Nations, are eligible (from our survey group - this list does not include the US or Turkey). 11

12 This graph provides a visual overview of the quantities of each crop harvested. It is evident that Coproexnic in Nicaragua (cassava and beans) and LOFP in Uganda (sesame) are producing the largest yields. BioRe s sorghum and maize production is also high (over 50,000 qq) Note the quantity of sesame harvested by LOFP is very impressive over 180,000,000kgs (180,000 quintals). This product is Ecocert ie certification covers both organic and fairtrade. 12

13 4.2 Africa Case study - LOFP Sesame. LOFP (Lango Organic Farming Production) in Uganda is made up of 630 members (27,000 individual farmers, 40% of them women). The co-op was set up to produce organic cotton by the Swedish development agency SIDA. Sesame has now become an important source of income. Sesame is considered a women s crop in Uganda, it is mostly women farmers who produce it, and thus it is giving women access to markets. As a crop-rotation side product (to cotton), the export of sesame was promoted. The sesame is passed on to a local business, Shares!, for cleaning, after which it is exported. Through the sesame cleaning at the Shares! factory more value is added in the country of origin, and a higher quality. Therefore a higher price can be obtained. Shares! sells the organic sesame to a number of European food processing companies. At least 40% of produce is kept for home consumption. 13 The graph on the next page shows the harvest quantities of farm system crops (where data has been provided). As evident, LOFP is producing large quantities of sesame and much of this is exported. BioSustain in Tanzania is also exporting sesame. However, generally, most of these rotation and other farm system crops go into the local market and not as organic, or are consumed at home. Before sale, it is common for some basic processing to be carried out, such as cleaning and drying. OBEPAB are currently selling 70,000kg of cashew but not with an organic premium. Organic cashew has been identified as having a high export demand. Mobiom, OBEPAB and LOFP are harvesting shea nut, hot peppers and chilli, respectively. These crops have been identified as having a high value internationally and export demand.

14 The graph on the right gives a tentative picture of how much production is kept in the household. Our African data covers >38,000 farmers (>13,000 women). A significant portion of food crops such as cowpea, groundnut and beans - and oil crops such as sunflower, soya and sesame - are kept back for home consumption. In Africa, the food security issue is very important. Organic cotton farmers contribute to food security in two ways: First, they grow safe and healthy food because they do not use any synthetic chemical. Second, many studies have proved that in terms of food availability during the year, organic farmers families are more secure than others. 14

15 All food crops grown organically beside cotton are sold in the local market. Crops like maize, peanut, cowpea, cassava, millet sorghum, sesames, are sold in the local market. However, for some of them that are not staple food, there is the potential to increase the production for export, in the case of crops like sesames, peanut, soya. -Director, OE, Africa As the table indicates producers generally sell crops into the local market. Feedback from agency stakeholders (see stakeholder consultation later in this report) indicates that improving the local market should be the first route to explore. Export markets (fro producer groups) need to be considered within a balanced strategy. Also, it is important to keep in mind the costs and risks associated with international market development. Responses from producers indicate that the 15

16 local market is indeed important to them. However, they are also interested in expansion and increasing value on the farm before sale. All food crops are sold in the domestic market. The disadvantage is that they are sold at conventional price. The organic value is hardly recognised in the domestic market. -Director, OE, Africa 4.3 Latin America Case study: Coproexnic is a grower-owned agricultural export co-op. The producers work together to sell directly to clients, no middle man is involved, and the farmers control their own contracts. The government s role has been to introduce Nicaraguan farming cooperatives to the idea that they can make their own choices and plans; to the option of having their crops certified as organic (and thus be able to sell them at a higher price); and to making a living wage. From establishing initial contacts with certifying organizations, processing plants, buyers, and shippers, this project has grown over the years. In 2006, Coproexnic exported six containers of organic sesame, one container of organic coffee and 3,000 pounds of organic cashews. 16

