Cottco set for windfall as cotton price surges 14pc

Edgar Vhera Agriculture Specialist Writer

THE country’s largest cotton contractor has reason to smile all the way to the bank following the 14 percent rise in international lint price from US$1,65 per kg at the beginning of November 2023 to the current US$1, 87.

In its recent trading update from September 1, 2023 to January 31 this year, Cottco said international lint prices rebounded from a low of US$1, 65 per kg at the beginning of November 2023 to current levels of US$1, 87 on the back of increased demand with top cotton consumer China accounting for more than half of the net sales.

Cottco company secretary Ms. Eunice Mupanduki said oilseed prices remained firm during the period with demand for ginned seed locally surpassing supplies.

“Liquidity in the local economy remained constrained, with Cottco unable to drawdown to the full extent of available facilities, despite having adequate security. The company was, however, able to settle US$19,6 million (83 percent) and $7,2 billion (18 percent) of the farmer payments dues in the respective currencies with outstanding dues expected to be cleared from product receipts by March 31,” she said.

The company is projecting to break even for the year ended 31 March 2024 in United States dollar terms, added the update.

The trading update revealed that there was a 48 percent increase in seed cotton intake from 46, 748 tonnes in 2022 to 69, 419 in 2023.

Ginning, which was supposed to end last year was delayed due to erratic power supplies in the last quarter of 2023 and to date 58, 326 tonnes (84 percent) of seed cotton has been ginned with only 1, 066 tonne (two percent) having been toll ginned in the Lowveld due to the high volumes in that area, added the update.

Ms Mupanduki said: “Local and offshore lint customer collections are still underway with 7, 776 tonnes of lint in stock. Ginned seed on hand is 4, 642 tonnes and upliftment by seed suppliers and oil expressors is underway.”

As Cottco expands its value addition drive, for better prices and increased earnings, 475 tonnes of lint have been converted to yarn since April 1, last year, continued the update.

The 2023/24 season, characterised by the El Nino weather conditions, saw the first effective rains being received in December 2023.

“A total of 181 604 growers have so far planted an estimated 128 152 hectares under cotton. The late crop will result in an estimated one-month delay in the intake,” the trading update revealed.

Working in collaboration with the Grain Marketing Board (GMB) and Agritex, Cottco is currently implementing robust measures to enable farmers to easily access extension services and the second tranche of inputs, which include chemicals and top dressing.

Cottco acting chief executive officer, Mr Munyaradzi Chikasha said renowned and established farmers who established the crop on more than two hectares during the 2023 cotton farming season have been given full input packages and all the necessary support to ensure they achieve maximum production.

“Furthermore, cotton inputs distribution points and virtual depots have been established to expedite the movement of herbicides and insecticides.

“The recent extensive ‘donje mumunda’ drive which was carried out in the Lowveld, Muzarabani, Chireya in Gokwe North and Zhomba in Gokwe South to encourage the planting of cotton during the prevailing window was positively received by farmers leading to an increase in the hectarage,” he added.

Cottco’s focus is now on preparations for the 2024 marketing season to ensure farmers are paid on time and side marketing is curbed.