Memorandum of Understanding

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1 MoU producer_buyer_faciliaor.doc Dae Memorandum of Undersanding beween: he producer organisaion: < of organisaion> he rading parner: < of rading parner> and he faciliaing organisaion: < of faciliaing organisaion> Concern: Parnership on producing and purchasing organic-fairrade coon < of producer organisaion> (hereinafer referred o as "he producer organisaion"), < of rading parner> (hereinafer referred o as he rading parner ) and < of faciliaing organisaion> agree upon he following: 1 Background Descripion of he projec, he role of he faciliaing organisaion, he producer organisaion ec. 2 Purpose The purpose of his memorandum is o esablish a long-erm parnership beween he producer organisaion and he rading parner in order o: provide he farmers organized by he producer organisaion wih a reliable marke for he organically produced coon a fair-rade condiions (as specified by FLO), 1

2 MoU producer_buyer_faciliaor.doc provide he rading parner wih an assured supply of cerified organic and fair-rade coon (OFTC) of good qualiy and wih a markeable sory on he social and environmenal benefis of he collaboraion wih OFTC farmers. 3 Roles and responsibiliies of he parners The producer organisaion commis o fulfilling he following responsibiliies: To organise he producion and he farmer groups in compliance wih organic regulaions (EU-Regulaion 2092/91) and Fairrade sandards (FLO); To provide adequae exension services o he farmers and operae a reliable inernal conrol sysem; To ake appropriae measures in order o ensure produc qualiy (qualiy managemen); To provide reliable producion daa (number of farmers, acreage, producion esimaes, harves figures) in a imely manner; To coordinae he collecion and processing of he seed coon, in collaboraion wih he coon socieies; To provide he rading parner wih a reliable supply of cerified OFTC (volumes as specified below); To provide informaion and conacs ha allow he rading parner o communicae he social and environmenal benefis of he collaboraion wih OFTC farmers. The rading parner commis o fulfilling he following responsibiliies: To use all reasonable endeavours o ensure ha he agreed volumes (specified below) of fair-rade-organic coon lin produced by he farmers of he producer organisaion are purchased and used in is supply chain; To ensure ha he producer organisaion receives a price ha allows hem: o o pay he farmers he organic-fairrade minimum price for seed coon (se by FLO) ha covers heir cos of producion, allows hem o make a decen profi and provides an incenive for more susainable farming, o o pay he farmer groups he fair-rade premium (se by FLO) ha is used for communiy developmen aciviies, and o o evenually cover he coss for he exension and inernal conrol sysem; To paricipae in join meeings wih oher projec parners a leas once per year or if possible - whenever muual agreemen is needed sraegic quesions like volume allocaion, new parners ec. The faciliaing organisaion commis o fulfilling he following responsibiliies: To coninue supporing he producer organisaion and he farmers in developing he necessary capaciies and sysems, a leas unil he end of 20XX; To faciliae he exchange of know-how and informaion among he parners and oher sakeholders; To faciliae negoiaions among he producer organisaions and he oher parners involved in he chain (concerning prices, allocaion of fibre volumes, supply chains ec.); To provide regular updaes on he developmen of he projec in order o enable he rading parner o promoe he projec in markeing and oher communicaion channels. All parners agree o inform he oher paries in ime on all imporan changes ha concern he scope of his memorandum; 2

3 MoU producer_buyer_faciliaor.doc in advance of all exernal communicaion ha refers o he cooperaion. 4 Supply and purchase agreemen The producer organisaion and he rading parner agree o provide, respecively purchase, a leas he coon lin volumes specified in Annex 1 of his MoU. The coon fibre volumes agreed above are subjec o he following condiions: he coon lin mees a leas he qualiy specificaions defined in Annex 2; he climaic condiions permi producing average yields. The volumes specified in Annex 1 define he minimum quaniies ha he rading parner inends o consume. If available and no fixed wih conracs wih oher commercial parners, he producer organisaion will cooperae wih he rading parner o provide addiional volumes. In case he overall coon producion in he producion region is reduced due o adverse climaic condiions, he volumes agreed above may be reduced accordingly. 5 Supply chain The seed coon is purchased and processed via he supply chain described in Annex 3 of his MoU. This may be subjec o change if a more efficien supply chain is idenified, afer consulaion beween he paries involved. In any case, he following principles shall be applied: Price seing on all levels prior o spinning (producer organisaion, coon socieies, exporer) shall be based on ransparen open-book cos calculaion. Prices paid for he coon lin shall be se in a way ha hey can cover: o he OFTC minimum price and fair-rade premium se by FLO; o he coss of ginning (including a reasonable profi for he coon sociey); and o an appropriae conribuion o he exension and cerificaion coss, evenually allowing for cos-covering producion once overall volumes have increased. The producer organisaion, in collaboraion wih he parners involved in ginning and expor, will ensure ha he rading parner is kep updaed concerning he possible firs delivery daes of coon. 6 Adminisraive provisions This insrumen is neiher a fiscal nor a funds obligaion documen. No pary has he auhoriy, express or implied, o creae financial obligaions on behalf of he oher pary, o creae commimens oher han as conained herein, or o ake any posiions on behalf of he oher pary wihou he oher pary s wrien consen. This MoU shall no be eiher legally binding on any pary o his MoU or be deemed o consiue an obligaion or commimen of funds by any pary. This MoU, neverheless, reflecs he presen inenion of each pary o pursue and implemen in good faih he undersandings described herein. The paries shall make heir bes effors o sele amicably any dispue over he erms or implemenaion of his MoU. 3

4 MoU producer_buyer_faciliaor.doc 7 Duraion, erminaion and modificaion This MoU is valid unil XXX. Thereafer, i shall be re-examined and adjused as deemed necessary. Any of he paries, in wriing, may erminae he collaboraion in whole, or in par, a any ime before he dae of expiraion. Adapaions o his MoU can be iniiaed by boh paries a anyime and shall be done in wriing. They require approval by boh paries concerned. Place, Dae: For <producer organisaion>: Place, Dae: For <rading parner>: Place, Dae: For <faciliaing organisaion>: funcion funcion funcion 4

5 MoU producer_buyer_faciliaor.doc Annexes o he MoU beween < of producer organisaion> (he producer organisaion), < of he rading parner> (he rading parner) and < of he faciliaing organisaion> Annex 1: Volumes of organic-fairrade coon lin The producer organisaion and he rading parner agree o provide, respecively purchase, a leas he coon lin volumes specified below: Harves period 2009/ / /12 Coon lin (in meric ons) Annex 2: Qualiy specificaions The producer organisaion will only deliver firs qualiy coon fibre o he ginning facories, so ha hese are able o fulfil he following qualiy requiremens: Fibre lengh: minimum x.x mm Acceped conaminaion levels: o 100% organic fibre only o foreign maerial conen < 0.x % o foreign fibre conen < 0.x % Annex 3: Supply chain The seed coon is purchased and processed via he supply chain described below: 5

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