adminLast year, cotton ginners financed cotton production to the tune of US$42 million, largely through the supply of inputs. But it has emerged that some farmers were breaching their contractual obligations by side marketing the crop. Under contract farming, farmers are obliged to sell their produce to the contractor.
Industry sources said some farmers were being tempted to sell the crop to buyers offering better prices than those who financed production of the crop.
Prices are ranging between US35c per kg and US42c, an improvement from between the US30c and US35c, on offer when deliveries started a month ago.
The slight improvement in prices was caused by a shorter season, slight market rebound and competition. Cotton Ginners’ Association director Mr Godfrey Buka said the association would soon ascertain the impact.
Zimbabwe’s Statutory Instrument 142 of 2009 makes it illegal for farmers to side-market cotton.
Prior to the promulgation of the Statutory Instrument, debt recovery on cotton investment was between 50 and 60 percent.
But it has since improved to between 80 and 90 percent, according to the Cotton Ginners’ Association.
Zimbabwe Commercial Farmers’ Union first vice-president Mrs Maidei Maswi said they have engaged farmers to stop the practice.
“We have advised against side-marketing because contractors will cut off their support and it’s not good for the industry,” she said.
An economic analyst has warned that with confusion over ownership of this year’s cotton crop, private investment into the sector was likely to fall.
“The rebound of the cotton industry is largely attributed to private investment,” a Harare-based economist, Mr Brains Muchemwa, said yesterday.
“It is therefore important that any intervention by the Government should not affect investment into the sector. Government should rather come in with subsidies to protect farmers from the volatility of global prices.”
Online Reporter