Low cotton producer prices to persist
Cotton growers in the Southern African Development Community (SADC) are set to endure low producer prices during the 2015 marketing season due to huge stockpiles of the crop from last season, the International Cotton Advisory Committee (ICAC) has said.
ICAC is an alliance of governments of cotton producing and consuming countries. The Secretariat of the Committee publishes information related to world cotton production, supply, demand and prices, and provides technical information on cotton production technology.
Last season cotton growers in the region were being paid an average price of about $0, 50 cents per kilogram which they said was half of what they expected to recoup production costs.
ICAC said world cotton area in 2015/16 was also projected down 6 percent to 31, 6 million hectares.
“Low cotton prices are expected to persist through the rest of 2014/15 when farmers in the Northern Hemisphere make their planting decisions,” it said.
“In 2015/16, cotton is likely to be much less attractive to plant due to falling cotton prices while prices for competing crops such as maize and soy have recovered from price downturns last September and October.”
It said assuming a world average yield of 777 kg/ha, world cotton production was forecasted to fall 6 percent to 24, 6 million tonnes, the lowest volume since 2009/10.
ICAC said this will not push cotton prices up. An agro-economist with Zimbabwe National Farmers Union said the fall of cotton prices on the global scale will be felt in the region.
“As most SADC nations heavily rely on the international markets, the current low world prices will be felt in SADC countries. Farmers are most likely to suffer low prices this marketing season,” it said.
“With this background viability of cotton production is now questionable; farmers are most likely to switch to other cash crops where possible.”
It said regional governments and private sector should seriously consider value adding the white gold before exporting it to increase the farmers’ income.
“Farmers in Southern Africa are price takers; they have no power to negotiate for better prices. The farmers have no say but to sell at prevailing market prices.
“Regional governments must subsidise cotton production were it is not happening. They should also make efforts to stimulate revival of downstream industries so that farmers are not exposed when international prices fall,” it added.
Cotton farming is a source of livelihood to the majority of farmers mostly subsistence in drier parts of Southern Africa.
However value addition of the crop is still behind in most regional countries since the bulk, if not all of the crop is still being exported raw to countries such as China and India. Cotton is grown in countries such as Zimbabwe, Malawi, Tanzania and Zambia.