King Cotton and Wal Mart

Winter 2006-2007

The High-Stakes Quest to Define Sustainability

by Alex Owre

Last year Wal-Mart CEO Lee Scott invited media frenzy by announcing his plan to move the company in a more environmentally friendly direction. Was this “greenwash,” a crafty bid to deflect attention from Wal-Mart’s labor and other problems – or was it a glimpse of true, sustainable commerce played out on the high-profile stage of the world’s largest retailer? As environmentalists struggle with these questions, industries that produce for Wal-Mart’s shelves have a bottom-line interest in how shoppers react to the store’s “sustainable” products.

Recently, the U.S. conventional cotton industry went on the offensive with a campaign to re-educate consumers on the sustainability of its product. Fueling this campaign was the industry’s anger at a statement made by Wal-Mart’s Scott, who said that in 10 weeks his company had “saved the equivalent of two jumbo jets of pesticides” in the sale of 190,000 organic cotton yoga outfits by its Sam’s Club division.

Wrong, said Cotton Incorporated, whose mission is to increase demand for and profitability of cotton through research and promotion. According to Roy Cantrell, vice president of breeding, genetics and biotechnology, the Wal-Mart calculations on pesticide were off 500-fold.  The company erred, too, in saying that it planned to buy 10 million metric tons of organic cotton in 2006. (The figure was supposed to be 10 million pounds.)

The first error is just an example of outdated or false data that gets spread in the press about the cotton industry, said Cotton Incorporated.  It negates the oft-quoted figure that cotton accounts for 25% of the world’s pesticide use, calling 8.5% more accurate. “In the United States where data are available,” said Cantrell, “about 0.038 ounce of pesticides is used to grow enough cotton for a t-shirt. They’re off by a factor of 150X.”

The second error (10 million tons of organic cotton) creates an illusion of abundance that misleads the consumer. The fact is, demand for organic cotton far outstrips supply. “Organic cotton represents only .03 percent of U.S. production and .01 percent of world production,” says Cantrell. “So there’s something of a credibility gap when a major retailer says it’s planning to use 5 million to 6 million tons of organic cotton, when only 25,000 tons were produced in 2005.”

Wal-Mart claimed to be misquoted in both instances, but executives from its textile group admitted that they are “still learning about sustainability.” (Farm Press, 10/12/06)

The term ‘sustainability’ can be confusing: Jet loads of pesticides? Metric tons?  With the world’s largest retailer struggling to convey the term, how will the average consumer decide what it means?

“The reality in the marketplace is that people are defining sustainability as organic,” said Berrye Worsham, CEO of Cotton Incorporated. “In reality, organic is only .01 percent of the market …  There’s 99.9 percent of the cotton market that’s non-organic and a chunk of that should be heralded as sustainable,” he said.  “The first one out there who creates a definition could have a tremendous marketing and selling opportunity.” (Farm Press, 10/4/06)
Another recent story shared headlines with Wal-Mart in the world press. Also turning on the theme of sustainability, it features the figure  $12.5 billion – the total amount in subsidies that the U.S. government paid to American farmers from August 1999 to July 2003. Subsidies guarantee U.S. (and European Union, and Japanese) growers a minimum price for their product, allowing them to sell cotton below the price of producing it.

According to the U.N. Food and Agriculture Organization, U.S. cotton production grew by more than 40% between 1998 and 2001, while the volume of its exports doubled—despite the fact that cotton prices fell to record lows during this period.  This September, the World Trade Organization “opened a formal investigation into whether the United States has complied with an order to scrap a series of illegal subsidies paid to American cotton growers.” At issue was a 2005 WTO ruling that said “billions of dollars in U.S. government handouts had unfairly distorted international cotton prices.” (Associated Press, 9/29/06)  By spurring over-production and export dumping by U.S. producers, these $12.5 billion lowered world prices by almost 13 percent. (Washington Times, 10/19/04)

According to a study by the FAO (“Cotton subsidies in rich countries mean lower prices worldwide”), “the collapse of cotton prices cost eight West African countries nearly $200 million in lost annual export revenue.  The cost to millions of rural families who rely on cotton as their only source of cash income has also been high. One recent study by the World Health Organization found that West African households that grew cotton in addition to maize had better nutrition and higher incomes.”  When cotton production grew by 175% in the mid-1990s, said the report, poverty decreased by 16 percent.

A final figure:  Less than 1 percent.  That is what Wal-Mart’s 10 million pounds of organic cotton translates to as a percentage of total textiles in its stores. (Farm Press, 10/12/06) Rare stuff, this organic cotton – not for your average consumer. 

To boost this figure, should we heed the call for a watered-down definition of sustainability that may include genetic modification, murderous subsidies and rampant chemical use (at any quantity, a deadly and unsustainable trend)?  Or should we demand that major retailers and manufactures help eliminate all U.S. subsidies for cotton production and export, or convert those subsidies into “green” subsidies for organic and transition-to-organic cotton production, a tenet of the Organic Consumers Association’s Clothes for a Change campaign.

Maybe some African farmers who can’t afford “modern” cotton – expensive chemicals and GM varieties – will one day see their simple, natural, sustainable product make it onto the world market at a fair price. (Edun, a new fashion label, is already working this angle. Edun Live organic-cotton T-shirts made in Africa sold roughly 100,000 units in one year. [Business Week, 9/27/06])

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