Uganda: Cotton agency speaks out on low cotton prices

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Frustrated by the low cotton prices, farmers across the country have started destroying the cash crop. Cotton prices range from sh800 to sh1,600 per kilogramme from around sh2,300 a year ago.
In Nebbi, Lira, Kumi, Kasese, Kamwenge, Rubirizi and other areas, farmers destroyed cotton gardens, while others have abandoned the crop.
They said although the prices were declining, the Government has not intervened to save them from incurring massive losses. The farmers are demanding that the Government gives them a subsidy to cushion and enable them meet production costs. They also argued that the low prices would discourage people from growing the crop.
“Cotton farmers in Nebbi are in tears because prices are dropping every time. We wonder why the Government cannot come up with the clear cotton price. The Government does not care about farmers,” said Kiliopa Ngakethi, a member of the Aryek Growers Co-operative Society.
Ngakethi urged the Government to revive the co-operative societies, saying this would enable farmers to store and sell the produce in bulk when there are better prices.
“Our problem can only be solved through the restoration of the co-operative movement. Otherwise, we will continue to be cheated by ginners and middlemen,” he said.
The Cotton Development Organisation (CDO), an organisation that monitors the production, processing and marketing of cotton in Uganda announced recently that a kilogramme of cotton would be bought at sh1,600. But Richard Olobo, the Nebbi district acting commercial officer, said dealers were buying the lint at sh1,000.
Recently, Ogasi Oriei, a farmer at Kanyamutamu village in Kidongole sub-county, Bukedea destroyed a five-acre cotton garden after discovering that the prices were at sh1,000 per kilogramme.
Robert Okumu, the Nebbi district LC5 chairperson, advised the farmers to store the lint until the Government comes up with a clear position prices.
The farmers lamented that if the Government does not increase the prices, they might fail to pay their children’s fees next term.
Cotton is the major cash crop and source of income for farmers in Nebbi.
“How to do you invest money and after six months you reap losses?” Janet Musoke, a farmer in Bushenyi, wondered.
Mawa Muhindo, the Kasese LC5 chairman, called for President’s intervention, saying cotton farmers in the district would suffer huge losses if prices are not raised.
However, CDO said the prices cannot be increased, arguing that weak global demand and high costs of ginning operations in Uganda were responsible for the low cotton farm gate prices.
Jolly Sabune, the Cotton Development Organisation managing director, added that prices are determined by market forces in a free market economy. “If international cotton prices are good, farmers benefit, but when they drop, the same effect trickles down.”
She added that the development was beyond the Government or ginners’ control.
Last season’s average cotton price was sh2,300 per kilogramme.
The global price for lint last season peaked to $2.30 due to increased worldwide demand for cotton and shortage of supply as climate change disasters unleashed havoc in the leading cotton producing nations; the US, China and Pakistan.
India, the world’s second-largest cotton growing nation, stopped lint exports to serve local consumer demand and strengthen its textile industry.
The good prices last season excited farmers, resulting into increase of acreage in all cotton growing areas as they expected better prices. But global prices dropped as the demand for cotton weakened due to the economic slowdown in Europe and the US, the leading consumers of cotton.
“Last year, we were marketing at the highest prices, but this year Uganda is marketing it at $95 cents (about sh1,900). Even if you are a wizard, what can you do?” Sabune asked.
Sabune noted that CDO gives guidance, but does not dictate the prices.
She said the Government announced an indicative price of sh1,600 last October to guide the farmers.
“We cannot give a pre-planting price because it is hard to predict the prices before the marketing season,” Sabune explained.
But the global market prices kept falling, forcing the Government, the cotton ginners and farmers to revise the indicative prices downward to sh1,200.
Amdan Khan, a member of the Uganda Ginners Cotton and Exports Association, explained that the prices kept collapsing.
“We had another meeting that agreed to further reduce the prices to sh1,000 per kilogramme for us to break-even.”
“Whatever happens, there is what is passed down to our farmers. When the prices are good, we pass it over to the farmers. The global prices affect both the farmers and the ginners,” he said.
“We are not cheating farmers because they are our partners. Besides, we cannot do business without cotton.”
Khan explained that the prices also fact-in the cost of ginning that includes fuel for power generators, foreign exchange and interest rates, which all remain high and unfavourable. “Whatever we do is transparent as we involve all stakeholders,” he remarked.
Hilary Magunda, the CDO board secretary, said prices were adjusted accordingly to establish a realist rate. “The market gives the prices and the factors that determine the prices are exchange rate, interest rates and oil prices,” he said.
“I appeal to everybody who loves farmers to stop inciting them. Sh1,000 a kilo is the best they have ever got,” Sabune requested.
“The Government is promoting value-addition to ensure that our farmers get best prices.”

1 COMMENT

  1. Am a textile weaver and a hand spinner,am intrested in value addition to ensure that farmers sell the products woven from the spun cotton they grow rather than selling lint.How can i get help from the Goverment ?

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