17 The graph below illustrates the large quantities harvested by Coproexnic. Harvest yields provided by projects in Peru, Paraguay and Brazil are much smaller. We cannot make too many assumptions here since we do not have a complete set of data (Latin American producers tended to report their yields in kg/ ha). This highlights one of the issues in the survey concerning consistency of information. However, we can say that, again, the majority of farm system crops are going into the local market. sold through cooperatives, weekly markets or community markets. The challenge is to organize these markets to sell organic products and develop the consumers mind to recognize the value of organic products. Farm System Crops Baseline Report -Business Development Manager, OE Diagram: courtesy of A. Travaglini, OE Latin America We are in a project to raise awareness among farmers so that their production is sustainable. We are developing a plan for 2 annual crops (one for sale and another for personal consumption). This project is 7 months, and there is interest among farmers. They are using natural fertilizers, tillage and friendly pest control. There is a lack of market for the low production. To facilitate the regional market is a solution in the short term. -Prorganica, Paraguay 17

18 As the table below shows, some crops are cultivated mainly for home consumption e.g. beans and in some cases maize. Others such as soya, coffee, groundnut, honey, sesame and sunflower are grown as cash crops only. The total number of farmers represented by the Latin American projects is much smaller (than Africa) at around 500. Food security is very important in Latin America. It is a priority for many governments (Brazil, Nicaragua, Paraguay and Peru) - due to the structure of agriculture, the large number of small farmers, the problems of education and poor rural economies, and little investment by governments in sustainable farming systems. The organic cotton farmers, who plant other than cotton plants, contribute mainly in the context of the family. There are a few exceptions when food reaches local markets nearby. -Director, OE, Latin America 18

19 Once again, existing markets tend to be local. With some notable exceptions such as Coproexnic. What is interesting is that almost all projects where data is available are interested in increasing volumes and introducing or upgrading processing activities. An example of innovation is Oro Blanco in Peru who are wanting to introduce indigo / sacha inchi and begin natural dye production. In many cases, farmers depend on a main crop like cotton (central coast and northern Peru), however, the examples of Paraguay are more balanced with other crops like sesame, or in Brazil with other crops of direct consumption. In Nicaragua farmers also have a better balance between cotton and other crops. -Director, OE, Latin America 19

20 4.4 South Asia Note: Although Super Spinning were involved we do not have crop data. We do know they grow red gram, French bean, tapioca, and gingelly (sesame) Case study: Chetna Organic is a co-op involving >7000 farmers. Project Chetna s mission ties well with our FSC Program it is a supply chain initiative with a vision to improve the livelihood options of small farm holding households involved in cotton cultivation through making their farming systems more profitable and more sustainable. This was envisaged through facilitating a democratic participation of the producers in the supply chain. The thrust was on federating farmers into groups and enabling the process of collective marketing complemented with possible value additions to the primary produce. On one hand while the project enhanced the entrepreneurial capacities of the farmers, it also raises awareness among the other stakeholders in the supply chain in the context of social accountability and environmental standards. 20

21 The table shows high yields for many farm system crops grown on projects in India and Pakistan. The variety is extensive and many crops such as chickpea, grams, and spices are much more common here than in other regions probably reflecting the South Asian diet and local market demand. However, with the exception of mung beans, the biggest quantities are in soya production. Guar a drought-resistant legume (used for a variety of food and industrial purposes) is an important intercrop for the Kings Group in Pakistan. 21

22 The table for South Asia clearly shows a majority of crops going into the market. The market is almost always local. However, it is not clear if this is the first part of a longer supply chain that results in crops being exported down the line. Nevertheless, it is evident that projects in South Asia are more likely to be companies and more commercially organized. 22

23 Studies show that farmers will sell as much of their food crops as they can especially if the market is good It is reaching the farmer in a personal education campaign or finding ways to incentivize the farmer to keep what the family needs. Buyers need to provide ways of looking after the farmer. It is a certain degree of education. But because of the fragmented nature of the farm it is not possible because the farmer has no other means of money. The need for money is immediate. If the [organic] buyer doesn t pick it up on time, they sell it to anyone because that is money in the pocket. They have sold organic [at a non-organic price] with all the trouble it takes, because they need the money. -Director, OE, India This table when viewed alongside the graph on page 27 reinforces the channeling of crops into the local market. There is potential to grow crop expansion, value-adding - and the market is large. 23

