Merchants to buy cotton only after settling outstanding payments

Agriculture News Editor

COTTON MERCHANTS will purchase cotton seed only after settling outstanding payments from last season, including price differentials, as the cotton marketing season begins tomorrow.

This year, farmers are set to receive payments exclusively in United States dollars.

Cottco, the country’s largest cotton buyer, requires US$17 million to finance this year’s purchases.

The marketing season traditionally begins on June 1, but the date has been moved as it falls on a Sunday.

It will run until July 15.

A rebound in production is expected this year following the El Niño-induced drought that affected yields last season.

According to the Second Crops, Livestock and Fisheries Assessment (CLAFA 2) report, Zimbabwe is expected to produce 61 289 tonnes (t) of cotton, up by 52 percent from last season’s 40 223t.

The Agricultural Marketing Authority (AMA) recently announced a producer price of 30 US cents per kilogramme for Grade D, with payments for grade differentials expected to follow afterwards.

Grade A is pegged at 41 US cents/kg; Grade B (37 US cents/kg); Grade C (34 US cents/kg); and Grade D (30 US cents/kg).

AMA acting chief executive officer Mr Jonathan Mukuruba said buying will be restricted to 697 common buying points (CBPs) — comprising 221 permanent and 476 mobile sites — across the country.

“Buying is strictly at AMA-designated points using the AMA database,” he said.

“Contractors are to deploy appropriate payment channels within reach of the farmers from their nearest buying point. No bales shall be moved from the buying point unless fully paid for.”

Merchants would only buy seed cotton after completing payments for last season’s deliveries.

To enforce order and curb side marketing, AMA has directed that all seed cotton be sold at registered CBPs, with transactions tracked via the authority’s database.

Farmers must also produce a national ID card to sell cotton, and only those issued woolpacks by their respective contractors and verified by AMA will be allowed to deliver.

“Recording and keeping of registers by each contractor at CBPs is encouraged,” added Mr Mukuruba.

“AMA creates a database, which is used as a mechanism for continuous verification during marketing on delivery of seed cotton.

“Woolpacks will be issued to farmers in the database and by their respective contractors while vetting of farmers is done by AMA officials.

“Farmers will only be allowed to sell after producing a national registration ID card.”

Cotton bought outside designated CBPs will be confiscated, while movement from CBPs to ginneries will require dispatch permits issued by AMA.

The Ministry of Lands, Agriculture, Fisheries, Water and Rural Development and AMA, he said, will conduct random blitzes to enforce compliance.

Cottco chief operating officer Mr Munyaradzi Chikasha said the company is deploying staff to more than 260 buying points and will begin clearing debts to farmers.

Cottco owes US$5,6 million for deliveries made in 2023 and ZiG436 580 for part of the 2024 season.

“We are ready for the marketing season, and we are going to deploy staff to more than 260 buying points,” he said.

“Cottco requires US$17 million to buy cotton from farmers this season.”

Cottco is, however, concerned about side marketing.

“Cottco is getting about 35 percent of the contracted crop,” said Mr Chikasha.

The company contracts approximately 400 000 farmers, many of whom have raised concerns over the viability of the current contracting model.

Some accuse merchants of providing insufficient inputs yet demanding full delivery of the harvest.

Merchants, in turn, accuse farmers of side marketing.

AMA has since proposed the creation of a price stabilisation fund to cushion farmers against international price volatility.

Unlike some developed nations that subsidise cotton production, Zimbabwean farmers remain exposed to global price shifts.

Farmers have also called for a more competitive market to break the monopolistic tendencies in the sector and help them realise better returns.

At the recent Oil Seeds Conference in Kadoma, stakeholders stressed the need to invest in local value addition to transform the crop’s economic impact.

Cotton Council of Zimbabwe chief executive officer Engineer Chris Murove said: “To increase earnings from cotton, the crop should be processed and consumed locally before we look at exporting. The crop should be processed in the areas where it is produced, and this is another way of creating jobs and industrialising rural areas. Farmers can be empowered to also go into processing.”

Cotton Producers and Marketers Association chairperson Mr Stewart Mubonderi confirmed that harvesting had been completed in most regions and urged the authorities to consider a price review to ensure farmers break even.

“Farmers are appealing for the upward review of prices if they are to break even.

“Farmers only get money from the sale of cotton seed,” he said.

“What happens after that does not benefit farmers.

“We should have oil pressing machines and that is real empowerment.”