Source: www.fibre2fashion.com
DBS Bank has collaborated with Inditex, a fashion retailer which owns brands such as Zara, Pull&Bear and Bershka, to launch an organic cotton procurement financing pilot programme in India with an aim to scale its organic cotton industry. While India is the largest producer of cotton, organic cotton comprises around 2 per cent of the total cotton produced.
Currently, key challenges for India’s organic cotton industry include a highly fragmented farming community comprising close to 170,000 farmers scattered across mainly nine states, with the majority comprising small-scale cotton growers with limited financial means and knowledge to invest in and implement sustainable farming practices; a disconnect in demand and supply due to a lack of transparency in supply chains with much of the trade remaining manual in nature; and a lack of traceability and integrity as to whether the organic cotton has been farmed and processed in a sustainable manner resulting in farmers being unable to transact at a premium.
The pilot programme combined with other tracking mechanisms enable Inditex and cotton spinners in its ecosystem (which comprise the main buyers of cotton from farmers) to trace the source of the cotton directly and ascertain if it had been farmed sustainably, ensuring farmers secure a higher premium for their organically harvested produce vis-à-vis traditionally farmed non-organic cotton.
In terms of environmental impact, traditional farming practices have resulted in soil fertility challenges across India. With easier and faster access to funds facilitated through the pilot programme.