24 Potential for value addition is enormous in tapioca. We are trying to establish a local starch converting facility for manufacturing organic starch which may have local & export market potential. Currently the tapioca grown is used for industrial products only. Here there is an opportunity to introduce edible varieties and convert the final produce as organic starch which could fetch a higher income to the farmers. This exercise is a value adding opportunity. -Super Spinning 4.5 Central Asia With the aim to build up another value chain for rotation crops these crops were identified as potential crops because from one side they are locally grown crops and fit to the local climatic conditions well and they are good to enrich the soil fertility. From another side these crops have good potential for marketing as there is a demand for them in big quantities. So if the market is guaranteed with long-term contracts for these crops, the potential to grow is big. -Bio Service Case-study: Bio Service is one of two organizations involved with Helvetas BioCotton Project. This project aims to develop and support the production and commodity chain of organic cotton and organic cotton products in both the domestic and international markets and has a purchase guarantee from retailers in Switzerland thus vertically integrating organic cotton producers and sellers. Bio Service are also producing a large range of farm system crops (see left). The majority of these are going into the local market or sold to Turkish traders. Fairtrade status is underway for all BioService crops. 24

25 We do not have total harvest data for Bio Service (this information was provided per ha) However, we can see from the table opposite that the co-operative is selling the largest portion to market but keeping some back for food and livestock consumption. In our project there is definitely a potential to introduce the pulses as new crops as it has a promising market. Local consumption of pulses is not big, therefore the production is not regular. So pulses are considered to be new crops. Pulses have a distinguished market prospect because there is a market for them in Europe (high consumed) and additionally they are easy transportable and storable. For example, currently a lot of conventional pulses are bought by the local Turkish traders and exported to Turkey and further to Europe.. -Bio Service Introduction of cleaning/ processing, packaging facilities (sorting the grains, cleaning from dirt/hard stones/dust, blowing) and a peeling machine for peanuts could help with value adding. Since the project aims at setting up the value chain for these crops the project is ready to invest in purchase of such equipment in Bio Service (on value-adding) The table below shows that Bio Service provide to a local (and Turkish) market. Opportunities to explore increasing production, value adding and new markets are evident for around 50% of the current crop varieties. 25

26 If the business financing is in place for the above mentioned investment into the cleaning/packaging machines and into the training of farmers on best production techniques, it can be a great benefit for promotion of these crops among the farmers for significant volumes and the establishment of long term value chains. -Bio Service (on financing) We see the European/UK market as potential for marketing of these crops. The local/ regional market is a better fit for the marketing of vegetables, as it is difficult to supply the fresh vegetables to the external market because of low storageability and also because of existing local demand for these crops. Although, in Kyrgyzstan the public awareness on organic products is low and the local consumers are not ready to pay premium for organic quality, still the plans are here to promote organic products among the local consumers. -Bio Service (commenting on beans, peanuts and chickpeas) 4.6 Middle East Most of our organic growers have small lands from which they cannot grow quantities worth investing in for further processing. Our farmers are contracted by us for organic agricultural production. Some larger farmers do organic agriculture on their own account. They are producing what they can sell to traders or processors. However, for rotation crops they may face lower returns which they are aware of. If this issue can be solved, their returns will be higher. -Director, Kadioglu/ Egedeniz Unfortunately, we do not have extensive data for Kadioglu. The survey was piloted here during a farm visit by the Director of the Farm Team. There are approximately 171 contracted growers covering more than 1600 hectares. We know that a little of some crops is kept for household consumption and that wheat and corn/maize goes to the mill (as uncertified organic). Tomatoes go to either the local or export market bulk packed or in jars. Okra is sold fresh and pinenuts are dried. Kadioglu have expressed some interest in further processing of tomatoes needs business plan and research into establishing processing Lavender could also be an interesting herb to explore on the market. 26

