THE extension of increased foreign currency threshold payments coupled with aggressive clearance of arrears backlogs has rekindled cotton farming interest in a development likely to see overall output increasing going forward, Cottco Holdings Limited has revealed.
ZWL payments extended to the sector over the past years had choked the crop's output before the Cottco restrategized and offered to pay 75% in US$ with the remainder in local currency which has been faring well due to its relative stability on both the official and parallel markets.
Presenting a trading update for the period ending August 2023, Cottoco's company secretary, Eunice Mupanduki said farmers' morale has visibly grown.
"Farmer morale improved following the 2021/2022 buying season where they were paid 75% in United States Dollars (USD) and interest to grow the crop was rekindled resulting in 360,224 farmers being registered as compared to 294,202 growers in the previous season," she said.
This coupled with Cottco's commitment to clear all outstanding debts owed to farmers r is expected to go a long way in restoring the viability of the cotton sector.
Meanwhile, as the season draws to an end, the company has achieved a 48% increase in intake from 46,748 metric tonnes in 2022 to 69,146 metric tonnes in the current season.
"Cottco has paid USD15.9 million to farmers to date and the remaining 32% is expected to be cleared in the month of September 2023 as market liquidity improves. Ginning has commenced at all ginning sites and product deliveries are underway. The company's order book continues to surpass available supply," said Mupanduki.
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Management has been implementing cost containment strategies since 2022 which are expected to improve margins in the year ended 31 March 2024 which include a 100% roll out of Smartfarmer, an Enterprise Resource Management system enabling a real-time capturing of farmer information among others.
The strategy has gone a long way to cut back on physical stationery costs as well as the employment of data-capturing clerks.
Savings on procurements have also been realised in the period under review through competitive bidding.
"Suppliers for the Presidential Inputs for Cotton Program have commenced delivery of fertilisers for distribution to farmers which will be helpful in early crop establishment given the forecast of El Nino weather patterns for the forthcoming season," added Mupanduki.
