Cottco workers stack seed cotton bales at a ginnery
Business Reporter
THE Cotton Company of Zimbabwe witnessed a massive jump in cotton deliveries last week following interventions by the Agriculture and Marketing Authority to curb rampant side marketing, raising hopes that Government would recoup its investment.
Government this season invested over $42 million in cotton production through Cottco, but side marketing, largely resulting from inadequate regulatory controls had put the investment at risk.
The marketing season, which opened two months ago had been characterised by serious levels of side marketing. Cottco managing director Mr Pious Manamike said deliveries significantly improved in the past week following some “interventions” by AMA.
“We received about 10 000 tonnes last week, a figure, which is quite significant compared to weekly average deliveries that we have been getting since the beginning of the season,” said Mr Manamike in an interview. “While there is room for improvement, we believe that there is some kind of sanity now prevailing in the industry.”
Since last week, AMA started enforcing quotas for merchants to ensure they do not exceed the threshold of the funded crop. In Sanyati – one of the major cotton producing areas in the Mashonaland West Province, farmers contracted by Cottco had to re-pack the crop intended to be sold to private players into the Cottco marked wool packs.
“What is happening is that some farmers contracted by the Government had received wool packs from some private buyers. But these companies have since been stopped from buying because they have exceeded their quotas,” an AMA official said.
“The fact that they have exceeded their quotas means they are no longer allowed to buy even if they still have growers who have not delivered to them. What has become clear is these companies were buying the crop contracted by the Government.”
Cottco extension officer for Sanyati central Mr Josiah Bhaureni confirmed this saying cotton deliveries have significantly improved over the past few days. “It is a big jump,” he said. “We have more farmers delivering their crop to us. The situation is gradually stabilising.”
Several farmers in Sanyati confirmed receiving wool packs from private players despite receiving inputs from Government. “We are re-packing our produce because these companies have been stopped from buying because they have surpassed their quotas,” said one farmer.
Despite enforcing the restrictions on merchants who have exceeded their quotas, The Herald Business also established that private companies are facing serious cash shortages.
Since the beginning of the marketing season, private buyers had been taking advantage of the prevailing cash shortages by paying spot cash to entice farmers into side marketing.
While Cottco has been paying up to $200 on the spot with the remainder being deposited into bank or mobile accounts such as EcoCash, private buyers were paying prices slightly above 47c cash, the base price the Government is paying for the lowest grade.
“They seem to have run out of cash and are now paying 50 percent via EcoCash for every delivery and the remainder in cash. They were using cash shortages as their biggest weapon to entice farmers into side marketing their crop,” farmer Primrose Ngarwe said.
Side marketing had been happening for a long time and this has contributed to massive decline in cotton production and to a certain extent pulling out of some contractors.
Last year, Government invested $26 million and only bought a third of the total output. United States-based company, Cargill closed its cotton business in Zimbabwe in 2014 citing high levels of farmer defaults resulting from widespread side marketing. The company said the practice had resulted in the company failing to operate profitably.
Last year, Cottco funded production of 300 000 hectares and is planning to increase the hectarage to 350 000ha, said Mr Manamike.
“We are already preparing for the next season.