Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Agricultural policy flip-flops damaging

Agricultural policy flip-flops damaging

Thursday, 05 July 2012 15:57

Peter Gambara

THE current impasse between cotton growers and ginners has seen disagreeing 
parties point fingers at each other as the marketing season progresses 
without the crop being sold. Cotton growers in the 1980s were respectable 
farmers as they got good returns from cotton and were able to buy basic 
farming implements like ploughs, cultivators and scotch-carts, while sending 
their children to boarding schools.
What has gone wrong as they can no longer afford this, why is there so much 
fighting over the producer price and why are cotton farmers living in 
abject poverty?

Cotton is produced by 300 000 small-scale farmers from the drier parts of 
the country like Gokwe, Chiredzi, Sanyati, Mutoko, Mudzi, Muzarabani and 
Mount Darwin. It is a drought tolerant crop and farmers are able to realise 
reasonable yields even during drought. The crop is a low feeder compared to 
other traditional crops like maize. Most farmers apply a bag of compound L 
and another bag of top dressing fertiliser per hectare and expect to harvest 
about 700 kgs. But cotton is a labour-intensive crop as it is handpicked.

There has been debate over whether the current basic package is adequate or 
not and ginners have since come up with other packages that provide more 
fertilisers and expect a higher yield per hectare. The issue of improved 
varieties has often been discussed as there are indications that some time 
back the country produced some improved cotton varieties but sold the 

During the 1980s, cotton was a controlled crop and the Cotton Marketing 
Board (CMB) had a monopoly over its marketing. CMB was privatised together 
with other marketing boards like Dairy Marketing Board and Cold Storage 
Commission with the advent of economic reforms in the 1990s.

The lack of competition then meant CMB was in control of the situation as 
regards the inputs scheme, buying the crop and payment to farmers. The 
liberalisation of the market has since seen the emergence of 14 players in 
the industry. Since this deregulation, there was a manifestation of 
fly-by-night players, mainly from the Asian region, who would come into the 
country at marketing time and entice farmers sponsored by other players to 
sell the crop to them.

This led local ginners to persuade government to come up with Statutory 
Instrument (SI) 142 of 2009, which essentially prohibits any buyer who has 
not sponsored any farmer from buying the crop. It also established the 
Cotton Marketing Technical Committee that falls under the Ministry of 
Agriculture, Mechanisation and Irrigation Development and is made up of 
ginners’ representatives, representatives from the four farmers’ unions, as 
well as other stakeholders who use cotton products like oil expressers.

Over the years the local ginners/merchants have formed a grouping under 
Cotton Ginners Association of Zimbabwe (CGA) that operates under a 
secretariat. That secretariat makes sure all contracted farmers are 
registered with CGA and no farmer gets inputs (double- dips) from more than 
one ginner, and only those who have sponsored the growing of the crop are 
allowed to buy it. CGA has also established common input distribution and 
buying points in the cotton growing areas.

Cotton lint is traded on the Liverpool market and the prevailing prices have 
a bearing on the producer price in the cotton growing regions of the world. 
When the prices on the Liverpool market falls, there is definitely a 
knock-on-effect on the cotton producer prices world wide. In order to reach 
a producer price, the local ginners and growers have agreed on a formula.

The formula takes into consideration factors like the prevailing Liverpool 
market prices, the cost of growing the crop and the ginning costs, among 
other things. Ginners provide the cost of ginning, whilst growers provide 
the cost of production. This year the two parties got deadlocked over these 
two figures, with growers accusing ginners of having inflated their ginning 
cost whilst ginners also questioned the cost of production.

When the two parties agree on a producer price, they also agree on prices 
for grades A to D. When a farmer delivers his/her cotton to a buying point, 
he/she is paid using the lowest grade, D, as there are no grading facilities 
at these buying points. The cotton is then moved to a grading facility where 
it is given a grade and the farmer then gets a supplementary payment, which 
is the difference between grade D (what was paid at collection point) and 
the final grade.

There are provisions in SI 142 of 2009 for independent graders to be used in 
cases of disputes. Previously ginners would also pay a bonus at the end of 
the marketing season to their growers if they reaped a “windfall” in their 
marketing of the crop. Growers have complained some ginners have not paid 
the top-up prices after grading and very few, if any, ginners have paid a 
bonus in the past few years.

