Cotton price directive amended
Bulawayo – Zimbabwe’s Competition and Tariffs Commission (CTC) has ordered cotton ginners and farmers to negotiate for advance minimum cotton producer price only, climbing down on its earlier directive, which banned collective bargaining of the commodity’s producer price paving way for negotiations between individual growers and merchants.
The directive is with immediate effect and will be used in the marketing of the 2014/15 crop.
CTC said the ginners and farmers shall negotiate initial payment only for cotton at the beginning of the cotton marketing season.
“Ginners shall adjust the price of the seed cotton after grading the seed cotton. The adjustment should take into consideration relevant factors including economic value of cotton seed and the international price of lint at the end of the marketing season,” the commission said.
The 2014 cotton producer price improved significantly to about US$0, 70 per kilogram compared to 2013 season’s US$0, 40 season owing to increased competition by ginners following the banning of the collective bargaining.
Commenting on the issue, agronomist Evert Kurewa said side marketing in the 2014 marketing season pushed prices up since those who did not finance the production of the crop were also buying it at the expense of those who contracted farmers to grow.
“Some ginners did not support the production of cotton and these were the ones who were offering higher prices last year crumbling those who financed the crop,” Kurewa said.
“If properly implemented the amendment will also ensure loan recovery and reduce side marketing as uniform prices will be paid at the start of the marketing season.”
This anomaly, Kurewa said, maybe be resolved by CTC’s latest amendment.
“CTC’s latest order is the best for cotton, farmers cannot get the real grade of the crop at the point of sale or at the buying point. It has to be graded first followed by payment based on grades,” she said.
“Farmers are expected to have better returns from grade adjustment payment. It is assumed ginners will compete at the point of paying grade adjustment. The benefit will be thus in the long run.”
Kurewa, however, queried the sincerity of ginners to give cotton growers quinine grades.
“The major sticking points are: how reasonable will be the grade adjustment payments, will ginners compete whilst they already have stocks in their warehouses ready for export. This is more like an acid test for all parties involved,” she said.
The Agricultural Marketing Authority (AMA), she said, should further be capacitated to be able to closely monitor the grading process to avoid the prejudicing of cotton farmers.
Cotton farming in Zimbabwe is facing a bleak future mainly due to drought, low producer prices as well as lack of trust and transparency as well as cooperation between ginners and farmers.
In the past selling seasons, farmer unions and the Cotton Ginners Association (CGA) would negotiate the producer price on behalf of their members.
The setup has often resulted in price wars with the two parties accusing each other of insincerity. This has resulted in the decline in the production of white gold in the Southern African country.