Cottoning on — Retailer group’s cotton project is a win for small-scale farmers and sustainability

Until quite recently, cotton farming in South Africa was on its knees. Production was a fraction of that sent to the country’s gins and mills in the late 1980s. Now, budding new cotton farmers once again see a future in the crop, as retailers return to local sourcing to meet their own sustainability targets. 

In northern KwaZulu-Natal, a partnership between a leading retailer and small-scale farmers is seeing home-grown cotton being spun into fibres that are used in locally manufactured bath towels.

The project, initiated by Mr Price, sources, gins and spins cotton grown by small-scale farmers in Makhathini into terry cloth used in towels produced for the retailer.

Co-founder of the Mr Price Foundation, Natasja Ambrosio, told the H&M Sustainable Production Africa Summit, held in Cape Town on 4 September 2024, that the group launched the project in 2013 — at a time when South Africa’s cotton sector was on its knees. That year, South Africa had a total cotton crop of just 6,500 tons — which had dropped off from a high of 80,000 tons in 1987. 

By 2017, owing to the cotton industry’s efforts to stop its total collapse and the formation of the Sustainable Cotton Cluster — of which retailers like Mr Price is a founding partner alongside the Department of Trade, Industry and Competition and other industry bodies — local production had regained significant ground. That year, farmers harvested a healthy 50,000 tons.

Cotton SA noted that despite an 800% increase in lint cotton production between 2016 and 2021, South Africa’s cotton industry faced a critical challenge: limited domestic processing capabilities. As a result, it said, a substantial amount of the country’s cotton lint is shipped overseas for processing, and then imported back as finished products.

Citing estimates from IQ Logistica, Cotton SA said this counterintuitive situation presents a significant economic loss estimated at around R20-billion, without factoring in lost potential employment and skills development opportunities.

Abrosio explained that Mr Price wanted to develop the cotton value chain while ensuring there was a socio-economic benefit to the partnership. However, it needed to be sustainable, so the group committed finance to offering the farmers loans to cover input costs and repayments. 

“Small-scale farmers don’t own the land so they can’t go to the bank for finance to pay for inputs. We decided to provide them with finance, at no interest. It allows them to pay for input costs and plant the cotton.”

Mr Price also offered loans to cover early payments. “We work with a gin in Makhathini to advance the funding so they can administer early payments to farmers, because that was another challenge: when farmers bring their cotton to the gin, they want to get paid. They’ve grown a crop for six months, and they need income. But that has to be graded and tested, which can take weeks. These loans allow the gins to pay percentages, and once the cotton is graded, they receive the balance of their money. It helps the farmers to pay their workers.”

Depending on the year, Mr Price works with between 260 and 540 farmers. It also partnered with the World Wildlife Fund, to offer guidance on water stewardship and sustainability concerns. 

“Cotton is a water-intensive crop, South Africa is water-scarce, and we wanted to ensure there were checks and balances throughout. Small-scale farmers don’t have the irrigation systems that commercial farmers have, and they’re under pressure to produce to feed their families.” 

As a retailer, offering loans to these farmers was a massive risk, Abrosio said.

“Initially, our forecasts were 18 months in advance, so we had to commit to tonnage well in advance. But because it’s an agricultural crop, the yields, grade or quality might not be as required due to a drought, late planting or other factors.” 

A big challenge in South Africa is the cost of cotton: input costs are putting farmers under pressure, which threatens the industry’s sustainability. To address the issue, Cotton SA is working on creating a pricing standard for South Africa. 

Loans for small-scale farmers

A Mr Price Home store in Westgate shopping centre in Johannesburg, South Africa, on May 27, 2020. (Photo: Papi Morake / Gallo Images)