27 Kadioglu has contracts with farmers for organically grown agricultural products. This company buys all organic products from these farmers which are cotton, cereals (mainly wheat and corn), tomatoes and dried fruits. In Izmir / Aydin region in Turkey, growers do not have issues on food security. They can grow or buy their needs locally, even luxury food items can be bought if they want. Farmers are aware of their families nutritional requirements and provide this with no problem. Rotation crops are always cash crops which are usually cereals and tomatoes with some other leguminous vegetables. There is not a big organic market for rotation crops. Wheat and tomatoes can be sold as organic when there is demand. Otherwise all other crops are sold as conventional easily as there is always need for these crops. -Director, Kadioglu/Egedeniz 4.7 USA Terranova Ranch, California, is run by Don Cameron - 5,700 acres in the Central San Joaquin Valley in addition to the approximately 1,200 acres that he custom farms for other landowners. Terranova Ranch produces numerous crops grown with conventional, biotech and organic practices. It includes 628 acres of organic or transitional ground certified by California Certified Organic Farmers (CCOF). Teranova s organic crops include (as well as cotton) tomatoes, walnuts, oat seed, wheat, alfalfa hay, oat hay, spinach, herbs such as sweet basil, cilantro, onions, garlic; as well as organic seed crops of dill, basil, lemon basil, gourds, broccoli, and various lettuces. We are adding drip irrigation to annual crops to reduce water costs and improve weed control thereby reducing labour requirements and costs -Terranova 27

28 In a country where food security is not a concern it is not surprising to see that all Terranova s crops are sold either in the US or internationally. In terms, of quantities; tomatoes are by far the biggest harvest. Note, Terranova produce a large range of products at smaller volume such as herbs and seeds. Unlike the focus on legumes and grains as in other regions this project s crop choice perhaps reflects the demand for boutique organics in the US. Terranova express some interest in expansion of tomatoes, alfafa and sudan chard seed and an interest in additional garlic processing. We now have better opportunities and leverage in obtaining prices for our products with increased demand. We are always looking for new, profitable crops to grow. -Terranova 28

29 4.8 Producer Summary Findings Farm System Crops Baseline Report Producers gave us their priorities for the next five years the top 7 ambitions reported were: Increase product into the local market Improve farming techniques; fertilizer, water and understanding of organic systems Increase diversification Look for value-adding opportunities (sorting, cleaning, drying, pulping) Increase farmer business skills Increase farmer-owned organic certifications Acquire financing or low-interest loans The information gathered reveals varying degrees of farm complexity and a range of crops produced on organic cotton farms. It s no surprise that rotation crops such as legumes, pulses, soya, nuts, sesame, sunflower and grains are the most prolific. There is however evidence of tropical and exotic fruit (such as bissap a hibiscus flower for juice or brewed for tea grown in Senegal), oils, spices, herbs and cultivation of other high-value crops. A small number of projects produce an extensive range of vegetables, vegetable seeds, herbs and spices eg Terra Nova Ranch in California and Sekem in Egypt. In all cases there are some established sales either locally, regionally or for export and some produce exchange within communities. Concerns for the needs of local communities are high priorities for some such as Koussanar in Senegal. When asked Do you have ideas of how you would like to make further improvements over the next five years? Their answer was Reinforcement of diversification, focus more on peanut and millet for local market. Most projects can report improvements in the way they are farming but expressed interest in further investment - either in expanding the production of their existing crops, or introducing new crops (although the latter was less common and often on the condition that market opportunities for existing production were satisfied). When asked Is there the potential for introducing a new crop/product to the farm? Mahima Organic, India replied This contains a great risk of failure of the crop, as in that case it becomes extremely difficult to pursue the farmers. We have seen this when we introduce new seed to the farmers which gets failed. Many indicated a move towards, or further investment in, fair-trade recognition. For example, BioService, Kyrgyzstan are planning to certify almost all their farm system crops this year. 29

