Published by the government of Zimbabwe
Golden Sibanda
13 November 2009
Harare — COTTON contractors will need to provide at least US$30 million to fund a targeted output of 245 metric tonnes of cotton under the 2009-2010 summer cropping season.
So far 12 cotton merchants have registered to fund cotton production this season.
The funds will be required for chemicals, seed and other inputs.
The contractors would be hoping for a better season after they lost an estimated US$12 million worth of inputs last year through defaulted loans due to side marketing.
Cotton Ginners Association director-general Mr Godfrey Buka said contractors would however take a leap of faith following the formation of the Agricultural Marketing Authority, which regulates the industry.
"A minimum of US$30 million to produce a crop around 245 metric tonnes will be required. This figure does not include other essential costs such as family labour and land preparation.
The contractors dilemma in this kind of investment is the 100 percent risk which they take come rain or sunshine they have to repay the borrowed funds from the bank for on-lending to the farmer, with interest," said Mr Buka.
He said fly-by-night buyers who never supported the crop fuelled side-marketing last year offering attractive prices since they did outlay for crop production.
Cotton production has declined over the years due to many reasons from a peak of 353 tonnes in 1999-2000 to 210 tonnes in 2008-2009. Over the years contractors threatened to reduce funding or pull out of contract farming due to the problem of side-marketing.
However, after realising the threat side marketing posed to the future of the cotton industry
Government, through the Ministry of Agriculture, Mechanisation and Irrigation Development, set up AMA.
AMA established the Cotton Marketing Technical Committee in line with the recently gazetted statutory instrument 142 of 2009 of the Agriculture Marketing Authority (Seed Cotton and Cotton Products) regulations. CMTC is tasked with implementing the provisions of the new legislation, which requires all contractors to support cotton production.
The enactment of the new legislation could have a huge impact on the cotton industry, which for years buckled under problems of side marketing.
CMTC is empowered at law to prosecute or impose stiff penalties on merchants or farmers who breach provisions entered before crop production.
"The legislation will bring back sanity to the cotton sector and expected results to be achieved among others include adequate inputs provision by contractors, increased crop production through improved yields, improved quality and reduced risk for investors," said Mr Buka.
Cotton merchants have for years invested heavily in infrastructure and ginning capacity now exceeds 700 000 tonnes of seed cotton. This capacity will allow for significant increase of cotton output without necessarily having to outlay more capital for additional capacity.
The local spinning industry therefore has unlimited scope for growth as it currently takes only 10-15 percent of lint production while the rest is exported.
Deregulation of the industry has allowed more merchants and ginners to enter the industry and most cotton production is now through contract.
The cotton production and processing is big business in Zimbabwe and comprises farmers, cotton growers, farmer trainers, seed suppliers, ginners, spinners, oil expressers, fabric makers and many other manufacturers.
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