CMYA IN ETHIOPIA - ONE YEAR LATER

CmiA cotton production started in the 2013/ 14 crop season in Ethiopia. Ayka Addis Textiles – a large integrated textile mill near Addis Abeba - agreed to buy 5,000 tons of lint cotton from Metema Union (a cooperatives union with 10,000 members), whereas the Ethiopian Cotton Producers Ginners and Exporters Association, ECPGEA, was assigned to be the managing entity for CmiA verification.

The arrangement is different from other African countries where ginners enter into agreements with individual farmers or farmers organized under cooperatives. A year has passed since the signing. After the start of the CmiA Initiative, farmers and extension agents were trained in basic agronomic practices, crop protection methods, handling of pesticides and empty containers as well as issues relating to gender and child labor. External audits were conducted in October to verify the farmers and the managing entity and the new Tiret Loyal Ginnery was audited in December 2014. All three entities audited were successfully verified.

The CmiA Initiative in Ethiopia successfully persuaded the farmers to restart cotton production, increased the knowledge base of farmers in cotton agronomy and protection and raised awareness of existing child labor and gender issues. The season was completed with 9,267 participating farmers - 591 of which were women - who produced around 14,000 tons of seed cotton. 

The introduction of biological pest control like molasses traps has enabled farmers to spray fewer pesticides. In general there was an increase in productivity and production and a decrease in production costs, especially of pesticides and spray. As far as marketing is concerned, the initial arrangement was that farmers would sell their cotton to the cooperatives which would in turn pass it on to Metema Union. The Metema Union would then aggregate and gin the cotton at Tiret Loyal Ginnery and supply Ayka Addis Textiles, the largest vertically integrated mill in the country.

During the harvest season the local and lint cotton prices were higher than world market prices. The higher lint cotton price led to an increase of the seed cotton price. This created a situation where farmers preferred to sell their cotton to traders instead of to the cooperatives union. Due to the presence of side-selling, the Union received less cotton from its member farmers. The cotton left the area without being ginned, which was not good for the designated CmiA verified ginner Tiret Loyal. The fact that the seed cotton produced in the area was shipped out of the region meant that there was less seed cotton to gin, with the result that the newly opened ginnery was underperforming. Therefore Tiret Loyal started buying directly from the farmers. It has so far bought 3,260 tons of seed cotton and signed an agreement to buy additional 1,000 tons. With the agreement with the Metema Union, Tiret Loyal intends to directly supply lint cotton to Ayka Addis Textiles.

Important lessons learned during the 2013/ 14 crop year from the powerful and invisible market forces include: Honoring contract obligations and side-selling may remain a challenge until trust between buyers and seller reach a desired level. Contracting parties have to meet frequently to better understand and coordinate efforts towards the fulfillment of contractual obligations as well as arrange access to pre-financing to the Farmers Cooperatives Union. These lessons learned will be incorporated in the new forward supply contract under review by the new interested textile mills. Major changes include a stakeholders' monthly meeting to oversee the preparation and evaluate progress.

In the 2014/ 15 crop year, the plan is to include up to four additional unions with a total membership of 50,000 farmers and additional four textile mills into the CmiA concept. If all goes according to plan, the envisaged partnerships will increase the total amount of CmiA-verified cotton produced by smallholder farmers to 17,500 tons. Most of the lint cotton will be processed in the country, thereby paving the way from Cotton made in Africa to Textiles made in Africa.

- By Asefa Aga (Regional agronomist and General Manager of the Ethiopian Cotton Producers Ginners and Exporters Association, ECPGEA)