Consumer demand is driving fashion outlets to use more organic cotton, pushing the commodity to a global market of over $15 billion. Despite double-digit growth in production year over year, companies struggle to meet that demand, and the fragmented nature of the supply chain makes it difficult for manufacturers to know if the cotton they’re buying is actually organic—or just a knockoff.
A new initiative intends to change this. Bext360, an agricultural blockchain startup, is partnering with fashion giants, nonprofits and other tech companies for a pilot test to see if blockchain can be utilized to ensure the integrity and authenticity of the organic cotton supply chain.
“We’ve developed systems at the farm level,” said Dan Jones, founder and CEO of Bext360. “We can mark those bags so that we’re sure about the location where we’ve harvested the cotton.”
The initiative, called the Organic Cotton Traceability Pilot, is a partnership between the C&A Foundation, the Organic Cotton Accelerator and Fashion For Good. It’s operating with support from fashion companies C&A, Zalando, PVH Corp and the Kering Group. The initiative began in December and is currently being used to trace organic cotton from farms to the gin where it’s processed for textile use. The second phase of the pilot will be ensuring cotton can be traced from gin to consumer, and finally the initiative is aimed at scale so it can be used for organic cotton farmers, textile producers and fashion companies alike.
Currently, organic cotton, which uses less water and pesticide than conventional cotton but costs more to produce, accounts for a tiny part of the market—less than 1% of the total amount of cotton produced globally, according to sustainability nonprofit Textile Exchange. But that’s still a global market of over $15 billion, in part because it commands a hefty premium—according to the USDA, prices for organic cotton can range from three to six times that of conventionally produced cotton. Demand for organic cotton among fashion outlets is also increasing, due in large part to consumer pressure.
The combination of growing demand and a price premium has also created an incentive for counterfeiting, according to Jones. “There’s more ‘organic cotton’ in the world produce—by a long shot—than is possible,” he noted wryly. “Because some of it’s simply not organic.”
Bext360 is the lead technical partner for the Pilot and is working with several partners: Tailorlux, IN-Code Technologies, and Haelixa. These companies provide different types of markers that can be applied to the raw cotton in order to “tag” it. Bext360 is also capable of analyzing the microbiome found both in the farm and the cotton itself, which provides yet another “fingerprint” to prove the authenticity of the cotton.
All of this data is then turned into an individual, electronic “token” on Bext360’s blockchain software product, which makes use of the Stellar network. The individual tokens can be used to track the cotton through the supply chain and provide ways to easily check throughout the process from harvest to processing to textile manufacturing that the final product is made from organic cotton from a given farm.
“By integrating these marker partners into this, we’re able to decrease the cost of people to manage their supply chain and increase their ability to prove authenticity, sustainability and origin,” said Jones.
The use of Bext360’s software is also a bonus for farmers. Because the cotton can be traced to the level of the individual farm, the payment process can be digitized, ensuring that producers are given their fair share of the proceeds from the cotton. Additionally, the blockchain tokens can be utilized to provide incentive payments to producers at various steps of the process. Utilizing the blockchain, Jones says, also allows textile producers and fashion companies the means to identify those cotton traders who aren’t actually producing the organic cotton product they claim to have.
“We’ll identify the bad actors so that we can reward the good actors,” said Jones.