Tinaye Agere
Business Reporter
THE Cotton Company of Zimbabwe (Cottco) has assured farmers that they will receive payments on time after banks started disbursing more money last week, the firm’s chairman Mr Sifelani Jabangwe has said.
According to Mr Jabangwe, guarantees for pre-finance facilities have already been secured.
Cottco, which administers the Presidential Free Cotton Inputs Scheme, a State-assisted programme supporting nearly 300 000 rural households, had stopped payments due to liquidity constraints that resulted in banks failing to release the money. The challenges resulted from the Treasury’s recent interventions meant to stabilise the economy.
Mr Jabangwe said the company was now expecting in excess of US$12 million from its facilities with banks, which would see the firm clearing all its outstanding obligations.
“The liquidity issues have basically been resolved in the past week and all banks we have facilities with have started disbursing the money,” said Mr Jabangwe.
“We also wanted guarantees from the Reserve Bank of Zimbabwe for pre-finance facilities and those guarantees are done and everything will now fall into place.”
He said the company received US$1,5 million on Thursday, being a drawdown from a facility with a local bank, while US$6 million was expected from a pre-finance facility on Friday, and the same amount this week. The firm requires US$16 million for about 45 000 tonnes that have been delivered so far.
About US$1,5 million has already been paid.
Mr Jabangwe said from next month, the company would be generating revenues from lint sales and that would improve its liquidity position going forward.
Cotton Producers and Marketers Association chairman Mr Steward Mubonderi confirmed that Cottco had already resumed the payments.
“We are happy the money is now coming through and we would like to assure the farmers they would be no further challenges going forward,” said Mr Mubonderi.
“Payment modalities have also been refined, and that will enable farmers with smaller volumes to be paid in cash.”
In a statement early last week, Mr Jabangwe urged farmers to shun side marketing and assured them that modalities were now in place to pay on time.
“The Cotton Company of Zimbabwe would like to assure farmers that payments for seed cotton delivered to depots and common buying points are now resuming after engagement with relevant authorities,” he said.
“Payment modalities are being refined, in partnership with other stakeholders, to ensure maximum convenience for farmers. Cottco urges farmers to shun side marketing and continue delivering the crop to designated points”
He said nearly 45 000 tonnes of cotton have so far been delivered and the company is still expecting a similar volume.
“Hopes are high that the full intake for the current season will double last year’s output, which stood at 46 000 tonnes.”
National production, including output from private merchants, is estimated at about 100 000 tonnes. Zimbabwe’s cotton season runs from September and includes a growing phase from around October to December, and a harvesting and sales period from May to August.
Cotton farmers, like their tobacco counterparts, are being been paid 85 percent in foreign currency. The remainder will be paid in the local currency at the official bank rate. The lowest grade is fetching US40c per kg while farmers are paid US46c for the premium quality grade (A).
Running for the eighth straight season, the State-assisted scheme has seen cotton production recovering. Despite occasional production dips during drought seasons, output rose from 28 000 tonnes in 2014, the lowest in nearly two decades, to 145 000 tonnes in the 2017/2018 season. Apart from free inputs, farmers also receive tillage services and agronomy support.
At peak, Zimbabwe produced 351 000 tonnes of cotton in the 2010/2011 season and the Government has since set a target — to raise production to 300 000 tonnes by 2025.
Zimbabwe mainly uses open-pollinated varieties, but indications are that production could go up to as much as 600 000 tonnes with the use of hybrid seeds. Experts are urging the Government to ramp up use of hybrid seeds to boost productivity and cut the risk of crop failures as open-pollinated varieties are getting more susceptible to diseases.
Online Reporter