Cotton in Africa: Are the CmiA and Compaci Models Financially Sustainable?
January 5, 2012 By Roger Peltzer, Director
and Alexa Tiemann, Economist
DEG-German Development and Investment Cooperation
The initial impetus to start a sustainable cotton project for Africa goes back to German entrepreneur Michael Otto, the owner of a large textile mail-order and retail company. In 2005, he took the initiative to create the brand “Cotton made in Africa” (CmiA) and to unite personalities from major textile retailers, African cotton companies and non-governmental organizations in the Aid by Trade Foundation (AbTF). The project was initially supported by the German Ministry for Economic Cooperation and Development (BMZ) through Public Private Partnership (PPP) funds.
In 2008, the Bill & Melinda Gates Foundation (BMGF) joined the project. This extension of the previous PPP funding allowed the project to be extended to more countries, companies and farmers. The large program funded by BMGF and BMZ to help African small-holder farmers to increase their income was named the “Competitive African Cotton Initiative” (COMPACI).
The AbTF is constituted under German law. AbTF is the owner of the brand “Cotton made in Africa.” AbTF’s function is threefold:
It is responsible for the management, definition and constant development of the CmiA criteria matrix and the verification of these criteria.
It is in charge of sponsoring and supervising activities to promote the CmiA brand.
It recovers via the marketing company Atakora the license fees paid for the utilization of the brand “Cotton Made in Africa.”
Cotton under the CmiA brand is neither organic nor Fairtrade. Fairtrade products typically involve minimum prices (independent from world market prices) that are sufficient to cover farmers’ livelihoods. This carries the risk that retailers pull out of the Fairtrade scheme when market prices go down, which it what happened during the world financial crisis in 2008.
In contrast, CmiA cotton combines a set of minimum exclusion criteria – the worst forms of child labor, utilization of very dangerous pesticides, destruction of natural habitats – with the obligation for the partners to improve the social and ecological conditions of cotton-growing over the time. CmiA cotton is traded at world market prices along the entire value chain without any premium. Instead, the textile companies pay a license fee for becoming a member of CmiA in order to use the brand and tag their products accordingly.
The brand “Cotton made in Africa” is incorporated by a hang tag in the products sold to ensure visibility to customers. Rather than create an internal brand only visible to producers, the hang tag aims to create a “secondary brand” that is also visible to consumers. Hence, CmiA seeks to establish a brand for mass markets, not a niche product, as traditional Fairtrade often does.
GET THE NEWSLETTER TODAY!
