Will brands and retailers reduce the amount of money they are willing to pay for cotton if they learn that farmers are earning more money?
One of the ways in which farmers benefit from growing Better Cotton is by reducing the costs of the inputs they use to produce it. By spending less on fertilisers, pesticides and water, farmers can increase the margin they make on sales of Better Cotton.
It is vital that the benefit of this increased margin accrues to farmers and not to other supply chain actors. However, it is important to note that BCI can only build a system to reduce cost and monitor member behaviour. We do not set a fixed premium for Better Cotton, and recognise that pricing is a function of the market.
Moreover, one of the reasons that leading retailers and brands support the Better Cotton Initiative is that they realise that if famers do not earn enough money growing cotton, they will switch to some other crop, and this could eventually lead to increased costs for the brands or other supply scarcity issues. It is very much in the brands’ own best interest that farmers benefit from any margin improvement their efforts result in.