Cotton producer price set at US30c per kg

Martin Kadzere

Cotton buying prices for the upcoming season have been set at US30c per kilogramme, from last season’s US32c, following extensive negotiations between the Government, ginners, and farmer organisations.

The agreement, reached in response to declining global lint prices, will see payments made at common buying points. The buying season is scheduled to commence during the first week of next month.

The discussions involved six farmer organisations, with five, including the Zimbabwe Farmers Union and the Zimbabwe National Farmers Union, agreeing to the new price. However, the Cotton Producers and Marketers Association objected, advocating for the price to remain at US32c.

“Global lint prices, along with ginning and shipping costs, were the main factors determining the prices,” said a local merchant executive.

“It’s, however, important to note that US30c per kilogramme represents the minimum price, with farmers eligible for additional payments (differentials) determined by the grade of their cotton.”

Global lint prices are down to about US67 per pound from around US87c per pound at the same time last year.

Professor Obert Jiri, permanent secretary of Lands, Agriculture, Fisheries, Water and Rural Development, represented the Government in the negotiations.

A proposal by The Cotton Company of Zimbabwe for 70 percent of the payment to be made in ZiG was rejected by other players.

Cottco had also suggested a validation exercise to ascertain merchant support levels, but this was deemed impractical given the season’s imminent opening and the fact that some cotton bales have already been delivered to common buying points.

Meanwhile, Cottco is actively pursuing funding for the upcoming 2025 marketing season.

As the country’s leading financier of cotton under the Presidential Inputs Scheme, Cottco has reportedly engaged at least three banks for lines of credit to buy the crop. Sources close to the matter indicate the discussions are being facilitated by the Mutapa Investment Fund, under which Cottco now operates.

“Hopefully, these (negotiations) will materialise before the season begins,” the source said.

Cottco’s head of operations, Mr Munyaradzi Chikasha, told the National Oilseed Conference organised by Zimpapers in Kadoma yesterday that the company needs as much as US$17 million to buy cotton.

Concerns are mounting that delays in securing funding for cotton purchases could entice desperate farmers to sell their crop to alternative buyers.

Industry stakeholders have also issued stern warnings about the significant risk of side marketing, especially given Cottco’s historical issues with delayed farmer payments. Many farmers are simply unlikely to be persuaded to deliver their harvest without immediate compensation.

However, Mr Chikasha moved to reassure stakeholders, saying Cottco would ensure farmers are paid on time.

He explained that outstanding payments from the 2023 buying season were largely due to producer price challenges that were beyond Cottco’s control. Despite past hurdles, he affirmed that farmers would receive their outstanding money and assured everyone that the company is fully prepared for the upcoming season.

“The outstanding balances are US dollars, which assures farmers of receiving their full monetary value,” said Mr Chikasha.

Zimbabwean estimates this year’s cotton production at 63 000 tonnes, a significant increase from the previous year’s 13 000 last year. Last year’s drastic decline was primarily attributed to the severe El Niño-induced drought, which has led to what is likely the lowest recorded cotton output for the country.