19 June 2017

Zimbabwe: Call for Crackdown On Unscrupulous Private Cotton Firms

Farmer organisations have called for a crackdown on unscrupulous private cotton companies paying spot cash to entice farmers to side-market the crop contracted by Government. The private companies have also increased the money they are paying to farmers to 50c per kilogramme after Government increased the base price from 40c to 47c last week.

The 47c base price is over and above 18c per kilogramme invested through the input subsidy.

The farmers are also entitled to a 5 percent export incentive to be paid by the Reserve Bank. There are adjustments, which farmers receive after their cotton has been graded. The top grade is fetching 55c but negotiations are ongoing to increase the price.

Cottco is paying a maximum of $200 cash on the spot and the remainder is being deposited into bank or mobile accounts.

The Government, through the Cotton Company of Zimbabwe invested $42 million on cotton production last year under the Presidential Free Input Scheme.

While Cottco is expected to buy 80 percent of the crop, private companies are taking advantage of the prevailing cash shortages and are luring farmers by paying spot cash.

"While we are encouraging our farmers to desist from side marketing, we need Government, through the Agriculture and Marketing Authority to punish companies that are violating the law. Their licences should be revoked," said Cotton Producers and Marketers Association of Zimbabwe chairman Mr Stewart Mubonderi.

"These companies have not invested much into production and they are paying prices slightly higher than what Cottco is paying. Naturally, farmers are tempted into side marketing but we have been telling them the three extra cents being paid by private companies are nothing considering that they received free inputs from Government.

"We also need these companies to be investigated and reveal their source of cash. We all know that there is cash crisis in the country. The Government is even struggling to find cash to pay farmers but these private players have hordes of cash at buying points."

In Murarabani, The Herald Business witnessed the issuance of fine of $1 000 to Grafax by AMA, which had bought 10 bales of cotton contracted by the Government.

The farmers admitted that they had sold cotton to Grafax despite getting all inputs from the Government.

Efforts to get the value of fines issued by AMA this season proved fruitless. Farmers who spoke to The Herald in Mushumbi Pools and Muzarabani last week confirmed the manoeuvres by private companies, claiming they sometimes visit them during the night offering cash for their cotton.

"They are coming during the night persuading us to sell to them because the Government does not have cash," said Mr Fine Mujeyi.

The Zimbabwe Farmers Union said Government should take action against errant merchants.

"These companies, instead of investing in production were hoarding cash so that they can buy the crop contracted by the Government.

"This is an act of sabotage. The ZFU calls upon Government to take drastic measures to avoid further loss of the crop," said ZFU.

Last year, Government invested $26 million into production and only bought a third of total production.

Industry players said there is need for AMA to review purchases by each merchant on the basis of funding levels and strictly enforce quotas for merchants who have purchased in excess of their financing.

AMA is empowered to cause arrest and prosecute unscrupulous merchants for non-compliance and theft of cotton, suspend licences for errant merchants or cancel licences for continued breach of cotton marketing regulations.

Instead, the regulator, for its own reasons, has chosen to ignore any form of deterrent penalty and continued issuing fines to offenders, which are of little effect relative to the benefit that errant players are enjoying from theft of contracted cotton.

Industry players said at a $100 penalty per bale, the fine is not enough to eliminate side marketing.

Analysts said there was need for immediate and drastic intervention in the cotton sector to stop the haemorrhaging by players suffering from the scourge of cotton theft.

Failure to do so would lead to the immediate decimation of this strategic industry. As a result, the vision of economic empowerment and rural industrialisation in the affected communities will therefore remain but a dream.

Meanwhile, farmers have appealed to Government to increase cash payouts to eliminate cases of side-marketing.

"The plastic money is good and were are embracing it. But we also need cash because some service providers and businesses are not accepting mobile payments such as EcoCash.

"The cash shortage problem is national problem and we don't have problem with EcoCash or other mobile platforms. But we appeal to Government to increase cash pay outs because there are certain things we need to pay using cash such as school fees and paying medical bills," another farmer from Mushumbi Pools Mrs Museruka Bwanya said.

Zimbabwe

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