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May 09, 2010

Zimbabwean farmers protest low cotton prices

Cotton farmers in Zimbabwe are disgruntled with the low prices they are being paid for their crop and as result are contemplating shifting to the more lucrative tobacco.

Buyers are paying US30c a kg, which the farmers said was not viable given the high production costs. It costs farmers between US$300 and US$400 to produce a yield of between 800kg and 1 200kg per hectare.

The textile industry hugely depends on the crop and its abandonment by farmers would spell doom for the industry and related sectors.

During the 2009/10 farming season most farmers financed their own operations as most contractors failed to help with inputs due to lack of trust in the growers. 
Most contractors were afraid of side marketing and could not sponsor cotton production, as they were not sure of recovering their money.

This resulted in a total of 261 191 hectares of cotton being planted. This is a 23 percent decrease from the 337 671 hectares planted last year.

Cotton is labour-intensive and farmers require adequate fertilizers and chemicals to get a meaningful yield.

Most cotton growers produce the crop under contract but have complained that even if they are given seed, fertilizers and chemicals, the inputs are usually late and at times inadequate. Cotton farmers end up financing their operations by sourcing financial assistance elsewhere out of the contract system.

Contractors have also accused farmers of side -arketing and diverting inputs meant for cotton production to other crops such as maize. But according to the Cotton Ginners Association growers needed to increase their profit margins by improving on yield and quality and streamline operations to minimise cost of production in the whole value chain.

CGA chairman, Mr Godfrey Buka said the issue of seed cotton prices needed to be addressed holistically taking into account the total cost structure which includes farm production, transport, council levies, buying costs, security, insurance, ginning and among others.

"The international market determines prices. In Zambia cotton growers are getting US25c to US30c per kilogramme while in Mozambique they are receiving US22c to US25c per kilogramme," he said.

He added that cotton was largely for the export market with volatile prices which local ginners had no control over. "Most of the major producing countries outside Africa pay their growers a subsidy to ameliorate the viability challenges bedeviling the cotton industry.

In China, government purchases of cotton since October 2008 have maintained domestic prices above international rates.

For the 2008/9 season, the Indian government significantly increased cotton minimum support prices by 40 percent over last season.

When prices fall below the minimum support price (MSP), government agencies start buying until they are back to the MSP levels. The Indian government also gave a five- percent tax credit on cotton exports and discounts for volume purchases of cotton from government agencies stocks.

"Regarding local cotton prices, the Cotton Ginners' Association went through a negotiation process with the Zimbabwe Farmers Union together with the Zimbabwe Commercial Farmers Union.

"It has always been a tradition that the CGA negotiates prices with recognized farmers unions, and this has been done before and after re-introduction of cotton legislation in the 2009/10 season," he said.

Mr Buka said it was important that the agreed price was only an interim seasonal pool price, which was not the final price.

An adjustment will be made to the seasonal pool price that will then be paid to the farmer at the end of the season.

The Herald

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