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Business Reporter
A SHARP decline in local cotton output is projected this year while concerns abound that crop funding by merchants for the next season may be lower than the previous year.It is understood that some cotton merchants may not provide financial support and inputs to farmers who failed to meet their contractual obligations this marketing season.
About 98 percent of cotton is grown under contract schemes. The schemes were introduced when farmers were failing to access finance from the banks due to lack of collateral.
Preliminary figures obtained from the Cotton Ginners’ Association indicate cotton output could be as low as 145 000 tonnes, from the initial forecast of 250 000 tonnes. This would be 58 percent lower the 2011/12 production of 347 000 tonnes.
The CGA said lower output was due to poor “grower viability” which resulted in poor harvests.
It also estimated the industry could have lost about 30 000 tonnes through side marketing.
“While most farmers were not in a position to achieve contracted volumes due to viability challenges, this does not take away the fact that substantial volumes were lost due to side marketing,” said CGA, an association that represents cotton merchants.
Last month, Olam, the country’s third largest cotton company, said it would consider supporting farmers under its contract scheme depending on recoveries.
“It is too early to comment on what is likely to be but it is fair to say that the current season’s intake and recovery statistics would naturally have a bearing on our planning for the next season,” Olam Cotton managing director Mr Aranyak Sanya said then.
Cottco chairman Mr Albert Nhau said the cotton industry in Zimbabwe has suffered a significant reduction in crop size, due among other reasons to a shift to tobacco in certain areas and lower yields than expected.
“Clearly and as a consequence, Cottco has not been spared from this phenomenon,” said Mr Nhau last week.
“The cotton buying season is just about to come to an end and we are in the process of reviewing our position as a basis of preparing for the forthcoming season.”
About 143 000 tonnes have already been delivered. The buying season ends on August 30.
Zimbabwe Farmers’ Union second vice president Mr Berean Mukwende acknowledged some merchants lost their crop due to side marketing, but most farmers failed to meet the contracted volumes due to bad weather experienced last season.
“Most merchants failed to get their planned quotas due to side marketing and the size of the crop was also small but we urge them to support production next season,” he said.
Side marketing has remained one of the major threats to the viability of the industry. Normally, it is promoted by merchants who have invested less in production and are able to entice farmers by offering higher prices than gazetted ones.
The “theft” of the contracted crop has been done under the guise of “free cotton”.
According to the CGA, the Agricultural Marketing Authority charged with ensuring orderly marketing of the crop, had not done much to discourage the practice. It says AMA has chosen to ignore “any form of deterrent” penalties and continued issuing of tickets to offenders which are of no effect, which in the end has benefited the errant players are enjoying from theft of contracted cotton, let alone the payment.
“Genuine financiers of cotton have been threatened by the regulator with loss of licence for reporting errant ginners to police. This is clearly a case of penalising the victim and promoting chaos in the sector by supporting and protecting errant merchants,” says CGA.
Last year, ginners halved funding from about USS$44 million to about US$22 million.
AMA chief executive Rockie Mutenha declined to comment when contacted for a comment.
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