Anger boils over cotton price
Saturday, 08 May 2010 19:21
A cotton price war has erupted in the Midlands amid reports that angry farmers in Zhombe recently clashed with Cotton Company of Zimbabwe (Cottco) buyers over prices. Farmers said there were skirmishes at Doneni area near Kadoma recently after they were “provoked” by the prices offered by the company for their crop.
Sources told The Standard they were angered by the 30 cents per kg offered by the company for their cotton.
Sources said farmers even boycotted delivering their cotton to the collection points.
This prompted Cottco employees from Sidakeni to go around the area asking farmers to sell their cotton.
“They resorted to go out to farmers because people were not bringing the crop claiming that they had no transport to take their bales to the Sidakeni collection point,” said one of the affected farmers.
“The Cottco buyers met hostile farmers who attacked them with logs and stones. The employees ran for dear life.”
But Cottco spokesperson, Mariah Pangidzwa last week said the reports were not true.
Pangidzwa confirmed that there were disputes over the pricing of cotton.
“What I can only tell you is that farmers are being concerned by the fact that other farmers were making large sums of money when they sold tobacco,” she said.
“What they forget is that as Cottco we give farmers loans in the form of farming inputs to enable them to have good yields.
“But some divert inputs such as fertilisers to other crops like maize.
“This then reduces the amount of yield that a farmer is supposed to get from one hectare.
“We expect a farmer to get something like 2 500 kg of cotton from one hectare but after diverting other inputs, farmers end up getting something like 400 kg and at the end of the day they say it’s not profitable.”
Cotton Ginners Association director-general Godfrey Buka said the prevailing prices were a product of negotiations between his group and the Zimbabwe Farmers’ Union as well as the Zimbabwe Commercial Farmers’ Union.
“This marketing season we agreed on a seasonal pool price of 30 cents per kg of seed cotton.
“It is of interest to note that in Zambia cotton growers are getting between 25 to 30 cents per kg while in Mozambique they are receiving 22 to 25c per kg,” he said.
“The crop is largely for the export market with unstable prices which local ginners have no control over.
“In 2009, global lint prices were very depressed and the average opening price of seed cotton in Zimbabwe was 15c/kg.
“However, the season ended up at an average of 28 cents per kg.”
Buka said the 30 cents per kg was only an interim seasonal pool price and adjustments could still be made to payments made to farmers at the end of the season.
“Price adjustments are not new in the cotton industry as this is what used to happen some years back before market liberalisation,” said Buka.
“Price adjustments are necessary because the processed seed cotton (lint) will only be sold after ginning,” he said.
“As prices are determined by the international market, we have to calculate backwards to arrive at fair prices.
“It is also important to note that the seed cotton crop is not marketed as a whole product.
“It has to be processed before it can be sold either on the local or international market.
Seed cotton on average yields about 41% lint, which is the higher value product.
The bigger proportion of 58% constitutes the ginned seed and the balance of 1% would be the processing waste.
In terms of producer prices, cotton is not a very high value crop and farmers the world over face viability challenges.
“Most of the major producing countries outside Africa pay their growers a subsidy to ameliorate the situation bedevilling cotton industry,” Buka said.
“However in our case we could try and increase profit margins by improving on yield and quality and streamlining operations to minimise the cost of production in the whole value chain”.
Prime Minister Morgan Tsvangirai during a recent tour of the Midlands urged buyers of crops to consider farmers’ plight in the face of the high cost of inputs and labour when negotiating prices. He said cotton farmers were some of the most affected by producer price distortions.
BY BRIAN NKIWANE