Sell now, cotton farmers urged

Zimbabwe Farmers’ Union has advised farmers to sell at a “slow pace” in anticipation of firming prices.
At the beginning of the negotiations, farmers were negotiating for a minimum of US50c per kilogramme while ginners were offering US35c.

“I do not see the wisdom of advising farmers to sell at a slow pace when there are no indications that prices will improve,” said Mr Buka.
“It’s like what happened last year when prices were between US85c and US105c per kg at the beginning of the selling season but by the time we finished we were down to about US40c per kilogramme.”

The current average lint price from daily Cotlook Index quotations is around US87c per pound, a drop of US7c from last week.
At the same time last year it was US165c with the highest recorded price in the season being US243,65c achieved in March 2011.
“This downward trend in prices is a cause for concern as viability is being eroded,” said Mr Buka whose association represents 13 ginners.

ZFU chief economist Mr Prince Kuipa said the prices announced by AMA were not final as negotiations with the ginners were ongoing.
“AMA put the price so that cotton can start getting into the market but the negotiations are ongoing,” said Mr Kuipa in an interview.
Mr Buka said the cost of production would not influence world market prices for lint on the international market as Zimbabwe produces an average 100 000 tonnes of lint out of global output 28 million tonnes.

This is statistically insignificant to influence global prices, which makes the entire industry — both the farmers and the ginners — price takers.
“Therefore, in practice, the price that the farmers can be paid is determined almost entirely by what price Zimbabwean lint fetches on the world market and the ability of the ginner to pay the farmer’s desired price.”

Globally, cotton farmers experience similar challenges with producer prices.
However some countries like the US have managed to keep their farmers in production by providing subsidies. China also subsidises producers to keep them motivated to grow cotton.

Countries like India have become more competitive through the use of biotechnology. In addition, they also provide minimum support prices.
Cotton output is expected to reach 275 000 tonnes this year, up from 250 000 tonnes produced last year.
At its peak in 1999/2000 season, production reached 353 000 tonnes. Last year, ginners spend US$42 million in financing production, up from US$36 million during the previous season.