Ethicus Promoting Inclusive Growth

Transcription

1 03 Ethicus Promoting Inclusive Growth Future Shapers A Decade of Innovation in Textile Sustainability ( ) India's first ethical fashion brand... FROM FARM TO FASHION Ethicus is a distinctive Indian brand with a strong sustainability ethos selling fine handloom organic cotton products to the local and international markets. Appachi Cotton, the company that owns the Ethicus brand, started out as a cotton ginning & trading firm. The company has a unique model that connects farmers, ginners, spinners, artisans and finally consumers. Ethicus s philosophy is to promote inclusive growth which protects the environment, revives the livelihoods of impoverished farmers as well as the declining heritage of handloom weaving, and leaves the next generations with a prosperous future. Over the coming years, Ethicus is committed to maintaining and strengthening its status as the first Indian ethical fashion brand which not only has a farm to fashion connection, but is also inherently sustainable. p 1

2 In this current world of greed and exploitation, it gives us satisfaction to operate ethically and fairly. People globally are craving change: the way governments run countries and companies conduct businesses as well as in our own personal lifestyles. Considering these circumstances, we would be extremly happy and grateful, if our business model is considered a role model for others to emulate. Mani Chinnaswamy, Managing Partner Appachi Cotton & Ethicus p 3

3 Location: Pollachi, Southern India Type of Business Handloom, knit fashions and home products Turnover: USD $1.0 Million/annum Number of Employees: 95 in total (garmenting unit (45) and handloom weaving unit (50)) Began selling organic cotton handloom products In 2009 OC Value Chain Partners: Savayava Krishikara Sangha (SKS) farmer group Sustainability Collection: Specialists in fine organic cotton handloom products, such as saris, stoles, scarves, bed and table linens, yoga mats, fine jersey knitted scarves & baby knits Certifications: OE 100, IMO, GOTS Targets: Grow the business to enable working with more farmers and weavers Future Ambitions: Maintain and strengthen the status of being the first Indian ethical fashion brand with a farm to fashion connection Recent Recognition: Runner up Best Start Up award by FICCI Agri & Food 360 Awards, 2011 (all award winners were shortlisted by Ernst & Young) p 3

4 Key Success Factors: Able to exert influence along the value chain: from farm to fashion Promotes inclusive growth Pioneered Integrated Cotton Contract Farming (ICCF) Created the Appachi Eco-Logic project which provides the company with a sourcing policy for organic cotton Establishes long-term, trusted relationships with farmer groups Proactively revives India s weaving heritage Backs up sustainability claims through certification: IMO, OE 100 and GOTS Offers ethical products in India a big and growing market Acts an ambassador for raising awareness on sustainability issues across India In the Beginning p 4 The brand Ethicus a name coined out of the two words Ethics and Us was born in Mani Chinnaswamy, a social entrepreneur, and his wife Vijayalakshmi Nachiar, a textile graduate, established the brand as something that would connect them to the end-customer who purchases their products. Cotton production is something that runs in their blood and has so for generations. The foundation for their operation was laid by Mani s grandfather who started a cotton ginning business in 1946, today called Appachi Cotton. Over the decades, a strong ethos has guided the family business, focusing on solid and trusted relationships with the farmers. Mani, an MBA graduate from the University of Philadelphia, is the 3rd generation owner of Appachi Cotton. Working in a sector that saw high rates of suicides by Indian cotton farmers in the nineties, he was determined to do things differently. For him, having a real connection to the growers and their environment, even more so than his grandfather and father before him, is of essence.

5 The Journey So Far... Working Along The Value Chain The first Indian spinner-ginner forward contract In his early years running Appachi, Mani continued the tradition of buying, ginning and selling cotton. However, 1999 marked a major shift in the way he ran his business. A well established textile mill based in Coimbatore, Southern Indian, entered into an agreement with Appachi Cotton detailing the specific cotton requirements as well as the obligations to be fulfilled by both parties. Prior to this agreement, mills often let Appachi down by not meeting their obligations. This was the first time that an industry agreement with legally binding clauses for both spinner and ginner/cotton trader was signed in India a contract which secured Appachi Cotton payment for its cotton through a buying back obligation on the part of the mill. Pioneering cotton contract farming Having secured a forward contract with a spinning mill, a logical next step would have been to tie up the supply end with farmers. This however was a challenge as farmers tend to grow and sell cotton on their own which can make it difficult for traders to secure reliable volumes of cotton of the desired quality. This changed in 2002 when Appachi, inspired by the co-operative societal system practiced by Tibetan monks growing agricultural crops in neighbouring Karnataka, developed a model of Integrated Cotton Contract Farming (ICCF). This system created a win-win situation: Appachi secured its cotton supply whereas the farmers benefited from a non-binding, openended purchase agreement, technical support, new technology and access to affordable loans to invest in their farms. Appachi pioneered this first ICCF model for cotton allowing farmers to reduce their input costs and increase their productivity leading to higher take-home incomes for farmers. p 5

