Farmers collect the pure white cotton which is exposed when the balls in cotton plants burst open and sell it to the trader who lends them money for cultivation. Owing to the interest rate being high, the farmers sell the cotton bales to the trader at low prices and thereby overcoming their debts.
The process of the production of cotton to the production is a chain and involves farmers, traders, merchants, weavers, exporters, factory workers and retailers. The trader employs laborers to make cotton yarns from the raw cotton bales. This cotton yarn is taken to a big cloth market which is visited by various traders, weavers and merchants.
The cotton yarn is sold by the trader to a cloth merchant, who further gives the yarn to the weavers, to weave the desired fabric from the same. The weavers usually prefer an arrangement, called the putting out system. In this arrangement, the merchant provides raw material and the weavers will give him the finished product. However, the weavers are paid quite less and they don’t earn profits owing to the high debts for purchasing expensive looms.
The cloth is then exported in the foreign markets by the exporter. In this buying and selling chain not everyone makes equal profit. Majority of the profit is made by the retailer only. The exporter in turn makes reasonable profits followed by the merchant and the trader who earn a bit less. However, it is the famers, weavers and the workers in the factory who get paid the least share of the profit.
In order to provide fair wages to all and help the poor workers, Indian Government has formed Cooperative societies. For instance, the weavers’ cooperative helps make the weavers’ independent where the role of merchant is reduced and they hence get a fair price of their cloth.