Published by the government of Zimbabwe
7 April 2004
Harare — NEGOTIATIONS over prices of cotton have started between growers and buyers before the selling season starts at the end of the month.
It has, however, emerged that the growers and buyers are yet to come up with an agreed pricing structure.
Cotton growers want an upward review of $5 000 for a kilogramme of their crop while the buyers are offering just $1 000.
Representatives of cotton growers met buyers at the end of last month to discuss the issue of prices, but nothing substantial came up.
"We met on March 26 and we explained to cotton companies about the prices.
"Some of the demands by the farmers were not realistic as they were asking for prices which are above the export prices," said Mr Obert Jiri, commodities chief executive with the Zimbabwe Commercial Farmers' Union.
Most cotton companies play with their cards close to their chests, as they would not want to divulge how much they are prepared to pay for the commodity.
This leaves farmers, who would have entered into contract with them, at a disadvantage as they are obliged to sell their crop to them.
"The best option is to sell back the crop to the contracting firm.
"We are going to link some of the farmers who are not contracted to high paying markets, because there are firms which link them to such markets," added Mr Jiri.
Some cotton growers have already started selling their crop at $1 000 a kilogramme as they wait for the conclusion of the season prices.
Firms buying cotton have different price structures, but there is no significant difference.
There are three major buying firms, namely, the Cotton Company of Zimbabwe, FSI Agricom and Farmers' World.
Currently on the international markets, Grade A cotton is selling at US$0,60 ($2 649) per kilogramme with Grade B fetching US$0,59 per kilogramme.
A kg of Grade C of cotton is priced at US$0,58 with the lower grade selling at US$0,55.
These prices would mean that on the local market, a kg would not sell at more than $2 000 as the buyers have to gin the commodity before export.
Cotton lint is the country's second largest agricultural export after tobacco, contributing US$150 million in gross earnings to the economy.
Cotton, due to its drought tolerant characteristic, is the only crop that can be successfully grown in rainfall regions three, four and five in Zimbabwe where the average annual rainfall is 600 mm or less.
These areas cover approximately 60 percent of Zimbabwe's total agricultural land, demonstrating how vital cotton is for a very large proportion of the rural economy.
Cotton production increased from 184 000 tonnes of seed cotton in 1980 to a peak of 353 000 tonnes in 2000.
Small-scale production has increased from 65 000 tonnes of seed cotton to 298 000 tonnes over the same period, with the planted area in this sector increasing from 59 000 hectares to 376 000 hectares.
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