6 Moving towards organic the Appachi Eco-Logic project 2006 was a challenging year for the cotton business. These and other setbacks experienced by the family (the Chinnaswamy family had invested heavily in vanilla farming and the beans were lost just prior to harvesting due to a fungal infection), sparked their decision to shift to more sustainable practices. Appachi at the time generated a significant turnover of close to US$ 10mil. Despite this, Mani was determined to let go of his conventional cotton business and re-position the company. These developments also coincided with the increasing pressure of genetically modified (GMO) cotton that most of Appachi s farmers had shifted to. Informed by their earlier experience with the ICCF model, Appachi formed an alliance with a group of farmers known as Savayava Krishikara Sangha (SKS) to source their organic cotton. It was the launch of the Appachi Eco-Logic project. This project supports participating farmers to convert to organic though Non Pesticide Management (integrating pest-control techniques which do not rely on pesticides), organic production technologies, as well as collective marketing and certification. PHOTO: Appachi Eco-Logic Project. PHOTO: Mani with Mrs. Kariappa, a SKS farmer. Reviving the handloom weaving heritage The Eco-Logic project supplied Appachi with an extra long cotton staple of high quality. The Indian market however was still in an embryonic stage and unaware of the value of this product. Appachi ended up stockpiling the cotton for two years not knowing what to do with it. Then in 2008 Mani joined forces with his wife Vijayalakshmi and together they decided to convert the cotton into yarn (his cousin who runs a GOTS certified spinning mill helped with this process) with the intention of producing organic cotton handloom fabrics. Initially they explored collaboration opportunities with other institutes, but soon realised that depending on external sources is not the most efficient way forward. The solution was just around the corner the Pollachi region itself is home to thousands of skilled handloom weavers. (A handloom is a manually operated device used to weave cloth.) The couple bought 22 old jacquard handlooms, repaired them and set those up within their own premises. With the help of designers from Mumbai, the couple created new designs and textures catering to the demands of customers for a higher-end stylish handloom product.

7 Value Chain Partners... Creating Trusted Partnerships In 2006, Appachi formed an alliance with a group of farmers called Savayava Krishikara Sangha (SKS) based in the eco-sensitive environment of the Kabini region. Over the years, SKS became more structured which enabled them to certify their organic cotton. Appachi, in turn, provided marketing support and inputs for SKS (such as non-gmo cotton seed) as well as an undertaking to buy their cotton using a transparent pricing model and to share 50% of the certification costs. Appachi also granted SKS a premium price during the transition period up until 2009 when the cotton was first certified. That way, the company demonstrated their commitment to the farmers. They even continued to pay premium prices of up to 10% (most others only paid 2-3%) in the 2010 and 2011 buying seasons when the market was suffering severely. Today, there are on average 60 to 120 SKS farmers each year growing organic cotton for Appachi. Although the farmers can sell the cotton to any trader offering them the best price, farmers prefer to sell to Appachi which reflects their trust in the company. Appachi builds on its SKS experience to inform and explore new alliances with farmers which will enable the company to grow further. In 2010/11, Appachi sourced a total of 70 metric tonnes of organic cotton. Mutual Trust & Fairness are the two key components that sustain our association with Appachi Cotton. Appachi has been with us, shoulder to shoulder, throughout our sustainability journey since our inception. Our relationship with them is emotionally bonded and hence has the endurance to survive and expand in the future. Anand, Founder Secretary, Savayava Krishikara Sangha p 7