The row over the producer price dates back to 2010 when world price started 
falling. Government had to intervene to set the price then. Due to disasters 
in some cotton growing areas during 2011, the world price shot up to around 
2,34 pounds per kg, resulting in local farmers being paid about US85 cents 
/kg, which was almost double what had been paid the previous season.

This year the Liverpool price fell to a low of 0,69 pounds per kg, leading 
to ginners offering a producer price of about US29 cents/kg for grade D.

Producer price negotiations are normally held under the auspice of 
Agricultural Marketing Authority and the parties will only refer the matter 
to the minister of agriculture after failing to agree. When they refer the 
matter to the minister, they also include all the relevant facts like the 
prevailing Liverpool price index, the ginning as well as cost of production. 
They also give recommendations for the ministers consideration.

This year, after the deadlock, they referred the matter to the minister and 
also recommended he considers paying a “subsidy” over and above what the 
ginners/merchants were able to pay. The minister refused this recommendation 
and instead proceeded to issue a statutory instrument declaring the crop to 
be a controlled product.

Once a crop has been declared a controlled product, its marketing becomes 
controlled by a body given the responsibility. You will recall that maize 
and wheat used to be controlled products up until 2009 when government 
liberalised their marketing. Anyone who wanted these products then had to 
approach the Grain Marketing Board, which had the sole right to buy from 

One of the most contentious issues in this country has been policy flip-flop 
by government. Government previously allowed the trading of maize and wheat 
on the open market and that saw the setting up of Zimace, a market-based 
commodity exchange which sadly is no more.

Today a lot of market proponents are saying we should bring back the 
commodity exchange in order to stabilise the marketing of maize and wheat. 
What exactly do we want as a country; do we want government to meddle in 
marketing, or do we want government to simply be a facilitator, more like 
what happens in tobacco marketing?

Tobacco Industry and Marketing Board licenses auction floors and contractors 
to buy the crop but also acts as the referee in cases of dispute. The 
marketing of tobacco in this country provides an example of how agricultural 
marketing should be handled. The prices provide an incentive to farmers to 
grow the crop and the area planted has been steadily increasing over the 
years. It is simple market economics: provide the platform and let market 
forces determine prices.

Government has previously tried to intervene in tobacco marketing with 
disastrous results. Due to the stability that exists in the tobacco sector, 
contractors are increasingly willing to contract farmers. More than 50% of 
the tobacco crop is now contract-farmed and this has helped liquidity in the 
local market.

The cotton industry is one of those agricultural sectors where almost 100% 
of the crop is grown under contract-farming. Ginners use offshore funding or 
borrow from banks to buy inputs that they give to contracted farmers. This 
is done without any collateral; after all the crop is grown by small holder 
farmers in communal and resettlement areas and these farmers do not have the 
kind of required security.

By declaring cotton a controlled crop, the minister risks destabilising that 
arrangement — cotton ginners and banks will hesitate to finance the crop 
next year. This change in policy is coming midstream, when changes should 
have been made at the beginning of the season.

Government is already failing to provide enough resources to boost 
production of essential cereals like maize and wheat. So where does it 
expect to find money to fund the production of cotton. Whilst government 
could not find US$20 million to finance inputs for the current winter wheat 
programme, the cotton crop was sponsored by ginners to the tune of US$42 
million. Financiers provide funding to cotton ginners on the basis that it 
will yield increased benefits at the end of the season.

Why would any financier provide funding to a cotton ginner for nine months, 
only for the ginner to be told to go and collect monies they invested from 
GMB which is already struggling to pay farmers for delivered maize and 

Government is failing to meet its revenue targets and pay civil servants 
adequately. Government should instead try to bring ginners and producers 
closer together on the producer price, fully aware that it does not have the 
resources to buy or subsidise the crop.

Politicians will always say they cannot stand by while their electorate are 
being “cheated by unscrupulous merchants” when elections are around the 
corner, but if interventions are to be made at all, they must be sustainable 
in the long term. Policy contradictions and inconsistencies do not

Peter Gambara is an agricultural economist and consultant with AgriExpert, a 
local consultancy firm. He writes in his personal capacity. Email: 
[email protected] . 


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