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AMA has set the price of cotton from 36 to 50 cents per kg depending on grade, pending outcome of discussions between farmer representatives and ginners.
Due to the price impasse, most cotton producers have not started picking up the crop, though the bulk of the cotton crop is ready for harvest.
In a statement, AMA said it had come up with indicative minimum prices for seed cotton.
Grade D will fetch between 36 and 39 cents per kg while Grade C will be sold at between 40 and 43 cents, Grade B 44 and 48 cents and Grade A 48 and 50 cents.
“Prices were arrived at after taking into consideration farmers’ and ginners’ production costs, price of lint on the international market among other fundamentals,” AMA said.
AMA said cotton was not a controlled product and movement in prices should be reflective of changes in international prices of cotton lint.
“Due to this, buyers who are able to pay higher prices that take into account these fundamentals are encouraged to pay prices above the indicated price ranges.
“The situation will be reviewed regularly to keep track with developments on the international market,” AMA said.
The Zimbabwe Farmers Union (ZFU) executive director, Mr Paul Zakariya, said prices announced by AMA were provisional, pending finalisation of negotiations between farmers and buyers.
“Farmers and buyers are still to reach an agreement on this year’s price and the price that was put in place now is just meant to make sure farmers will not sell their produce at an extremely low price.
“This is just a working price whilst the negotiations continue hoping that in the mean time it will work for both parties,” he said.
According to cotton outlook figures, the global production rose 16 percent to 27,1 million tonnes due to high prices obtained last season and the area under cotton cultivation this year has risen to 432 709 hectares from last season’s 379 689 hectares.
The scenario for 2012 contrasts that of 2011 in that cotton stocks are high against limited demand
whereas in 2011 production could not nearly match supply.
“The favourable prices offered last year, along with the Presidential Well Wishers Scheme and contract farming, have attracted more farmers into growing the crop this year.
“I think this has resulted in the lowering of prices but farmers will be considering the cost of production hence the demand for a higher price,” Mr Zakariya said.
Last year, the Liverpool A index, normally used by ginners to determine local price, was US230,17c per pound and current price is US99, 46c per pound, showing a decline of 57 percent.
“The price being offered by ginners is almost 180 percent less compared with what farmers were paid for the lowest grade at the start of the 2011 marketing season.
“This is the major cause of discord in this year’s price and we will be holding a National Commodity Marketing meeting for cotton in Gweru this week where some of these problems will be looked into in detail,” he said.
Online Reporter