8 Making a Difference Indian cotton farming is characterised by a large number of impoverished farmers with very small landholdings (only one hectare or less). These small entities are often not eligible for institutional based financing which means that farmers cannot get the bank loans essential for investment in their farms. This has forced many farmers into dependency on private money lenders. Appachi pioneered the Integrated Cotton Contract Farming (ICCF) model a system that supported these resource poor smallholders by forming them into groups, providing them with critical linkages with seed producers and financial institutions, supporting them with marketing and assuring them of buy back, while allowing the farmer freedom to sell at higher prices if the opportunity arose. Like many indebted cotton farmers, most Indian weavers are also tied up to master weavers and have to work on a daily wage basis. This means that the master weaver gives them an advance and records every garment the weaver returns, creating a vicious cycle of dependency for the weaver. As demand for Ethicus products grows over the next few years, Mani plans to replicate what he has done for his farmers. He envisages adopting villages where artisans live and organising them into weaver cooperatives giving them the firm commitment to buy back all the hand woven textiles that they make for Ethicus. Advocacy and Leadership Mani and Vijayalakshmi, owners of Appachi Cotton and its in-house brand Ethicus, are pioneers in terms of giving farmers and weavers an identity and appreciating their hard work. Farming as well as weaving is no longer a desirable occupation in India. Neither weavers nor farmers want their next generation to continue with this traditional profession. The company tries to address this through hangtags on Appachi Cotton and Ethicus products promoting skills and talent and highlighting the effort (e.g. time it took to produce a garment). Another strategy to maintain the dying art of traditional textiles is to offer the children of the young weavers free quality education by running a community college. The intention is to spark the pupils interest in pursuing further studies in textile technology or design, continuing the tradition of weaving as a career and passing the message back to the villages where they come from encouraging others to follow. Ethicus is an ambassador for the traditional handicraft sector that India is well known for. The country is also the largest producer of organic cotton which Appachi promotes. With India becoming a growing market for consumer goods, both Appachi and Ethicus s efforts ensure that all the players along the textile value chain can benefit from this growth. This is very much in line with the company s inclusive growth philosophy. p 8

9 Ethicus is not just about the fabric, it is not just about organic cotton, it is about a new kind of lifestyle. In my work, I ve been focusing on socially and environmentally conscious designs. As such, Ethicus was the ideal company to collaborate with. Rahul Mishra, Indian Fashion Designer Telling the Story The most important way of conveying the sustainability message is by attaching hangtags to their products which include information about the farmer or weaver (including picture, name and production details) and which allows the consumer to connect with the producers and their history. Mani and Vijayalakshmi have also shared their story extensively in lectures at fashion technology institutes and at major textile exhibitions in India. Other channels that support brand publicity are the national and international press (online and print magazines and TV channels) that have picked up the Appachi Cotton / Ethicus story. With no budget for advertising, this public interest has helped to develop the brand further. The couple has been the sole brand ambassador over the last years, and Mani believes that almost 90% of business enquiries come from word of mouth publicity. Another initiative that the company launched is the Cotton Trail. This is an opportunity for interested customers and stakeholders to see the operations in action. Participants can meet with farmers and discuss firsthand their livelihood issues. They can also engage with the handloom weavers, see the design studio or visit the school, and experience firsthand the sustainability policies adopted by the business. The Appachi Cotton / Ethicus story is beautiful because it can be told, heard, seen and felt. The Cotton Trail is also a unique opportunity for customers to trace the product all the way back to the farmers enabling them to personally verify any sustainability claims made. p 9

10 Without understanding the cotton industry and by that we mean farming business structures and farm techniques - we can t fully appreciate what we are doing and where we want to go as outspoken proponents of a more conscious textile or design industry. Leading us by example are Mr. Mani Chinnaswamy and his wife, Ms. Vijayalakshmi Nachiar, of Appachi Cotton and Ethicus. Yoshiko Iwamoto Wada (renowned textile scholar and promoter of traditional textiles), World Shibori Network ( p 10

11 Where to Next? Thanks to Ethicus, the past years have been a steep and valuable learning curve for Appachi Cotton. Mani and Vijayalakshmi now understand what the market expects from them and feel confident about their products and the range. The next stage will be to focus on increasing sales allowing their business to grow. Ethicus realises that there is a strong need for outreach and to invest more money, energy, time and resources in creating advertising and stronger public awareness through campaigns. With higher demand for Ethicus products, it will also be possible to engage more organic cotton farmers and to adopt more weavers who in turn can benefit from the operations of this social enterprise. p 11

12 For more information on Appachi Cotton and Ethicus, please visit: Textile Exchange inspires and equips people to accelerate sustainable practices in the textile value chain. We focus on minimizing the harmful impacts and maximizing the positive effects of the global textile industry. Our signature program focuses on organic cotton value chains; improving lives for farmers, stimulating markets, and supporting best practice. Website: farmhub.textileexchange.org/ Copyright. All rights reserved.