30 In the 5 years has prospered in the field in the economy of rural families, achieve better nutrition, education and health, better material conditions in housing and environmental conditions required for compliance organic production, as well as profits in sales of all these items. -Coproexnic, Nicuagua. There is also much interest in finding ways to add value at the farm either by improving existing infrastructure such as product cleaning facilities or value adding such as milling and packaging. Potential for value addition is enormous in tapioca. We are trying to establish a local starch converting facility for manufacturing organic starch which may have local & export market potential. We may initiate work on this aspect during Kharif Super Spinning, India. Some farmers indicated concerns in terms of market security and buyer relations. Support and assistance are reported to be required for farm development and business skills-building including negotiation, leadership, training and ways of transferring ownership to farmers. Training the farmers to develop leadership qualities, marketing skills for collective bargaining and educating them to strengthen their farmer organizations to execute their plans and internal control systems so that over a period of time they become independent. And alongside to the training of farmers and strengthening their associations, creating the producer company with tangible assets which can process and trade multiple agro-commodities. AOFG Zameen, India (4,500 farmers, organized independent farmer families formed into a cooperation association). 5. Findings: Stakeholder Consultation Stakeholder consultation was conducted in a variety of ways: surveys, interviews and workshop groups. Surveys requested comments from organizations on: markets food security value adding financing business management and other advisory input Interviews and conference calls were conducted across the globe. Interviews focused on: Is there a market opportunity here? Where should the focus be? What are the challenges? And what can OE do to best facilitate the market (if appropriate)? The PAN-hosted workshop titled Using crop diversity to reduce dependency on cotton and combat poverty was held in Hamburg in September Almost 30 individuals attended representing farmer groups, certification bodies, and other NGOs. Their views are taken into consideration as part of this program s stakeholder consultation. Some of the ways that chains can be organized, with fewer intermediaries, with a closer connection between buyer and seller, I think that s an aspect of modern food systems that can be beneficial, because many of these traditional markets have reproduced poverty, they haven t been that fantastic despite what some NGOs say. -Corporate investment in new economies. Head, Sustainable Markets, IIED 30

31 5.1 Stakeholder Summary Findings The top 10 stakeholder issues are: 1. Product quality 2. Quantity (logistics and economies of scale) 3. Need for consistency and reliability in supply 4. Supply chain logistics (e.g. transport, packaging) 5. Food safety regulations - HACCP (hazard assessment of critical control points) 6. Risk management and risk sharing 7. Financial management and business planning 8. Volatility of (organic) markets 9. Traceability compliance 10. Good post-harvest handling A number of ethical issues and topics for debate emerged including: 1. Food versus cash crops 2. Local versus export markets 3. Food miles versus other issues of sustainability 4. The impact of HIV/AIDS especially in East and South Africa These have not been discussed in detail in this report but will be kept within the program s field of view and must be taken into consideration during any pilot project decision-making activities. The top 3 emerging issues for consideration are: Trust between suppliers and buyers Sustainability long-term success, and the importance of private sector involvement Partnerships including financial services, and other NGOs. Working together, not in isolation. Stakeholder consultation also highlighted the following points for consideration: Food security and nutritional security Markets Sustainability 6. The Way Forward Consultation during Phase 1 of this Program highlighted a number of recurring themes. These are summarized below. Think - and act - locally Organic farm systems are in the main healthy, safe and nutritional. Farmer and family food and nutritional security in a time of a food crisis must be a priority. Regional market opportunities should be explored in many cases farm system crops reflect cultural/typical local diets (and add nutritional value to local diets). 31

