Zimbabwe clinches US$500m Chinese cotton deal
Harare, Zimbabwe – China and Zimbabwe have struck a US$500 million cotton
production and export deal, officials said Monday. Under the agreement,
China Development Bank will advance the funds to a Chinese firm, Sinotex to
finance cotton production in Zimbabwe through its venture with a local
company. The Zimbabwean company, Cotton Company of Zimbabwe, is the largest
cotton buyer in the country and has an out-grower scheme supporting more
than 200,000 farmers.
With the bank loan, Sinotex and the Cotton Company of Zimbabwe hope to
increase the out-grower scheme by 100,000 new farmers, and expand technical
and input support to the growers.
Under the deal, Sinotex will then buy the entire contracted cotton output
from farmers, via the Cotton Company of Zimbabwe.
It is by far the biggest agricultural export deal Zimbabwe has clinched, and
is expected to rival tobacco earnings, the country’s top farm export earner.
The Chinese firm requires around 800,000 tonnes of cotton lint a year, six
times more than Zimbabwe’s current national output.
Officials said the deal, which also provides a ready market in addition to
financing, will spur production in the country, which produces some of the
finest cotton in the world.
A combination of lack of financing and market had weighed down Zimbabwe’s
cotton production in recent years, with farmers switching to tobacco which
was better paying.
The agreement takes effect this year.
Pana 08/03/2011