adminHarare Bureau
THE Cotton Company of Zimbabwe (Cottco) wants to partner local and foreign companies in the beneficiation of cotton to promote higher producer prices for farmers.
Addressing members of the National Assembly from cotton growing areas, Cottco managing director Mr David Machingaidze said his company was in the process of engaging experts in the textile industry who will advise on the due processes.
“We are looking at two aspects in the process of cotton beneficiation. The first is mostly partnerships with local oil expressers who already have the capacity to crush seed but are not fully utilising it. Instead of selling raw seed what we want to do is to crush it so that the revenues come back to Cottco which in turn would allow us to offer better producer prices,” he said.
The issue of pricing has been a sore point in the cotton industry, with farmers remaining resolute in their push for higher prices while ginners argue that cotton prices are determined internationally forcing them to pay lower prices.
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 $60.
The move to add value cotton seed would mean better producer prices for farmers and employment creation for locals in line with the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.
According to the ZimAsset document, value addition in the manufacturing industry would result in an increased supply of domestically produced cooking oil of up to 7 million litres per month as well as increased production of stock feeds.
This is expected to resuscitate the oil expression industry which is under performing. Mr Machingaidze however said the current scenario of selling raw seed to oil expressers does not benefit farmers as the companies get to keep the revenues realised from value addition.
“When we sell our raw seed to oil manufacturing companies, money does not find its way back to the farmer after beneficiation, whereas if it is done under Cottco’s control we basically end up with more revenue which will allow us to pay farmers more.
“That is why we have to take control of the beneficiation. Ultimately the oil and cake becomes raw material for these companies because we do not have our own factories for oil.
“At least we will be taking it a step further instead of selling it raw. Beneficiation is the only way to go because if we do not do that, it will be very difficult for cotton to compete with other crops like tobacco,” he said.
He said Cottco would also look at partnerships with Chinese companies who have the capacity and expertise in lint processing as most of the lint produced locally was being sold to China.
He said these partnerships would promote the growth of the textile industry as they would lure the companies to bring capital and equipment into the country for local beneficiation.
“At this stage we don’t have tangible deals but this is what we hope to achieve in terms of our strategic plan and the business plan we presented to our shareholders as part of recapitalisation.”
Cottco is this year targeting 100 000 tonnes output and has set aside $25 million for contract farming, double what it spent last year. However the group’s parent company AICO Africa recently issued a profit warning saying Cottco will show a loss in the year to March 2014.
Online Reporter
Bongani Ndlovu