32 Local and community wellbeing may include contribution/ improvements to existing organic markets we should build on what is already there. Farmers (and other stakeholders) expressed a need to prioritize local market development. We should restrain the urge to jump into export markets which hold a much greater risk and not necessarily a better return. Export markets must be considered within an integrated market strategy. Consider emerging economies Emerging economies (eg China, Thailand, Sth Africa) interesting option. Increased demand for quality but perhaps not yet as many regulations and restrictions as western markets. Export markets can work as part of an integrated approach Export markets with organic and fairtrade premiums tapping into consumer demand for specialized food, health and beauty products such as bissap/hibiscus, essential oils, exotic chillies. Business development needs to reflect social and environmental priorities Community development, improved health and wellbeing locally whilst contributing to sophisticated and fair value chains as part of an integrated strategy. 7. Recommendations Recommendations have been grouped into (1) FSC program management activities and (2) recommendations for action which will result in impact. The recommendations for program management concern maintaining and improving the framework of the program. The second set of recommendations focus in on program action and offer options for how we can best make a positive impact. 7.1 Program management improvements i: Improve Crop Survey Methodology and Collection OE must continue to build on current information gathering systems and improve accuracy. Post-survey feedback has identified some key improvements that could easily be made to improve interpretation, likelihood of completion, and general value of survey data. Improvement to the methodology would also include integrating the collection of data with other information collection windows such as fiber data for the Fiber Report. As part of this management area, a system for reviewing and updating crop data on a regular basis should be implemented. A small data report could be produced annually or, perhaps preferably, this information could be integrated into the Fiber Report. ii: Link Farm System Crops to Cotton Traceability Program - Historic Futures Feedback suggests that integrating farm system crops into a string traceability (track and trace system) should be a long term goal. Stakeholders believe it is important to build relationships first, make the links in a personal way and establish supply chain partnerships. However, string traceability is acknowledged as a valuable tool for communicating evidence of product availability, certifications, farmer identification, product origins and other characteristic information that will facilitate supply chain management, add value to the product and tell a story to the consumer. So the human links and the technological solution should run side by side for a time. 32 Linking growers to the market

33 ii: Link Farm System Crops to Cotton Traceability Program continued One of OE s primary strategic goals is to have a marketplace for farmers, retailers and brands to put very simply - communicate supply and demand. We are working with Historic-Futures on product Track and Trace software. Basic information such as product availability, quality and quantities etc will be shared online. Communications will also include the opportunity to personalise data with farmer profiles, stories and pictures. This will be consistent with the organic cotton String Traceability online activities. To begin with, we plan to input crops and other products cultivated on organic cotton farms and generally raise awareness of this budding market. It is hoped that this information will integrate well with the cotton data and other information to be held and communicated in the system such as key performance indicators. iii: Integration with other OE Farm Development program initiatives The OE Farm Team believes the overlaps between the various Farm Development programs (and the progress made within them) should be beneficial. Building on each program s progress and establishing permanency through integration are key areas of leverage across the organization e.g. the advances made on Key Performance Indicators for the economic, environmental and social impact of organic cotton growing, understanding fair returns via a membership Code of Conduct, and orchestrating a financial services advisory hub will benefit the FSC program and the FSC research will feed into these initiatives in return. I think one of the biggest weaknesses of organic businesses has been to focus on a crop. It s a farming system and I think diversification is what it s all about, so you are looking at the whole basket of the farming system and not just one crop. I find organic is quite high risk for farmers, there s a volatility there, If farmers can t get a reasonable income across a range of products, or share the risk, I think it s quite a difficult area. -A buyer s perspective on organic. European Director, Olam International 33

34 iv: Stakeholder Consultation OE should continue to build and nurture its relationships with key stakeholder groups. At this stage, stakeholder consultation should be kept wide and inclusive; ensuring a broad range of expertise is captured. Consultation can be carried out on an as-needs basis and information should flow both ways ie FSC program information must be fed back to key stakeholders (as well as asking for their contribution to the program). Feedback suggests that formalizing an Advisory Group at this early stage is not recommended. A Stakeholder Forum should be established, a wider and looser collection than the Advisory Group. This can be used to recruit for the Advisory Group and gives the advantage of the stakeholders feeling connected to the FSC program without too much effort on either side. 7.2 Recommendations for action If we use all the information collected so far how can we best make a positive impact on the livelihoods of organic cotton producers in developing countries? Below are a number of pilot project ideas under consideration. Feasibility studies must cover the ability to roll-out, scale up or replicate pilot projects. These pilot suggestions are not presented in any particular order of priority. Pilot 1: Facilitating the link of high-value crops to the (export) market For example, organic sesame, cashew and other nut-oils are experiencing demand in the marketplace. It is possible that some of these crops are reaching up to three times the price of organic cotton (Organic Exchange research). FSC, OE Regional Directors and the Business Development Manager should follow up, identifying sources and producing proposals. Pilot 2: Linking farmer group(s) to a Corporate Corporate Social Responsibility (CSR) is becoming a powerful tool for some global companies behaving differently ; acknowledging the impact they have on society, and mitigating their reputational risk. Staff and consumer interest in a company s values is proving a powerful motivator for CSR. Plus the increasing consumer interest in organic and fair-trade products, sourcing origins and product traceability is all contributing to closer ties within the supply chain. The OE FSC team should explore corporate willingness to be twinned with a producer group. The story has to be very clear and passionate around everything from how workers are treated - the social justice element - through to the organic side of things - how it s grown and the environmental impact - and if that story is so strong and it s global then people will demand the cotton from Uganda or wherever. But until you ve got the story articulated, I wouldn t suggest that farmers add the next peg under this, because there s a bigger risk of failure. You can t add the value-added until you ve made your resource story the best on the planet. -Story of origins. CEO, Suzuki Foundation (ex CEO Mountain Equipment Co-op) Pilot 3: Organic Brokering Building a database and networking operation/hub within each OE focus region to start linking growers of organic products with buyers of organic products (pilot in one country initially). This would focus on ensuring the organic premium is paid, identifying the obstacles and generally facilitating market development. Lessons on organic brokering can be learned from other organizations attempting to link producers with the buyers, for example, Helvatas and FairMatch. OE FSC should start by identifying a program partner and scoping the IT requirements of such a database. 34

