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The Cotton Company of Zimbabwe says it will give farmers a backpay for cotton that was bought before the producer prices were increased last month. The company has been buying cotton from farmers at US45c/kg since June 29. Cottco marketing and public relations manager Mrs Veronica Kadandara said the company would pay farmers for cotton that was brought in at the beginning of the season before the price review last month.
“Cottco is paying its farmers a price adjustment for all cotton deliveries made before the producer price was increased to US45c per kg,” she said.
“In other words, farmers are being paid the difference between what they were paid initially and US45c per kg.”
She said Cottco had increased the amount being paid to farmers from US45c to US50c per kg for cotton purchased from July 24 but there would be no adjustments on that price.
The issue of pricing continues to be a sore point in the cotton industry, with farmers remaining resolute in their push for higher prices of at least US80c per kg.
Ginners, however, argue that they are price takers since cotton prices were determined internationally.
Last season, farmers were forced to withhold their crop to force ginners to increase cotton prices but in the end, most farmers had to sell a 200kg bale of cotton for as little as US$60.
However, Cotton prices have been improving from the gazetted minimum price of US35c per kg at the beginning of the marketing season, to between US45c and US55c per kg this month.
According to the latest report from the Agricultural Marketing Authority, a total of 105 764 875kg of seed cotton has been brought in so far.
Alliance Ginneries is buying cotton at between US50c to US55c per kg and Cargill at US45c and US50c. Cottzim is buying at US50c with Fahad offering between US46c and US50c while Sino Zim buys cotton at between US50c and US52c.
Chinatex Investments’ producer prices are between US50c and US55c while Jinmmac buys at between US48c and US58c and Grafax at between US49c and US53c.
Analysts say the current crop shows potential production of over 300 000 tonnes based on seed distributed to farmers from 259 000 tonnes last year.
Cotton prices have remained under pressure for the past year and a half due to a surplus on the international market for the third consecutive year.
But despite the surplus, prices have shown recovery since the beginning of 2013 due to the robust demand from the largest consumer, China, and expectations that the US may witness a sharp fall in cotton hectarage this year.
Online Reporter