adminCottco Holdings said on Friday it has recouped most of the $7 million that it invested in production of the crop last year through on going deliveries from contracted farmers.
With the marketing of the crop, also referred to as the “white gold”, already underway, Cottco Holdings chief executive officer Mr Collins Chihuri told shareholders that the firm would recover in full its investment by end of the marketing season.
“We are coming towards the end of intake and our purchased quantities are in line with level of our inputs funding,” Mr Chihuri said at the company’s annual general meeting, without disclosing how much cotton had been delivered to the company.
“We should be able to recover our input costs by end of season.”
Despite challenges of pricing and side marketing, which have rocked production of the crop, resulting in some farmers abandoning it for tobacco, Mr Chihuri said cotton production remained a viable business.
“We need to change the perception that cotton as a business is not viable as the principal ingredient to profitability is yield improvement,” he said.
He said the company was pushing a drive to increase national cotton production focusing on increasing its profitability through cost reduction.
“Industry initiatives are targeting improvements through farmer training and improved extension where we are complementing Agritex,” he said.
Zimbabwe produced 145 000 tonnes in the 2013 season, after plummeting from 350 000 tonnes the previous year with estimates that production this season would be even lower than last year. Mr Chihuri said the average producer price had increased by 10 percent this season, noting that price movements were still subject to developments on the international scene.
Over production of the crop which is exceeding demand by nearly three million tonnes at an international level, remained a factor affecting price stability, he said.
Cottco Holdings returned to profitability in its financial year ending March 2014 after posting an after tax profit of $2,6 million from a $9,6 million loss the previous year. – New Ziana
Online Reporter