35 Pilot 4: Collaboration with doubly-specialized intermediaries Collaborating with intermediaries that are both business-oriented and development-motivated. A number of organizations with expertise in both business and development have expressed an interest in working on an organic transition program to build supply to meet the increasing demand shown for organic products. OE FSC should follow up this interest and work along side the relevant OE Regional Director. Pilot 5: Value adding for (domestic) markets We need to ask farmer groups if they have looked at what value they can add to their crops rather than just looking for a market for the crop itself. This would involve working with both farmers and buyers to identify opportunities to boost local economies. This project could be carried out in collaboration with a financial service provider and/or specialist in low-tech implementation. Pilot 6: Knowledge transfer/sharing exchange program to boost business planning Learning from other, successful, organizations that either started small or rely on good relationships with their producers/ suppliers could only benefit the organic cotton farmers we partner. An exchange program would involve identifying an organization/business that has been successful in promoting, marketing, negotiating and generally commercially operating - and creating the opportunity for a sabbatical either by producer representative going into the successful organization to learn from them or a representative of the organization going to work for a while with a farmer based organization in need of business skills. An OE education/exchange program would be a very effective project, transferable from region to region. OE FSC should start with organizations it already has close relationships with, and then branch out. External challenges are the willingness of their current intermediaries to see [farmers] engage in marketing activities directly, and then there s the willingness of buyers to take a risk on trading with farmers. -Farmer autonomy. Director Farm Team, OE Training the farmers to develop leadership qualities, marketing skills for collective bargaining and educating them to strengthen their farmer organizations to execute their plans and internal control systems so that over a period of time they become independent. Along side the training of farmers and strengthening their associations, creating the producer company with tangible assets which can process and trade multiple agro-commodities. -Zameen, India 8. Next Steps The next phase of the Farm Systems Crop program (year 2) will focus on: Continuing and improving the farm data collection, and thus the data base of rotation and other crops grown in conjunction with cotton. This will form the foundation of the next annual FSC report and the beginnings of a comprehensive crop database in collaboration with Historic Futures. 35

36 Taking forward a number of the recommendations for pilot projects (as outlined earlier). Initially feasibility studies including stakeholder consultation will help prioritize the projects and partners to work with to get the best results. As a result of the feasibility ground work it is likely that OE will take forward three of the six proposals presented in this report. The fundamental strength of the project partnerships, ease of replication and project roll-out, and long-term project self-sufficiency will be essential success factors in the pilot initiatives. In today s economic climate, community benefits in terms of alleviating poverty will be even more central to the ambitions of this OE/ICCO program. As members and stakeholders of Organic Exchange we openly welcome your feedback on this report and would be delighted to consider any propositions you might like to make in relation to partnering us on any of the pilot projects we have put forward. Please contact Liesl Truscott at liesl@organicexchange.org OE wish to acknowledge and thank the following organizations for allowing us to use their photos in this report: Helvatas: pgs 8, 9, 44 Coproexnic: pg 21 Chetna Organic: pg 25 The remaining photos were provided by Simon Ferrigno of OE, the OE picture bank or sourced online. 36

