Online Reporter
Edgar Vhera
Specialist Writer
Cotton growers will this marketing season be paid exclusively in United States dollars, with the grade D pegged at US$0.30 per kilogramme.
After grading, farmers will get their top up as grade C will be bought at US$0,34, while grade B is at US$0,37, and the top-paying grade A fetching US$0,41 per kg.
This comes as the growers are calling for a cost-plus pricing model, which is more viable to them than the current arrangement.
Zimbabwe Farmers Union secretary general, Mr Paul Zakariya, said the current profit and loss pricing model tended to pass on ginners’ inefficiencies to producers.
“As the farming community, we would have been happier if the price had been pegged above last year’s base price of US$0,32 per kilogramme.
“Considering the producer price of seed cotton this year, we need to look at the model we use to negotiate, as this profit and loss sharing model is not working for the farmer,” he lamented.
Mr Zakariya said farmers were bearing the inefficiencies of the ginners.
“We advocate for a cost-plus pricing model, where farmers’ production costs are considered and then negotiate the markup,” Mr Zakariya said.
Cost-plus pricing is a strategy whereby the selling price of a product is determined by adding an agreed percentage mark-up to the product’s unit cost.
On the other hand, the profit and loss pricing model determines the price of a commodity in the market to make the business profitable, and in the case of cotton, it is the viability of ginners that is considered.
ZFU is concerned that following the introduction of the grade-based pricing system, farmers have not benefited from the price differentials.
“The grade D price paid at the common buying point (CBP) is the last price that a farmer gets and no top-ups for better grades.
“We want farmers to get a voucher which shows their cotton grades to incentivise them to produce quality crops,” he explained.
Zimbabwe National Farmers Union (ZNFU) president Mrs Monica Chinamasa said the cost of production should be used to determine the price of cotton.
“ZNFU wants production cost to be used in coming up with a good price for the crop,” she said.
Zimbabwe Commercial Farmers Union (ZCFU) cotton commodity chairperson, Mr Clemence Gondo, said it was better for farmers to get to the contract system where merchants would compete for price.
Local cotton expert, Mr Justice Mupotsa, said stakeholders should think of ways to resuscitate this sector and improve the capacity utilisation of local ginneries.
“We need to rethink this important crop and revise how we are rewarding farmers. According to the world market price, the announced grade A price of US$0.41 is justifiable and this ought to be paid across all cotton grades this season,” he said.
Farmers said they expected a price review so they could break even.
Most of the growers said they paid cotton pickers (US$1 per 20kg) for a 200-kilogramme bale of cotton, and got paid US$60 for the same quantity.
The remaining US$40 will have to pay US$5 for transport from the field to the homestead and another US$5 from the homestead to the CBP. This leaves the farmer with only US$30 less than other ancillary costs.
Cotton is a major source of livelihood for approximately 2 million people.
The crop contributes immensely to income and employment creation while contributing to foreign currency earnings.
Cotton provides raw material for oil expressing, knitting, spinning, weaving and stockfeed industries.
Cotton removes carbon emissions from the atmosphere as it sinks 150 times more carbon dioxide than it produces. Conservation tillage practiced under Pfumvudza/Intwasa, cotton further helps in carbon sequestration.
Zimbabwean estimates this year’s cotton production at 63 000 tonnes, a significant increase from the previous year’s 13 000 tonnes.
The El Niño-induced drought experienced last year affected cotton production.
