Martin Kadzere Senior Business Reporter
GLOBAL lint price has plunged to lowest levels since the global financial crisis in 2008 due to coronavirus, denting growth prospects of Zimbabwe’s cotton industry that has been on a recovery path since 2015.

The lint price is down 33 percent to US49c per pound from around US70c the same period last year on the New York Futures (NYF) as the deadly pandemic take toll on major commodity prices.

The lowest price was in 2008 during the global financial crisis when prices fell to US 44 per pound. Industry players are concerned that the prevailing international lint prices will exert pressure on the margins of ginners and the producer price if the Government does not chip in with a subsidy.

The bulk of Zimbabwe’s lint is sold to offshore markets, making the commodity produced from raw cotton one of the country largest foreign currency earners. Last year, Zimbabwe produced 74 000 tonnes of raw cotton, down from 144 000 tonnes a year earlier after output was badly affected by drought.

However, production has been steadily increasing since 2016, thanks to Government’s inputs support scheme. There has also been a growing appetite from private sector funding cotton production.

At the end of the season in September last year, the price of cotton was equivalent to about US33c per kg from around US55c at the start of the season due to the loss of value of Zimbabwean dollar.

This will not bode well for the viability of local farmers — who in about seven years ago abandoned cotton production citing poor prices. Even though the majority of small scale farmers are enjoying a subsidy in the form of free inputs through a state sponsored scheme known as the Presidential Inputs Scheme meant to support vulnerable rural households, industry players warned poor prices were likely to dent appetite for farmers to grow the crop next season.

This week, a farmer representative body appealed to Government to come up with a subsidy to cushion farmers from the effects of the deadly pandemic, which has infected nearly 2,6 million and killed 825 000 worldwide.

Farmers in the major cotton producing countries such as USA, China and India enjoy some form of price protection in the form of either guaranteed prices or lifeboat subsidies, which kick in when world cotton pricing dips below agreed levels.

Major cotton producing nations US, Brazil, India, Pakistan pay minimum support prices for their farmers.

China support production by controlling import volumes and values by applying border protection measures based on quotas and sliding scale duties.

China also maintains a strategic reserve of cotton and releases the commodity on to the market from reserve through a system of auctions when there is a shortage and replenishes in times of abundance thus supporting prices.

Unlike tobacco, the cotton marketing season is unlikely to be affected by coronavirus as most of the buying points are decentralised.

The opening of the tobacco auction floors, which was set for today was indefinitely postponed as the authorities work on modalities on the sales would be conducted in light of Covid-19.

Beyond its impact on human health (materialised by morbidity and mortality), coronavirus, is disrupting an interconnected world economy through global value chains, which account for nearly half of global trade.

The pandemic has also resulted in abrupt falls in commodity prices, fiscal revenues, foreign exchange receipts, foreign financial flows, travel restrictions, declining of tourism revenues and shrinking labour market.

Zimbabwe extended the 21-day national lockdown last Sunday by two more weeks as part of measures to slow the spread of the highly contagious disease, which had infected 25 people and killed four.