22 November 2007
Maputo — The director of the Mozambique Cotton Institute (IAM), Norberto Mahalambe, has regretted that so far the producers and buyers of raw cotton have been unable to agree a reference price.
But Mahalambe told AIM that he hoped a consensus will be reached when negotiations between representatives of the peasant farmers who grow the crop and the concessionary companies that purchase it resume in April.
The IAM introduced a reference price (rather than a legally binding minimum price) for the first time this year, during discussions with the producers and the buyers in the northern city of Nampula on 16 November. But the meeting ended without full agreement
"The ideal would have been to reach a single figure agreed upon between the producers and the companies. We were unable to do that, but we came to figures with a very modest difference of just a few centavos", he said. (The Mozambican unit of currency, the metical, is divided into 100 centavos).
Mahalambe said that the producers are proposing a selling price of 6.2 meticais (about 26 US cents) a kilo of raw cotton, while the buyers were prepared to offer only six meticais. At the end of the meeting, the buyers upped their offer to 6.1 meticais.
The gap had narrowed dramatically since the start of this year's discussions. Then, the companies were only prepared to offer 5.3 meticais per kilo (the same price paid in the last harvest), and the producers were demanding 7.2 meticais.
"Initially, the companies were not very open to negotiating a reference price", said Mahalambe. "The feared it was very risky, because of the variety of factors involved in the production and marketing of cotton".
He added that the IAM had worked with the companies prior to the start of negotiations, to persuade them that a reference price was needed to help the peasant farmers plan their activities better.
Mahalambe noted that the companies' final proposal of 6.1 meticais, even if it falls slightly short of the farmers' demands, is a considerable increase on 5.3 meticais. Furthermore, it could not yet be described as definitive.
"I am sure that the price will go slightly higher than this, if the natural indicators improve, but will not go lower if they worsen. This is an instrument agreed upon by both parties, and we are happy about that", he declared.
Both sides had made concessions, and the final difference of 10 centavos could be overcome in the next round of talks in April.
Matters would be much more serious, Mahalambe said, if the two sides went into the April negotiations without this prior narrowing of positions.
Cotton production during the present campaign is estimated at about 90,000 tonnes, which represents a significant decline if compared with the last harvest, when production reached 122,202 tonnes, the highest figure for more than three decades.
Mahalambe blamed this decrease on a number of natural factors, including irregular rainfall, that was poor in some areas in December 2006, during the planting season. The opposite happened in parts of Niassa and Nampula provinces, where there was too much rain, flooding the cotton fields in January, and causing a loss about 30 per cent of the expected harvest.
Mahalambe said that, to face these factors, the IAM is working with the National Meteorology Institute to have more accurate weather forecasts, that can be used to advise farmers on when best to plant their cotton.
He stressed that the 2007 decline in production has nothing to do with any demotivation of the producers or of the companies. "They are still highly motivated, and estimates are that the next campaign will yield about 120,000 or 122,000 tonnes. We have indications that this is possible, were it to depend solely on the motivation of the farmers and the companies".
He added that all efforts are being made to try, over the next few campaigns, to supply enough raw material for the ginning mills, which have an installed capacity to process 400,000 tonnes of raw cotton a year.
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