37 Appendix 1: Organic Cotton Growers Surveyed Farm System Crops Baseline Report Project Survey respondent Web address Logos Coproexnic Raul Martin Machin (Gerente General) Bergman Rivera Orlando Rivera (Manager) Oro Blanco Hugo Cárdenas and Víctor Perez Cedepas Jorge Cespedes (Manager) Tusa Raul Gerbolini PNP James Vreeland and Miguel Cervantes Alejandro Pozzi and Ing Felipe Lopez Proorganica (technical/ agronomist) Esplar ENDA Mobiom OBEPAB Sekem Pedro Jorge B. F. Lima and Manuel Siqueira de Melo (President of ADEC) Mariam Sow and John Joerg and Malick NDIAYE Siaka Doumbia and Sidi N'Guiro (Director) Simplice Davo VODOUHE and Delphine BODJRENOU Christina Boecker and Ahmed Rashad (Production Manager) Kadioglu Aydin UNSAL (Director) LOFP LAVAN BioRe Niranjan Pattni and Remen Nyange (Production Manager) BioSustain Dr. Riyaz Haider and Mr. Duncan Omari (Production Manager) BioService Nasipgul Sharapova and Jyldyz Abdyllaeva (Executive Director and Marketing Specialist) Kings Group M.Usman.Khan and Shahid Iqbal (Project Manager) Agrocel Mr. Himanshu Baghel and Mr. Gordhanbhai & Mr. Chaman Patel Arvind Mills Chetna Mahima Organic Farms Mahesh Ramakrishanan and Pramod Awatade (Project Manager) Arun Chandra A and Suleman Khan (M&E Officer) Rohit Doshi and Pawan Kushwah (coordinator) Ashish Shinde and Ashish Shinde (Project Manager) Vashudha Mr.Om Anand Sharma Mr. Gijs Spoor and Mr. Dileep Kumar Zameen (Mgr Certification and QA)

38 Appendix 1: Organic Cotton Growers Surveyed Farm System Crops Baseline Report Company/ Organisation Interviewee / survey respondent Web address AK Organic Head, Organic Production Bart Spices Chairman Community Foods Sales and Supplier Communications Mgr Fairmatch Director Innocent Drinks Procurement, Trade Communications Mgr Kadioglu/Egedeniz Director Marks & Spencers CSR Manager Neal's Yard Remedies Head of Sustainability Olam International CSR Manager Root Capital Director of Strategy & Innovation Sainsbury's Company Agronomist, Policy Soma Organics Supply Chain Advisor Spiezia Organics Director The Body Shop Head of Sustainable Development Tropical Wholefoods UK (fairtradmarketing Director Whole Earth / Kallo Foods Supply Chain Manager Yes! Sales & Marketing FLO Standards Unit Manager Grolink Project Manager Cotton Project Coordinator International Programmes, Food & Farming Pesticides Initiative Programme Policy and Capacity Building IFOAM Africa Office Coordinator PAN Germany Project Coordinator PAN UK International Project Officer homepage Soil Association Standards Researcher Solidaridad Fashion Programme Economic Development and Fairtrade Advisor (EPOPA) Agro Eco Country Manager Fairtrade Foundation Policy Advisor, Commercial Team Helvetas Organic & Fairtrade Competence Historic Futures Director Track and Trace Manager ICCO Programme Coordinator, Asia Programme Coordinator, Africa IIED Head, Sustainable Markets Group OE Programme Co-ordinator Director, Farm Development Programme Regional Director, Africa Regional Director, India Agronomist, Sth & Central Asia Regional Business Developer, Sth America Practical Action Senior Policy Advisor Regoverning Markets Consultant and Professor Suzuki Foundation CEO/Ex CEO of MEC Canada Senior Director of Marketing and Technoserve Corporate Partnerships Yes 38