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May 4, 2024

Can this tech start-up fix the cotton supply chain?

Can tech be the solution to making the global cotton chain sustainable?

Can this tech start-up fix the cotton supply chain?

Overview

Currently, cotton prices are determined by the global market through supply and demand and there’s no supply chain data on the industry.

While consumers are paying more for organic and “better” cotton, those premiums aren’t attached to the farmer -- Retail mark-ups of organic cotton are generally about 20–40%, when they are typically 1-2% for other fibers.

It’s nearly impossible to track cotton production across the supply chain, making it hard for farmers and brands to set targets and measure progress -- Most of the world’s cotton (70%to 99%) — is grown by smallholder farmers who farm on 1 acre or less.

Sourcery is set out to transform the cotton supply chain, from how it is grown, to its carbon and water footprint, to farmer subsidies for sustainability.

  1. Invite cotton growers to track and record farm level data from water use and soil health to things as basic as farm acreage
  2. License that data from the farmers, ensuring farmers are paid royalties for their data for 3rd party purchasers
  3. Transparent data-driven tracking of cotton production that supports farmers and provides environmental + economic benefits

The data on the app gets converted to a NFT and then encrypted and stored on the blockchain as ““Sourcery Bluechips”. Only farmers have ownership of their data and they get to decide who to sell it to.

The Impacts

The Good: This data can hold brands accountable for reporting ESG practices and meeting supply chain sustainability goals through end-to-end transparency.

The Bad: There’s a potential that brands will retaliate against farmers for using the platform and not purchase from them. Farmers could try to fraud the system through falsely reporting data metrics to raise the prices of their cotton. There’s also a potential for brands to begin selecting farmers based on their output volumes, penalizing slow performing farmers who may be using agro-ecology principles.

“With the regulatory landscape, with more transparency and traceability, [brands] won’t have a choice but to prove that what they’ve been saying is happening on the farm is actually happening on the farm. There has simply not been enough resources invested in farms, period. We’re not investing in the success of these farmers.” - Crispin Argento, Sourcery’s co-founder and managing director

Reference

https://www.voguebusiness.com/story/sustainability/cotton-supply-chain-is-broken-will-brands-agree-to-fix-it-sourcery-fashion