Tomorrow Talks

Anita Chester

Head of Materials at Laudes Foundation

Anita Chester is the Head of Materials at Laudes Foundation, previously C&A Foundation, and a member of the foundation’s leadership team leading the development and implementing of the foundation’s materials strategy. Previously, she worked at IDH, The Sustainable Trade Initiative managing their cotton program and The Better Cotton Fast Track Fund. She has also been CEO South Asia at Cotton Connect working closely on the ground in building capacity for sustainable cotton initiatives & their market linkages.

Questions & Answers

What has been the impact of Covid-19 on the cotton farmers? Globally, are there any geographical variations in impact?

Cotton is grown globally in about 70 countries by more than 26 million farmers, most of whom are smallholders in developing countries. The current Covid-19 crisis has impacted cotton farmers at various levels. The restriction on movements has impacted the availability of inputs for the upcoming cotton season in countries like India, Pakistan and China. It will most likely also impact the harvest and marketing of cotton in countries in the southern hemisphere where the harvest is round the corner. The shutdowns in various parts of the world have also led to migrant populations from cotton growing families returning to their villages. This will further impact the family income, as remittance income will reduce in the near future.

Fortunately, the spread of the infection is still restricted to urban areas with better health facilities. It is critical to maintain this status as the spread of the disease in rural areas will have severe implications for the farming families as they may not have access to good healthcare. This can also further impact family income as a lot of these households do not have insurance and they will lose productive working days. As the virus seems to have similar levels of incidence across all geographies with differences only in the onset of the infection, the impact is likely to be similar for most countries, and they include supply chain issues, labour shortages and instability in market demand and prices. The difference is that in the developed nations, safety nets are available in terms of relief packages, and in the lesser developed countries, farmers will pretty much be fending for themselves.

How will Laudes Foundation’s role change in this new ecosystem?

The crisis has re-emphasised the need to work on the dual challenge of climate change and inequality, which form Laudes Foundation’s mission and vision. We will continue to work through our partner organizations towards building the resilience of farming communities. In addition to this, our field partners are also working closely with the community in providing Covid-19 relief and creating non-farm productive employment in the community to address the economic impact of reverse migration.

At the industry level, we will continue our work to harness its power for good through our various initiatives such as Organic Cotton Accelerator, Better Cotton Initiative, Cotton 2040 and others in helping to build safe, healthier and more positively connected supply chains that work not just for a few but everybody.

How do you see the global trade being affected in the coming years?

The decline in economic growth associated with the crisis will impact the global demand for cotton. However, there is lot of uncertainty about the quantum of the actual impact. The current projections by International Cotton Advisory Committee (ICAC) show an 11.8% decline in consumption for 2019/20. The production is also likely to fall as farmers might prioritise food crops for food security due to incentives provided by some governments. As per ICAC, there will be a 4% decrease in planted land in 2020/21 and a 4% decrease in production in 2020/21. The crisis is also likely to impact cotton pricing. The year-end price projection for 2019/20 has been revised down by ICAC to 71.4 cents and the projected year-end average of the 2020/21 A Index is 56.9 cents indicating a decline of around 20%. These estimates assume that things will start to improve from the next quarter. However, as of now, the outlook isn’t rosy. Whilst Government policies and international collaboration will be essential for recovery on the supply side, how long the disruption in demand lasts is quite uncertain. Even if retail outlets reopen soon and the international supply and manufacturing system comes back on line, the economy is suffering and consumer sentiment is low. Just how low international demand will sink is anybody’s guess.

Will there be any long-term shift in the cotton sector due to Covid-19?

We do see shifts in the cotton sector though not just on account of Covid-19. The pandemic has reminded us about the urgency to speed up collaborative action on sustainability. And whilst sustainability programs might see some short term disruptions, in the long run the cotton sector will likely continue its trajectory towards sustainable production and uptake. In terms of the supply chain, there might be some disruptions but near shoring might still not be on the cards for cut and sew operations. Asia, the hub of production is currently going through some devastating consequences but is likely to bounce back in due course with some likely shifts between countries.

What role can technology play in preparing for events like this?

This crisis provides an opportunity to relook at technology adoption by farming communities in the developing world. The lockdowns announced by the various governments have re-emphasized the role of technology in future and its effectiveness in reaching many people in a short span of time. Online aggregation platforms and marketplaces have been useful in connecting buyers, sellers and service providers during these times. Online training and the use of technology for dissemination of information related to weather and pests is on the rise. We see a bigger role for these technologies going forward. With banks and financial institutions not being able to function in their full capacity, the penetration of digital payment solutions in rural areas is also going to increase. This will bring a large portion of the population who were earlier not part of this, into the formal financial network.

The broader fashion market place is also experiencing a faster substitution from in store shopping to online shopping. In the absence of physical fashion weeks, designers too are resorting to live- streaming their new collections. This will probably lead to some significant and permanent changes in how the industry uses technology.

Do you see the post-Covid-19 world taking sustainability more urgently? What should be our immediate next steps?

A microscopic organism has certainly reminded us of the fragility and helplessness of our lives and made us realize that, as humanity, our focus has been on the wrong things. Yet, it is not too late to learn and reset our thinking about our society and business environment. As economic activity reboots, we expect not to simply go back to recreating the problems we’ve had, but take this opportunity and to create broad based prosperity and respect for our natural systems. Sustainability will be one of the key themes in the post-Covid-19 world. Stemming global warming, large scale conservation of forest landscapes and more resilient supply chains should be the front and centre in the reboot of our economic system. This will need some co-ordinated and intentional interventions by consumers, business leaders, civil society and governments and actions that should result in all system agents “redefining value.” That is to say consumers look beyond cheap products, Governments look beyond GDP growth and businesses beyond just shareholder value.

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