Ibrahim Kasita
22 December 2008
Kampala — AFTER analysing the impact of the global financial crisis on the cotton sector, the Government has raised the cash crop's farmgate price to sh600 per kilogramme.
The credit crunch has affected the cotton sector by depressing consumer purchasing power, which has reduced demand for textiles, yarn and lint.
Consequently, the spinners are not buying lint from merchants and the merchants are not buying cotton from ginners.
This has made the ginners not to buy cotton from the farmers, a situation that had reduced cotton prices to sh450 per kilogramme in December from sh800 in October.
The Prime Minister, Prof Apolo Nsibambi, recently told Parliament that the Government had intervened with a price support of sh150 per kilogramme, which will give the farmer a farmgate price of sh600.
"The matter was conclusively discussed at the recent Cabinet meeting and the Government adopted this proposal," Nsibambi said.
"The financial implication, based on 170,000 bales for the 2008/09 season, is sh13.52b."
Nsibambi said President Yoweri Museveni met the Cabinet and officials from the agriculture and finance ministries to reach the decision.
In a statement issued to Parliament about the pricing of cotton in the 2008/09 season, the agriculture ministry said through the Cotton Development Organisation (CDO), it would agree with the ginners to monitor cotton prices and hold on lint and sell it when prices have recovered.
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