‘Cotton growers being ripped-off’
Friday, 27 July 2012 07:31
Thom Khanje
A Zimbabwean cotton merchant has described the prices at which Malawian
cotton farmers are being paid for their produce as a “rip-off” on the part
of local ginners.
The Cotton Ginners Association of Malawi and the Ministry of Agriculture
have, however, defended the local cotton prices, saying they were reasonable
considering the low cotton prices on the world market.
The Zimbabwean executive, who did not want to be named because of his
company’s business partnerships in Malawi, told The Daily Times from Harare
that despite reduced cotton prices on the world market compared to last
year, farmers in Zimbabwe are being paid for their cotton at prices which
are two and a half times higher than those in Malawi.
“I was in Malawi early this month and I was shocked to see the cotton
prices,” said the official, who is a manager at a major cotton ginnery
company in Zimbabwe.
“In Zimbabwe, we are buying cotton from farmers at eight [US] cents [K224]
per kilogramme while in Malawi; your farmers are being paid an equivalent of
3 US cents [K100]. That is a complete rip-off on your farmers by the
buyers.”
“They should not hide behind world prices because we all sell to the same
buyers internationally,” he said.
He admitted that cotton lint prices on the world market have gone down to
about US$1.71 from US$3.50 last year but believes Malawi buyers should still
have been able to pay better prices than they were doing at present.
Cotton lint is made up of 60 percent of the raw cotton bought from growers
while the remaining 40 percent consist of cotton seed whose market price for
a kilogramme is usually around 10 percent of that paid for lint.
He said the Malawian buyers have taken advantage of the kwacha devaluation
in April to make money at the expense of farmers, saying prices of cotton
should have changed significantly after the devaluation.
“Considering that cotton in Malawi is an entirely export crop which is sold
in dollars to international buyers, the prices of cotton paid to farmers
should have gone up in real [dollar] terms. On the contrary, the prices are
down.That is day right robbery,” said the Zimbabwean dealer.
Calculations by The Daily Times show that before devaluation, buyers paid
K120, which is 7 US cents at the exchange rate of K163 to the dollar, for a
kilogramme of cotton from the farmers.
Government set the “recommended” price of cotton at K78 per kilogramme in
February, which in dollar terms was 4 cents at the exchange rate of K163.
After devaluation, the recommended price has remained at K78, which in
dollar terms is at 2 US cents.
The Zimbabwean merchant has since called on the Malawi government to
intervene on the matter and protect the farmer, saying the present situation
will kill the cotton grower as they will not be able to buy inputs next year
whose prices have gone up tremendously as a result of devaluation.
However, Cotton Ginners Association of Malawi Chairperson Jesse Kita and
Ministry of Agriculture Principle Secretary Jeffrey Luhanga said in separate
interviews on Wednesday that prices of cotton on the world market were the
reason for the unsatisfactory prices being offered on the local market.
“The world financial crisis has affected consumer demand for cotton products
on the world market. As a result, prices of cotton have gone down,” said
Kita.
He said, however, that the local ginners were still paying at prices well
above the K78 as recommended by government.
“The price is currently around K100 per kilogramme. If anybody is paying
below K100, they must be vendors, not ginners. Farmers should be careful by
selling their cotton only to ginners not vendors,” said Kita.
On his part, Luhanga said while government appreciate the concerns raised by
farmers, they were aware that prices being offered by ginners were being
influenced by world market prices.
“World market prices have slumped and the market is still sluggish,” said
Luhanga, adding: “But we still hold weekly meetings with buyers to review
the market. Once we notice that world prices have improved, appropriate
decisions will be made.”