University of Vaasa - Vaasan yliopisto

Price difference in organic and
conventional cotton finished
fabric (per Kg) at retail stage
Category E retailer
Additional cost of
organic cotton t-shirt
at supplier stage
$ 112 $ 3. 71 $ 108. 30
Category C retailer
$ 14 $ 0. 37 $ 13.63
Table 13: Value addition at the retail stage
Conclusion
Value addition at
the retail stage
169
Our study has shown that the use of organic cotton can add value at each stage of the
production process, both to farmers and intermediaries. Organic methods also have
wider social and environmental benefits that come from the use of sustainable
methods (Alfoeldi et. Al. 2002). We also identified opportunities for value addition
that are currently being missed, for example the sale of organically grown rotation
crops like clover.
In the future, a number of changes to the cotton production industry are likely to
affect the shape and scope of the value chain. It is predicted that the demand for
organic cotton will grow substantially in the coming years (Organic Exchange 2008).
And this demand is likely to be increasingly met by producers in developing
countries, who are now benefitting from better support services, know-how, and the
economic and regulatory infrastructure necessary to allow them to shift to organic
production. This is likely to affect the price of organic cotton at each stage of the
production process, although whether this will be up (as the currencies of developing
countries increase in value), or down (as more organic cotton enters the market
leading to economies of scale), is difficult to predict.
However, even though organic farming is forecast to grow, it is likely to be a
different issue where organic dyeing is concerned. It can take up to 2-3 months to
prepare small quantities of organic dyes, adding to the cost of full certification.
Moreover there is a concern that increased use of organic dyes would mean more
pressure on natural resources; the use of organic dyes can mean large scale
deforestation, increasing the likelihood that its take-up would be resisted by
environmentally-aware consumers. Indigo dyes, for example, whose current demand
is 14m kilos, would, if produced naturally, require 400m kilos of indigo leaves, 98%
of which would become acid waste (Fletcher et al 1999). The implication is that
category C retailers are likely to be the biggest and most profitable sellers of
organically farmed (but not fully certified) cotton in the future, as they are now.