10 February 2011

Zimbabwe: Cotton Farmers Bank on Firming Prices


For the first time in years the cotton industry begins its marketing season on a positive note with firming international cotton lint prices, ushering in renewed hope to over 200 000 producers.

The cotton marketing season has always been riddled with price disputes, with producers withholding their crop and buyers accusing farmers of side-marketing.

This year offers farmers a chance to break the vicious cycle of poverty that had been created over the years because of low earnings from the crop.

Cotton Ginners Association director general, Godfrey Buka, said the seasonal average price for 2009/10 was US77,54 cents per pound. But the price quoted on January 25 2011 was a record high of US190,70 cents/ pound which saw the seasonal average move up to US135,72 cents/ pound.

"A year ago at the same time, the average price was US76,60 cents/ pound while two years ago it was US59 cents per pound," he said.

Last season was characterised with price deadlocks with contractors paying US30 cents/kg, rendering cotton production unviable and farmers threatening to quit producing the white gold.

What kept the producers in the cotton fields every season was the hope that one season the prices would improve.

"Obviously, the firming of lint prices means producers can expect higher returns. The prices have more than doubled when compared to the same period last year," Buka said.

Demand for higher prices by farmers is premised on the cost of production that is generally high considering the removal of subsidies by the government.

The producer price impasse has contributed to the decline in the crop with farmers producing 270 000 tonnes last season.

"From a high of 333 000 metric tonnes produced in 2004, the national cotton crop had dwindled to 207 000 tonnes in 2009 largely due to inadequate investment in inputs due to the risks associated with funding cotton production. Favourable weather conditions permitting this season, the industry is anticipating more than 30 percent increase in seed cotton production and likely to produce more than 120 000 tonnes of lint, up from (around) 110 000 tonnes produced last season," he added.

More than 80 percent is exported in semi-processed form and 95 percent of the crop is produced under contract farming due to lack of capital and inability by farmers to finance production.

Cotton is the second largest agricultural export crop after tobacco but farmers who form the backbone of the industry have not benefited from producing the cash crop.

Gokwe cotton fa-rmer, Luckmore Ma-noti, said that every marketing season had proved to be a disappointment because of the producer price impasse, but this year they were ready to fight the buyers for better prices.

"We have nothing to show for the years of back-breaking work in the fields; the unfair prices continue to demean our livelihoods and push us into abject poverty," Manoti said.

Another farmer, Daniel Madungwe from Mtoko, said the firming prices were an indication that this year will be a different year for cotton farmers compared to last year.

"We expect buyers to buy our crop for at least US$1, 50/kg considering they make more (and) everything after ginning is useful. Nothing is thrown away."

"From cotton seed after ginning, 50 percent is for oilseed and there is the stock feed. All that is money for the buyers and ginners," Madungwe said.

According to Madungwe, the prices are likely to continue firming because of the expected shortage of cotton lint on the market.

As a result of the firming prices, farmers are looking forward to a successful season since the international price influences the local prices.

The introduction of the cotton legislation, Statutory Instrument 142 of 2009 has brought sanity to an industry that was in chaos with contracted growers renegading on their contractual agreements and contractors faced a growing risk of credit default.

The legislation seeks to ensure long term viability of the cotton industry through regulating the entire production chain from crop production to marketing.

"The promulgation of Statutory Instrument 142 of 2009, ushered in a new era in cotton production in Zimbabwe and Africa as a whole in terms of transparency in the financing and buying of seed cotton," Buka said.

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