Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Zimbabwe clinches US$500m Chinese cotton deal

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


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