13 May 2019

Mozambique: Slight Increase in Minimum Cotton Price

Maputo — Tete (Mozambique), 13 May (AIM) - Mozambican cotton farmers and the concessionary companies that buy raw cotton have reached agreement on a new minimum price for first grade cotton of 23.3 meticais (about 37 US cents) a kilo.

This proposal emerged from a meeting on Friday in the western city of Tete between the National Forum of Cotton Producers (FONPA - representing the farmers), and the Cotton Association of Mozambique (representing the companies). The meeting was chaired by Agriculture Minister Higino de Marrule, and attended by the administrators of some of the main cotton growing districts.

The previous minimum price, set in 2017 and reaffirmed in 2018, was 23 meticais a kilo, so the producer price has only risen by 1.3 per cent.

The minimum price for second grade cotton rose from 16.5 to 17 meticais a kilo, an increase of three per cent.

These prices are not definitive, in that they must be approved by the full government. But it is most unlikely that the government would overrule a consensus reached by the producing farmers and the purchasing companies.

Closing the meeting, Marrule recognised that the price is a factor motivating cotton farmers to increase their production, and so he encouraged those companies that can afford to pay more than the minimum for their raw cotton to do so.

He admitted that the negotiated prices "are far from ideal", but believed they form "a solid basis for balancing the interests of the parties involved and for the sustainability of the business along the cotton value chain. Hence we praise and encourage dialogue and the construction of consensus".

This year's cotton marketing season, to which the new prices apply, is due to end on 30 September, and he urged the concessionary companies to purchase all the raw cotton produced by that deadline.

The original target for this year was production of 60,000 tonnes of raw cotton, by about 170,000 households, on an area of 100,000 hectares. But cotton producers in some provinces - notably Sofala and Cabo Delgado - were hit by cyclones earlier this year, and so the target is likely to be missed.

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