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News from Global Partnership Projects

Premium prices for Better Cotton a challenge


Cotton cultivated with practices that require less chemicals in the form of fertilisers and pesticides is better for the environment and often cheaper for the farmer to produce because he saves money by not having to buy as much chemicals. This win-win perspective is part of the reasoning why Better Cotton should not be allowed to become a premium-prices commodity.

"Still, we have a challenge here," says Arif Makhdum, Director Sustainable Agriculture WWF Pakistan and part of the team that started the joint cotton projects in Pakistan in 2005. "Some supply chain actors feel they do something special that they don’t get anything extra for."

"We have seen requests for 8-15% premiums in India, where the demand is far bigger than the supply. This comes mostly from ginners and spinners - the farmers are not necessarily seeing a price premium," says Pramit Chanda, IKEA Material Development Leader Textiles.

However, IKEA and other retailers who are members of the Better Cotton Initiative stand firm:

"We will not pay premium prices because this counteracts our goal to make Better Cotton a sustainable mainstream commodity. The moment it becomes more expensive than conventional cotton it will become a niche product," explains IKEA cotton spokesperson Guido Verijke.

Hammad Naqi Khan, Global Cotton Leader at WWF International’s Market Transformation Initiative agrees:

"Retailers have to stick to not allowing a premium, and pay only for real production costs. But it is an open market commodity, subject to supply and demand mechanisms. And when demand rises, some people do see an opportunity to make money.”


 


 

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Better Cotton will fail to become a mainstream commodity if it is more expensive than conventional cotton.

 

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