Investing in Fair Trade Cotton opens Markets for Ugandan Farmers

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gadc_cotton In recent years, there has been an increase in public-private partnerships in development, particularly in facilitating access to markets for subsistence farmers and business enterprises. Micro-finance initiatives often seek to inject cash into local economies by financing small businesses in developing countries. These ventures can be successful in gradually increasing market access for the rural poor. A step up from this is the emergence of non-profit foundations partnering with local businesses and producers to help bring local workers into the global market. The Gulu District of Northern Uganda has reinvigorated its cotton industry through just this kind of partnership. The Gulu Agricultural Development Company (GADC) is a commercial cotton ginnery that has partnered with Acumen and Root Capital to improve the livelihoods of thousands of rural farmers in the area by helping them expand their cotton yields and sell their organic, fair trade products to buyers abroad. The initiative has impacted over 200,000 subsistence farmers and helped to reinvigorate the economy in the area.

The GADC is the only commercial cotton ginnery in the region, and it sources organic and conventionally produced cotton from over 55,000 subsistence or small-hold farmers in the area. It was founded by Bruce Robertson of South Africa, chairman of the Uganda Ginners and Cotton Exporters Association. The company, with the financial support of Acumen and Root Capital, provides farmers with training, agricultural outputs and managerial support. He leased the ginnery in 2009 at the request of the Ugandan government, which was attempting to stimulate the industry in the Gulu District. GADC purchases cotton from farmers involved in the Acholi Joint Farmer’s Association, which promotes agriculture and social and economic development of low income earners through fair trade, competition and access to markets. The Association is made up of local farmers and seeks to give them access to markets, strengthen community development groups, and improve worker skills and capacities.

Gulu_cottonAcumen is a non-profit social venture and investment firm based in New York, which focuses its efforts on assisting people in developing countries with income generation, capacity building, and livelihood recovery. Their partner, Root Capital, is also a non-profit investment fund that focuses on enhancing rural prosperity through sustainable agribusiness in Africa and Latin America. Together, Root Capital and Acumen have invested over $2 million dollars in the Gulu District initiative and their efforts have been met with success. Over 40,000 farmers between 2010 and 2011 have been engaged in the operation, allowing them to move away from subsistence farming and move into the income-generating market. Participation has steadily grown since then, and the operation has expanded into producing organic cotton. Currently, 7,500 certified organic cotton growers in the area are receiving a 20% price premium over conventional cotton prices, which serves to aid farmers in increasing their capacities to enter and compete in local and global markets.

This is significant because the Gulu District is home to the most disadvantaged and marginalized groups in Northern Uganda. Over 61% of its population living in extreme poverty (the national average is 31%) and subsistence farming is intermittent and seasonal. After upwards of 25 years of armed conflict, which left over 1.8 million people internally displaced, only within the last 5 years have people started to return to the area and attempt to reconstruct their livelihoods. In the area, the cotton industry was thriving prior to war. After the war, those returning to the area had virtually no access to markets, at either the local or global level. Intermittent subsistence farming for cash crops have been the only means by which people in the area have been able to meet their basic needs.

fairtrade_cotton2The idea of an investment firm partnering with local producers to help export goods is not new, and it has been criticized for exploiting local workers and companies. This initiative is not only increasing the capacities of local farmers, but has tapped into the fair trade niche markets that are favoured abroad by ensuring that organic cotton is certified as a fair trade product. In 2013, the cotton lint produced by the GADC was certified by Fair for Life, which is an independent social and fair trade certification mechanism backed by the Swill Bio-Foundation and the Institute for Marketecology. The cotton has been deemed a fair trade product from sourcing to production, and in traceability and pricing.

The involvement of non-profit investment firms is a growing trend in the Global South. This is one case among many that emphasises the significant impact that public-private partnerships can have in restoring livelihoods in the Global South. The future of development may lie here, as improving access to markets and facilitating locally – driven supply chains can pave a more direct and efficient path toward improving local and national economies, and help lift them out of poverty sustainably.

For more information about Acumen, Roots Capital, and their other socially-driven investments, click here and here.

For more detail regarding the Fair For Life certification company, and the other initiatives it is involved with, click here.

 

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Sarah Anstett

Sarah Anstett

Sarah is a writer, researcher, and development practitioner currently based in Toronto, Canada.

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